“Peak Boomers” - born ‘59 to ‘64 - had “median retirement assets of just under $225,000 as of 2022.” Noted are wide gaps especially by education level: $6992 median retirement assets for those without a HS degree; $661449 for those with a graduate degree. Not stated is what proportion of wealth is held within the top 1% but I suspect it is the majority.
My WAG is that the vast majority of Boomers will be using their RMDs and more for living expenses. Required is not required. They don’t have enough there plus Social Security to stay close to previous standard of living.
These are the folk who are crash will hurt the most
And IMHO the bunch with the most wealth, can weather a bear market easily, and will reinvest RMDs the same as they have been investing before.
Not “Peak Boomers” … that was the part of where the article was going, the demise of defined benefit pensions for this group, and eventually to a sales pitch for annuities as part of retirement plans:
About a quarter of peak boomers have such plans, which provide former workers with a fixed monthly check based on their past earnings and which covered about two-thirds of private-sector workers in 1980. They have been largely supplanted by “defined contribution” savings plans such as 401(k)s, in which employees make contributions and manage withdrawals in retirement.
I don’t know if this is the right thread (vs starting a new one), but I imagine it’s got the right people looking at it for this question.
I currently have three separate retirement accounts, from three different employers (each with a different bank). I am actively contributing to one, but the other two are just sitting there doing what the market does.
I’m wondering if it makes sense to consolidate them, and if so, what I should look at to make a decision about where to move them? What things should I consider? Other than having less paperwork to track, is there a benefit to… doing something with the inactive accounts?
I like having them all together, and depending on the company managing the accounts and the size of the employer, you may save significantly putting them into a rollover IRA someplace like Fidelity.
For instance, my wife worked for a really small employer, and the only 401K the company could afford was FlyByNight Investments, and while the funds were reasonable funds, they were all heavily managed with high fees. Still worth it because of the tax and match advantages, but the minute she left that job we got that money into her Fidelity IRA. Fees dropped by a full percent.
Also, being in a rollover IRA you won’t be limited by the funds the plan chooses to offer. Got your eye on HABX, Hookers And Blow Index, knock yourself out.
Additionally, with everything in one place you’ll get a more accurate look at (for instance) what % is domestic equities, bonds, etc.
Finally, Fidelity at least (I’ll admit to being a Fidelity shill, but I’m sure others are good too) gives you more benefits as you get more money under management with them. So for instance, I have a tax advisor I can speak with for no fee, a general investment advisor, etc. They can be useful.
TL;DR Yes, I think it’s a good idea to consolidate.
Nailed it in one. Good bet you’re losing performance and paying unnecessary fees by having multiple vendors. Another downside to multiple vendors is people forget about them and abandon that money unnoticed. More often for people who move house and move jobs a lot, and end up with token amounts in each 401k. But those are the folks for whom a “token amount” is a big deal.
Since your mentioned employers, it sounds like these are 401k accounts. And you probably don’t have them at banks; rather at brokerages or financial services firms.
Anyhow, many 401k plans accept rollovers into them from prior 401ks. So you could probably combine the former employers’ 401ks into your current employer’s 401k. If that was an especially good plan with low fees and good investment options that’s one plausible way to go.
The alternative is to roll all the former employer’s 401ks into your IRA. Speaking of which, there’s nothing to prevent someone from owning multiple IRAs at multiple institutions. That’s another area where having multiple is almost certainly a mistake. Combine all your IRAs and 401ks into one institution and one account. The only thing you need to keep separate is Roth IRA/401k money from non-Roth (AKA “Traditional”) IRA / 401k money. So you may end up with two IRAs at the same vendor; one Roth, one not-Roth.
Once you have all your IRA(s) and prior employer 401k(s) combined, then you’re ready. Both ready to optimize what you’re invested in and ready for the next job change.
As you leave your current job for the next one, or for retirement, rolling that now-former employer’s 401k money into your IRA(s) should be an automatic part of your personal “leaving a job” checklist.
I have one old IRA with relatively little in it (two personal choice stocks, one that has fizzled but still holding it, XYZ, the company that does Square, and one that has gone up many times over, MTZ, MasTek). I’ve also toyed with moving it over.
Plus side? If I died suddenly easier for my wife to deal with one account than two. And when I hit RMD age and assuming still working, as is current thought, RMDS won’t be required. If I do retire and need to start RMDs easier from one account than two.
The big 401K plan (Empower) wants to make it easy to consolidate and then use them to help better sell their … guidance. And it is probably very little work. But I am lazy.
When I retired, I had a small IRA in Principal, a smallish IRA in Vanguard, and smallish Roth IRA in Waddell & Reed, plus my largeish 401k at my employer. I didn’t do anything with them for a while, but eventually opened an account at Fidelity and rolled everything into that account. (Three accounts, actually: IRA, Roth IRA, and investment account which I opened with inherited cash after Mom died.)
