Pimco Total Return A Mutual Fund Versus ETFs

Much chatter since last Friday about Bill Gross leaving Pimco to sign on with Janus Capital Group.  Gross, for those not in the know, was the legendary "Bond King" largely responsible for the asset management firm Pimco's rise to fame.  I'm not interested in rehashing why Gross left and what the implications might be for either firm.  I don't care.  I know Gross has been lionized in the press over the years for having stellar performance running Pimco's Total Return Fund {Symbol PTTAX}.  If you want to see a really good write-up of this, go read Josh Brown's piece from the weekend over at the "Reformed Broker".  I think he does a pretty good job of telling you what you need to know if your're interested in this sort of thing.  

Here's what I know and care about.  If you wanted an allocation to bonds you could have largely mimicked PTTAX's strategy over the past few years at a much cheaper rate.  The ETF Database lists four funds that carry a similar strategy to PTTAX in that they all use the Barclays Capital US Aggregate Bond Index as a benchmark.  PTTAX also carries an expense ratio of 0.90% per ETF Database.  The four funds along with the respective symbols and expense ratios are SPDR Barclays Aggregate Bond ETF {LAG-expense ratio 0.16%}, Total Bond ETF {BND-expense ratio 0.08%}, Core Total US Broad Market ETF {AGG-expense ratio 0.08%}.  US Aggregate Bond ETF {SCHZ-expense ratio -.08%}.

Here on a return basis is how these funds have stacked up in the past year or so with PTTAX.  {Performance chart from "Stockcharts.com".}

I need to point out that PTTAX has slightly outperformed these four ETFs longer term, but Josh Brown in his post listed above details how Gross made a wrong headed bet on US Treasury bonds in 2011.    You can read more detail about that trade from Cullen Roche over at "Pragmatic Capitalist" here. The chart above shows how the fund has underperformed since the end of 2012.  Indices, being passive investments don't make bets like active managers.  Investors make the bet by making their allocation to an asset class.  

So I'll asks the question. All things being equal why allocate money to a mutual fund manager that charges significantly more for almost the same portfolio that you can have with an ETF with underperforming results?  I don't understand it and I'm sure many investors if they dig a bit into their portfolios wouldn't understand it either.

Irritants & Confusion

Down big, up big then down again!  Irritants and confusion seem to have taken over the  mood on Wall Street.  We discussed this over the summer.  On 06.26.2014, we listed some of the things bothering the markets at that time.  Some of those things like immigration are now on the back burner.  Others such as Iraq have gained more prominence.  In a post we called "Ticks" we discussed an old country expression that usually went something like, "Davey's got more problems than ticks on a hound" as a metaphor for how a bunch of small irritations could finally add up to a larger problem.  That is how a bunch of smaller issues, anyone on its own might not amount to much, was beginning to give the markets pause.  Today we'll update the list of what I think is bothering markets.  I'll list the tangible concerns up front and then a few intangibles that lurk below the surface.These are in no particular order and some are the same as last summer.

1.  Economy:  Economic growth is still strong.  US GDP grew at a 4.6% clip in the second quarter.  That's the best showing since Q4 2011 according to the Wall Street Journal.  Strong economic growth is a two edged sword right now.  While economic growth is great, markets fear that it will lead to an increase of interest rates sooner rather than later.  Investors are obsessed with the eventual rise of rates.  It is discussed incessantly  in the financial press.  While I think a moderate schedule of rate increases will be well handled by markets as long as the economy continues to expand, Wall Street is clearly bothered by this and it is going to bother investors until we actually see the process to begin.  Not saying it is going to cause stocks to go down but I do think it will contribute to a rise of volatility into 2015.

2.  Middle East:  Israel fought a war over the summer and ISIS exploded on to the scene in Iraq and Syria.  The brutality of ISIS has galvanized a Western response.  It remains to be seen if this can be limited to the current situation where military advisors direct air strikes or whether western nations will need to establish more of a military footprint.  The deterioration in the region has definitely had an effect on investors since June.  

3.  Ukraine:  Ukraine may have taken a backseat over the summer, but the crisis has definitely not ended.  Sanctions imposed by Western nations have had an impact on trade, especially in European economies that do more business with Russia than the United States.  Russia supplies most of Western Europe's natural gas and it remains to be seen how that will play out in the coming months.  As they say in Game of Thrones, "Winter is coming".

