PBS Frontline : The Retirement Gamble, sorta Must See (1 Viewer)

[wilked]

Johnnymac, don't shift your portfolio to equities in an effort to 'catch up', this is the gambler who heads back to the ATM after he lost his 'max betting amount', in an effort to recoup his losses.

At 53, you have time, focus on increasing savings, consider working a little longer if needed. What are your total assets saved at this point?

If this market plummets to a bear market level (20%) down on S&P and NAZ, you pour into the market 100% equities.

Apply this system here

http://www.stockpickssystem.com/wp-content/uploads/2011/03/1929-stock-market-crash-stock-chart-djia.gif

And you are now 100% equities at $300. Would take nerves of steel for JohnnyMac to hang on while his $130K turns into $25K. 20 years later he is 73, hopefully alive, and sees his principal approaching par.

Going 100% equities in your 50s is a disaster waiting to happen. A mistake / bad turn of events that late in the game cannot likely be recovered... Market drops by 50%, and you need it to double to simply get back to where you started.

 

[Johnnymac]

Johnnymac, don't shift your portfolio to equities in an effort to 'catch up', this is the gambler who heads back to the ATM after he lost his 'max betting amount', in an effort to recoup his losses.

At 53, you have time, focus on increasing savings, consider working a little longer if needed. What are your total assets saved at this point?

Well, I have roughly $120,000 in my 401K, another $5,000 in a supplemental plan through my employer, and around another $3,000 in my Ameritrade acct. I have only had the brokerage acct for about 18 months.

Was not going to go 100% equities but I admit I considered it. When I re-balanced last year I actually moved more conservative.

When do you expect to retire and how much is your expected pension?

I'm not sure when I expect to retire. My full retirement age is 67 so I plan on working to that age at least. No pension, just my 401K.

 

[Johnnymac]

Johnnymac, don't shift your portfolio to equities in an effort to 'catch up', this is the gambler who heads back to the ATM after he lost his 'max betting amount', in an effort to recoup his losses.

At 53, you have time, focus on increasing savings, consider working a little longer if needed. What are your total assets saved at this point?

If this market plummets to a bear market level (20%) down on S&P and NAZ, you pour into the market 100% equities.

Apply this system herehttp://www.stockpickssystem.com/wp-content/uploads/2011/03/1929-stock-market-crash-stock-chart-djia.gif

And you are now 100% equities at $300. Would take nerves of steel for JohnnyMac to hang on while his $130K turns into $25K. 20 years later he is 73, hopefully alive, and sees his principal approaching par.

Going 100% equities in your 50s is a disaster waiting to happen. A mistake / bad turn of events that late in the game cannot likely be recovered... Market drops by 50%, and you need it to double to simply get back to where you started.

After careful thinking last year this is the conclusion I came to as well. Its just too late in the game for me to take that kind of risk.

 

[NutterButter]

If you work to 70 JMac, you can make another 400k in contributions with the additional catch up contribution. You'll also be getting the max on SS. With your house paid off, you'll be in solid shape then.

 

[wilked]

Johnny, the best way to think of it is you can safely retire when you have 25X your annual expenses.

Let's say your monthly expenses are $2000 (for instance). Let's then say you will get $1000/month from SS. You would need $300k to safely retire

You need to use your numbers and need to make sure they are as accurate as possible. You say you will work til 67, I assume that means you are relatively healthy?

 

[wilked]

If you work to 70 JMac, you can make another 400k in contributions with the additional catch up contribution. You'll also be getting the max on SS. With your house paid off, you'll be in solid shape then.

Seems simple enough... ;-)

If he had saved $130 in his first 20-25 years of working (including interest earned), it's a bit of a jump to assume he will save $400 in the next 15 years

 

[NutterButter]

If you work to 70 JMac, you can make another 400k in contributions with the additional catch up contribution. You'll also be getting the max on SS. With your house paid off, you'll be in solid shape then.

Seems simple enough... ;-)

If he had saved $130 in his first 20-25 years of working (including interest earned), it's a bit of a jump to assume he will save $400 in the next 15 years

I believe in people and I believe in JMac. He can do it. Actually, now that I think about it, he's getting 5k from the boss as a match so his total contribution can be 29/year so just south of 500k over the next 17. You're golden JMac.

 

[RUSF18]

The most important thing is to not take a look at where you are and just throw in the towel. Figure out what you can save every month and then try to save 10% more. Just keep funding your retirement accounts and do the catch up when you can.

 

[IC FBGCav]

45 and have nothing in bonds. Not expecting to retire to 67. Should I just move some to bonds now or wait? TIA.

 

[wilked]

Google Asset Allocation...there are a million articles. Here's one from Forbes that popped up

http://www.forbes.com/2009/12/23/asset-allocation-mutual-funds-etfs-personal-finance-bogleheads-view-dogu.html

There are other ways to determine an asset allocation, including several rules of thumb:

–Your age in bonds. So if you are 40 years old, you use a 60/40 (equity/bond) allocation.

–110 minus your age in equities. So, 110-40 years old=70/30 (equity/bond) asset allocation.

–120 minus your age in equities. So, 120-40 years old = 80/20 (equity/bond) asset allocation.

 

[IC FBGCav]

Google Asset Allocation...there are a million articles. Here's one from Forbes that popped up

http://www.forbes.com/2009/12/23/asset-allocation-mutual-funds-etfs-personal-finance-bogleheads-view-dogu.html

There are other ways to determine an asset allocation, including several rules of thumb:

–Your age in bonds. So if you are 40 years old, you use a 60/40 (equity/bond) allocation.

–110 minus your age in equities. So, 110-40 years old=70/30 (equity/bond) asset allocation.

