PBS Frontline : The Retirement Gamble, sorta Must See (2 Viewers)

[Random]

Pre retirement living well:

Live in nice house

Drive nice cars

Take 1 international vacation every few years

Take 2-4 family vacations per year

Post retirement living well:

Live in same house

Drive nice cars

Vacation anywhere we want for as long as we want (will likely be traveling 6mos out of the year)

We definitely do not make a LOT of money.

 

[FUBAR]

Pre retirement living well:

Live in nice house

Drive nice cars

Take 1 international vacation every few years

Take 2-4 family vacations per year

Post retirement living well:

Live in same house

Drive nice cars

Vacation anywhere we want for as long as we want (will likely be traveling 6mos out of the year)

We definitely do not make a LOT of money.

You're clearly living objectively "more well" than we are.

For us.

Pre retirement living well:

Live in (rent) nice house

Drive fully functional, decent, and paid for cars (Highlander / Odyssey)

Take 1 family vacation each year

Take a day trip twice a month

Keep our four sons active and healthy

First retirement living well:

Buy and live in nice house

Drive functional cars of a slightly higher quality

Take 1 international vacation every few years

Take 2-4 family vacations per year

Pay half our of kids' college tuition

Full retirement living well:

Buy and live in nice house on or near a beach

2nd home in Tennessee

Drive functional cars of a slightly higher quality

Take 1 international vacation every few years

Vacation anywhere we want for as long as we want

 

[Dentist]

You have to make a LOT of money to be able to live well now and in retirement.

Most of us have to choose one or the other or have the entire thing be mediocre to crap

Define "live well".

You can live a very good, enjoyable and satisfying life without spending a lot of money.

Sure, you'll probably need to decide whether to join that country club now or in retirement, whether to own a beach house or live in a less expensive town, whether to drive used cars instead of leasing a new car every couple of years, but none of those choices really mean you're not living well.

That's a good point. I suppose that we're all living well just to live in a country where we are free, aren't starving, and have access to quality shelter, air, water, food, etc.

Add in safe transportation, decent education, and leisure time and globally you are living pretty high on the hog.

So maybe my statement was crap.

I assume there are billions of people in the world that would be receiving a life upgrade to live like our poor.

 

[FUBAR]

You have to make a LOT of money to be able to live well now and in retirement.

Most of us have to choose one or the other or have the entire thing be mediocre to crap

Define "live well".

You can live a very good, enjoyable and satisfying life without spending a lot of money.

Sure, you'll probably need to decide whether to join that country club now or in retirement, whether to own a beach house or live in a less expensive town, whether to drive used cars instead of leasing a new car every couple of years, but none of those choices really mean you're not living well.

That's a good point. I suppose that we're all living well just to live in a country where we are free, aren't starving, and have access to quality shelter, air, water, food, etc.

Add in safe transportation, decent education, and leisure time and globally you are living pretty high on the hog.

So maybe my statement was crap.

I assume there are billions of people in the world that would be receiving a life upgrade to live like our poor.

Your point is sound - the need to evaluate when to spend, what your priorities are, and in general sacrifice now for long term benefit.

My only point in rebuttal (if it was really even that) is we all need to consider what a good life really is, and whether we need to spend a lot to have a good life.

 

[kutta]

Regarding living well now or in retirement, or both - I've always believed in living well now. You never know if you will even wake up tomorrow. I never understood people who have tons of money and are still cheap/tight with it and don't enjoy themselves. The last thing I want to do is have a bunch of money in my retirement account while not enjoying myself today, and get hit by a car tomorrow and die.

I totally agree that some restraint is in order and saving for the future is a must. But if the choice is to take that vacation now or wait 20 years until retirement, take the damn thing now and have some fun.

 

[NutterButter]

So subjective, but if you're working a lot of hours and/or have a lot of work related stress, I don't care what kind of material acquisitions you make, that's not living well in my book.

 

[Bull Dozier]

You have to make a LOT of money to be able to live well now and in retirement.

Most of us have to choose one or the other or have the entire thing be mediocre to crap

Define "live well".

You can live a very good, enjoyable and satisfying life without spending a lot of money.

Sure, you'll probably need to decide whether to join that country club now or in retirement, whether to own a beach house or live in a less expensive town, whether to drive used cars instead of leasing a new car every couple of years, but none of those choices really mean you're not living well.