Now the intangibles:  Ebola in Africa is much worse than originally thought, you have protests in Hong Kong, elections in Brazil,  and regions of the world such as Scotland and Catalonia that have voted or will vote on independence from their respective mother countries.  You also have the issue of immigration which is on the back burner for now but will likely be revisited after our elections.  On top of this you have the election cycle which could add to volatility between now and November and  statistical concerns regarding market seasonality.

All of these add up to a market that is uncomfortable with itself right now.  Any one or two of these might not be giving investors fits, the combination of the entire list has given traders an excuse to sell.  I think we'll see some clarity as we head towards the end of the year on some of these things but for now the watchword among many investors, especially in the short term has been caution.

What Happened Over The Summer

Here's how various asset classes of performed since July 1st.  The asset classes are represented by various ETFs.  Basically if you haven't been in ETFs related to the largest capitalized stock ETFs  or short term bonds, you've lost money.

Note that with the exception of the bonds we have exposure in one form or the other to most of what you see in these charts.  Note also that the distribution of these assets isn't uniform across all of our accounts due to different investment strategies and also note these positions can change at any time.

Comparison charts come courtesy of "Stockcharts.com".

Next post here is Monday.  

an tSionna {Market Returns}

Today we return to the "Hidden Correction" meme.  Bespoke Investment Group out the other day taking a look at returns by market capitalization this year.  They note in the post "Up until early March, all four indices were trading in lockstep with each other and comfortably in the green for the year.  Since then, though, we have seen indices fall out of favor one by one from the smallest market cap up the line."   

The rally in the S&P 500 has also narrowed since the summer.  Bespoke asks the question in the above stated post all the investment community is wondering right now.  "With its smaller peers dropping like flies, will the S&P 500 manage to hang in there or succumb to the pressure of its peers?"

We'll try and tackle this question next week.

*Long ETFs related to the S&P 500, certain mid-cap indices in both client and personal accounts.  Certain clients own indices related to smaller cap stocks as well.  Please note these positions can change at any time.

Link:  Bespoke:  "Dropping Like Flies"

an tSionna {An Intermediate & Longer Term Review}

We talked recently about the hidden correction that the market seems to have been going through and we became a bit more cautious shorter term back on August 5, 2014.    I'd point out though that this cautiousness is at this point for our shortest time frame.  On an intermediate and longer term basis markets-as defined as the S&P 500-are still in a bullish phase by our work as of this post.  

Some times you just need to look at longer term charts.  Below we post courtesy of FINVIZ.com intermediate {weekly} and longer term {Monthly}charts of the S&P 500's ETF SPY.  Are comments are on the charts.

Weekly:

Monthly:

*Long ETFs related to the S&P 500 in client and personal accounts although positions can change at any time.

I am out tomorrow for client meetings so the next post here will be Wednesday.

Annuities

I'm not a fan of annuities.  I come to this with clean hands, meaning there is no hidden agenda when I say this.  Nothing prevents me from reorganizing my company so I could sell annuities.  In fact in an earlier life when I was a broker I sold a few of these.  But the annuities I sold then were simple fixed income annuities.  They initially yielded 8% and had a floor of 4%.  A few of my clients still have these.  That product or something like it doesn't exist today as far as I know.  I think if it did we'd all be hearing about it.    It would be lucrative for me to be in the annuity business.  The average commission is between 5 and 8%.  I'm guessing that I could probably add $30,000-50,000 each year to my bottom line if I did so.  But my first responsibility is to my clients and nobody has ever convinced me that the majority of annuities {especially the way they are currently structured} are good investments.

There's an interesting article about these over at "Business Insider" yesterday.  I'm going to list the main points below.  In fairness before I do so, I will note that the article I'm linking is sponsored content.  It was not written as far as I know by "Business Insider's" staff.  The article is sponsored by a money management outfit like myself.  It is fair to say that they could potentially have an ax to grind on this subject.  However, even if it's in their self-interest to talk about annuities, that doesn't mean the points they bring up are invalid or not something investors should consider before they invest in one of these.  

Here's the articles two main points against annuities:

High Surrender Charges:  "Surrender charges are high fees assessed for leaving the contract soon after you buy it. “Soon” to an insurer typically means about seven years, with the fees starting out highest in year one and falling slowly through year seven…...Fisher Investments has analyzed thousands of annuities over time, and they’ve seen initial year surrender charges as high as 20%. But you don’t have to take Fisher’s word for it. CNN cites the same 20%. According to the Texas Department of Insurance (the state’s insurance regulator), surrender charges “commonly range from 5 to 25 percent of the amount withdrawn.” 

