Maria Bruno and Joel Dickson: 'Building a Better Retirement'

Our guests for the latest installment of "The Long View," Maria Bruno and Joel Dickson, are both veterans of investment behemoth Vanguard.

Bruno is the head of U.S. wealth planning research at Vanguard, leading a team responsible for conducting research and analysis on a wide range of retirement, wealth planning, and portfolio construction topics. She also contributes to the oversight of the investment philosophy, methodology, and wealth management strategies supporting Vanguard's advisory products and services. Bruno is a Certified Financial Planner, and she's a fount of wisdom on many subjects, but especially retirement planning.

Dickson has worn many hats at Vanguard during his long career there. In his current position as Vanguard's global head of advice methodology, he oversees all investment methodology development for Vanguard's advice programs whose end consumers are individual investors.

The transcript for this podcast can be found here.

Background Information

• Maria Bruno bio
• Joel Dickson bio
• "The Planner and the Geek" podcast series
• Vanguard Research and Commentary Archive

How Retirement Savers Can Play Catch-Up
"It's the 'how much?' But then also how do you actually direct those savings?" (1:30-2:56)

"It's such an idiosyncratic or individual sort of consideration from a planning standpoint; there are plenty of people that have little wealth but high income." Whether traditional tax-deferred accounts are automatically better than Roth for people playing catch-up on retirement savings. (2:57-5:53)

"It's a little bit simpler when you're younger and accumulating." How basic savings and investing habits, combined with plan defaults, make the accumulation period much simpler than decumulation. (5:54-8:24)

'Off-Label Uses': Ways Supersavers Can Maximize Their Investments Aftertax
401(k): What it is and how heavy savers can take advantage of it. (10:41-12:55)

• After-Tax 401(k), Bogleheads Wiki entry
• "Should You Make Aftertax Contributions to Your 401(k)?" Morningstar.com article
• "Aftertax 401(k) vs. Taxable Account? Evaluating Options for High-Income Savers," Morningstar.com article
• "Heavy Savers, Meet the Mega-Backdoor Roth," Morningstar.com article

Backdoor Roth IRA: How it works, who should consider, and potential pitfalls to be aware of. (12:56-16:34)

• "IRA Insights: The Benefits of a Backdoor Roth," Vanguard research
• "Backdoor IRAs: What You Need to Know," Morningstar.com article

"There's more and more focus on minimizing income taxes during one's life than there is about avoiding estate taxes." Using a 529 as an additional tax-advantaged savings vehicle. (16:35-21:26)

• Navigating College Savings episode from The Planner and The Geek podcast

Decumulation
"How do I meet my goals today but then also make sure that I'm protecting myself down the road?" Why setting spending rates can be so tricky. (21:27-24:26)

• "Determining Withdrawal Rates Using Historical Data," research paper by William Bengen
• William Bengen bio
• "How to Put a Dynamic Retirement Spending Strategy in Place," Vanguard research
• "Spending Trends Boost Safe Withdrawal Rate for Retirees," Morningstar.com video
• "The 4 Percent Rule Is Not Safe in a Low-Yield World," research paper by Michael Finke, David Blanchett, and Wade Pfau

"We're telling people to, on average, oversave and underspend." Balancing longevity, sequence risk with spending and quality of life. (24:27-28:35)

• "Is There an Upside to Sequence of Return Risk?" Morningstar.com video
• Exploring the Retirement Consumption Puzzle, research paper by David Blanchett

"At the end of the day you still kind of get to the same end result." How bucket portfolios may not look very different from traditionally allocated retirement portfolios. (28:36-31:30)

• "The Bucket Approach to Retirement Portfolio Allocation," Morningstar.com article

"Retirees could be overexposed to equity risk." Whether retirees aren't derisking their portfolios. (31:31-32:41)

• "Best Practices for Portfolio Rebalancing," Vanguard research paper
• "Generations: Key Drivers of Investor Behavior," Vanguard research paper

"The rules of thumb just don't work as well." Why managing taxes during retirement is necessarily an individualized process. (32:42-36:24)

• "Spending from a Portfolio: Implications of Withdrawal Order for Taxable Investors," Vanguard research paper

"Here you're actually looking at strategies that could accelerate income taxes." How the post-retirement/pre-RMD years are a prime time to control future tax bills. (36:25-39:41)
• "An IRA Conversion Sweet Spot," Morningstar.com video
• "Age Is Just a Number: Start Thinking About RMDs Now," Vanguard blog post
• "Strategies for Annual Roth Conversions," Vanguard research
• "But What If I Don't Want My RMD?," Vanguard research
• "What to Do With RMDs You Don't Need," Morningstar.com article

Building Portfolios
"You have human capital risk at the same time you have investment risk." How investors should think holistically about risk when building their portfolios. (39:42-44:37)

• "Vanguard ETF Strategic Model Portfolios," Vanguard research paper
• "Global Equity Investing: The Benefits of Diversification and Sizing Your Allocation," Vanguard research paper

"Focus on the things that you can control." What to do if investment returns are muted in the future. (44:38-46:23)

• "What Fed Projections May Mean for Longer-Term Stock Returns," Vanguard research
• "Vanguard Economic and Market Outlook for 2019: Down but not Out," Vanguard research
• "Experts Forecast Long-Term Stock and Bond Returns: 2019 Edition," Morningstar.com article

ETF Landscape
"Investors that were more likely to trade chose the ETF." Are ETFs being used for long-term investing or trading? (46:24-49:28)

• "ETFs: For the Better or Bettor?," Vanguard research paper
• "Morningstar's 2018 Fee Study Finds That Prices Continue to Decline," Morningstar.com article

"98% of the DNA is the same." Whether the benefits of ETFs relative to traditional index funds been overstated. (49:29-51:27)

• "ETFs Versus Mutual Funds: A Comparison," Vanguard research
• "Traditional Index Fund vs. ETF Cage Match," Morningstar.com article

Vanguard's Personal Advisor Service
"The most important part of the financial planning process is the goal discovery." Why Vanguard's service offers a combination of human and automated advice. (51:28-56:17)

• "Helping Vanguard Personal Advisor Service Clients Understand the Anatomy of Our Methodology," Vanguard research
• The Robo-Advice Market Is Growing, but Changing, InvestmentNews article

About the Podcast: The Long View is a podcast from Morningstar. Each week, hosts Christine Benz and Jeff Ptak conduct an in-depth discussion with a thought leader from the world of investing or personal finance. The podcast is produced by George Castady and Scott Halver.

About the Hosts: Christine Benz and Jeff Ptak have been analysts and commentators on investments and the investment industry for many years. Christine is Morningstar's director of personal finance and senior columnist for Morningstar.com. Jeff is head of global manager research for Morningstar Research Services, overseeing Morningstar's team of 120 manager research analysts in the U.S. and overseas.

To Share Feedback or a Guest Idea: Write us at TheLongView@morningstar.com

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