That's a good point. I suppose that we're all living well just to live in a country where we are free, aren't starving, and have access to quality shelter, air, water, food, etc.

Add in safe transportation, decent education, and leisure time and globally you are living pretty high on the hog.

So maybe my statement was crap.

I assume there are billions of people in the world that would be receiving a life upgrade to live like our poor.

You are absolutely right about that. Everytime I read this thread I feel like I'm living in squalor compared to most of the people in this thread. But, then I think about all of the thigs I have and realize I live better than the vast majority of people in the world. If I don't get to tour Europe, spent a month in Hawaii, or drive a Mercedes in my retirement, it doesn't mean I wont be living well.

 

[FUBAR]

So subjective, but if you're working a lot of hours and/or have a lot of work related stress, I don't care what kind of material acquisitions you make, that's not living well in my book.

there's probably a "sweet spot" which varies for everyone. I'll say the time I was in best spirits were the couple years with my longest hours and highest stress, working with people I liked and respected. I still work with people I like and respect, but far fewer hours. Less professional satisfaction but far better for the fam.

 

[Dentist]

So subjective, but if you're working a lot of hours and/or have a lot of work related stress, I don't care what kind of material acquisitions you make, that's not living well in my book.

Correct. This is why I'm happy to live very modestly now in the hopes that I can quit ASAP.

If I die, I die... so what that I'm not driving a Merc... hopefully my child will take my life insurance money and score some hot chicks or something

 

[kutta]

So subjective, but if you're working a lot of hours and/or have a lot of work related stress, I don't care what kind of material acquisitions you make, that's not living well in my book.

As a general, broad statement, I guess I might agree with this. But it really depends on what's happening with that work. If you are building a company, that can be extremely rewarding, both financially and emotionally. It can mean a lot of hours and stress, but the rewards can also outweigh that. Also, it's not just about material acquisitions. If you make a ton of money, maybe you only work until you're 40. Having a stressful 10 years in your 30's might be worth retiring well at 40.

To each his own. Personally, I've always welcomed work stress/money, because I would much rather have work stress than home/money stress.

 

[Dentist]

Regarding living well now or in retirement, or both - I've always believed in living well now. You never know if you will even wake up tomorrow. I never understood people who have tons of money and are still cheap/tight with it and don't enjoy themselves. The last thing I want to do is have a bunch of money in my retirement account while not enjoying myself today, and get hit by a car tomorrow and die.

I totally agree that some restraint is in order and saving for the future is a must. But if the choice is to take that vacation now or wait 20 years until retirement, take the damn thing now and have some fun.

I agree with taking the vacation. I'd say most people aren't bankrupting their futures with travel.

Most often they are bankrupting their futures through being over-housed or over-vehicle'd.

I can't imagine what it must feel like to live in a high COL area where to get your kids a decent education you either need a half million dollar home or to pay for crazy expensive private school... how do you ever get ahead

 

[Random]

Regarding living well now or in retirement, or both - I've always believed in living well now. You never know if you will even wake up tomorrow. I never understood people who have tons of money and are still cheap/tight with it and don't enjoy themselves. The last thing I want to do is have a bunch of money in my retirement account while not enjoying myself today, and get hit by a car tomorrow and die.

I totally agree that some restraint is in order and saving for the future is a must. But if the choice is to take that vacation now or wait 20 years until retirement, take the damn thing now and have some fun.

I agree with taking the vacation. I'd say most people aren't bankrupting their futures with travel.

Most often they are bankrupting their futures through being over-housed or over-vehicle'd.

I can't imagine what it must feel like to live in a high COL area where to get your kids a decent education you either need a half million dollar home or to pay for crazy expensive private school... how do you ever get ahead

This. The RE threads still amaze me. How on earth do two (let alone one) average wage earning professionals afford to live in these areas? We purchased our "forever" home 11 years ago and our mortgage payment is now pretty much an afterthought. Make fun of the midwest all you want, but a little bit goes a long way here. And that in turn goes a long way on the "happiness scale" for me.

 

[acarey50]

Regarding living well now or in retirement, or both - I've always believed in living well now. You never know if you will even wake up tomorrow. I never understood people who have tons of money and are still cheap/tight with it and don't enjoy themselves. The last thing I want to do is have a bunch of money in my retirement account while not enjoying myself today, and get hit by a car tomorrow and die.

