Quote:
Originally Posted by Reese
“No chance you properly explained the waffles plan and told an advisor they have to choose between the two and a real financial advisor said he'd choose the waffles plan. You either did not properly explain the waffles plan or you did not tell him it is an either or choice but made it seem like an add on. Which it might be if you are senior, but the waffles are a replacement for an A plan for new hires.”
you’re on crack. There are plenty of advisors who say a “bird in the hand is worth more than two in the bush.”
there are also a good list of financial advisors who are happy to put you in a 60/40 portfolio of funds that are charging you 1% expense ratios on top of the 1% fee the financial advisor is charging you. So why the heck do I trust their opinion?!
so you wanna know what I say to your “financial advisor?” Go F yourself. You’re not worth the money I pay you. You’re an antiquated service that is no longer relevant, like the 1970s A plan pilots that are so stuck on a blue collar structure that apparently don’t care about trying to build generational wealth.
A plans are for the “company man.” The true “blue collar” worker. Hi! I’m mr pilot, I’m gonna break my back working hard for my company, because they’re gonna take care of me in retirement. I don’t need to save, and my children will be part of the “cog” just like me. Just slave labor happy to pay income tax while the C suite get tax advantage compensation.
screw that. I’m not a “company man.” I want MY money, in MY name. I’m not buying bread, butter, or beef from the company store, I’m wanting financial independence for myself and my heirs! Give me the opportunity to create a better future for my future generations!
I'm not really sure where to start with this. It's hard to tell if you're being sarcastic or if you only grasp terms but not the actual concepts. Or maybe you get the concept but not the why behind the concept. I'd love to speak with any financial advisor who advocates giving up an A plan for any other type of plan. Now you might not like the term financial advisor but that seems to fit a large group of professionals with financial expertise. Now not all are good or even competent, but I'd like to think if you have one, then you did some research to choose him/her. I was replying to a previous comment and kept the financial advisor phrase. If you like, substitute financial services or retirement planner or retirement services or really anyone who has taken a finance class or two. None of them will advocate giving up an A plan for even a B plan not to mention this untested or poorly explained waffle plan.
You seem to think that our current options are only an A plan to be your retirement plan. Perhaps that is not what you were intending to imply. But maybe you are unaware but we do have a 9% B fund. That is "MY money, in MY name" as you advocated. Even new hires starting right now, if we assume no new contract ever, with the 9% B fund will average about $25000 deposited every year. With a very conservative 7% annual return (using the 60/40 you hate) that means their retirement portion of "MY money, in MY name" will generate about $85,000 per year in retirement spending (using the 5% withdrawal process) after 25 years. If they fly 30 years then the B fund will generate around $125,000 per year. So from a purely numbers basis we are already somewhat balanced. If you contribute to your 401K then add that in also and your retirement accounts will be in excess of your A fund income amount annually.
The issue (or the why behind the concept) is the risk. No one is advocating for you not to save in your 401K. You should be maxing that out right into your Roth 401K. No question about it. Precisely because, as you said, that is "My money, in MY name." I can choose the amount of risk I want to take and hopefully reap the rewards down the road. However, an A fund is very LOW risk. That’s the reason to advocate increasing the annual retirement number. All the risk is borne by the company. Sure they could go out of business, but I could die tomorrow also. Prepare for the worst, but also plan for the best case. There are risks with a B fund also. You could have lousy market timing. There could be a long term economic contraction. Congress could change the laws and reduce the max B fund allowed. Congress could reduce the max 401k allowed annually (already been proposed). Global warming, Calif falls into the Pacific, etc. With the A fund buttressing your retirement planning, you can take increased risks with your B fund/401k money. Without an A fund, you will be forced back to the 60/40 planning that you hate for your personal B fund/401k. Right now the A fund can represent the 40 in the 60/40 and that's guaranteed.
The waffles plan is exactly what you hate. It will be 60/40 on steroids. It cannot even get close to 60/40. Maybe a 50/25/15/10 plan. With withdrawals beginning almost immediately and continuing to grow annually they might be forced to a larger cash position than 10%. The 15% will be risk mitigaters like re-insurance or annuities. Oh and you have no input into the level of risk you are comfortable with. Everyone get the same annual return. With many close to retirement age, the plan will have to be very conservative. An average return will be between 4.5 and 6%. Even those numbers might be too high.
04-22-2023