–120 minus your age in equities. So, 120-40 years old = 80/20 (equity/bond) asset allocation.

I get this but when to make the move? ASAP or wait?

 

[wilked]

Google Asset Allocation...there are a million articles. Here's one from Forbes that popped up

http://www.forbes.com/2009/12/23/asset-allocation-mutual-funds-etfs-personal-finance-bogleheads-view-dogu.html

There are other ways to determine an asset allocation, including several rules of thumb:

–Your age in bonds. So if you are 40 years old, you use a 60/40 (equity/bond) allocation.

–110 minus your age in equities. So, 110-40 years old=70/30 (equity/bond) asset allocation.

–120 minus your age in equities. So, 120-40 years old = 80/20 (equity/bond) asset allocation.

I get this but when to make the move? ASAP or wait?

I would do it ASAP, personally.

Let's say you move 30% of your portfolio to bonds and tomorrow bonds drop 5% while stocks rise 10%, would that eat you up inside, or not bother you much? If it would eat you up then you can always do it slowly, say 5% now, 5 more percent in 3 months, and so on

 

[IC FBGCav]

Google Asset Allocation...there are a million articles. Here's one from Forbes that popped up

http://www.forbes.com/2009/12/23/asset-allocation-mutual-funds-etfs-personal-finance-bogleheads-view-dogu.html

There are other ways to determine an asset allocation, including several rules of thumb:

–Your age in bonds. So if you are 40 years old, you use a 60/40 (equity/bond) allocation.

–110 minus your age in equities. So, 110-40 years old=70/30 (equity/bond) asset allocation.

–120 minus your age in equities. So, 120-40 years old = 80/20 (equity/bond) asset allocation.

I get this but when to make the move? ASAP or wait?

I would do it ASAP, personally.

Let's say you move 30% of your portfolio to bonds and tomorrow bonds drop 5% while stocks rise 10%, would that eat you up inside, or not bother you much? If it would eat you up then you can always do it slowly, say 5% now, 5 more percent in 3 months, and so on

It would bother me but not kill me. I don't track things every day. I will do it in 2 moves. Thanks for your help.

 

[IC FBGCav]

One last thing please, these are my bond options. Go with High Yield? I figured short term was a no go.

Columbia High Yield Bond Fund ©

Columbia Intermediate Bond Fund ©

Columbia Short Term Bond Fund ©

 

[FUBAR]

Google Asset Allocation...there are a million articles. Here's one from Forbes that popped up

http://www.forbes.com/2009/12/23/asset-allocation-mutual-funds-etfs-personal-finance-bogleheads-view-dogu.html

There are other ways to determine an asset allocation, including several rules of thumb:

–Your age in bonds. So if you are 40 years old, you use a 60/40 (equity/bond) allocation.

–110 minus your age in equities. So, 110-40 years old=70/30 (equity/bond) asset allocation.

–120 minus your age in equities. So, 120-40 years old = 80/20 (equity/bond) asset allocation.

I get this but when to make the move? ASAP or wait?

I readjust my TSP about every 6 months to keep within my preferred allocation. If you haven't done so in the last year, do it soon. Don't wait for the bounceback or other timing of the market.

My allocation is probably different than yours, or anyone else's, as I count my pension essentially as bonds (generally speaking, it's fixed rate income, not tied to the stock market). I also go by the rule that I want to withdraw 4% of our retirement accounts each year after we're 62 and fully retired; I have a goal in mind of what I want the 4% to be (therefore the total amount saved in 22 years). Using a calculator based on 3% interest (yes, that's intentionally low), we'll reach that goal with room to spare. Because we have that cushion and the pension, we have less than 5% bonds.

 

[Binky The Doormat]

45 and have nothing in bonds. Not expecting to retire to 67. Should I just move some to bonds now or wait? TIA.

22 yrs till retirement - I would go minimal LT high quality bonds or bond fund if none at all. Like what has been discussed in here before starting moving into decent chunk of bonds around 10-12 yrs prior to retirement. Its all based on your comfort level with risk.

 

[Juxtatarot]

The rule (or rules) of thumb about equity/bond asset allocation makes sense if you are planning to use most or all of your retirement savings in retirement. But what if you plan to exceed that amount? Perhaps you want to leave a nice inheritance or perhaps your generally frugal nature has you saving more than you'll need. In that case it seems to me that a much higher percentage of equities is reasonable since there isn't that shorter time horizon when the money is needed.

 

[Dentist]

The rule (or rules) of thumb about equity/bond asset allocation makes sense if you are planning to use most or all of your retirement savings in retirement. But what if you plan to exceed that amount? Perhaps you want to leave a nice inheritance or perhaps your generally frugal nature has you saving more than you'll need. In that case it seems to me that a much higher percentage of equities is reasonable since there isn't that shorter time horizon when the money is needed.

If you're not going to spend the money, then it sounds like you're already rich... why take a risk with money you don't need and aren't going to use?

That's like worrying about what you're going to invest in after you win a lottery... you only need to get rich once.... if you have a lifetime supply of money, I'd probably be overly conservative with the money rather than overly aggressive.

 

[Random]

The rule (or rules) of thumb about equity/bond asset allocation makes sense if you are planning to use most or all of your retirement savings in retirement. But what if you plan to exceed that amount? Perhaps you want to leave a nice inheritance or perhaps your generally frugal nature has you saving more than you'll need. In that case it seems to me that a much higher percentage of equities is reasonable since there isn't that shorter time horizon when the money is needed.

If you're not going to spend the money, then it sounds like you're already rich... why take a risk with money you don't need and aren't going to use?