I totally agree that some restraint is in order and saving for the future is a must. But if the choice is to take that vacation now or wait 20 years until retirement, take the damn thing now and have some fun.

I agree with taking the vacation. I'd say most people aren't bankrupting their futures with travel.

Most often they are bankrupting their futures through being over-housed or over-vehicle'd.

I can't imagine what it must feel like to live in a high COL area where to get your kids a decent education you either need a half million dollar home or to pay for crazy expensive private school... how do you ever get ahead

You don't unless you make an extremely good wage. I will admit I am probably overhoused, my wife would likely not agree as we live in a very nice area and our kids go to a good school. On the flip side, I have not had a newer car in the 15 years since we have been married. We did buy my wife a 2 year old car a couple years ago when my 98 F-150 with 270K miles on it finally dies and was going to cost way more to repair than it was worth... so now I am in the :hand me down" Pilot that is approaching 200K miles, and while I miss a truck, I plan to drive the Pilot until it dies or I win the lottery.

If it wasn't for family living either here in Southern California (wife's family) or Northern California (SF area - my family) I would be all for moving to a much lower cost of living place, but moving that far from family is not a trade off we are willing to make at this point.

 

[SFBayDuck]

Regarding living well now or in retirement, or both - I've always believed in living well now. You never know if you will even wake up tomorrow. I never understood people who have tons of money and are still cheap/tight with it and don't enjoy themselves. The last thing I want to do is have a bunch of money in my retirement account while not enjoying myself today, and get hit by a car tomorrow and die.

I totally agree that some restraint is in order and saving for the future is a must. But if the choice is to take that vacation now or wait 20 years until retirement, take the damn thing now and have some fun.

I agree with taking the vacation. I'd say most people aren't bankrupting their futures with travel.

Most often they are bankrupting their futures through being over-housed or over-vehicle'd.

I can't imagine what it must feel like to live in a high COL area where to get your kids a decent education you either need a half million dollar home or to pay for crazy expensive private school... how do you ever get ahead

You don't unless you make an extremely good wage. I will admit I am probably overhoused, my wife would likely not agree as we live in a very nice area and our kids go to a good school. On the flip side, I have not had a newer car in the 15 years since we have been married. We did buy my wife a 2 year old car a couple years ago when my 98 F-150 with 270K miles on it finally dies and was going to cost way more to repair than it was worth... so now I am in the :hand me down" Pilot that is approaching 200K miles, and while I miss a truck, I plan to drive the Pilot until it dies or I win the lottery.

If it wasn't for family living either here in Southern California (wife's family) or Northern California (SF area - my family) I would be all for moving to a much lower cost of living place, but moving that far from family is not a trade off we are willing to make at this point.

Local COL is such a huge factor in all of this. In 98% of the country at my current compensation (I work remotely so I could really live anywhere at the same income) I'd be living well in a nice house with a mortgage I'd be paying off in the next 10-15 years, I'd have 3-6 months emergency fund and would be saving 20+% for retirement. But living in the Bay Area means I rent a small home (that would sell for $600K) in an area of the county with the worst schools, have no savings, am currently only saving 8% for retirement (401K), and pretty much live paycheck to paycheck.

I'm divorced (another expensive proposition in CA) and have 50/50 custody of my kid so I can't/won't leave here for the next 6 years until she graduates high school. The good news is anywhere I move at that point will be much cheaper (likely back to OR), but that's a long period of time that you simply can't make up when trying to save for retirement.

 

[Judge Smails]

Regarding living well now or in retirement, or both - I've always believed in living well now. You never know if you will even wake up tomorrow. I never understood people who have tons of money and are still cheap/tight with it and don't enjoy themselves. The last thing I want to do is have a bunch of money in my retirement account while not enjoying myself today, and get hit by a car tomorrow and die.

I totally agree that some restraint is in order and saving for the future is a must. But if the choice is to take that vacation now or wait 20 years until retirement, take the damn thing now and have some fun.

I agree with taking the vacation. I'd say most people aren't bankrupting their futures with travel.

Most often they are bankrupting their futures through being over-housed or over-vehicle'd.