High Cost of the Annuity:  "Another motivation for these high exit penalties is the insurer has costs to recoup, a major one being the compensation paid to the agent or broker who sold you the annuity. Typically, these commissions are far higher than equity or mutual fund commissions. ABC News cites a common range of 5%-8%, not dissimilar from typical surrender penalties in the first few years. Over time, the fees embedded in the annuity are designed to recoup these costs plus some — after all, annuity firms generally aren’t not-for-profits. The surrender is more or less structured to give you incentive to either own the contract long enough for the insurer to recoup their costs— or make you outright pay up if you don’t."

I'll list a few more issues I have with annuities.  For example there are potential tax implications with annuities that you don't have in other products, they are complex and hard for investors to understand and in my opinion every annuity strategy can be replicated by investors {or their advisors} for a much lower cost than the annuity.   

I don't think a single annuity would be sold in this country if the person selling the annuity didn't make that 5-8%.  Now to be fair, people in good faith can differ on issues.  I'm happy to debate anybody who wants to email me about why annuities are good investments.  If I think they have a valid point I'll put up there response here on the blog.  I'm guessing though that I'll only be met with silence.

Next post Monday.

Link:  "The Real Story Behind Annuities" {Sponsored Content Over At "Business Insider"}

Preserving Capital

There's been a bit more negative chatter in the markets recently as all of a sudden folks have woken up to the fact that a lot of stocks have been going through corrective phases even while the S&P 500 has held up relatively well.  Readers of this blog will note that we've been a bit more cautious over the past six weeks.  Back on August 5th, in order to reflect what we had been doing in client accounts, we changed or shortest term indicator to NET MARKET NEUTAL {You can go here for a definition of that terminology.}.  We also talked about some of our concerns back on August 28th:

"What is the greatest risk that you see to markets right now?

There are two things as I see it.  There is short term seasonal risk.  Late summer through October has traditionally been a seasonal period of weakness for stocks.  This has the potential to be compounded this year due to the elections in early November.  Apart from that, the biggest risk seems to be an exogenous event likely coming from one of the crisis areas of the world or a natural disaster such as an earthquake.  The hurricane season is shaping up to be rather mild this year so I think a Katrina type disaster is likely off the table.  The problem in managing a portfolio is that an event like this-one that could have a serious impact on equity valuations-is that it could happen tomorrow or it could happen never."  

Given the above, I thought it would be a good time to briefly cover an article I saw yesterday over at "Yahoo Finance" on how to preserve capital during a bear market.  I'm going to list what I think are the main points of the article {In Green & underlined}and then comment where appropriate.

"You don't start planning for a bear market after it occurs."  I want to start out here by saying that based on what we see today, I don't believe we are entering a bear market.  I think we're in some sort of corrective phase right now which is reasonable given the fact that stocks have gone up for over two years now without a 10% correction.  That being said, I acknowledge that I could be wrong.  That's why we have the defensive pages of the playbook handy during times like this.  Investors should always have a plan for investing.  Part of that plan is what to do when things go wrong.  Even doing nothing during a bear or corrective phase can be part of a plan as long as it fits into your investment profile.  Investors with no plan often panic and end up doing the wrong thing at the wrong time.

"The biggest thing is to have a plan and stick with it."  We have the playbook and the game plan.

"You don't need fancy Black Swan Hedges."  The author prefers intermediate term bonds.  We prefer cash for this type of hedge.

"There's no way to avoid risk in the financial markets."  There is no free lunch.  If you have the time go read Howard Marks of Oaktree Capital latest essay on risk.  You can find it here.  

"Understand your ability to and willingness to take risk."

"For investors approaching retirement don't have money tied up in the markets that you will need to use for spending purposes within five years or so."  That period seems a bit long to me, especially in an environment where cash pays nothing.  I do agree that investors of all ages should make sure to have an appropriate financial cushion.

Link:  How to Preserve Capital During a Bear Market. 

Note:  I will be out tomorrow so the next post here will be Thursday and then Monday next week.

*Long ETFs related to the S&P 500 in client and personal accounts although positions can change at any time.