That's like worrying about what you're going to invest in after you win a lottery... you only need to get rich once.... if you have a lifetime supply of money, I'd probably be overly conservative with the money rather than overly aggressive.

What about those of us who aren't rich, but have other sources of retirement income? And a "normal" amount in the 401K/IRA. Still play conservative with it?

 

[Juxtatarot]

The rule (or rules) of thumb about equity/bond asset allocation makes sense if you are planning to use most or all of your retirement savings in retirement. But what if you plan to exceed that amount? Perhaps you want to leave a nice inheritance or perhaps your generally frugal nature has you saving more than you'll need. In that case it seems to me that a much higher percentage of equities is reasonable since there isn't that shorter time horizon when the money is needed.

If you're not going to spend the money, then it sounds like you're already rich... why take a risk with money you don't need and aren't going to use?

That's like worrying about what you're going to invest in after you win a lottery... you only need to get rich once.... if you have a lifetime supply of money, I'd probably be overly conservative with the money rather than overly aggressive.

So if you became "rich" (defined here as having more money than you'll need in retirement) you'd become more conservative with your money? I'm quite surprised by your response. I guess my response would be why not be more aggressive? You can afford to lose the money in down market periods and there will likely be more money to give to others (family or charity) when you're gone.

 

[lod01]

Johnnymac, don't shift your portfolio to equities in an effort to 'catch up', this is the gambler who heads back to the ATM after he lost his 'max betting amount', in an effort to recoup his losses.

At 53, you have time, focus on increasing savings, consider working a little longer if needed. What are your total assets saved at this point?

If this market plummets to a bear market level (20%) down on S&P and NAZ, you pour into the market 100% equities.

Apply this system here

http://www.stockpickssystem.com/wp-content/uploads/2011/03/1929-stock-market-crash-stock-chart-djia.gif

And you are now 100% equities at $300. Would take nerves of steel for JohnnyMac to hang on while his $130K turns into $25K. 20 years later he is 73, hopefully alive, and sees his principal approaching par.

Going 100% equities in your 50s is a disaster waiting to happen. A mistake / bad turn of events that late in the game cannot likely be recovered... Market drops by 50%, and you need it to double to simply get back to where you started.

Ok for the average guy that doesn't pay attention, that may be the way to go. I'm over 50 and 100% equities or in cash like now. You do have to pay attention.

 

[NutterButter]

Johnnymac, don't shift your portfolio to equities in an effort to 'catch up', this is the gambler who heads back to the ATM after he lost his 'max betting amount', in an effort to recoup his losses.

At 53, you have time, focus on increasing savings, consider working a little longer if needed. What are your total assets saved at this point?

If this market plummets to a bear market level (20%) down on S&P and NAZ, you pour into the market 100% equities.

Apply this system here

http://www.stockpickssystem.com/wp-content/uploads/2011/03/1929-stock-market-crash-stock-chart-djia.gif

And you are now 100% equities at $300. Would take nerves of steel for JohnnyMac to hang on while his $130K turns into $25K. 20 years later he is 73, hopefully alive, and sees his principal approaching par.

Going 100% equities in your 50s is a disaster waiting to happen. A mistake / bad turn of events that late in the game cannot likely be recovered... Market drops by 50%, and you need it to double to simply get back to where you started.

Ok for the average guy that doesn't pay attention, that may be the way to go. I'm over 50 and 100% equities or in cash like now. You do have to pay attention.

curious, if the market were to tank, how would paying attention help? you saying you'd know when to pull out before the tank actually happens?

 

[FUBAR]

The rule (or rules) of thumb about equity/bond asset allocation makes sense if you are planning to use most or all of your retirement savings in retirement. But what if you plan to exceed that amount? Perhaps you want to leave a nice inheritance or perhaps your generally frugal nature has you saving more than you'll need. In that case it seems to me that a much higher percentage of equities is reasonable since there isn't that shorter time horizon when the money is needed.

If you're not going to spend the money, then it sounds like you're already rich... why take a risk with money you don't need and aren't going to use?

That's like worrying about what you're going to invest in after you win a lottery... you only need to get rich once.... if you have a lifetime supply of money, I'd probably be overly conservative with the money rather than overly aggressive.

What about those of us who aren't rich, but have other sources of retirement income? And a "normal" amount in the 401K/IRA. Still play conservative with it?

my answer is above, but the other side, to go conservative because you don't "need the risk" makes sense too.

The difference probably just comes down to what you would do under the three basic scenarios - (A) things play out essentially as you predict, (B) the market tanks, © the market rises more than expected.

For us, (A) means we live in a nice beach house, we're able to give to charity and our grandkids and live comfortably. (B) we still live comfortably but in a lesser house, maybe not on the beach, give less to charity and our family, © We live in a nicer beach house and give more to charity and family. Because the worst case scenario isn't dire, we take more risk. Others might say "because the best case isn't substantially better than a lower risk option, take less risk".

 

[Johnnymac]

Johnny, the best way to think of it is you can safely retire when you have 25X your annual expenses.

Let's say your monthly expenses are $2000 (for instance). Let's then say you will get $1000/month from SS. You would need $300k to safely retire

You need to use your numbers and need to make sure they are as accurate as possible. You say you will work til 67, I assume that means you are relatively healthy?

Thanks Wilked and yes I am relatively healthy.

 

[Dentist]

The rule (or rules) of thumb about equity/bond asset allocation makes sense if you are planning to use most or all of your retirement savings in retirement. But what if you plan to exceed that amount? Perhaps you want to leave a nice inheritance or perhaps your generally frugal nature has you saving more than you'll need. In that case it seems to me that a much higher percentage of equities is reasonable since there isn't that shorter time horizon when the money is needed.

