Date: Tue, 28 Dec 2004 04:12:37 CST
From: "pmess" 
Subject: Re: Retirement investment advice wanted
Newsgroups: misc.invest.financial-plan
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 wrote in message 
news:1104171444.944364.246140@f14g2000cwb.googlegroups.com...
> With retirement 2-4 years away (depending on kids' college and the
> stock market) I've been talking to various counselors about the best
> way to structure my investments for the future.  Depending on who they
> are I get *very* different scenarios.
>
> Basically I have two questions.  One advisor told me to put 45% of my
> assets into bond funds to use as my salary for the next 10 years.  By
> drawing down on it, and allowing for inflation, I'd be able to meet my
> needs with no additional money for teh period.  Social Security would
> not kick in until about year 8 due to my age.
>
> The remainder of my money would go into index equity funds and not be
> touched until the bonds were gone.  Given the historical performance of
> the market I'd then have a large nest egg to carry me and my wife
> comfortably.
>
> This sounds attractive, but the caveat is that we need to assume the
> market will resume its growth, something I'm uncomfortable with
> considering the current state of the economy.  If we continue with the
> neo-con philosophy of aiming stimulus at investment rather than at
> consumption I don't see a driver for growth.  There must be some other
> "gotchas" that I'm missing.  Can someone point out a few to me?
>
> The other question is whether to take my pension in a lump sum (~20% of
> my net worth at the moment) or as an annuity (varies depending on how I
> do it, but approximately 30% of my current monthly gross).  The same
> advisors as above said it makes more sense to take the lump sum unless
> the discount rate goes up to 7-8%.  Of course, this gives them more
> money to play with.  AARP recommends I take the annuity.  Any thoughts
> on this choice?
>
> TIA.
>
> FYI, I have some health care benefits from my emplpoyer into
> retirement, so that's not as much of an issue for us as others.
>
Bond funds are risky now due to rising interest rates, you could easily lose 
principal and have a negative total return. You might want to consider a 
laddered portfolio of investment grade corporate bonds. At your age you 
should also have some exposure to equities such as utility stocks, REITS,oil 
and gas royalty trusts and other good dividend payers.

PM 



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