I can't imagine what it must feel like to live in a high COL area where to get your kids a decent education you either need a half million dollar home or to pay for crazy expensive private school... how do you ever get ahead

Yeah - I'm sort of done beating myself up. I live in a very high COL area but am not over-housed. Am not keeping up with the Jones with cars either. Driving a 9 year old CTS and wife driving a 10 year old Denali. Last kid (3) finishes college in 2 quarters so I'll get a big raise. No debt. I'm not as far along as several of you here with respect to retirement - been maxing out every year for years, etc. It's just that even being reasonably smart I've got an awfully big nut. At least for now.

 

[FUBAR]

Regarding living well now or in retirement, or both - I've always believed in living well now. You never know if you will even wake up tomorrow. I never understood people who have tons of money and are still cheap/tight with it and don't enjoy themselves. The last thing I want to do is have a bunch of money in my retirement account while not enjoying myself today, and get hit by a car tomorrow and die.

I totally agree that some restraint is in order and saving for the future is a must. But if the choice is to take that vacation now or wait 20 years until retirement, take the damn thing now and have some fun.

I agree with taking the vacation. I'd say most people aren't bankrupting their futures with travel.

Most often they are bankrupting their futures through being over-housed or over-vehicle'd.

I can't imagine what it must feel like to live in a high COL area where to get your kids a decent education you either need a half million dollar home or to pay for crazy expensive private school... how do you ever get ahead

You don't unless you make an extremely good wage. I will admit I am probably overhoused, my wife would likely not agree as we live in a very nice area and our kids go to a good school. On the flip side, I have not had a newer car in the 15 years since we have been married. We did buy my wife a 2 year old car a couple years ago when my 98 F-150 with 270K miles on it finally dies and was going to cost way more to repair than it was worth... so now I am in the :hand me down" Pilot that is approaching 200K miles, and while I miss a truck, I plan to drive the Pilot until it dies or I win the lottery.

If it wasn't for family living either here in Southern California (wife's family) or Northern California (SF area - my family) I would be all for moving to a much lower cost of living place, but moving that far from family is not a trade off we are willing to make at this point.

Local COL is such a huge factor in all of this. In 98% of the country at my current compensation (I work remotely so I could really live anywhere at the same income) I'd be living well in a nice house with a mortgage I'd be paying off in the next 10-15 years, I'd have 3-6 months emergency fund and would be saving 20+% for retirement. But living in the Bay Area means I rent a small home (that would sell for $600K) in an area of the county with the worst schools, have no savings, am currently only saving 8% for retirement (401K), and pretty much live paycheck to paycheck.

I'm divorced (another expensive proposition in CA) and have 50/50 custody of my kid so I can't/won't leave here for the next 6 years until she graduates high school. The good news is anywhere I move at that point will be much cheaper (likely back to OR), but that's a long period of time that you simply can't make up when trying to save for retirement.

Yeah, but you have kick ### hills.

 

[Sand]

This. The RE threads still amaze me. How on earth do two (let alone one) average wage earning professionals afford to live in these areas? We purchased our "forever" home 11 years ago and our mortgage payment is now pretty much an afterthought. Make fun of the midwest all you want, but a little bit goes a long way here. And that in turn goes a long way on the "happiness scale" for me.

No joke. I just bought what I think is the last house I'll buy and it wouldn't buy much at all in SoCal or another area like that. Add to that some of the RE taxes folks pay (2.5% - holy ####!) compared to spots like I'm in (.6%) and I consider myself pretty lucky.

You are absolutely right about that. Everytime I read this thread I feel like I'm living in squalor compared to most of the people in this thread. But, then I think about all of the thigs I have and realize I live better than the vast majority of people in the world. If I don't get to tour Europe, spent a month in Hawaii, or drive a Mercedes in my retirement, it doesn't mean I wont be living well.

All about priorities. By cutting mercilessly in areas that don't matter to you you can make room for some good stuff. I don't think I'll ever drive a Mercedes. In fact, thinking back to my car history I've owned 4 cars in my lifetime - about 22 years of driving my own vehicle. My total car purchase expenditure is slightly under 30k for all of those combined.