If you're not going to spend the money, then it sounds like you're already rich... why take a risk with money you don't need and aren't going to use?

That's like worrying about what you're going to invest in after you win a lottery... you only need to get rich once.... if you have a lifetime supply of money, I'd probably be overly conservative with the money rather than overly aggressive.

So if you became "rich" (defined here as having more money than you'll need in retirement) you'd become more conservative with your money? I'm quite surprised by your response. I guess my response would be why not be more aggressive? You can afford to lose the money in down market periods and there will likely be more money to give to others (family or charity) when you're gone.

You can do as you wish of course. But if I was handed a check today for my "retire today" number and then even generously was added a million on top of that, I'd change my entire investment platform to "just enough to beat inflation" not go for broke.

But I also don't give too much of a crap about "leaving a legacy"

 

[Dentist]

The rule (or rules) of thumb about equity/bond asset allocation makes sense if you are planning to use most or all of your retirement savings in retirement. But what if you plan to exceed that amount? Perhaps you want to leave a nice inheritance or perhaps your generally frugal nature has you saving more than you'll need. In that case it seems to me that a much higher percentage of equities is reasonable since there isn't that shorter time horizon when the money is needed.

If you're not going to spend the money, then it sounds like you're already rich... why take a risk with money you don't need and aren't going to use?

That's like worrying about what you're going to invest in after you win a lottery... you only need to get rich once.... if you have a lifetime supply of money, I'd probably be overly conservative with the money rather than overly aggressive.

What about those of us who aren't rich, but have other sources of retirement income? And a "normal" amount in the 401K/IRA. Still play conservative with it?

I'm aware of your situation as read through numerous posts. And I gotta be honest, I really don't know what I'd do if I were you. Your real estate game seems like a very solid idea... it's just not for me.. I don't understand the real estate game, I don't like the effort involved to do it, and I certainly don't know how to factor that into a portfolio.

My response would be of no value to you because it would purely be speculation. I think I can only adequately advise someone who has a pretty traditional job and deals with ira/401k/hsa types of government tax advantaged accounts... and who deals mostly with stock/bonds... the only real estate i understand are REITs.. and i don't invest in them anymore due to not understanding them as well as I should.

 

[Bob Sacamano]

The rule (or rules) of thumb about equity/bond asset allocation makes sense if you are planning to use most or all of your retirement savings in retirement. But what if you plan to exceed that amount? Perhaps you want to leave a nice inheritance or perhaps your generally frugal nature has you saving more than you'll need. In that case it seems to me that a much higher percentage of equities is reasonable since there isn't that shorter time horizon when the money is needed.

If you're not going to spend the money, then it sounds like you're already rich... why take a risk with money you don't need and aren't going to use?

That's like worrying about what you're going to invest in after you win a lottery... you only need to get rich once.... if you have a lifetime supply of money, I'd probably be overly conservative with the money rather than overly aggressive.

What about those of us who aren't rich, but have other sources of retirement income? And a "normal" amount in the 401K/IRA. Still play conservative with it?

I'm aware of your situation as read through numerous posts. And I gotta be honest, I really don't know what I'd do if I were you. Your real estate game seems like a very solid idea... it's just not for me.. I don't understand the real estate game, I don't like the effort involved to do it, and I certainly don't know how to factor that into a portfolio.

My response would be of no value to you because it would purely be speculation. I think I can only adequately advise someone who has a pretty traditional job and deals with ira/401k/hsa types of government tax advantaged accounts... and who deals mostly with stock/bonds... the only real estate i understand are REITs.. and i don't invest in them anymore due to not understanding them as well as I should.

You fund an IRA? Traditional? Back door Roth?

 

[Grace Under Pressure]

The rule (or rules) of thumb about equity/bond asset allocation makes sense if you are planning to use most or all of your retirement savings in retirement. But what if you plan to exceed that amount? Perhaps you want to leave a nice inheritance or perhaps your generally frugal nature has you saving more than you'll need. In that case it seems to me that a much higher percentage of equities is reasonable since there isn't that shorter time horizon when the money is needed.

If you're not going to spend the money, then it sounds like you're already rich... why take a risk with money you don't need and aren't going to use?

That's like worrying about what you're going to invest in after you win a lottery... you only need to get rich once.... if you have a lifetime supply of money, I'd probably be overly conservative with the money rather than overly aggressive.

So if you became "rich" (defined here as having more money than you'll need in retirement) you'd become more conservative with your money? I'm quite surprised by your response. I guess my response would be why not be more aggressive? You can afford to lose the money in down market periods and there will likely be more money to give to others (family or charity) when you're gone.

You can do as you wish of course. But if I was handed a check today for my "retire today" number and then even generously was added a million on top of that, I'd change my entire investment platform to "just enough to beat inflation" not go for broke.

But I also don't give too much of a crap about "leaving a legacy"

I'm probably in this camp. Perhaps I'd take $75K or so and invest in "risky" stuff for fun. But I think the point is to keep 99.9% of what you got when what you got is a lot.

 

[Dentist]

The rule (or rules) of thumb about equity/bond asset allocation makes sense if you are planning to use most or all of your retirement savings in retirement. But what if you plan to exceed that amount? Perhaps you want to leave a nice inheritance or perhaps your generally frugal nature has you saving more than you'll need. In that case it seems to me that a much higher percentage of equities is reasonable since there isn't that shorter time horizon when the money is needed.

If you're not going to spend the money, then it sounds like you're already rich... why take a risk with money you don't need and aren't going to use?

That's like worrying about what you're going to invest in after you win a lottery... you only need to get rich once.... if you have a lifetime supply of money, I'd probably be overly conservative with the money rather than overly aggressive.

