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Mar 22, 2009, 6:14 AM

Post #1 of 6 (9240 views)


Need Practical Advice: Managing Retirement Savings

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I was wondering if I can share in the benefit of your wisdom and experience, folks. My wife and I are now preparing for retirement and we intend to retire in Mexico (probably in Lake Chapala) primarily because of the weather and lower living expenses versus NOB. We are planning for a quiet retirement....not too much traveling, etc. We will not be beneficiaries of company defined benefit pension plans. We will draw upon our gov't. plan (in our case CPP and OAS) one day. And we do have (albeit much reduced ones versus last year) modest retirement savings (in our case RRSPs, I guess equivalent to IRAs and/or 401Ks). I have been talking to a financial adviser and here is what he is recommending how I should invest our retirement savings: a) allocation - have at least 50% in stocks and 50% in fixed income (bonds, t-bills, etc.) and plan to have to live off these for up to 40 years (we are in our 50s and relatively good health); b) type of assets - exchange traded funds or index mutual funds for stocks and bonds because these have lower management expenses, and you are diversified automatically; c) cash - keep at least one year's worth of living expenses in cash (high rate interest accounts).....or better still, if affordable, three years worth of living expenses , as bear markets tend to last that long so you give time for your invested funds to recover when we hit the next bear market (assuming we retire after this bear market's recovery). Now that I have (so called) "expert" advice, I will be appreciative of practical advice from those of you who are now actually managing your retirement savings. Is the "expert" advice logical, or "voodoo". Have you followed your own plan and how have you fared? Sorry for the long post. If you don't want to post your response, please feel free to PM me. Thank you in advance!


Mar 22, 2009, 7:59 AM

Post #2 of 6 (9217 views)


Re: [411guy] Need Practical Advice: Managing Retirement Savings

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These are VERY volatile times. Being 77 years old, over the years I have had many gains and many losses in the market. Right now I am nearly 100% in liquid assets. Mainly CD's and annuities. I was able to get out of stocks only days before the slide. It is a lot better to preserve your capital and get little interest than to end up with half of your original nest egg.
I do not have much faith in all the stimulus programs being brought out and plan to set on the side lines till the dust settles. I also have little faith in the average financial planner. Look at the downward trend of the DOW. Five or six up days in the market does not mean a bottom. Some say that stock prices are now low and now is a good time to buy in. But it could very well go lower. Stocks and bonds at this time? Not for me.


Mar 23, 2009, 8:48 PM

Post #3 of 6 (9108 views)


Re: [411guy] Need Practical Advice: Managing Retirement Savings

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I think that your financial planner is giving you sensible advice, consistent with what most experts would suggest. In fact, his advice is so sound that I am almost surprised. ;-)

Index funds are the low-cost way to go; all the studies that I have seen say that index funds beat most managed funds, especially in the long run. People like to think that they can beat the market, but it is just wishful thinking. Same for market timing; nobody knows which way the market is going to go. You need a long term strategy, rather that getting into the latest hot stock, which is probably already overvalued. (If a given stock or category has outperformed the market in the last X months, the statistical principle of regression to the mean says that it will probably not do as well in the next X months. This is especially true since anything that has appreciated significantly is more likely to now be overvalued rather than undervalued).

You are too young not to be in the stock market; statistically, at least one of you will probably live past 90 years old. The other poster is 77 years old, so his situation is different; he does not have a 40 year time horizon.

Go with the advisor; you are lucky to have one that smart.



Mar 24, 2009, 7:08 PM

Post #4 of 6 (9022 views)


Re: [411guy] Need Practical Advice: Managing Retirement Savings

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My wife and I are also preparing for retirement in Mexico in a couple of years. We have visited the Lake Chapala area (and San Miguel and Guanajuato) in that area of the country, but we keep gravitating toward the tropical city of Merida - but location is not key to this topic :).

We will both have governmental defined benefit pensions, two from one US state and one from another. The public sector jobs we have now also have a defined contribution bit. We also have IRAs and a 457 plan (401k equiv for public sector employees) that we put money in every month. I am 57 now and my wife is 54. I am pretty sure that Social Security will be there for both of us. We call it the many small pots of money and we won't starve retirement plan :).

I think you are getting pretty sound advice. The funds we control directly are pretty heavily in stocks, but the allocation going in over the past year or so has been 50% fixed, 50% stocks. The part of our state pensions that is defined contribution we do control, it is invested by the state investment board that also controls the defined benefit public pension fund.

Best wishes to you!!
Planning for Mexico Move Blog


Apr 9, 2009, 10:08 AM

Post #5 of 6 (8782 views)


Re: [411guy] Need Practical Advice: Managing Retirement Savings

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Hi to all,
i have only just joined this forum a few minutes ago, as like people here we are wanting to retire to Mexico. my only input on this is what i have been told by my friend who pays $10,000 a year to an Economist with no products to sell (so he tells me) the economist forecasts a long and deep recession, with continued property decline for at least 2 years (UK anyway) and his advice is to liquefy assets with at least 15% in gold which he is forecasting to rise to $2000 to $3000 an oz and an extreme high of possibly $6,000. he does say if your property is for home use this is fine but not to enter the buy to let market. Again apologies as we are Limeys and this may not apply to the US although i think it will.
I would hate to see anybody's 401K or whatever you guys call it go up in smoke with so much invested in a particular area.
he also stated that if you can get 8% returns in the next 10 years to take it especially in govt. Bonds.
anyway just thought i would pass on what little i know and have heard. one thing is for sure, it is a testing time ahead for us 'apprentice' pensioners!!
good luck!


Apr 17, 2009, 8:46 PM

Post #6 of 6 (8654 views)


Re: [411guy] Need Practical Advice: Managing Retirement Savings

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411guy- Sounds like pretty sound advice from your financial planner. I might extend the 1 year's living expenses to 2 or even 3, if you can manage it. That should get you over any major bump in the financial world, such as the one we are now experiencing. The rest, invest as he suggests. The cash reserve I would put in a CD "ladder" (if this term is unfamiliar, ask your planner), so that you get the advantage of higher interest rates, but continually have money coming available over time.

What you didn't address is the spending side of the equation. How much of your current expenses can you peel away to get down to what you really need to live on? My guess is that, like virtually everyone else NOB, you got a lot of peeling to do. My wife and I live a very comfortable lifestyle in Mexico (we're full timers from the US) comparable to the middle class lifestyle we had while I was working NOB. Over the last 18 months, we have averaged $2100/month. That includes everything, including entertainment and travel to the many wonderful old colonial cities in Central Mexico. If we didn't eat out 3-4 times a week, and didn't go on travel adventures every couple months or so, we could probably live on $1500-1800/month. What we don't do is waste money on stuff we don't need. I suppose we could spend $4000-6000/month and I see expats in Mexico who probably do spend that kind of money, but it is simply not necessary.

There are various previous posts from people who have detailed what their typical monthly expenditures are. Check these out. It should be quite educational.
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