Retirement Goal

sid
Posts: 1277
Joined: Sat Dec 02, 2006 11:44 am

Re: Retirement Goal

Post by sid »

nathan61 wrote:
> It depends when you are buying into the market, and what your timeline
> looks like. Were I going to retire in five years I would not be that
> excited about putting money into stocks right now. Past performance does
> not predict future success. I am a very careful type, and to me a well
> balanced portfolio will include some rental income and physical assets,
> along with stocks/bonds. Of course brokers are going to tell you to put
> everything into the market.
If you’re hoping to retire in 5 years, I hope you’ve put money somewhere!
shadowjack
Posts: 2054
Joined: Sat Oct 06, 2012 9:49 am

Re: Retirement Goal

Post by shadowjack »

Hear hear Sid!

And if you are vested in a national retirement plan in a Western country, that improves your cash flow too. If you left right away and never contributed - then it's all on you...
jschott
Posts: 27
Joined: Sun Nov 13, 2016 4:31 pm

Re: Retirement Goal

Post by jschott »

mysharona wrote:
> We're starting our next phase with $1,500,000 and hope that the 4% rule
> holds true.

The 4% rule was created when bonds in a 60/40 portfolio actually yielded something. 2.5 to 3% is the new normal--if you're lucky.
Mike
Posts: 102
Joined: Wed Dec 06, 2006 2:18 am
Location: Europe

Re: Retirement Goal

Post by Mike »

if you are an American make sure you have your 40 credits for social security and more importantly medicare. sign up online and check those credits!!
Beg-1
Posts: 5
Joined: Mon Jun 03, 2019 11:29 am

Re: Retirement Goal

Post by Beg-1 »

[quote=jschott post_id=61088 time=1617999535 user_id=217818]
mysharona wrote:
> We're starting our next phase with $1,500,000 and hope that the 4% rule
> holds true.

The 4% rule was created when bonds in a 60/40 portfolio actually yielded something. 2.5 to 3% is the new normal--if you're lucky.
[/quote]

I'm wondering about this though. My conception of the 4% rule is that if you have 1.5 million, and you withdraw 4% a year, you will live with 60,000 USD a year for 25 years. So if you retire at 65, and your investments don't even return anything, you are still going to be 89 before you have no money, right?

And that's not taking into account that as the years go down you can surely whittle your budget down as you go as 60k seems like on the higher side of annual needs, you can also look to readjust your portfolio allocation, etc.
Psychometrika
Posts: 63
Joined: Sun Nov 20, 2016 10:08 pm

Re: Retirement Goal

Post by Psychometrika »

jschott wrote:
> mysharona wrote:
> > We're starting our next phase with $1,500,000 and hope that the 4% rule
> > holds true.
>
> The 4% rule was created when bonds in a 60/40 portfolio actually yielded something.
> 2.5 to 3% is the new normal--if you're lucky.

The author of the rule, Bill Bengen, raised it to 4.5% in 2006 and then to 5% in 2020 assuming a 50/50 split. Total returns determine the safe withdrawal rate not just bond yields.
Historically, the actual safe withdrawal rate ranged from 7 to 13%, so 4% is a fairly conservative guideline to start with. I could perhaps see going to 3% for an early retiree, but those arguing for lower assume some sort of financial dystopia in the future which is not really possible to plan around in any case in my opinion.
Beg-1
Posts: 5
Joined: Mon Jun 03, 2019 11:29 am

Re: Retirement Goal

Post by Beg-1 »

[quote=Mike post_id=61091 time=1618017704 user_id=227]
if you are an American make sure you have your 40 credits for social security and more importantly medicare. sign up online and check those credits!!
[/quote]

For real! I'm delivering Uber Eats right now (back in the States due to Covid) because last summer I did the check you speak of and saw I had like 39 or 39.5 credits. So I have to earn like 1,300 USD this year to get that 40th credit!

Some people say that it won't even be around in the future, but I'd rather be vested in the program and hope that something will work out. And also I know nothing of Medicare, but would rather be eligible than not lol.
sid
Posts: 1277
Joined: Sat Dec 02, 2006 11:44 am

Re: Retirement Goal

Post by sid »

The 4% rule is greatly debated. Basic premise: if you invest 40/60 and take out 4% in your first year of retirement, adjusting for inflation in following years, your portfolio has a 95% chance of lasting at least 30 years.
As pointed out, the original creator has upped it to 5% as recently as fall 2020, based on further research and data -.
Many variants abound, often put forward by someone trying to make their own fortune/reputation, so they have to say something slightly different so as to be seen as offering something.
Detractors also abound. Just this morning I saw an - using historical returns in different countries, rather than the US (the 4% rule was created on US historical returns), and claiming it doesn’t hold up internationally.
It may prove to be the best system, regardless, since it is at least something, a starting point.
Good luck everyone. We roll the dice, we take our chances.
sid
Posts: 1277
Joined: Sat Dec 02, 2006 11:44 am

Re: Retirement Goal

Post by sid »

Interesting. ISR has “edited” my post in two places to remove the word “a n a l y s i s”.

****************************************************************************************
ISR NOTE: I can assure you we did not edit your post. BEN @ ISR
fine dude
Posts: 590
Joined: Tue Dec 18, 2012 7:12 pm
Location: SE Asia

Re: Retirement Goal

Post by fine dude »

Are there any conservative folks who simply save their coin in the bank without investing in the stock market or property?
sid
Posts: 1277
Joined: Sat Dec 02, 2006 11:44 am

Re: Retirement Goal

Post by sid »

There are. They generally experience that their buying power declines over time due to inflation.
And if you want to harness the power of compounding returns, you won’t find it in a basic savings account.
buffalofan
Posts: 313
Joined: Wed Jan 06, 2010 11:08 pm

Re: Retirement Goal

Post by buffalofan »

Mike wrote:
> if you are an American make sure you have your 40 credits for social
> security and more importantly medicare. sign up online and check those
> credits!!

This is assuming you are American and intend to retire in the US. Since Medicare can't be used outside the US, it becomes much less important if you are retiring abroad in low cost of living country.

I also have 2 decade long gaps in SS contributions, and I expect this is pretty common for US expats. Yes I could go back to the US and be a wage slave for Uber to hit 40 credits like the above post. And if someone has 39 credits or something, then I get it. But with 24 credits currently, and the mere thought of returning to the USA making me physically sick, I'll take my chances with my private investments.
Heliotrope
Posts: 961
Joined: Sun May 13, 2018 1:48 am

Re: Retirement Goal

Post by Heliotrope »

Which low cost-countries are you all planning to retire in?
fine dude
Posts: 590
Joined: Tue Dec 18, 2012 7:12 pm
Location: SE Asia

Re: Retirement Goal

Post by fine dude »

Here is my shortlist:
Costa Rica, Ecuador, Spain (if my nest egg is big enough), Thailand, and Vietnam
Psychometrika
Posts: 63
Joined: Sun Nov 20, 2016 10:08 pm

Re: Retirement Goal

Post by Psychometrika »

fine dude wrote:
> Here is my shortlist:
> Costa Rica, Ecuador, Spain (if my nest egg is big enough), Thailand, and
> Vietnam

Good list. I'm also considering the Philippines, but SE Asia is my focus area with Thailand and Vietnam towards the top of the list.
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