What about those of us who aren't rich, but have other sources of retirement income? And a "normal" amount in the 401K/IRA. Still play conservative with it?

I'm aware of your situation as read through numerous posts. And I gotta be honest, I really don't know what I'd do if I were you. Your real estate game seems like a very solid idea... it's just not for me.. I don't understand the real estate game, I don't like the effort involved to do it, and I certainly don't know how to factor that into a portfolio.

My response would be of no value to you because it would purely be speculation. I think I can only adequately advise someone who has a pretty traditional job and deals with ira/401k/hsa types of government tax advantaged accounts... and who deals mostly with stock/bonds... the only real estate i understand are REITs.. and i don't invest in them anymore due to not understanding them as well as I should.

You fund an IRA? Traditional? Back door Roth?

back door roths for myself and wife

 

[Bob Sacamano]

The rule (or rules) of thumb about equity/bond asset allocation makes sense if you are planning to use most or all of your retirement savings in retirement. But what if you plan to exceed that amount? Perhaps you want to leave a nice inheritance or perhaps your generally frugal nature has you saving more than you'll need. In that case it seems to me that a much higher percentage of equities is reasonable since there isn't that shorter time horizon when the money is needed.

If you're not going to spend the money, then it sounds like you're already rich... why take a risk with money you don't need and aren't going to use?

That's like worrying about what you're going to invest in after you win a lottery... you only need to get rich once.... if you have a lifetime supply of money, I'd probably be overly conservative with the money rather than overly aggressive.

What about those of us who aren't rich, but have other sources of retirement income? And a "normal" amount in the 401K/IRA. Still play conservative with it?

I'm aware of your situation as read through numerous posts. And I gotta be honest, I really don't know what I'd do if I were you. Your real estate game seems like a very solid idea... it's just not for me.. I don't understand the real estate game, I don't like the effort involved to do it, and I certainly don't know how to factor that into a portfolio.

My response would be of no value to you because it would purely be speculation. I think I can only adequately advise someone who has a pretty traditional job and deals with ira/401k/hsa types of government tax advantaged accounts... and who deals mostly with stock/bonds... the only real estate i understand are REITs.. and i don't invest in them anymore due to not understanding them as well as I should.

You fund an IRA? Traditional? Back door Roth?

back door roths for myself and wife

With a stated goal of early retirement, what % of your $ are you comfortable having in retirement accounts? Something you even consider?

 

[wilked]

Johnnymac, don't shift your portfolio to equities in an effort to 'catch up', this is the gambler who heads back to the ATM after he lost his 'max betting amount', in an effort to recoup his losses.

At 53, you have time, focus on increasing savings, consider working a little longer if needed. What are your total assets saved at this point?

If this market plummets to a bear market level (20%) down on S&P and NAZ, you pour into the market 100% equities.

Apply this system here

http://www.stockpickssystem.com/wp-content/uploads/2011/03/1929-stock-market-crash-stock-chart-djia.gif

And you are now 100% equities at $300. Would take nerves of steel for JohnnyMac to hang on while his $130K turns into $25K. 20 years later he is 73, hopefully alive, and sees his principal approaching par.

Going 100% equities in your 50s is a disaster waiting to happen. A mistake / bad turn of events that late in the game cannot likely be recovered... Market drops by 50%, and you need it to double to simply get back to where you started.

Ok for the average guy that doesn't pay attention, that may be the way to go. I'm over 50 and 100% equities or in cash like now. You do have to pay attention.

It sounds like you pay attention more than I do, so I have one request - if you see signals that a crash is coming, please start a new thread such as this one so it doesn't get lost somewhere in an old open thread

https://forums.footballguys.com/forum/index.php?/topic/653949-get-your-money-out-of-the-market/page-1

 

[wilked]

One last thing please, these are my bond options. Go with High Yield? I figured short term was a no go.

Columbia High Yield Bond Fund ©

Columbia Intermediate Bond Fund ©

Columbia Short Term Bond Fund ©

What are your expense ratios? Also, you might want to do a review of all your investment expense ratios. High ERs will be a serious drag to your portfolio.

High yield bonds come with high risk, there is no free lunch. Are those really your only three options? If they are you might consider 1/3 to each, assuming the ERs are relatively low

 

[Dentist]

The rule (or rules) of thumb about equity/bond asset allocation makes sense if you are planning to use most or all of your retirement savings in retirement. But what if you plan to exceed that amount? Perhaps you want to leave a nice inheritance or perhaps your generally frugal nature has you saving more than you'll need. In that case it seems to me that a much higher percentage of equities is reasonable since there isn't that shorter time horizon when the money is needed.

If you're not going to spend the money, then it sounds like you're already rich... why take a risk with money you don't need and aren't going to use?

That's like worrying about what you're going to invest in after you win a lottery... you only need to get rich once.... if you have a lifetime supply of money, I'd probably be overly conservative with the money rather than overly aggressive.

What about those of us who aren't rich, but have other sources of retirement income? And a "normal" amount in the 401K/IRA. Still play conservative with it?

I'm aware of your situation as read through numerous posts. And I gotta be honest, I really don't know what I'd do if I were you. Your real estate game seems like a very solid idea... it's just not for me.. I don't understand the real estate game, I don't like the effort involved to do it, and I certainly don't know how to factor that into a portfolio.

My response would be of no value to you because it would purely be speculation. I think I can only adequately advise someone who has a pretty traditional job and deals with ira/401k/hsa types of government tax advantaged accounts... and who deals mostly with stock/bonds... the only real estate i understand are REITs.. and i don't invest in them anymore due to not understanding them as well as I should.