Valuation 09.13.14

I said last week that we would take a deeper look at the market.  Today we'll tackle valuation.   As of this writing the S&P 500 is trading at 1,985.  The S&P 500 has added just under 2% since we last looked at valuations on 06.25.2014.  This is a bit misleading however as stocks also staged a 4-5% decline back in August and have basically traded in place since around the 4th of July.  {See our previous post below this one on this subject.}  Below is our current analysis.

Our Midpoint S&P 500 Earnings Estimate of $118.75 {Through 12.31.2014}

Current PE:                     16.71

Earnings Yield:               5.98%

Dividend Yield:               1.80%

Rolling Four Quarter Estimate  $125.80 {Through 009.13.2014 via Fundamentalis.com}

Current PE:                   15.77

Earnings Yield:               6.33%

Dividend Yield:              1.86%

Current Expected Price Cone of Probability,   09.13.2014:   1,700-2,100.

The current yield on the 10 year US Treasury is 2.38%.  

The Cone of Probability is our current assessment of the trading range within which we think stocks have the potential to trade during the described time period.  It is a probabilistic assessment based on a many factors.  Some of these inputs are: Earnings estimates, also are those estimates rising or falling, dividend yield, earnings yield and the current yield on the US 10 year treasury.  This is not an exhaustive list of all of the variables that are used in creating the cone.  The Cone of Probability is used solely for analytical purposes.  It will fluctuate with market conditions and changes to the data inputs.  Index prices can and have traded outside of the range of the cone.  The data supplied when we discuss the cone is for informational use only.  There should be no expectation that this price range will be accurate and there are no guarantees that this information is correct.

*Long ETFs related to the S&P 500 in client accounts, although positions can change at any time.  

Hidden Correction

I know in the past couple of weeks there's been a lot of hoopla over the S&P 500 crossing the 2000 mark for the first time.  Have you seen anybody talking about how much stocks are up since the 4th of July?    I haven't.  That's probably because the S&P's up less than a third of a percent since then.  In the last two months the index has gained about 7 points.  There was a 4% decline in early August from which we've seen a nice recovery, but that seems to have stalled out since then.

Bespoke Investment Group was out with some interesting statistics that show that many stocks have actually been in a hidden correction.  They show that:

-The average stock in the S&P 500 is down 7.5% from its own 52 week high.

-The average stock in the S&P 400 Mid-Cap index is down 11.1% from its own 52 week high.

-The average stock in the S&P 600 Small-Cap index is down 17.3% from the same.

-Overall the average stock in S&P 1500 is down 12.4% from the same.

By their work, here's a chart of the average decline in the same period by sector.

  

That the major averages have held up better than this is a bit worrisome as it likely suggests that the market's rally has been narrowing to a handful of leaders.  That's a trend we'll have to watch in the coming weeks.  Remember we're still in the statistically weakest period of the year for stocks.

*Long various indices via ETFs that represent this different sectors of the markets above in both client and personal accounts.  Please note that these positions can change at any time.

Link:  Bespoke, "Average Stock Declines from 52-Week High"

Another View Of Emerging Markets

We've talked recently about emerging markets.  Today Dr. Ed Yardeni has an excellent piece on the same subject.  Here, in my opinion is the main point:

"An even simpler explanation for the outperformance of the EM MSCI is that it has been and still is relatively cheap compared to the other MSCI stock composites based on their forward P/Es at the end of August: US (16.0), EMU (13.7), Japan (13.7), UK (13.6), and EM (11.3)."

And here's a performance chart going back to 12.31.2010 from stockcharts.com showing how various foreign indices via ETFs have done vs the US {as represented by the S&P 500 ET-SPY}.

*Long ETFS related to various indices listed above in client and personal accounts although these positions may change at any time.

Yardeni:  "Why are Emerging Markets Outperforming?"

Bull Market Duration

I wanted to add one thing to our discussion last week regarding the possibility of the S&P 500 going to 3,000 at some point.  While we talked about the potential to get to that level in some future year, we didn't discuss anything about the current markets.  We'll tackle that subject over the next week   or so when we'll look at the market's fundamentals, valuation and money flow analysis.

