The better half is aware of "all knowing" reputation! A year or so from retirement and is doing max catch up $25,000 pre tax/year. Currently contribution in Vanguard 2025 option. Rest of the portfolio is 75% fixed/stable value. Good, bad or indifferent strategy? Thank you!
Investment/ retirement question!
- Thread starter emrtmakesshiteup
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Too many unknowns for anyone to give you an answer here. How old? Health? Mortgage? Education responsibilities? Plan or desire to leave anything? Long term care?
The only thing that I would say is that you will need more income than you think given chance that you live longer. Take the time and go see a financial planner.
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Not to sound like a complete ass, but would you ask the board for a serious medical issue? I would imagine you would ask a doctor. Why not pay someone that is in the business to handle your finances?
And no I am not a financial planner by any means. It just boggles my mind that probably the biggest financial decision anyone will ever make and they don't want a professionals advice.
And no I am not a financial planner by any means. It just boggles my mind that probably the biggest financial decision anyone will ever make and they don't want a professionals advice.
Is 2025 75/25? Most of the target dates as u get closer to retirement allocate a large % to bonds.
Me I’d go at at least 80/20 for the whole portfolio if not 90/19 especially at these prices
I think a lot of people would be willing to talk things over with a pro at the rate of say $200/hour.
What they don't want to do is talk with a pro who wants 1% of your invested net worth per year.
As the comments above have said, there is more to it than trying to make a decision among investment options based upon the info you provided.
But one thing I would add is that keeping liquid enough that you can defer taking Social Security until age 70 allows the SS to grow and be a sort of insurance against living long. Your other investments will all rise and fall, have their yields determined by factors other than what it actually cost you to live the life you want to in your retirement years. Only SS is actually tied to the cost of living by it's being adjusted upward in a somewhat orderly manner based upon inflation. And with our national debt and other current issues there are reasons to believe there could be periods of higher inflation during the coming years.
So unless you or your wife have very significant health issues, waiting to begin your SS until age 70 is insurance against living long.........
But one thing I would add is that keeping liquid enough that you can defer taking Social Security until age 70 allows the SS to grow and be a sort of insurance against living long. Your other investments will all rise and fall, have their yields determined by factors other than what it actually cost you to live the life you want to in your retirement years. Only SS is actually tied to the cost of living by it's being adjusted upward in a somewhat orderly manner based upon inflation. And with our national debt and other current issues there are reasons to believe there could be periods of higher inflation during the coming years.
So unless you or your wife have very significant health issues, waiting to begin your SS until age 70 is insurance against living long.........
Since this is just message board advice, take it for what it is worth. But the following investment thought process helped me get comfortable with how to approach my portfolio.
In general, the answer to your question is based entirely on your and your wife's risk tolerances. Once you have determined what your risk tolerances are, it becomes pretty easy to rebalance your portfolio every few months to keep your investments in line. For example, let's say your risk tolerance means you are comfortable with something like this:
Energy 5.0%
Emerging Markets 5.0%
Real Estate 8.0%
Bonds 35.0%
International 9.0%
Domestic Equity 30.0%
Health Care 3.0%
Mining/Commodities 5.0%
When you periodically rebalance your holdings to those percentages, you generally end up selling out of positions that have gained in value and buying into sectors at a lower price. Your wife may have a lower (or higher) tolerance for risk, so perhaps her portfolio should be more weighted to fixed income than yours (or vice-versa).
As you get older, you may decide to move your portfolio to more conservative percentages over time, but that is up to you, and it is based on how your risk tolerance changes. So, in the above example, if you were comfortable having 35% in bonds at age 45, maybe you want to slightly increase your bond holding percentage each year as you near retirement. Also, if you are really concerned over the recent drop in equities, it is an indication that you may want to move towards a more conservative portfolio. But if you look at the recent market drop as a buying opportunity, you are probably positioned pretty well, based on your risk tolerance.
The financial professionals on the board will probably have all kinds of criticism over these thoughts, but this approach has worked well for me over the years.
dude, it's 1929
get into cash and ammo- or ammo and cash
get into cash and ammo- or ammo and cash
Just one thing I’d like to mention since I did the dance on it. I decided after some time to purchase a rental property. What a fiasco. I could have done an all cash purchase but figured to use some leveraging instead.
If you foresee any reasons to use debt after you retire, do it before you retire. The lenders put you through a ridiculous process which is eye opening. They would rather lend to a 25 year old who can lose their job the day after closing versus lending to someone with 5 million in assets. You can get a loan based on percentage of assets but it’s not nearly as favorable to what you think it would be. It was beyond comprehension.
So, just something I learned. If you envision using debt for say arental property or business, do it before you retire.
