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The Cordant Blog

Why Winging Your Retirement is a Really Bad Idea

by Isaac Presley, CFA on June 14, 2017

Last weekend the Wall Street Journal had a short article titled Beware of Winging Your Retirement that emphasized giving thought to the non-financial aspects of retirement before reaching this major milestone. The upside to those who envisioned and planned for their future? Greater life satisfaction. From the article:

But in talking with and hearing from hundreds of retirees through the years, I have found that those who are most satisfied with their lives spent at least some time thinking and talking about their hopes for the future—typically, several years before retirement itself—and then took specific actions to move closer to those goals.

This is exactly what we do as part of our financial blueprint process to help clients plan for their future. Or, as someone recently described it, we help them integrate their financial plan with their life plan.

But here I want to highlight, in addition to the non-financial reasons, a very important financial reason to stop winging your retirement: the sequence of returns risk.

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Making the Most of Your Intel Benefits: A Look at Outperformance Stock Units (OSUs)

by Isaac Presley, CFA on June 08, 2017

Starting in 2009, Intel announced a new form of stock compensation in the form of Outperformance Stock Units (OSUs) for top executives (MCM members) and expanded the OSU grants to executives grade 12+ in 2014 (coinciding with the last year of stock options). In 2017 for those levels 12+, OSUs will make up 60% of the focal grant’s value with the remaining 40% coming in the form of RSUs.

Given the increased importance of this relatively new form or stock compensation, let’s take a look at how they work, their historical performance and, for those nearing retirement, how they vest upon leaving the company.

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Retiring from Intel: Calculating Years of Service, Determining Retirement Eligibility and the Benefits of Being an Intel Retiree (Part 2)

by Isaac Presley, CFA on May 26, 2017

Last time we looked at how to calculate years of service at Intel and the different ways to qualify as an “official Intel retiree.” In part two, we get to the good part as we’ll review the benefits of retiring from Intel. Additionally, we’ll introduce the “Intel Retirement Benefits Calculator” (a free downloadable Excel tool) that will assist you in calculating your years of service and outline what it means for your retirement benefits.

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Retiring from Intel: Calculating Years of Service, Determining Retirement Eligibility and the Benefits of Being an Intel Retiree (Part 1)

by Isaac Presley, CFA on May 17, 2017

Not everyone leaving Intel, even if it’s their last job, officially retires from Intel. The company has very specific retirement eligibility rules and subsequent benefits accruing to official retirees. And, as with all Intel benefit plans, these benefits can be enormously valuable but are often complex and difficult to determine how they apply to your specific situation.

We help our clients in defining their benefits and then applying them to their individual situation as part of our retirement planning process, but here we want to lay out this part of the Intel retirement process for everyone. This series will attempt to do three things: Review when someone qualifies to officially retire from Intel; Illustrate how years of service at Intel are calculated, and then, in part two we will review the benefits accruing to Intel retirees.

As Intel’s 2017 Pay, Stock and Benefits Handbook (hereafter, simply the 2017 Handbook) states, Understanding the retirement eligibility rules and how your retirement benefits work is essential to maximize the value these benefits offer.”

Let’s take a look.

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How to Stress Test Your Financial Plan: A Look at the Key Variables

by Isaac Presley, CFA on May 12, 2017

As any engineer can tell you, sensitivity and stress testing are important tools in determining how a system can fail and therefore, determining the safe usage for that system. When it comes to your financial life, it should be no different. Stress testing your financial plan is an important exercise in determining the health of your wealth. While this a natural inclination for engineers, it can be unclear where to start. Let’s look at the key variables and the impact they have on a financial plan.

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Five Myths About Landing a Good Job Later in Life [Infographic]

by Isaac Presley, CFA on April 25, 2017

Next week we will be hosting a webinar titled Accelerate Your Journey to Financial Independence where we expand on recent blog topic that proved to be quite popular (see How To Reduce Your Target Number and Retire Earlier). In the webinar, we'll look at the tremendous value of using supplemental income in retirement to create a shorter path to achieving financial independence.

With baby boomers more healthy and living longer than ever before, these "encore" or second careers are becoming increasingly common. In fact, a 65-year-old can now expect a lifespan of nearly twenty additional years—over five years longer than a 65-year-old in 1950.

These increases in health coupled with the shifts in the U.S. economy to service work and white color jobs and away from manufacturing jobs add up to an attractive opportunity for anyone nearing the traditional retirement age to bring in some supplemental income and, ultimately, get to financial independence earlier. Consider that:

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Margin Debt Hits All-Time High, or Does It?

by Isaac Presley, CFA on April 13, 2017

If it bleeds, it leads. ~Joe Loder in Nightcrawler

Margin debt recently hit an all-time high—$528 billion as of February month end. But, by another measure, margin debt divided by underlying assets, it’s actually at a lower level than it was in February 2009—the start of the market recovery from the global financial crises.

So, how concerned should you be about margin debt? What does it tell us about the market going forward and how much attention should you pay to these attention-grabbing headlines?

In the 2014 film Nightcrawler, Lou Bloom (played by Jake Gyllenhaal) is a down and out thief turned “Stringer” (a freelance photojournalists) through whom the movie explores what Wikipedia calls “the symbiotic relationship between unethical journalism and consumer demand” or, better known as, “If it bleeds, it leads.”

The demand for gloomy or sensational headlines can be explained by our negativity bias, something the media is very adept at exploiting to their advantage.

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How Do You Know If Your Investment Strategy Has Stopped Working?

by Isaac Presley, CFA on March 29, 2017

Over the last three calendar years, Global stocks (MSCI All Country World Index - ACWI) have returned a meager 3.7% annualized leading some to question their investment approach. Large market moves up are obviously fun, and even big moves down are often easier to ride out (at least you can see something happening) than a sideways markets. It’s extended periods of low returns which test patience and one’s ability to stick with a strategy and let it work over time. 

These periods can be frustrating, causing investors to wrestle with questions like: am I doing the right things to succeed? Is there somewhere else I should be focusing? Are there changes I should make? The pain of patience triggers the question: is my strategy broken?

In his fantastic biography, legendary mathematician, successful gambler, and hedge fund manager, Ed Thorp reveals how he answers this question.

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Social Security Income: How to Delay and Optimize for Taxes

by Isaac Presley, CFA on March 22, 2017

We received a couple of questions on our recent post “How to Increase Retirement Wealth With the Right Withdrawal Order” and will address the first one here. (Note: as we mentioned earlier this year, we will be making an effort to address more reader questions on the blog this year, so, if you have questions send them in.)

The question has to do with the issue of taxes. Specifically, is taking IRA distributions before you are required smart given a potential increase in taxes paid on Social Security income or is it better to delay Social Security in the first place. Here’s the question:

What about the effect of taxable income on SS taxes? Or delay SS with additional withdraws from retirement accounts to cover delay in SS?

This question breaks down into a couple of parts: First, how social security income is taxed and second when to start taking it.

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Make an Appointment Now to Update Your Financial Plan for 2017

by Scott Malbasa on March 16, 2017

We know that time doesn’t slow down for anyone, but it’s hard to believe we are already more than two months into 2017. Now that you have settled into the year and have hopefully made some headway on your resolutions, it’s time to get serious about making your finances a priority for the rest of the year.

As you reflect on the financial decisions you made in the past, this is an ideal time to determine new goals and focus your attention on your financial plan to set yourself up for a successful 2017.

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