You fund an IRA? Traditional? Back door Roth?

back door roths for myself and wife

With a stated goal of early retirement, what % of your $ are you comfortable having in retirement accounts? Something you even consider?

Retirement accounts make up over 60% of my current net worth. Home is 2nd at 20% the last 20% is a spackling of cash, cash management accounts, property

I'd never put much thought into what percent i was comfortable with.

Basically I put as much as the government allows towards retirement 401k + match, 2 backdoor roths, HSA (i consider that a retirement account in many ways even if I use some of it now), and any additional savings... then live meagerly on the rest.

 

[IC FBGCav]

One last thing please, these are my bond options. Go with High Yield? I figured short term was a no go.

Columbia High Yield Bond Fund ©

Columbia Intermediate Bond Fund ©

Columbia Short Term Bond Fund ©

What are your expense ratios? Also, you might want to do a review of all your investment expense ratios. High ERs will be a serious drag to your portfolio.

High yield bonds come with high risk, there is no free lunch. Are those really your only three options? If they are you might consider 1/3 to each, assuming the ERs are relatively low

https://www.sponsorportal.com/SponsorsPortal/index.cfm?nfc&custno=f1fc5413-fc23-4593-94a9-7288aa905ab9&plan=8135&sortby=name

 

[regularguy]

wilked> Those bond % seem high compared to the 10% in the Vanguard 2040/2045 plans (I'm 39). If you were using one of these targeted funds, would you set aside some % off the top into a bond fund? I'm essentially 100% equities but have been actively researching an updated allocation.

 

[Bob Sacamano]

The rule (or rules) of thumb about equity/bond asset allocation makes sense if you are planning to use most or all of your retirement savings in retirement. But what if you plan to exceed that amount? Perhaps you want to leave a nice inheritance or perhaps your generally frugal nature has you saving more than you'll need. In that case it seems to me that a much higher percentage of equities is reasonable since there isn't that shorter time horizon when the money is needed.

If you're not going to spend the money, then it sounds like you're already rich... why take a risk with money you don't need and aren't going to use?

That's like worrying about what you're going to invest in after you win a lottery... you only need to get rich once.... if you have a lifetime supply of money, I'd probably be overly conservative with the money rather than overly aggressive.

What about those of us who aren't rich, but have other sources of retirement income? And a "normal" amount in the 401K/IRA. Still play conservative with it?

I'm aware of your situation as read through numerous posts. And I gotta be honest, I really don't know what I'd do if I were you. Your real estate game seems like a very solid idea... it's just not for me.. I don't understand the real estate game, I don't like the effort involved to do it, and I certainly don't know how to factor that into a portfolio.

My response would be of no value to you because it would purely be speculation. I think I can only adequately advise someone who has a pretty traditional job and deals with ira/401k/hsa types of government tax advantaged accounts... and who deals mostly with stock/bonds... the only real estate i understand are REITs.. and i don't invest in them anymore due to not understanding them as well as I should.

You fund an IRA? Traditional? Back door Roth?

back door roths for myself and wife

With a stated goal of early retirement, what % of your $ are you comfortable having in retirement accounts? Something you even consider?

Retirement accounts make up over 60% of my current net worth. Home is 2nd at 20% the last 20% is a spackling of cash, cash management accounts, property

I'd never put much thought into what percent i was comfortable with.

Basically I put as much as the government allows towards retirement 401k + match, 2 backdoor roths, HSA (i consider that a retirement account in many ways even if I use some of it now), and any additional savings... then live meagerly on the rest.

I was just curious. If you're sitting there in your early 50s staring at total assets that should allow you to retire, but 80% is in retirement accounts and your house, are you going to be able to do it? It wasn't something I had considered much until recently. Now I find myself wanting to put more and more outside retirement accounts just to be safe.

 

[wilked]

wilked> Those bond % seem high compared to the 10% in the Vanguard 2040/2045 plans (I'm 39). If you were using one of these targeted funds, would you set aside some % off the top into a bond fund? I'm essentially 100% equities but have been actively researching an updated allocation.

Vanguard's target funds are more aggressive than I am comfortable with (if I were to choose based simply on date).

The best thing is to look under the hood and pick a fund that matches the Asset Allocation you are comfortable with

You can use this tool to put an asset allocation in and backtest it. I like to look at what largest yearly loss is, and see if I could stomach it leading into retirement

https://www.portfoliovisualizer.com/backtest-asset-class-allocation

 

[wilked]

Bob, just because you are in your 50s and want to retire doesn't mean you can't use your retirement funds.

Take a look at this http://www.forbes.com/sites/advisor/2012/02/13/the-72t-early-distribution-from-your-ira/#521d9aa56423

 

[Bob Sacamano]

Bob, just because you are in your 50s and want to retire doesn't mean you can't use your retirement funds.

Take a look at this http://www.forbes.com/sites/advisor/2012/02/13/the-72t-early-distribution-from-your-ira/#521d9aa56423

Thanks. I was unaware of that. I thought it was automatic 10% penalty before 59.5 unless it was for college, home, medical, etc.

 

[Dentist]

The rule (or rules) of thumb about equity/bond asset allocation makes sense if you are planning to use most or all of your retirement savings in retirement. But what if you plan to exceed that amount? Perhaps you want to leave a nice inheritance or perhaps your generally frugal nature has you saving more than you'll need. In that case it seems to me that a much higher percentage of equities is reasonable since there isn't that shorter time horizon when the money is needed.

If you're not going to spend the money, then it sounds like you're already rich... why take a risk with money you don't need and aren't going to use?