If you foresee any reasons to use debt after you retire, do it before you retire. The lenders put you through a ridiculous process which is eye opening. They would rather lend to a 25 year old who can lose their job the day after closing versus lending to someone with 5 million in assets. You can get a loan based on percentage of assets but it’s not nearly as favorable to what you think it would be. It was beyond comprehension.
So, just something I learned. If you envision using debt for say arental property or business, do it before you retire.
I read an interesting article that was click bait. I’m fortunate in that I also have a pension. The article thrust was that your pension (say annuitized dual life) and SS should be viewed as your fixed income base so that your portfolio should be invested aggressively to provide for max return given outliving your expectancy. I guess if your pension annuity and SS are sufficient to meet your needs then I guess it can make some sense. But it certainly was interesting flip of otherwise going more conservative as you get older.
If you're not touching your money for at least another 5 years, there is little reason to be overly conservative as it gives the market time to recover.
So they can prescribe very expensive toxic prescription drugs that may or may not work, given that 80% of the drugs prescribed are useless money making shyyt? LOL
FWIW this will probably be my final year of working full time and we too have Vanguard as our 401k custodian. I strongly believe in them and they match up well with much of the advice I read or listen to on podcasts. I have most of our savings in the 2020 and 2025 funds. Looked at my 2018 returns this morning and though not positive numbers our end of year settled at -5.2% so against the 17% SP loss and impact of interest rates I feel good. We needed a year like 2018 in that trees don’t grow to the sky and reversion to the mean is likely to occur. 2017 wasn’t sustainable. I also keep a year’s spending in liquid funds and though they don’t pay much, advisors I respect advise having cash to use in case the market falls significantly early in your retirement. It keeps you from having to sell your stocks when the market is low since rebounds often occur within a year or so.
Your eventual need for long term care, that's really unpredictable. A little intimidating to dwell on, I'm experiencing.
Best not to have money at risk that you're going to need in 3-5 years. That gives you time to recover from bear markets. For a retirement portfolio presumably you're not going to need most of that money for a long time, so have it primarily invested in equities since that will give you the best long term return.
I moved a significant chunk to cash a couple of years ago because A) Was considering retiring early, therefore I'd be spending some of it; B) because the expansion was getting long in the tooth (even longer in the tooth now); C) because when interest rates are extremely low, bonds are actually kind of risky and D) because idiotic people got control of Washington, which usually presages a recession.
We are about to have a trade war and recession at the same time -- last time that happened was the 1930s. Anyone buying equities right now has got to think long term because the short term is going to be rough and maybe really rough. Bonds start to look safer because interest rates are getting into more normal territory and could be going back down as the recession sets in.
If you're saving for retirement in 10 or 20 years, none of this matters -- just keep up your 401k or IRA contributions like clockwork and let dollar cost averaging work for you.
I moved a significant chunk to cash a couple of years ago because A) Was considering retiring early, therefore I'd be spending some of it; B) because the expansion was getting long in the tooth (even longer in the tooth now); C) because when interest rates are extremely low, bonds are actually kind of risky and D) because idiotic people got control of Washington, which usually presages a recession.
We are about to have a trade war and recession at the same time -- last time that happened was the 1930s. Anyone buying equities right now has got to think long term because the short term is going to be rough and maybe really rough. Bonds start to look safer because interest rates are getting into more normal territory and could be going back down as the recession sets in.
If you're saving for retirement in 10 or 20 years, none of this matters -- just keep up your 401k or IRA contributions like clockwork and let dollar cost averaging work for you.
It was the toughest aspect for me. I eventually bit the bullet but I changed my mind twice on it. I’m still not sure I should not have simply taken a chunk and ear marked it and put it away in case it was needed. For me, the thing that swung it is the protection against something happening right now. I got 4 years of care starting at $x of coverage indexed annually. But I went back and forth and still not convinced I made the right choice.
Dear all-knowing board:
I am wondering if anyone knows anything about a milky discharge....
The Bogleheads forum is really an interesting site to ask this type of question. Bogleheads are followers of the philosophies on Vanguard Founder, John Bogle. If you are starting online , Bogleheads would be my suggestion as a great site to ask this type of question.
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We’ve already won the trade war and there is no recession on the horizon. Stop listening to CNN and look up BRIAN Westberry
Likewise. Talk about timely dumb luck. Right place, latest possible right time.
Do you mean this Brian Wesbury? Better off looking at someone else's blog.
Brian Wesbury, July 26, 2007
"The current financial environment does not reflect conditions normally associated with a credit crunch. The bottom line is that fears about the underlying health of the economy and financial markets are more about hypochondria than reality."
Put your annual contribution on Alabama to win the Nat’l Football Championship. Repeat each year for the forseeable future.
Unfortunately, most people look at this decision by simply comparing the monthly amount at age 70 vs the monthly amount at age 65. Of course it is going to be a larger nut by waiting until age 70. Actuarial tables aren't stupid - those tables recognize you don't extend your life expectancy by another 5 years simply by waiting 5 years to start taking your monthly payments. You are simply passing up on 4-5 years of income.