Today I wanted to show you this chart from "Chart of the Day". It shows you that irrespective of whatever anybody thinks about where the market might be in the future, the current bull market has been below average.  I think that is about right since the economy has been growing at a below average rate.  Here's the chart and their commentary:

"{T}oday's chart provides some perspective to current rally by plotting all major S&P 500 rallies of the last 82 years. With the S&P 500 up 91% since its October 2011 lows (the 2011 correction resulted in a significant 19.4% decline), the current rally is slightly below average in magnitude and above average in duration. In fact, of the 23 rallies plotted on today's chart, the current rally would rank 7th in duration."

Notes:
- A major stock market rally has been defined as a S&P 500 gain of 30% or more (following a correction of at least 15%).
- The S&P 500 was not adjusted for inflation or dividends.
- Selected rallies were labeled with the year in which they began.
- There are 252 trading days in a year (100 trading days equal about 4.8 calendar months).

Link:  Chart of the Day: Comparison of Previous Bull Markets and Today.

* Long ETFs related to the S&P 500 in both client and personal accounts.  Please note these positions can change at any time.

Active Managers Getting Trounced.

Josh Brown over at the "Reformed Broker" was out with this chart last week showing the abysmal performance of large cap mutual funds versus they S&P 500 this year.  Here's the chart that is also via the Wall Street Journal's "Moneybeat" blog.  

Notice in the chart that only two years out of the last twelve have more than half of these active managers beat the S&P 500.  That's less than 16% of the years listed above by my math.  The real expenses of most large cap mutual funds average in the 2-3% range.  The S&P 500 ETF {SPY} has an expense ratio of 0.09% and it's up nearly 9% this year.  One other thing about the chart, take a look at the year 2008.  The market lost something like 33% that year.  Only 34% of these large cap managers did better than the market so that has to mean that 66% did just as poorly or worse that year!

This just chronicles the problems at large cap mutual funds. The active money management crowd I know has also been having a hard time of it in 2014.  Brown notes in the article that the average hedge fund is up 2% for the year.  This kind of investing is becoming a hard sell in my book.

The Reformed Broker.com: 2015 Will Be the Year of the Stockpicker!

Moneybeat.com Why Stock Pickers Have Suffered a Really Bad Year.

*Long ETFs related to the S&P 500 in client accounts although positions can change at any time.  Long certain large cap mutual funds as legacy positions in client accounts.

S&P 500 Will Someday Go To 3,000.

A lot of Wall Street buzz and guru punditry out this week discussing a report from Morgan Stanley suggesting that the end of this current market cycle could be years away and could ultimately peak out around 3,000 on the S&P 500.  That's another 50% rise based on prices at the time the article was published.  You can find a summation of the article over at "Business Insider".  Here's the link.  The chatter by the TV talking heads and over the internet, as you can imagine, runs the spectrum from using the article as evidence of a blow off top in prices to the folks citing it as a reason to go out and purchase equities today.    Those pointing to evidence of a top note that one of the authors, Adam Parker, was once one of Wall Streets more strident bears on the market.  

To me it seems a rather silly thing to waste a lot of time over.  The S&P 500 will eventually get to 3,000.  You have to believe this if you believe in the economic progress of both the American and world economy.  If you don't then you probably shouldn't be invested in the markets.  I think the issue here is one of time.  Now I haven't read the original Morgan Stanley research note and I'm therefore relying on the summaries I've read.  Having said that the main point in the research note regarding how we get to 3,000 on the S&P 500 seems to be 5-6 years left of economic expansion, coupled with 6% annual growth in earnings which leads to a 17 PE multiple out in the future.  Based on that line of reasoning, it's hard to fault the underlying argument.  Here's my thoughts.

Right now the major danger to this scenario is likely an unlooked for event.  The world's a mess and there are probably 5-10 crisis points out there that could burst into a larger event.  A crisis such as a war would be bad for stock prices.  As would an unlocked for natural event {major earthquake in Los Angeles for example} or man made disaster {something like the Fukushima nuclear crisis}.  The problem with future events is that they can't be predicted and may never happen or at least not occur during the time frame we're discussing here.  You can't manage assets based on expectations of these other than to have a go to plan such as our playbook when they occur.  

The bigger problem in the research report may be that the timing will turn out to be wrong.  Prices might get to 3,000 eventually but  it could take us possibly more years than the article seems to suggest to get to that point.  The reason for this could be that earnings, pegged to grow annually about 6%, as well as market gains probably won't be linear.  There's probably also a down year in our future at some point or perhaps a period like most of 2011-2012 when stock prices basically went nowhere.  