That's like worrying about what you're going to invest in after you win a lottery... you only need to get rich once.... if you have a lifetime supply of money, I'd probably be overly conservative with the money rather than overly aggressive.

What about those of us who aren't rich, but have other sources of retirement income? And a "normal" amount in the 401K/IRA. Still play conservative with it?

I'm aware of your situation as read through numerous posts. And I gotta be honest, I really don't know what I'd do if I were you. Your real estate game seems like a very solid idea... it's just not for me.. I don't understand the real estate game, I don't like the effort involved to do it, and I certainly don't know how to factor that into a portfolio.

My response would be of no value to you because it would purely be speculation. I think I can only adequately advise someone who has a pretty traditional job and deals with ira/401k/hsa types of government tax advantaged accounts... and who deals mostly with stock/bonds... the only real estate i understand are REITs.. and i don't invest in them anymore due to not understanding them as well as I should.

You fund an IRA? Traditional? Back door Roth?

back door roths for myself and wife

With a stated goal of early retirement, what % of your $ are you comfortable having in retirement accounts? Something you even consider?

Retirement accounts make up over 60% of my current net worth. Home is 2nd at 20% the last 20% is a spackling of cash, cash management accounts, property

I'd never put much thought into what percent i was comfortable with.

Basically I put as much as the government allows towards retirement 401k + match, 2 backdoor roths, HSA (i consider that a retirement account in many ways even if I use some of it now), and any additional savings... then live meagerly on the rest.

I was just curious. If you're sitting there in your early 50s staring at total assets that should allow you to retire, but 80% is in retirement accounts and your house, are you going to be able to do it? It wasn't something I had considered much until recently. Now I find myself wanting to put more and more outside retirement accounts just to be safe.

I've read numerous posts on this board and in various articles about loopholes to access your retirement funds early... as early as 55 If I recall correctly.

 

[dino259]

wilked> Those bond % seem high compared to the 10% in the Vanguard 2040/2045 plans (I'm 39). If you were using one of these targeted funds, would you set aside some % off the top into a bond fund? I'm essentially 100% equities but have been actively researching an updated allocation.

Vanguard's target funds are more aggressive than I am comfortable with (if I were to choose based simply on date).

The best thing is to look under the hood and pick a fund that matches the Asset Allocation you are comfortable with

You can use this tool to put an asset allocation in and backtest it. I like to look at what largest yearly loss is, and see if I could stomach it leading into retirement

https://www.portfoliovisualizer.com/backtest-asset-class-allocation

Wilked, you know a lot about this, I don't recall if you do planning for other people or not. Do you generally consider yourself conservative when it relates to this?

 

[Tiger Fan]

The rule (or rules) of thumb about equity/bond asset allocation makes sense if you are planning to use most or all of your retirement savings in retirement. But what if you plan to exceed that amount? Perhaps you want to leave a nice inheritance or perhaps your generally frugal nature has you saving more than you'll need. In that case it seems to me that a much higher percentage of equities is reasonable since there isn't that shorter time horizon when the money is needed.

If you're not going to spend the money, then it sounds like you're already rich... why take a risk with money you don't need and aren't going to use?

That's like worrying about what you're going to invest in after you win a lottery... you only need to get rich once.... if you have a lifetime supply of money, I'd probably be overly conservative with the money rather than overly aggressive.

What about those of us who aren't rich, but have other sources of retirement income? And a "normal" amount in the 401K/IRA. Still play conservative with it?

I'm aware of your situation as read through numerous posts. And I gotta be honest, I really don't know what I'd do if I were you. Your real estate game seems like a very solid idea... it's just not for me.. I don't understand the real estate game, I don't like the effort involved to do it, and I certainly don't know how to factor that into a portfolio.

My response would be of no value to you because it would purely be speculation. I think I can only adequately advise someone who has a pretty traditional job and deals with ira/401k/hsa types of government tax advantaged accounts... and who deals mostly with stock/bonds... the only real estate i understand are REITs.. and i don't invest in them anymore due to not understanding them as well as I should.

You fund an IRA? Traditional? Back door Roth?

back door roths for myself and wife

With a stated goal of early retirement, what % of your $ are you comfortable having in retirement accounts? Something you even consider?

Retirement accounts make up over 60% of my current net worth. Home is 2nd at 20% the last 20% is a spackling of cash, cash management accounts, property

I'd never put much thought into what percent i was comfortable with.

Basically I put as much as the government allows towards retirement 401k + match, 2 backdoor roths, HSA (i consider that a retirement account in many ways even if I use some of it now), and any additional savings... then live meagerly on the rest.

I was just curious. If you're sitting there in your early 50s staring at total assets that should allow you to retire, but 80% is in retirement accounts and your house, are you going to be able to do it? It wasn't something I had considered much until recently. Now I find myself wanting to put more and more outside retirement accounts just to be safe.

I've read numerous posts on this board and in various articles about loopholes to access your retirement funds early... as early as 55 If I recall correctly.

http://www.401khelpcenter.com/401k_education/Early_Dist_Options.html#.VqftuZorJhE

Leaving Your Job On or After Age 55

The age 59½ distribution rule says any 401k participant may begin to withdraw money from his or her plan after reaching the age of 59½ without having to pay a 10 percent early withdrawal penalty.

There is an exception to that rule, however, which allows an employee who retires, quits or is fired at age 55 to withdraw without penalty from their 401k (the "rule of 55"). There are three key points early retirees need to know.

First, this exception applies if you leave your job at any time during the calendar year in which you turn 55, or later, according to IRS Publication 575.

Second, if you still have money in the plan of a former employer and assuming you weren't at least age 55 when you left that employer, you'll have to wait until age 59½ to start taking withdrawals without penalty. Better yet, get any old 401k's rolled into your current 401k before you retire from your current job so that you will have access to these funds penalty free.

