No. of Recommendations: 2
<<<I calculate that I will need a return on my investments of 6% to 8% to maintain our present lifestyle. My financial planner has me invested in 14 mutual funds with a distribution as follows:

55% are equity funds,
25.7% fixed income,
13.9% mortgage backed,
4.9% preferred securities,
and .5% cash.>>>

First off, 14 mutual funds in pretty high. If you have 3 or 4 in each catagory, they may have different names and goals but I bet the stocks owned have a high overlap between them. Therefore, you're paying more fees to own the same stocks multiple times. Also, how much of a kick back is your financial planner getting for putting you into these funds, i.e., how does he earn his living?

Second, have you planed for inflation? You might need 6-8% return, but what about 20 years from now? At 62+ and in good health, you could live another 20-25 years. That 50k buying power could easily be down to 25k by then. Therefore, you need some growth in your portfolio.

Finally, as mentioned before, a 4-5% draw-down is what's been bantied about here and being conservative enough to keep your retirement funds producing and growing with inflation. General concensus is that you need 20 years living expenses saved. Place 5 years worth in cash/cash equivilants and the rest in equities, the simplist equity to hold is an S&P 500 Index fund. Don't be fooled by bonds, bond funds, etc, they're just as volatile and can loose money just like stocks. Each year, take a year's worth of living expenses from equities and place in cash. Do a search here on "draw downs" for more info and ideas.

Keep studying and learning and good luck.


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