When I was a whelp of a young broker, I learned a basic formula from the gentlemen that taught me the business.  That was 3% population growth, 3% inflation and 3-4% GDP growth basically gave you a 6-7% rise in corporate earnings.  In a normal year that formula gave you an S&P market multiple between 14-17.  That formula has worked pretty well over the years, although I think that secular headwinds will reduce that GDP growth rate to 2-3% in the coming years.  Using assumptions like these is why I don't have a problem with Morgan Stanley's analysis.  Probability suggests that it could take us longer to get to that point, perhaps 6-9 years instead of the 5-6 the article seems to suggest.  Therefore, put me in the camp that suggests it's a matter of when the S&P 500 get to that point, not if we can get to 3,000.

*Long ETFs related to the S&P 500 in client and personal accounts although positions can change at any time.

Emerging Markets

Long time readers know that I've been saying that emerging markets looked statistically cheap.  You can see me specifically talking about this in the summer-fall seasons of 2013 here, here and here.  We've mentioned these in passing a few other times but these were our main posts on the subject.  

For most of the last three years emerging markets have seriously underperformed the US.  I might also add that statement about under performance versus the US also holds true when looking at two of the three dates from the posts I listed above.  That's proof enough in my book that anybody who reads me  looking for market timing signals will be disappointed.  For the most part we are not short term oriented in client accounts or in most of our strategies.  Even where we are, we'll not be discussing it here!   

Having said all of this, the performance discrepancies between the US and emerging market started to change last fall.  Year to date emerging markets as measured by Vanguard's emerging market ETF {VWO} have slightly outperformed the US.  Stock indices have done pretty well around the world this year so the fact that the two have more or less performed in lockstep might not be worth noting, except look at these longer term charts {charts are from FINVIZ.com}.  The first is a monthly chart of the S&P 500 ETF {SPY} going back to 2006.  It's been off to the races since 2009 for the US.

This next chart over the same period is the previously mentioned VWO

Emerging markets are roughly flat versus their highs in 2007 and have in essence gone nowhere since 2010.  On a money flow basis this has started to change in 2014 and these indices are on the cusps of breakouts.  I'm not the only one to have noticed this.  Here's a couple of links to others that have seen what has the potential to be a break out move at some point.  See here and here.

Right now these are overbought like most everything else and we changed our shortest term indicator on these along with the US and other foreign markets to NET MARKET NEUTRAL back on August 5, 2014.  Note thought we've left our longer term readings on these as well as the US at NET MARKET POSITIVE.  

There seems to be a lot going right in this neck of the market woods right now and this sector should be on investor's radar, particularly if we get some sort of pull back this fall.  There is always the potential for a correction in these stocks and I'd not these are often more volatile than the US or European contemporaries.  Yet, absent an unlooked for change on the economic or political front, probability suggests the stage is set here for out performance over a longer period of time.  

*Long ETFs related to the S&P 500 in Client and personal accounts.  Long VWO in client and personal accounts.  Please note these positions can change at any time.

**Please also note that we point out in this post certain discrepancies in the markets.  Nothing here should be considered a recommendation to buy or sell any security or asset class.  You should discuss  with your own financial advisor, do your own homework or hire us before you invest in anything we talk about here on this blog.

Retirement

Go read this post over at "Business Insider".  Titled "No One Can Tell You How Much to Save for Retirement", the article has to my way of thinking some of the best advice for individuals trying to calculate how much to put away for their post working years.  Here's a couple of the main points:

"I can’t tell you how much you should be saving for retirement. It’s up to you to figure out the kind of life you want to live, and how much you’re going to need to live that life.  Those who dream of traveling the world and dining at Michelin star restaurants are going to have to save a lot more money than those who want to retire to a country house and eat vegetables grown from their own garden. Not everyone needs a $1 million nest egg, so don’t freak out if you’re not going to hit that target. You can live on less. Just don’t pretend that you’ll be buying tickets to Europe every weekend if you’re not saving that kind of money."

"Not everyone has to retire at 65, either. That’s the age you read the most about, but you can retire whenever you want once you have enough money to support yourself. And if you like your job and want to work a few more years, there’s no reason why you must quit at 65. There’s no reason I need to quit writing for money at 65!"

Any way I think it's worth the five or so minutes to give this article a once over.  A lot of good common sense points in it.