SerpApi.Org
Dear Fix My Portfolio,
Any tips on retirement would be much appreciated.
Almost Every Reader
Dear Reader,
I’m here to help you. It’s my mission in life. I just need to ask you a few questions first.
Because I’m a stranger who people regularly turn to for financial help, my inbox typically overflows with general questions like the one above. In the last month, I’ve been asked: How do I even get started? What’s your take on traditional IRAs versus Roth? Where should I put my emergency savings? What are I bonds and where do I get them? Does Schwab have a T-bill money-market fund?
I’ve also heard from various people telling me their whole financial picture, down to the pennies in their accounts, and the ins and outs of their divorces, estate fights and bad relationships with financial professionals.
I see the same thing happening on social-media forums, subreddits, Facebook groups and the like. People either give out too much information or not enough.
We’re all looking for the happy middle, where you can get some feedback from real people (or supposedly real people) without paying for a formal financial-planning engagement — and without using mistake-ridden AI interfaces that may ingest your personal info. Even those who do hire a professional sometimes need extra help, a second opinion or just somebody to test ideas with — off the clock.
So here’s what I — or anyone — would need to know in order to give you some basic educational guidance on your situation without crossing ethics lines. If you’re inspired, you can try out our new MarketWatch retirement questionnaire and ask a good, meaty question of your own.
Your age
If you are asking for the most basic tips on retirement, I can’t even get started without knowing if you are 25 or 55. No matter what question you are asking, your age matters most. Nobody can help you with a financial question unless they know your general time horizon.
Almost every financial calculator you will use will also want this information, too. Need an insurance quote? Can’t get started without it. Want an estimate of how much you need to save for retirement? It’ll likely be the first input asked. What will your required minimum distribution be for your IRA? That’s all about your age. When should you take Social Security? That’s also all about your age.
Your family orbit
Your tax-filing status matters for a lot of financial questions, which is why your family (and sometimes their ages) matter too. They also figure into your long-term plans in terms of gifting and inheritance. What’s most important for somebody trying to help you is to know if you’re asking your question for yourself, or are there other people involved.
This conversation can get quickly bogged down with too much information, and some of it could lead to you being identifiable. Strangers don’t need to know your whole family tree, which is the first way asking for free advice differs from paying a professional. I just generally need to know if you’re legally married, and if you have any others who depend on you directly for support, like kids, aging parents, other relatives or friends.
If you were hiring a pro, they would dig much deeper and look at everyone’s tax-filing status, employment and financial needs, and keep track of it. You might even get anniversary cards from particularly on-the-ball advisers, but not from me.
Your work situation
Like your tax-filing status, what matters for general advice is a sketch of your situation, not the name of the company you work for or your exact salary. Unless your question specifically is about managing your job, what I need to know about are your sources of income: jobs, pensions, Social Security and annuities.
Generally, if you’re under the age of 65, I’m going to assume you’re still working, and if you’re over 75, I’ll think of you as retired. But between 65 and 75, it’s going to be a big unknown. So if you’re in that range, it would be helpful to specify to your audience whether you are employed, because it would greatly change the dynamics.
Your net worth
Most financial advice applies whether you have a lot of money or a little, mostly because it’s so general. Your level of wealth actually makes a huge difference to giving you a useful answer.
The trouble is that half of Americans don’t know their net worth, according to CreditKarma. There’s some $2.1 trillion out there in lost 401(k) accounts. There are people out there who don’t know the exact amount of their income, especially if it’s fluid. There’s a sizable chunk who don’t know how much they owe in student loans or credit-card debt, or the percentage they are paying in interest payments.
A helpful person on the internet can give you some advice without this information, but it won’t mean quite as much. This is where professional help would make a big difference. They’d ingest all of your financial information into their software and would have checklists to make sure they got all the relevant information. This is when you might find out about a lost retirement account, or the true scope of your debt. It can be eye-opening.
When people write me with questions and don’t include any net-worth information, I assume the national averages for income and retirement savings. It might not be accurate, but it is close enough that people can apply their situation to it by multiplying up or down.
I’m actually more worried about the people who offer too much information. Telling me your overall retirement balance is $1.3 million is fine, but detailing the breakdown of your various accounts to the dime and what funds you’re invested in is too much. I’m a certified financial planner and I’m therefore a fiduciary, but I’m not your fiduciary. I try to edit out any identifying details to protect people’s identities, but that’s just me. For posts beyond the reach of my inbox, there’s a risk in putting that information out there because nefarious sleuths can figure out more than you think.
Putting all of this together, if you wrote to me and said: “I’m single and 62, with $500,000 saved so far. I’m still working and make $75,000 but not sure how much longer I want to keep at it. Any tips on retirement would be much appreciated.” This is something I could help with. Anyone out there want to give it a shot?
Got a question about retirement? Fill out our new questionnaire or write to me directly at [email protected] (please put “Fix My Portfolio” in the subject line).
You can also join the Retirement conversation in our Facebook community: Retire Better with MarketWatch.
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