Third, this exception only applies to funds withdrawn from a 401k. IRAs operate until different rules, so if you retire and roll money into an IRA from your 401k before age 59½, you will lose this exception on those dollars.

 

[Bob Sacamano]

Sure, but who wants to wait until 55?

 

[Tiger Fan]

Sure, but who wants to wait until 55?

that's why it's important to maximize roths/backdoor roths where you can. pull out principal penalty free whenever. While not ideal to pull out, it's a good risk mitigation plan.

 

[FUBAR]

Sure, but who wants to wait until 55?

that's why it's important to maximize roths/backdoor roths where you can. pull out principal penalty free whenever. While not ideal to pull out, it's a good risk mitigation plan.

I tried that and failed. Four kids later...

 

[lod01]

Ok for the average guy that doesn't pay attention, that may be the way to go. I'm over 50 and 100% equities or in cash like now. You do have to pay attention.

curious, if the market were to tank, how would paying attention help? you saying you'd know when to pull out before the tank actually happens?

Unless you believe it will never come back, who cares if it tanks. My objective is to lose less than the buy and hold guys on the way down and make the same on the way back up.

You look at the S&P max chart: http://finance.yahoo.com/echarts?s=%5EGSPC+Interactive#symbol=%5EGSPC;range=my

It's not easy to determine if the market is going to tank but I have a pretty good idea. For example, I watch the DOW transports because that is pretty much a signal of problems to come. It was right again. Doesn't mean some weird event could happen out of the blue but usually with something like that, the market will snap right back. I sold in August, bought back in for the EOY rally and I sold on the 30th of Dec. when the 'santa claus' rally did not materialize. The tougher part is knowing how bad the selloff is going to be. I pay way more attention to what is going on that the average person. The housing bubble was so damn obvious for instance. In 2005 I told friends that it was going to be epic. I mean come on, who gives out a loan for more than the value of the house AND the house is already 3x more than it's worth. Once the #### hit the fan, I knew that market would be destroyed and it would be a buying opp. of a lifetime. I try and pick off 1-2% here and there to beat the market. Sometimes I'm right, sometimes I'm wrong but as long as I beat the market, I will keep doing it.

Even after 2 of the biggest bubbles in history, the market came back. It took 7 years after the Internet bubble and 6 years after the housing bubble and these are WORST case scenarios. Looking at a normal recession, July 1990 – Mar 1991, the market hit new highs in 8 months.

btw, we a re really overdue for a recession but the signs are not there right now.

 

[wilked]

wilked> Those bond % seem high compared to the 10% in the Vanguard 2040/2045 plans (I'm 39). If you were using one of these targeted funds, would you set aside some % off the top into a bond fund? I'm essentially 100% equities but have been actively researching an updated allocation.

Vanguard's target funds are more aggressive than I am comfortable with (if I were to choose based simply on date).

The best thing is to look under the hood and pick a fund that matches the Asset Allocation you are comfortable with

You can use this tool to put an asset allocation in and backtest it. I like to look at what largest yearly loss is, and see if I could stomach it leading into retirement

https://www.portfoliovisualizer.com/backtest-asset-class-allocation

Wilked, you know a lot about this, I don't recall if you do planning for other people or not. Do you generally consider yourself conservative when it relates to this?

I do planning for my wife, myself, and kids. Have helped with parents and in-laws though

I am conservative compared to the cowboys at this site, where everyone seems to be 100% equities and each has an angle they believe no one else on Wall St knows about. My go-to financial site is www.bogleheads.org, and compared to that site I would say I am either in-line or slightly more aggressive. It just depends upon your measuring stick.

Compared to lots of authors I trust (Malkiel, B Graham, Bogle, Bernstein) I think I am just about in the middle

 

[wilked]

If you believe those are the worst case scenarios I would suggest you are limiting yourself to a very narrow view of economics. Here's one counterpoint

http://www.thedigeratilife.com/images/nikkei-chart-mint-large.png

 

[IC FBGCav]

One last thing please, these are my bond options. Go with High Yield? I figured short term was a no go.

Columbia High Yield Bond Fund ©

Columbia Intermediate Bond Fund ©

Columbia Short Term Bond Fund ©

What are your expense ratios? Also, you might want to do a review of all your investment expense ratios. High ERs will be a serious drag to your portfolio.High yield bonds come with high risk, there is no free lunch. Are those really your only three options? If they are you might consider 1/3 to each, assuming the ERs are relatively low

https://www.sponsorportal.com/SponsorsPortal/index.cfm?nfc&custno=f1fc5413-fc23-4593-94a9-7288aa905ab9&plan=8135&sortby=name

Ratios are in link.

 

[wilked]

Either you have the wrong link or you are mixing something up.

What I see in the link is various returns (1 yr, 5 yr, etc). What you want are expense ratios, something like this (see arrow)

http://cbsnews1.cbsistatic.com/hub/i/r/2013/07/29/077dc7bf-1c4e-11e3-9918-005056850598/thumbnail/620x350/942babd6637e8aa5f7cfbb0829ffa5bd/Screen_Shot_2013-07-29_at_8.18.35_AM.png

edit to add: I see them now

I almost threw up

1.6-1.8% ERs. That is about as bad as it gets.

Are those really your only options?

Final edit - FatJerry, imagine if this 401k provider reached into 'About-to-retire' FatJerry's pocket and took 1/3 of his retirement. That is what your 401k company is doing to you and fellow employees

Take an hour and watch this http://www.pbs.org/wgbh/frontline/film/retirement-gamble/if you haven't (the reason this thread was started)