Farrell: Should reader manage money himself?

Q: Should I manage our portfolio myself? As my wife and I near the age 59 ½ milestone in our planning process I would appreciate your opinion on my decision to not manage our sizable portfolio myself.

Our focus now is to pay down debt in an effort to reduce future cash-flow needs and consider how we define retirement. Age 59 ½ is a key milestone for how we choose to define and spend our remaining years. Both of our kids are educated and equipped to make meaningful lives for themselves.

Now I question if my reasoning for allowing a reputable institution to take day-to-day operation of investing and managing our portfolio is wise for the long haul. Here are the key points supporting my current strategy:

• We have more to lose than gain by doing it myself.

• I've learned the hard way that I don't know everything.

• My extreme tolerance to risk needs to be tempered by a professional.

• The 0.6 percent fee plus underlying expenses of mutual funds, averaging 0.8 to 1.2 percent, seem acceptable when compared to the downside risks associated with getting caught up in the psychology of the market.

• Do I really want to be responsible for all it takes to meet the responsibilities that come with this effort?

Mark

A: First of all, I applaud your efforts to pay down debts, which should boost your margin of safety during the traditional retirement years. Second, I like that you're thinking about what comes next.

What I've learned over the years is that the term "retire" doesn't mean "not working" or even "leisure" to most people. Instead, it's a time of transition, a rebalancing of the time spent at work, family, community and adventure. You and you wife are good savers. You have built up a healthy nest egg. You have many opportunities to consider for the encore stage of life.

You're right. I am a fan of the low-fee, plain-vanilla do-it-yourself approach to managing money, especially for the typical household.

I would hold off making a change until you have a better idea of what you'll be doing during your encore years. You're paying a fair amount in fees. In looking at your reasons for working with a professional all these years, what would change in your next chapter?

Will you have more time and inclination to monitor a handful of low-cost, broad-based investments? In that case, the DIY is fine.

However, if you stay as busy as you are now, will tending to your portfolio always fall to the bottom of your "to-do" list? Perhaps your urge to take risks won't abate and you'll still appreciate a sober reminder before acting on an impulse. In that case, I'd stay the course.

In other words, figure out what comes next and then decide what financial arrangement works best to support that lifestyle.