 

[Sand]

Regarding living well now or in retirement, or both - I've always believed in living well now. You never know if you will even wake up tomorrow. I never understood people who have tons of money and are still cheap/tight with it and don't enjoy themselves. The last thing I want to do is have a bunch of money in my retirement account while not enjoying myself today, and get hit by a car tomorrow and die.

I will say though that I get a lot of personal satisfaction from investing said money and the process behind that.

Maybe not so much at the moment as I own a ridiculous amount of CVX ( :X ), but in general I do like that game.

 

[Doctor Detroit]

I was going to be $1300 short of my Roth IRA limit this year so I bought in after the market closed today.

 

[James Daulton]

Well there goes my 12% annual growth projections.

Thanks Obama!

 

[Wooderson]

So we have maxed out our 401k for the year and do not qualify for a Roth IRA. Was thinking of just going with a traditional IRA for our next investment. Any better ideas?

 

[Sand]

So we have maxed out our 401k for the year and do not qualify for a Roth IRA. Was thinking of just going with a traditional IRA for our next investment. Any better ideas?

That's the next best vehicle unless you can setup an HSA.

 

[rick6668]

I was going to be $1300 short of my Roth IRA limit this year so I bought in after the market closed today.

Nice

I have ~2/3 of my 401K from my previous employer that I rolled into an IRA still in cash waiting to re-enter the market.

Monday morning here we come.

It's on sale.

 

[Doctor Detroit]

I was going to be $1300 short of my Roth IRA limit this year so I bought in after the market closed today.

Nice

I have ~2/3 of my 401K from my previous employer that I rolled into an IRA still in cash waiting to re-enter the market.

Monday morning here we come.

It's on sale.

Unfortunately I got paid last week and not this week, so I don't get to invest my 13% and the my 401k match this week.

The way I look at it is that I WANT corrections, I want several of them in the next 14 years but not in years 13 and 14 (well at least not a crash). I know that in 2029 the Dow will be higher than 16500, and the NASDAQ will be north of 2000. So give me a few months of instability along the way and hope I can drop a few extra bucks into my retirement accounts at the right time. Market timing is generally unfruitful, no one knows with any great certainty when markets will rise or fall. But buying in times of instability is fun, unless you are day trading or playing the market like it was a sportsbook in Vegas.

The best investors like Buffet say it all the time, buy and hold stuff you believe via experience and research and you'll profit. I believe that, and I believe the U.S. will be the preeminent financial 800 pound gorilla for every year I'm walking this planet. So love the dips/corrections, hate crashes, play the long game and prosper.

 

[KCitons]

I was going to be $1300 short of my Roth IRA limit this year so I bought in after the market closed today.

Nice

I have ~2/3 of my 401K from my previous employer that I rolled into an IRA still in cash waiting to re-enter the market.

Monday morning here we come.

It's on sale.

Unfortunately I got paid last week and not this week, so I don't get to invest my 13% and the my 401k match this week.

The way I look at it is that I WANT corrections, I want several of them in the next 14 years but not in years 13 and 14 (well at least not a crash). I know that in 2029 the Dow will be higher than 16500, and the NASDAQ will be north of 2000. So give me a few months of instability along the way and hope I can drop a few extra bucks into my retirement accounts at the right time. Market timing is generally unfruitful, no one knows with any great certainty when markets will rise or fall. But buying in times of instability is fun, unless you are day trading or playing the market like it was a sportsbook in Vegas.

The best investors like Buffet say it all the time, buy and hold stuff you believe via experience and research and you'll profit. I believe that, and I believe the U.S. will be the preeminent financial 800 pound gorilla for every year I'm walking this planet. So love the dips/corrections, hate crashes, play the long game and prosper.

If I trade enough in one day, I get a free buffet. With a bigger bankroll I'd have a chance at that satin NASDAQ jacket.

 

[rick6668]

I was going to be $1300 short of my Roth IRA limit this year so I bought in after the market closed today.

Nice

I have ~2/3 of my 401K from my previous employer that I rolled into an IRA still in cash waiting to re-enter the market.

Monday morning here we come.

It's on sale.

Unfortunately I got paid last week and not this week, so I don't get to invest my 13% and the my 401k match this week.

