Retirement Income: Why It Matters – BLS Research Part 2 (2018)
TRowe Price will get a look at in the second in our series on analyzing investment firms online portfolio recommendation tools.
TRowe Price offers 4 different models. We’ll just look at 2 in this review. The Self-directed recommendation and then their “advicepro”.
The remaining two platforms, which I do not review, have higher investment minimums. So, in order to compare apples to apples of various investment firms tools, I am just using platforms that allows a portfolio of $50,000. Now you can always put more in there if you want.
Overall, I like the TRowe Price in terms of overall diversification. Very well diversified.
The fee structure is a bit more of a challenge because while you just pay whatever the internal fees of the mutual funds are, you don’t actually know what those fees are unless you do some digging.
It’s easy to find the fund fees but unless you actively search for the fees, you will have no clue what you’re paying. You won’t get invoiced. You won’t have a debit on your account. You’ll get no year end statement of fees.
That can be a problem.
But the TRowe Price model is certainly better than other models that charge you a management fee PLUS the mutual fund fees too!
In this episode, we dive even further into the BLS and other research on retirement income.
The Pension Rights Center says the average Social Security benefit per beneficiary is $1,360. While the average asset distribution was $1,542 per household.
They claim less than 30% of retired households have pensions and less than 7% have VA benefits. And the average earned income in retirement is $25,000.
The BLS provides this table:
Age of Household Median Income Mean Income Households Aged 55-64 $62,802 $89,986 Households Aged 65-74: $47,432 $68,905 Households Aged 75 and Older: $30,635 $45,989
Notice the difference between median and mean. IT’s HUGE! We want to look at the median when we can as opposed to the mean, i.e., average
In the video, we’re going to dissect the income sources AND, as always, the tax consequence of having income from various sources.
Again, using the Tax Foundation handy-dandy calculator, you’ll see very quickly that depending on how where your income is from has a drastic affect on the tax you pay.
So, for those who do not want to watch the video, the crib note recommendation: Delay Taking Social Security Until You Are 70!