Fidelity is so easy to work with, has an incredible amount of investment options, and, as @OldOlds said, they have a great team that thus far has been free for me to use for advice. I wish I had done the consolidation sooner.
The only downside, and it wasn’t huge, was that I had to liquidate my 401k and have the custodian send a check to Fidelity. A bit of paperwork, but nothing outrageous.
It’s from my total assets with them, which is my investment account, my rollover IRA, my Roth IRA, and my wife’s rollover IRA. Fidelity allows me to claim her account and manage it, with her permission of course. And her eyes glaze over at the mention of yield or CAGR, so she was only too happy to let me have it. As I mentioned, as you get more in the account the available services go up. When I was young and poor, I believe I just got free seminars. Then I got the opportunity to meet with an advisor. Now I have an advisor who is assigned to me and has been consistent for several years. FWIW, I’m doing well, but I am by no means rich- and I’m not at the top level of service. Officially Fidelity doesn’t publish the thresholds but you can find them online.
When I log in, under my main “Portfolio” page where it shows the summary of all accounts, there’s a drop down in the upper right that says “contact your team.” There I see my advisor and her admin. I can reach out to her for things I need. For instance, she recently scheduled me a meeting with a Long Term Care advisor who walked me through the different products available and how they work.
I probably shouldn’t have said “I have a tax advisor” but “I have a financial advisor who can arrange a meeting with a Fidelity tax advisor or get questions answered”
I know that was a joke, but I get some value from it. Since I’m big on the Bogle philosophy, there isn’t too much to do. But I like that I can bounce ideas/moves off of her and she’s knowledgeable enough to give useful feedback. What she won’t do (but I wish she would") is give me a list of funds to consider that meet some set of criteria I give her. I think they don’t want the liability of “But you told me it was a good idea to invest in Hookers and Blow!” She’s also pretty good at walking me through some of the more advanced performance metrics on my accounts, like alpha etc.
Oh, and another thing they did that was pretty useful was they did a review of my wife’s stock options, held at E-Trade, and provided an analysis intended to help determine when it made sense to sell, how many, etc. based on value, concentration, stock volatility, risk, etc. That was really nice.
Unfortunately, after that we learned that the trading window for her options is only open twice a year, and the price (it is a volatile startup) never seem to cooperate.
My Fidelity advisor set my wife and me up with a meeting with an estate planning specialist. We have been trying to decide if we need a Trust, and this woman was extremely helpful in pointing out do’s and don’ts of wills, trusts, and other end-of-life decisions and documents that we should have in place.
I have not used my advisor and his team for investment advice, although he probably would be happy to give me some tips. I did ask him for a quote for Fidelity to manage my money, but it was too expensive, so we passed on that service.
We have multiple Roths. My husband’s logic was that it diversified risk. My husband is all about diversifying risk. We have several different investment accounts with varying levels of risk, although nothing too crazy. The IRAs are also diverse in how they are managed. I have two managed with JP Morgan and Fidelity and one self-managed with JP Morgan. Then I have a 401K for work which I only contribute up to the match.
Our retirement account savings aren’t great, but when you add up all of our investments, we are where we need to be for retirement.
We saw our advisor earlier this week because we had some “emergency money” in our checking account we weren’t doing anything with, then we got a substantial windfall, which happens occasionally. We decided to invest half of the total into our… uh… Dynamic multi asset something account, which is pretty conservative, and then we put half of it into a more aggressive account. Saving a smaller chunk for us to just get crazy with it.
I’m finally past the craving to pay off my student loans. We can handle that payment now and our investments, even the conservative ones, are outperforming the interest rate on the loans, so it made no sense to me to pay off the loans. 11 years to payoff!
It’s even worse for my GenX cohort. When the top quartile of GenX has only about an average of $250k saved, things are looking grim for us former latchkey kids. As it happens I, luckily enough, AM a traditional pensioner w/ a COLA. But that’s only 14% of us, closer to half the rate of the peak boomers and about on par with the Millenials following us. It seems to have leveled off in my generation as the pension became the near-exclusive domain of government employees. But even those with pensions today have mostly less generous terms than the classic plans of yesteryear.
I rather suspect the Golden Age of the silver-haired Palm Beach/Palm Springs senior golf crowd is nearing its end.
Getting back to more general investment discussion.
There doesn’t seem to be much that slows down money coming into this market.
Oracle disappoints resulting in jitters about AI possibly not delivering as big as hoped, fear of missing out decreases, fear of loss higher. And? Really just a little off the big AI plays and overall up for the market overall.
There have been a couple of articles and columns in the Times all about how this situation is nothing at all like 2001. Not a bit. All the companies in AI are big and making money. cough OpenAI cough.No one back then was making money. Yeah, like Microsoft and IBM and Sun and Intel. There were all these dumb startups in 2001, no dumb AI startups now. AI will change the world, so profit. It will, but the Internet kept on getting used even after the crash.
I would love someone to show me how AI companies are going to make enough to get a good return on hundreds of billions of dollars of infrastructure.