The way I look at it is that I WANT corrections, I want several of them in the next 14 years but not in years 13 and 14 (well at least not a crash). I know that in 2029 the Dow will be higher than 16500, and the NASDAQ will be north of 2000. So give me a few months of instability along the way and hope I can drop a few extra bucks into my retirement accounts at the right time. Market timing is generally unfruitful, no one knows with any great certainty when markets will rise or fall. But buying in times of instability is fun, unless you are day trading or playing the market like it was a sportsbook in Vegas.

The best investors like Buffet say it all the time, buy and hold stuff you believe via experience and research and you'll profit. I believe that, and I believe the U.S. will be the preeminent financial 800 pound gorilla for every year I'm walking this planet. So love the dips/corrections, hate crashes, play the long game and prosper.

Haven't done anything yet, but likely later today or tomorrow. Markets are going to take another hit this morning.

If the market doesn't do the above it won't matter where I have my money.

 

[Buck Bradcanon]

 

[Steve Tasker]

lol Dow

 

[NutterButter]

Good god

 

[FUBAR]

everyone loves a good sale.

Reminds me of 2008. Except I'm not in Iraq.

 

[Judge Smails]

This is when I wish I had a pension

 

[Dentist]

This is when I wish I had a pension

people get so upset when there is a sale

 

[Tiger Fan]

Times like these are perfect "teaching moments" about being a passive investor and leveraging the "Target Retirement Date" funds. The "slow phase" of reducing risk in your portfolio the closer you get to retirement date is done for you and you're not stuck dealing with a sharp downtown.

 

[Doctor Detroit]

Times like these are perfect "teaching moments" about being a passive investor and leveraging the "Target Retirement Date" funds. The "slow phase" of reducing risk in your portfolio the closer you get to retirement date is done for you and you're not stuck dealing with a sharp downtown.

On days like this the target date funds are getting hammered too. Some of those funds are also overly weighted in bonds. I have some exposure in my Roth but chose a fund 10 years after my target retirement date.

 

[kutta]

Days like the last few are one of the reasons I am happy I paid off my house instead of putting that money in the market.

 

[Tiger Fan]

Days like the last few are one of the reasons I am happy I paid off my house instead of putting that money in the market.

 

[Tiger Fan]

Times like these are perfect "teaching moments" about being a passive investor and leveraging the "Target Retirement Date" funds. The "slow phase" of reducing risk in your portfolio the closer you get to retirement date is done for you and you're not stuck dealing with a sharp downtown.

On days like this the target date funds are getting hammered too. Some of those funds are also overly weighted in bonds. I have some exposure in my Roth but chose a fund 10 years after my target retirement date.

I would imagine the impact is a lot less.

Talk to me about the strategy of choosing a fund 10 years after your target retirement date

 

[Doctor Detroit]

Times like these are perfect "teaching moments" about being a passive investor and leveraging the "Target Retirement Date" funds. The "slow phase" of reducing risk in your portfolio the closer you get to retirement date is done for you and you're not stuck dealing with a sharp downtown.

On days like this the target date funds are getting hammered too. Some of those funds are also overly weighted in bonds. I have some exposure in my Roth but chose a fund 10 years after my target retirement date.

I would imagine the impact is a lot less.

Talk to me about the strategy of choosing a fund 10 years after your target retirement date

It increases the volatility of the fund and keeps you more invested in equities. I don't want to be 40% in bonds ten years out, I think that's silly. I plan to be over 80% invested in equities up to five years out, then go from there.

 

[Doctor Detroit]

For example in the 401k target date funds available to me, my current allocation mix is slightly more aggressive than the 2050 fund. The 2030 fund is already 35% bonds, no thanks.

For people who are afraid of investing or don't understand it, lifecycle funds are fine. For anyone with some financial acumen, I think you're better off doing your own investments.

 

[xulf]

For example in the 401k target date funds available to me, my current allocation mix is slightly more aggressive than the 2050 fund. The 2030 fund is already 35% bonds, no thanks.

For people who are afraid of investing or don't understand it, lifecycle funds are fine. For anyone with some financial acumen, I think you're better off doing your own investments.

Target date funds are also killer on the expense ratios.

 

[George Jefferson Airplane]

Not sure how I missed this thread, good stuff in here.

 

[NutterButter]

I think I'm going to switch all my stock funds into cash funds. Sound like a good idea? JK

 

[FUBAR]

Times like these are perfect "teaching moments" about being a passive investor and leveraging the "Target Retirement Date" funds. The "slow phase" of reducing risk in your portfolio the closer you get to retirement date is done for you and you're not stuck dealing with a sharp downtown.

