The Run-Up to Retirement

Comment on “A One-Page Wealth-Building Plan to Get a 60-Year-Old Couple to Retirement,” by Charles Rotblut, CFA, in the May 2023 AAII Journal:

A minor point: If the couple is 60 now, in 2033 when the required minimum distribution (RMD) age changes to 75 they will only be 70. So RMDs for them would start at age 75, as it stands today in the SECURE Act 2.0.

One method that I have employed when using James Cloonan’s Level3 approach is to feed all dividends and interest into the cash bucket. This provides cash flow that can approach 2% or more, depending on the type of mutual funds or exchange-traded funds (ETFs) you have in your total portfolio, which mitigates nearly half of the sequence risk from a typical portfolio that is withdrawing 4%. The result of this is that there is less risk of running out of money in a four-year cash bucket, thus allowing you to reduce the current cash you hold. The reason is your other income from all the bonds and equities in your portfolio has little risk of declining in a large way, even during a downturn, and will continually be streaming cash into your cash bucket.
—Dave G. from Texas

Retirement Account Rollovers

Comment on “The Rules Regarding Retirement Account Rollovers,” by Charles Rotblut, CFA, in the May 2023 AAII Journal:

The article doesn’t distinguish between IRS rules and possible rules set by a provider or employer—e.g., 403(b) plans, 401(a) plans, defined-benefit plans or 857(b) plans.

I have extensive experience dealing with 403(b)/401(a) plans versus a defined-benefit plan. I retired in 1998 with benefits vested in both of those types. There was/is no provision for doing rollovers from the defined-

benefit plan. I started doing rollovers from one 403(b) and two 401(a)s in January 2012 (all three at the Teachers Insurance and Annuity Association of America, or TIAA) to a traditional IRA at Fidelity, because of restrictions at TIAA and my former employer. It wasn’t until November 2021 that I could completely move all my accumulation at TIAA to Fidelity.

Anyone contemplating a rollover needs to do their homework. It may be easy to do online—e.g., from Schwab to Fidelity—or it may require a lot of time and effort.
—Donald M. from Arizona

Dividend Stock Returns

Comments on “Lift off With Rising Dividend-Paying Stocks,” by Jack Gilleland, in the May 2023 AAII Journal:

An equal-weight investment in these securities yields just 3.79% before tax. Surely there are lower-risk alternatives that can deliver comparable results?
—Dewey T. from Texas

Derek Hageman wrote well. He was interesting. He communicated to the needs of his audience. He asked for member input and actually responded to my suggestions. I miss his missives. This reprise was an appropriate commemoration of his work and his legacy.
—Barry J. from Texas

Using AAII Stock Screens

Comments on “Charles Kirkpatrick’s Approach to Beating the Market With Relative Rankings,” by Matt Markowski, in the May 2023 AAII Journal:

AAII often provides well-written articles like this one, touting the methodology of various AAII stock screens and graphically showing how they’ve outperformed the S&P 500 index by a wide margin over a long period of time. However, the screens are apparently updated on a monthly basis, with significant turnover, making them difficult to use in practice.

I would like to see articles showing how an individual investor can actually use these screens to achieve the outperformance they are designed to deliver. Personally, I favor the Buffett Hagstrom screen, based on its strong performance at reasonable risk. I’m also looking for some return from dividends and long-term capital gains.
—Kenneth P. from New York

From our Screening FAQs page:
The performance charts for AAII stock screens reflect buying and selling every month at the month-end closing. Only the price gains for the portfolios are tracked. While this makes the reported performance unachievable even in a best-case scenario, all approaches are subject to the same conditions and procedures. The goal of tracking the performance of the screens is to help gain an understanding of how each approach reacts in different market conditions.

The screens are not meant as investment recommendations, only as examples of the companies you would find when applying a specific investment technique. Each screen attempts to identify a different type of company for a different type of investment style. The companies that match each screen are only a first step in the investment process.

Please see our Guide to Stock Screening, linked at the top of the Screening page at AAII.com, for tips on selecting and using a stock screen to build and monitor a stock portfolio.