For most people, the crossover where waiting means you will receive more total money over your life span (than taking it at age 65) is approx age 85. So now, it becomes a decision.
If you think you will live (significantly?) longer than age 85, you should wait. On the other hand, if you think you will more likely be healthy, traveling, and spending more money in your 65-85 age bracket than you will in your 85-95 age bracket, it might make sense to start taking it earlier (age 65/66).
I don't believe it has anything to do with what you plan to do at any age. If you have the other savings to live how you want to live until age 70, then you can delay SS till 70 and if you happen to live a long life you will have more income for anything you play to do in the years past 70.
The other issue for some couples is that one of the two will have a much larger SS than the other. That is my situation. So by waiting I am much more likely to get a return by waiting, if if it is not actually me but instead my wife. If I happen to die at 70, my wife may still live to 90 or 100 and when I pass away she will then get my SS instead of hers. The survivor gets the higher of the two. And my SS will be double hers....... And she is 5 years younger so on average she would live almost 10 years past the time I am gone (younger plus women live longer on average). So it is insurance against either of us living long!
If you are born after '43 , get about 8% more in SS each year by waiting a year, pretty solid investment return if you are financially able to wait .
https://www.ssa.gov/planners/retire/delayret.html
There is a big elephant in the room that none of these discussions about social security are addressing. The rules are going to change. They have to change. The liabilities are inadequately funded. People are living longer and there is a mass of baby boomers. I believe there are more (negative) factors but let's leave it at just these two.
U.S. debt is now 22 trillion. I don't want to get into a political discussion but let's just say that someone has to pay that back. If we were to balance the budget today, without some form of invention or discovery to produce real growth, then taxes would have to be raised so high that it would clobber the economy. The problem is only getting worse. Doesn't matter which political party is running the country. Neither are telling you what you really need to know. They can't, and they wouldn't even if they could.
I believe that 22 trillion (and growing) debt is going to have to be paid by those who are able to pay it, in one form or another. There isn't enough wealth in corporations or in the top 1%, or however you want to define "people who don't need the money," to pay this down. Some cite the debt in terms of GDP and say it isn't that bad at about 1:1, but much of our economy is intangible, i.e., services that can evaporate more rapidly than infrastructure, factories, producing mines, etc.
I think social security, for those who have retirement savings, will vanish. It has to. People who have saved, and that generally means older Americans and retirees, will have to give up some of their wealth in the form of higher taxes. Younger generations are barely getting by. They can't afford higher medicare and social security taxes. They can't afford tax rates that are anywhere close to the amounts needed to balance the federal budget.
How will SS vanish for many Americans? It can't be through inflation, since SS is, supposedly, inflation-adjusted, and that affects poor Americans more than any other. I think it will be like most other forms of government intervention in financial situations -- through the tax system (IRS). You'll get a social security check, but it will be heavily taxed based on the rest of your income. If you're lucky enough to have savings that are already tax paid, then great, you might get your social security (provided there isn't some form of "net worth" component). For those that saved in the traditional (IRA/401K) way, or who have pensions, you can't count on social security for marginal income. What will be available will go to people who saved less. Those people will, sadly, constitute a majority within the voting block. You won't be able to get your SS on top of adequate savings by simply voting republican.
I think it is impossible to have a retirement financial plan that has any significant level of confidence. It won't be long before the Federal Reserve's ability to contain inflation will be gone. One more stock collapse with a quantitative easing cycle and we are there. Interest rates have been trending down for decades. If they flatten or need to go up then the federal debt continues to increase or balloons. If you think The Fed and President are at odds right now, well that heat is likely to get much worse.
A lot of retirees I know are well aware of what is likely to happen with SS. They have chosen to take SS at age 62 and bank the money if they don't need it. I would really like to defer until I'm closer to age 70, for reasons that many cite here about money in the latter years of retirement, but I don't think it will be there. It is an extremely vexing question. I turn 62 next month.
Tell me what's in your crystal ball...
U.S. debt is now 22 trillion. I don't want to get into a political discussion but let's just say that someone has to pay that back. If we were to balance the budget today, without some form of invention or discovery to produce real growth, then taxes would have to be raised so high that it would clobber the economy. The problem is only getting worse. Doesn't matter which political party is running the country. Neither are telling you what you really need to know. They can't, and they wouldn't even if they could.
I believe that 22 trillion (and growing) debt is going to have to be paid by those who are able to pay it, in one form or another. There isn't enough wealth in corporations or in the top 1%, or however you want to define "people who don't need the money," to pay this down. Some cite the debt in terms of GDP and say it isn't that bad at about 1:1, but much of our economy is intangible, i.e., services that can evaporate more rapidly than infrastructure, factories, producing mines, etc.