On days like this the target date funds are getting hammered too. Some of those funds are also overly weighted in bonds. I have some exposure in my Roth but chose a fund 10 years after my target retirement date.

I would imagine the impact is a lot less.

Talk to me about the strategy of choosing a fund 10 years after your target retirement date

It increases the volatility of the fund and keeps you more invested in equities. I don't want to be 40% in bonds ten years out, I think that's silly. I plan to be over 80% invested in equities up to five years out, then go from there.

For example in the 401k target date funds available to me, my current allocation mix is slightly more aggressive than the 2050 fund. The 2030 fund is already 35% bonds, no thanks.

For people who are afraid of investing or don't understand it, lifecycle funds are fine. For anyone with some financial acumen, I think you're better off doing your own investments.

well said on both accounts DD. I don't use lifecycle funds but if I were to, I'd do the same thing. Helps that some of us have a higher risk tolerance than others.

Target date funds are also killer on the expense ratios.

Depends on the fund.

https://www.tsp.gov/planparticipation/administrative/administrativeExpenses.shtml

Since the L Funds do not have any unique administrative expenses, they do not have any additional charges. Therefore, the L Fund administrative expense ratios are weighted averages of the expense rations of the G, F, C, S, and I Funds.

 

[lod01]

I think I'm going to switch all my stock funds into cash funds. Sound like a good idea? JK

I would wait until we get a little lower. Try and hit the bottom.

 

[Steve Tasker]

For example in the 401k target date funds available to me, my current allocation mix is slightly more aggressive than the 2050 fund. The 2030 fund is already 35% bonds, no thanks.

For people who are afraid of investing or don't understand it, lifecycle funds are fine. For anyone with some financial acumen, I think you're better off doing your own investments.

Target date funds are also killer on the expense ratios.

I'm in Vanguard 2050 and it's only 0.18%. Not quite as good as the Total Stock Market (Admiral) of 0.05% but still better than all of my 401k options.

 

[NutterButter]

I think I'm going to switch all my stock funds into cash funds. Sound like a good idea? JK

I would wait until we get a little lower. Try and hit the bottom.

I like your thinking. Can you PM when that happens?

 

[Doctor Detroit]

For example in the 401k target date funds available to me, my current allocation mix is slightly more aggressive than the 2050 fund. The 2030 fund is already 35% bonds, no thanks.

For people who are afraid of investing or don't understand it, lifecycle funds are fine. For anyone with some financial acumen, I think you're better off doing your own investments.

Target date funds are also killer on the expense ratios.

I'm in Vanguard 2050 and it's only 0.18%. Not quite as good as the Total Stock Market (Admiral) of 0.05% but still better than all of my 401k options.

Yeah I think he might be referring to the actively managed ones at Fidelty, T Rowe, and other places. Read some stuff about them before, expenses are higher due to all the shifting of assets from month to month to balance and rebalance. Makes sense.

 

[Tiger Fan]

Thx DD. something to look at for sure. I was speaking in generalities across the board.

 

[dino259]

Times like these are perfect "teaching moments" about being a passive investor and leveraging the "Target Retirement Date" funds. The "slow phase" of reducing risk in your portfolio the closer you get to retirement date is done for you and you're not stuck dealing with a sharp downtown.

On days like this the target date funds are getting hammered too. Some of those funds are also overly weighted in bonds. I have some exposure in my Roth but chose a fund 10 years after my target retirement date.

I would imagine the impact is a lot less.

Talk to me about the strategy of choosing a fund 10 years after your target retirement date

It increases the volatility of the fund and keeps you more invested in equities. I don't want to be 40% in bonds ten years out, I think that's silly. I plan to be over 80% invested in equities up to five years out, then go from there.

When you retire, how long to you plan to live in retirement? If you retire at 60, and you live to 80 that is 20 years of living you need to have money for. It maybe even longer 30 to 40 years even. If you have that long there is time to handle the fluctuations of the market. Most people wont be able to just park their money in low risk, they may need to be more aggressive.

I know that is not worded the best but hopefully you can understand my question/point.

 

[Slapdash]

How does NewlyRetired spend a day of market turmoil like this?