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The Retirement Planning/ Investment/ Savings Thread (3 Viewers)
- Thread starter inca911
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Thank you!!!
Haha, he beat me to it @moechar
It's still basically what the government is doing indirectly in my opinion. They have been incentivizing private investment in the stock market in IRA's and 401k's etc. for years. I think a big reason for this is they want people to be their own retirement plan. It's like switching from defined benefit to defined contribution.
bergs
Royal Flush
It’s a giant pyramid scheme that was destined to fail as people lived longer and Congress is unable to fix it because both parties use it (albeit in 2 different ways) as a campaign platform.
I don’t know what you call a government that weaponizes public health care and a social safety net for the elderly for political purposes, it sure to fucking hell isn’t a goddamn functioning democratic republic.
ekricket
Royal Flush
Just so we are informed
https://www.ssa.gov/history/50mm2.html
There’s a lot of rumor and misplaced fact around this program. But there’s also been a lot of subtle and not publicized changes to a lot of stuff in the last few years. So who knows anymore.
https://www.ssa.gov/history/50mm2.html
There’s a lot of rumor and misplaced fact around this program. But there’s also been a lot of subtle and not publicized changes to a lot of stuff in the last few years. So who knows anymore.
I've been rebalancing my portfolio to move some investments into tax advantaged accounts and others out to make room. I know depending on who you listen to I should have 20-40% of my investments in bonds. I'm 40 so some will say your age in bonds, some will say less. But it's really hard for me to invest in something with such low expected returns. I'm at 15% bond funds.
Thoughts?
Thoughts?
louBdub
4 of a Kind
Hi Dave, my thoughts?
I’m not a fan of loaning money to gov/corp entities, that pay extremely low… Just so they can leverage that debt and make money off of my back/time.
I’m much more a fan of positions that will yield far greater returns on a portfolio.
I prefer you control and decide the vehicle speed. Bonds you just can’t…. Equal value position in say, $MSCI, would yield dividends and have a much higher ROI in a decade or two. Many more hands off options would beat the bond market, even the high cost 3X leveraged positions added to your portfolio like ProShares would develop far greater steam.
TLDR:
Warren Buffet is anti bond as well. Puts his cash in stocks, not bonds.
I hold investments as index funds with one exception... BRKb has always been good to me.
In 2025 by default I won't put any more into bonds and that % of my holding should drop to 10%
Aiming for something like:
VOO/VTI: 70%
BRK.B: 10%
REIT/FSRNX: 10%
VBTLX/BND: 10%
I have a $100 savings bond from when I was a kid.
That's the only bond I own.
Well that and a James Bond action figure.
kaida
Pair
IMHO, having bonds is a matter of risk tolerance. As you get closer to retirement, you should have less risk because you don't have as much time to ride things out and/or rebuild. Bonds don't give huge returns, but they won't incur massive losses. Do you really want to risk retiring later if things go sideways a few years before the finish line? That's the risk you take if you're still heavily weighed into stocks all the way to retirement.
You'll have to evaluate what your retirement goals are, where you're currently at and if you're willing to possibly change your goals or investment strategy if there is a major shift in the market. Some people like it slow and steady and others like to gambol.
As a point of reference, my 401k has a targete-date fund. With a target of 2045 retirement, that fund's allocation is 13% bonds right now.
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Poker Zombie
Royal Flush
My issue with "retirement target-date" investment strategies, is that the bond-holding percentages were written at least 40 years ago, and have not changed. The average life expectancy was ~11 years from retirement till death, provided you retired at age 62.
Today the average life expectancy is 17 years post retirement. That increasing "average" has stalled/declined a little over the last few years, because of the number of anti-vaxxers out there. Take care of your health, exercise, eat right, and your retirement nest-egg needs to last an average of 22 years. That's 2x as long as the "retirement target-date" plan. Retire before 62, and that number increases even more.
Instead, I have built my own retirement projections. I have tracked every dollar I have spent over the last... well, my entire adulthood. Entering that into a spreadsheet I can build projections of future spending, thus creating a "cost of living". Then I just need to make sure my investments will last through my expected life, with some extra years built in as a safety buffer.
Can I weather a stock market crash? I'd rather not find out, but tracking the market is something I plan to do in retirement. Safe, dividend paying stocks (Kraft-Heinz, Bank of America, Coca-cola) will help to ride out bumps, while I cash out higher risk, non-dividend stocks sooner. Bonds may creep in post-retirement, but with 2.5 years to retirement, I'm not planning to add any.
