Financial Advisor meeting #3

It is all about the assumptions….

Well, last night we had our third meeting with the financial advisor, and things did not go as well as I might have hoped. I was hoping that, after we gave him a ton of information before we even started, and answered all his outstanding questions in sessions #1 and sessions #2, that he would have some more concrete analysis for us to review last night. In the first session, he showed a sample binder from another client that had a wealth of data, spreadsheets, annual spending vs. income, etc. Several scenarios were explored. I really wanted that 3-ring binder!

Alas, it was not to be. He had two scenarios to show us on the computer in order to get our feedback, and to make any final “tweaks” to the income, spending and assumptions. In looking over his shoulder at the computer, I pointed out a few errors I thought I saw (For example, he continued charging us for company health insurance, once we retired early – as well as charging us for the new insurance we’d have to take out, etc.). Because I did not have anything in front of me, I could not really correct/alter some of the data he is going to be using.

In just the short review, it is obvious that a lot of the analysis is based on some of the assumptions he has put in (inflation rate, rate-of-return, etc.) and that will determine how well we do. What is funny is he started out saying that our original plan (work four more years, take Social Security at full retirement age of 67) fulfilled 95% of what we needed, but when we dug into the details, we were in the black all the way to age 97/99 (our plan). Therefore, his numbers were off somewhere.

When asked, he said, “you definitely can’t retire right now” which does not really match my numbers, when I add in Social Security. Still, I cannot refute him without the actual data/spreadsheets. He is saying all the things that Mrs. 39 Months wants to hear about being cautious, so I am afraid he might be poisoning the well in terms of achieving FI. We will see.

Still, we did make some good decisions based on our discussions:

  • Do the Roth conversion of $40K this year (probably the last year we’ll be able to do it until we retire)
  • Stop putting money into the deferred account at work. Go ahead and just take it as regular salary, pay the taxes now, and invest the money. If we continue to put it into deferred, we’ll have a major tax bite when I leave the company
  • Depending on the situation, consider beginning to withdraw from the deferred account, so you can draw it down instead of paying the big lump sum when you leave the company.
  • Look into benefits/risks of taking social security later than 67. Your SS benefits will increase, but you will need to draw down your investments more to live off for that 3 years. What is the right balance?

I think we are getting a benefit out of this, and I am glad we are doing it. I hope that I am passing good info along to folks. If you can think of something, you would like me to explore with him, please comment.

I will let folks know after we have our fourth meeting (early November) how that is going. In the meantime, I hope all your plans work out.

Mr. 39 Months.

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