Q&A: "I'm Scared of Running Out of Money in Retirement!"
Jun 4, 2024
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Sara, five years from retirement, fears running out of money before turning 80. Lauren seeks advice on ETFs vs. index funds. Discussion on retirement planning, investment options, and safe investing $500,000 for a nomadic lifestyle.
Test drive retirement plans before committing to ensure a secure future path.
Invest lump sum windfall using low-cost, diversified strategies tailored to specific time horizons.
Prioritize investing lump sum into the market for long-term financial growth and independence.
Deep dives
Testing the Retirement Lifestyle With a Test Drive
Joy, who is about to sell her home and embark on a nomadic or slow matting lifestyle due to disability, emphasizes the importance of test driving retirement plans. Joy's prior test drives validate her chosen path, offering a secure plan for the future.
Investing the Windfall Wisely
Joy seeks advice on managing the proceeds from selling her home, totaling half a million dollars. The strategy includes investing the lump sum with a focus on passive, low-cost, and tax-efficient investments. Morningstar's asset allocation builder and model portfolios are recommended to create diversified investment buckets based on different time horizons.
Exercising Caution with Retirement Investments
The discussion underscores the importance of asset allocation tailored to specific time horizons within the windfall. This approach ensures safety by aligning investments with desired outcomes and goals. Morningstar's model portfolios offer guidance in creating a diversified investment strategy.
Lump Sum Investment Strategies for Long-Term Financial Security
Joy is advised to invest the lump sum into the market immediately rather than holding it in cash. By balancing high-interest debt, emergency funds, and a bias towards equities in the investment strategy, Joy aims to preserve the principle while living off gains.
Empowering Financial Independence Through Test-Driven Retirement
Joy's journey of selling her home with the aim of embracing a nomadic lifestyle due to disability highlights the importance of initially testing retirement plans. By carefully investing the half a million dollar windfall, she takes a crucial step towards ensuring financial independence and security.
The Critical Role of Asset Allocation in Long-Term Financial Health
Joy's inquiry into wisely managing the proceeds from selling her home emphasizes the significance of customized asset allocation based on different time horizons. Employing Morningstar's tools for model portfolios optimizes the diversification strategy for long-term financial health.
#511: Sara is five years from retirement with a paid-off house. But she’s worried that her money will run out before she turns 80. What does she need to do now to protect her future self?
Lauren is a personal finance nerd who gets it. But one question perplexes her: When should she should choose an ETF over an index mutual fund? What about vice versa? Paula and Joe explain.
An anonymous caller plans to sell her house and live a “slow-madic” lifestyle. But she’s on disability and needs to keep her money safe. How should she invest her $500,000 windfall?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