Note: My retirement will also include a pension, a managed retirement plans from past employers, and Mrs Zombie will work a few years after I retire. If you will require your entire retirement to be based off of your investment portfolio, meter my advice accordingly.
Today the average life expectancy is 17 years post retirement. That increasing "average" has stalled/declined a little over the last few years, because of the number of anti-vaxxers out there. Take care of your health, exercise, eat right, and your retirement nest-egg needs to last an average of 22 years. That's 2x as long as the "retirement target-date" plan. Retire before 62, and that number increases even more.
Instead, I have built my own retirement projections. I have tracked every dollar I have spent over the last... well, my entire adulthood. Entering that into a spreadsheet I can build projections of future spending, thus creating a "cost of living". Then I just need to make sure my investments will last through my expected life, with some extra years built in as a safety buffer.
Can I weather a stock market crash? I'd rather not find out, but tracking the market is something I plan to do in retirement. Safe, dividend paying stocks (Kraft-Heinz, Bank of America, Coca-cola) will help to ride out bumps, while I cash out higher risk, non-dividend stocks sooner. Bonds may creep in post-retirement, but with 2.5 years to retirement, I'm not planning to add any.
Note: My retirement will also include a pension, a managed retirement plans from past employers, and Mrs Zombie will work a few years after I retire. If you will require your entire retirement to be based off of your investment portfolio, meter my advice accordingly.
OP
OP
Some different thinking on stock/bond ratios in retirement.
My focus is on bridging to claiming SS at 70.
My focus is on bridging to claiming SS at 70.
DrStrange
4 of a Kind
TLDR: If you don't need a safe flow of cash right now, you likely don't need a bond component in your portfolio.
"Bonds" is far too generic a term, just as "stocks" is. There is cross over - stocks that act like bonds and bonds that act like stocks. There is a world of difference between a 5-year treasury vs an uncallable tax-free AA+ rated municipal bond vs. a junk rated corporate bond barely out of default. You can find bond funds that cater to each of these, but you should know why you are picking one over the other.
Investors have to know why they are buying the types of bonds they are considering. Are they aiming for diversification? Is the investor trying to manage their cash flow in retirement? Tax considerations? Bonds are not as risk free as people seem to think. If you will recall, the root cause of many bank failures this decade is billions of dollars of bad investments in five- or ten-year US Treasury bonds. Something that sounds pretty safe. . . . but was highly vulnerable to inflation and yield curve inversion.
People under "retirement" age - lets be generic here - have no specific need for income producing bonds in their portfolio. Leave aside someone wealthy enough to consider tax free bonds. If someone wants to speculate on deeply discounted bonds - that's more like an equity investment. < you best know what you are doing, YOLO isn't a good plan here.>
"One sized" fits all age-based investing is better than nothing but leaves a lot to be desired. Advice crafted in the 1970's about bonds should be gently put aside in favor of investment strategies that are based on the current situation. If you utilize an investment advisor, you should question why they are suggesting bonds as part of your portfolio. Could be sound reasoning, but perhaps there isn't any reasoning behind the advice at all - just a remembrance of some 1970's vintage textbook.
Younger investors and not so young investors need most of their retirement money invested in risky, high return sorts of investments. e.g. equities. College funds should become risk adverse as college age approaches. Short term savings can't tolerate much risk at all.
I am happy to answer questions -=- DrStrange
"Bonds" is far too generic a term, just as "stocks" is. There is cross over - stocks that act like bonds and bonds that act like stocks. There is a world of difference between a 5-year treasury vs an uncallable tax-free AA+ rated municipal bond vs. a junk rated corporate bond barely out of default. You can find bond funds that cater to each of these, but you should know why you are picking one over the other.
Investors have to know why they are buying the types of bonds they are considering. Are they aiming for diversification? Is the investor trying to manage their cash flow in retirement? Tax considerations? Bonds are not as risk free as people seem to think. If you will recall, the root cause of many bank failures this decade is billions of dollars of bad investments in five- or ten-year US Treasury bonds. Something that sounds pretty safe. . . . but was highly vulnerable to inflation and yield curve inversion.