I think social security, for those who have retirement savings, will vanish. It has to. People who have saved, and that generally means older Americans and retirees, will have to give up some of their wealth in the form of higher taxes. Younger generations are barely getting by. They can't afford higher medicare and social security taxes. They can't afford tax rates that are anywhere close to the amounts needed to balance the federal budget.
How will SS vanish for many Americans? It can't be through inflation, since SS is, supposedly, inflation-adjusted, and that affects poor Americans more than any other. I think it will be like most other forms of government intervention in financial situations -- through the tax system (IRS). You'll get a social security check, but it will be heavily taxed based on the rest of your income. If you're lucky enough to have savings that are already tax paid, then great, you might get your social security (provided there isn't some form of "net worth" component). For those that saved in the traditional (IRA/401K) way, or who have pensions, you can't count on social security for marginal income. What will be available will go to people who saved less. Those people will, sadly, constitute a majority within the voting block. You won't be able to get your SS on top of adequate savings by simply voting republican.
I think it is impossible to have a retirement financial plan that has any significant level of confidence. It won't be long before the Federal Reserve's ability to contain inflation will be gone. One more stock collapse with a quantitative easing cycle and we are there. Interest rates have been trending down for decades. If they flatten or need to go up then the federal debt continues to increase or balloons. If you think The Fed and President are at odds right now, well that heat is likely to get much worse.
A lot of retirees I know are well aware of what is likely to happen with SS. They have chosen to take SS at age 62 and bank the money if they don't need it. I would really like to defer until I'm closer to age 70, for reasons that many cite here about money in the latter years of retirement, but I don't think it will be there. It is an extremely vexing question. I turn 62 next month.
Tell me what's in your crystal ball...
Pretty big political football there. But there is no way the SS rules would change dramatically in an immediate way. IF, a big IF, there are changes made there will be a time to take SS before changes are phased in.
The new wave of young "THINKERS" that seem to arriving in D.C. are really taking the opposite approach by offering not only to not cut any benefits, but propose printing the money for "free" health care for all, free college, ..... With those geniuses getting involved how could any group attempt to balance the budget, let alone plan any payment on the principle of the debt..... I just don't see how putting the money in the bank and making 2% is wiser than waiting to take SS and gaining 8% per year.
Past updates to SS on the benefit side have been phased in gradually, like the move to make 67 the "full" retirement age for taking benefits. On the funding side, which although painful politically, is probably more likely to be used to solve SS's imbalance since politicians try and avoid upsetting Seniors. Any higher SS tax rates aren't likely to be felt by retiree's unless they have very considerable retirement income. Managing your "income" by having more Roth after tax savings available would help with this issue.
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I managed my own retirement account during most of my teaching career as a Professor. I am retired now. I am doing fine with my 100% stock portfolio. My dividends from my dividend paying stocks are actually ample for my needs. Note, Social Security is de facto a bond. My account has risk/reward which I am more than happy to tolerate. Bonds are risky too, loss of capital if Total Return is negative. I remember when money market was yielding 18% when inflation was around 19 to20%. Every one with money market was jumping for joy without realizing: Total Return = Yield - inflation - (Taxes on the Yield) was negative, i.e. they were losing money.
Put money in the hands of a firm that manages money. Tell them to invest 75% in dividend paying stocks of solid companies and put about 25% in growth. Or, better yet, learn to manage your portfolio. Do not solely rely on pensions or social security. Take equity in America, invest in great American companies and in some cases great companies from other countries. Note, I do not day-trade but I trade when an opportunity presents itself.
I knew very early that I must invest or have a bad retirement.
You are too conservative in your investments. Happy New Year to all Penn State fans and board members.
Put money in the hands of a firm that manages money. Tell them to invest 75% in dividend paying stocks of solid companies and put about 25% in growth. Or, better yet, learn to manage your portfolio. Do not solely rely on pensions or social security. Take equity in America, invest in great American companies and in some cases great companies from other countries. Note, I do not day-trade but I trade when an opportunity presents itself.
I knew very early that I must invest or have a bad retirement.
You are too conservative in your investments. Happy New Year to all Penn State fans and board members.
It certainly isn't wiser if you believe that you're actually going to get that 8% after paying your taxes. Everybody I know in my retirement village are collecting social security, unless they are still working, and many are in their 60s.
An older retiree (in late 70s) said he took SS at 62. Says to do that and "invest it." Of course, that's all great if the stock market continues its upward trend. But I believe the stock "fuel," through tax cuts and quantitative easing (interest rates), is just about gone.
Tax rates and brackets have to be considered. Some I know believe that they will be forced into higher tax brackets in their later years just by the need to withdraw savings after age 70. So they fill their lower tax bracket during their 60s with SS.
It isn't as simple as the 8% assumption, especially if you believe your benefit is going to get cut (possibly for being too "rich").