People under "retirement" age - lets be generic here - have no specific need for income producing bonds in their portfolio. Leave aside someone wealthy enough to consider tax free bonds. If someone wants to speculate on deeply discounted bonds - that's more like an equity investment. < you best know what you are doing, YOLO isn't a good plan here.>
"One sized" fits all age-based investing is better than nothing but leaves a lot to be desired. Advice crafted in the 1970's about bonds should be gently put aside in favor of investment strategies that are based on the current situation. If you utilize an investment advisor, you should question why they are suggesting bonds as part of your portfolio. Could be sound reasoning, but perhaps there isn't any reasoning behind the advice at all - just a remembrance of some 1970's vintage textbook.
Younger investors and not so young investors need most of their retirement money invested in risky, high return sorts of investments. e.g. equities. College funds should become risk adverse as college age approaches. Short term savings can't tolerate much risk at all.
I am happy to answer questions -=- DrStrange
ekricket
Royal Flush
I’m in this camp. Increasing stock as we age instead of the usual mix. Maybe when I’m older and in a wheelchair I’ll be more risk adverse, but while I’m young and retired I’ll gladly take the risk.
Not big on strategy’s that were envisioned in the 50’s, then perfected in the 70’s, and practically worthless now.
Anything works great as long as you’re one of the few doing it. When everyone and their dog is doing it…..
You absolutely cannot help yourself. How about those pro-jabbers that are six feet under with 40 needles stuck in their arms? You’re the last person I’m taking financial advice from, and you sure as feces can bet I’m not taking medical advice from you.
I have a similar focus. I plan to delay drawing SS until 70 to maximize it. While actuarially I may not live super long in claiming it, my wife will likely live over 100 and so the points being made here about longevity after retirement are valid.
My goals are to bridge from when I retire at some earlier age than 70 but not tomorrow via retirement income, then supplement that with SS without touching the principal.
bergs
Royal Flush
Why would an undertaker agree to prepare someone for burial with 40 needles sticking out of their arms? That just seems weird to me.
Just wanted to chime in and thank everyone for sharing advice and opinions in this thread. We have always been good savers and lived below our means but my biggest sin was being too conservative. I was investing in short term bond funds in my 30’s! I guess my philosophy was always that I would increase my nest egg by adding my money to it, not by making money on my money. I’m still probably too conservative, but you guys have helped!
I was doing 10% bonds but I stoped a while ago and am 100% equities. I’ll leave my less risky investments in real estate.
My parents are far more conservative and have had 100% bonds and cash since they retired. So far they’re about 18 years into retirement and I shudder to think how much they’ve left on the table by not having some in equities. Fortunately they have pensions to cover their retirement income but still…
My parents are far more conservative and have had 100% bonds and cash since they retired. So far they’re about 18 years into retirement and I shudder to think how much they’ve left on the table by not having some in equities. Fortunately they have pensions to cover their retirement income but still…
elemeno
Two Pair
How do you guys like to hold your cash and cash equivalents?
Poker Zombie
Royal Flush
The fact that...
- The best way to save for retirement is complex
- The complexities are not taught except specific college classes for someone getting into accounting/retirement planning
- People in the field are expensive to hire to navigate the complexities of retirement saving
ekricket
Royal Flush
We need the government to help usThe fact that...
Makes me think that the whole thing is rigged against the middle-class and the poor.
- The best way to save for retirement is complex
- The complexities are not taught except specific college classes for someone getting into accounting/retirement planning
- People in the field are expensive to hire to navigate the complexities of retirement saving
Meh. What you invest in and what complex strategy you us is much less important than that you invest somewhere. Now, more than ever, there are easily accessed, low-cost vehicles available to just about everyone. The internet and Vanguard have made investing available to everyone. The barrier for a person putting some money into an S&P 500 index every payperiod is not the understanding how to do it, it is the discipline to forgo whatever you could spend that money on now. Maybe that is an income thing, but it's not rigged. Its how people deal with their circumstances.The fact that...
Makes me think that the whole thing is rigged against the middle-class and the poor.
- The best way to save for retirement is complex
- The complexities are not taught except specific college classes for someone getting into accounting/retirement planning
- People in the field are expensive to hire to navigate the complexities of retirement saving
Brilliant!! But I know that will go right over his head, unfortunately.
This, exactly. The playing field is more fair now than it’s ever been. Some people just want to play their deck of victim cards during every hand.
buzzmonkey
Flush
I invest in Gold Bond. It helps alleviate itching.
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