Retirement goal changed due to inflation?

[AvidIndoorsman]

don't dare put your money in the market. or 1940, 1969, 1991, 2001, 2008, and my takeaway, 2022.

I'd still invest.

I'm just saying the average market performance from 1940-1970 can't be used to tell you how the SP500 index will do from 2022 -2060... inform sure

 

[hank4elk]

This ! You might be surprised how much more you can do, for a lot less, by living in some countries. I always loved new adventures and learning/living a different culture, so when he suggested it I was all in.

We started with 10 countries and narrowed it down to four --Spain, Malta, Ecuador, and Costa Rica. Costa Rica was a close second, but we settled on Spain. We sailed, fished, took trips to the other European countries, hunted ( mostly in Spain and Austria ), art classes, ran with the bulls ( o.k. we watched others run ) and sometimes just set, listening to good music ( not Kiss ) and drank wine What about family ? They loved visiting us

Good suggestion BuzzH

That's why Nuevo Mexico, Senora!
But mine can't find it.

 

[TOGIE]

I'd still invest.

I'm just saying the average market performance from 1940-1970 can't be used to tell you how the SP500 index will do from 2022 -2060... inform sure

Right. I mean pick your thirty years, wildly different results, but all quite good.

The exercise was more still to look at a tumultuous time and then look at it thirty years later. All were good choices

 

[VikingsGuy]

Right. I mean pick your thirty years, wildly different results, but all quite good.

The exercise was more still to look at a tumultuous time and then look at it thirty years later. All were good choices

In the end, there is no alternative - inflation destroys the value of cash - assets eventually rise - no proven way to time the markets.

 

[AlaskaHunter]

It's really interesting having this intergenerational retirement conversations. Obviously the mechanism that current 30 year olds use will be totally different than 65 year olds used, but the fundamentals are the same.

A question that I always have, probably also a good one for @SAJ-99 and @npaden are what have you seen as average real portfolio returns over 30 years. One of my biggest petpeeves is guys that use the historical growth of the market as a means of projecting portfolio performance.

How many people have actually been in an index fun for 40 years, probably almost no one, some peoples portfolios might mimic them still... likely big differences right?

I was pleasantly surprised how quickly my 401k recovered following the 2008 market crash.

 

[TheTone]

Just did the math; between my employer retirement account and my differed comp accounts I’m putting away about 21% of my gross pay each pay period. That seems good right? I do need to up my differed comps a little since I did get a raise

 

[SAJ-99]

I'd still invest.

I'm just saying the average market performance from 1940-1970 can't be used to tell you how the SP500 index will do from 2022 -2060... inform sure

You ask some great questions. The invention of mutual funds, and index funds, 401ks, etc over the last 50 yrs creates a constant bid under the market. Every 1st and 15th, people get paid and money flows to investment companies.

Regarding using the past to infer the future, I agree it has problems, but what else do you have? 1940-1970 was post war second industrial revolution. 1980-2000 growth financialization and beginning of tech and personal computing boom. Every period is different and predicting the future is hard. And try to find a financial advisor that doesn’t use past returns as some basis to make you feel better about letting him/her watch over your money, for a small fee of course.

 

[VikingsGuy]

Just did the math; between my employer retirement account and my differed comp accounts I’m putting away about 21% of my gross pay each pay period. That seems good right? I do need to up my differed comps a little since I did get a raise

In the most general terms, yes that is good. Specifics like age, years to retirement, desired income at retirement, second income in the household, defined benefits plan, income to debt ratio, home equity status, investment strategy, the existence of adequate emergency savings separate from retirement savings, are you soc. sec eligible, do you get post-retirement med coverage, how many kids under age of 25, your view on future inflation rates, and your view on future investment returns all have to be hashed out to get a real sense of where you are.

 

[VikingsGuy]

And try to find a financial advisor that doesn’t use past returns as some basis to make you feel better about letting him/her watch over your money, for a small fee of course.

FWIW, I am of the view that 98% of Americans don't need money managers and are better off using broad-based low load index funds (think Vanguard). The top 2% (about $5million not including home equity) have enough financial complexity and net worth to receive some benefit from a top-notch advisor and some clever tax management approaches.

 

[Nameless Range]

Then there are a number of ways to retire. How to pick?

- Cold turkey. In the office today, retired tomorrow and fishing by 8 am. I hope you have health insurance figured out! Lets say work until 60.
- Half way. Drop to part time in your current job. Possibly retain health insurance. In theory, you could go this route earlier, but then have to remain part time employed longer. Start this at 57 but have to work until 63.
- Quit the current job and do something fun. Work at a gun or sporting goods store or whatever trips your trigger. Would that really be a job? Gives you some spending money, maybe a good discount, and keeps you active.

Part of it is luck or blessing or privilege or whatever and not available to all, but why not shoot for a job that "trips your trigger" in your 30s and ride that out? Having had jobs that felt like jobs and having had jobs that did not, I'll take that latter for as long as I can, though I suppose it may lend itself to short-sightedness where retirement is hard to think about. A part of this perspective or question comes from knowing folks who worked until the wheels fell off or still are working well past the typical retirement age, and they seem incredibly content in their lives, and life without hustle, without productivity, isn't really life to them. It's not clear to me that this perspective is any worse than pouring a significant amount of thought and money into planning for some threshold where one's "work" is over.

Not the point of the OP and not at all intending to hijack. This is a struggle in my own mind as to what perspective one should have about work and retirement and savings that would have the most utility in a world that I suspect will be insanely different in 25 years when I am "retirement age".

 

[Randi]

In the most general terms, yes that is good. Specifics like age, years to retirement, desired income at retirement, second income in the household, defined benefits plan, income to debt ratio, home equity status, investment strategy, the existence of adequate emergency savings separate from retirement savings, are you soc. sec eligible, do you get post-retirement med coverage, how many kids under age of 25, your view on future inflation rates, and your view on future investment returns all have to be hashed out to get a real sense of where you are.

Yeah--little things like that ! I agree, but your post did make me smile, but you are correct

My father was going through an investment strategy with me on some extra money that had came my way. When he was done he ask my grandfather if he had anything to add. He said, dont forget to spend some of your money enjoying life and making memories, they are worth a fortune when you are my age.

 

[TN2shot07]

Part of it is luck or blessing or privilege or whatever and not available to all, but why not shoot for a job that "trips your trigger" in your 30s and ride that out? Having had jobs that felt like jobs and having had jobs that did not, I'll take that latter for as long as I can, though I suppose it may lend itself to short-sightedness where retirement is hard to think about. A part of this perspective or question comes from knowing folks who worked until the wheels fell off or still are working well past the typical retirement age, and they seem incredibly content in their lives, and life without hustle, without productivity, isn't really life to them. It's not clear to me that this perspective is any worse than pouring a significant amount of thought and money into planning for some threshold where one's "work" is over.

Not the point of the OP and not at all intending to hijack. This is a struggle in my own mind as to what perspective one should have about work and retirement and savings that would have the most utility in a world that I suspect will be insanely different in 25 years when I am "retirement age".

I think the real goal is to find that “sweet spot” where you are able to use whatever God given abilities/talents you have to earn a decent living. There are enough career tracts in America that people can earn a good living, enjoy their work (most days), and save for retirement. It does often take coming to reality that lifestyle has to be reconciled to your bank account. Like you said, there are people take the highest earning opportunity with an end goal in mind but that can also be tough.

 

[VikingsGuy]

Part of it is luck or blessing or privilege or whatever and not available to all, but why not shoot for a job that "trips your trigger" in your 30s and ride that out? Having had jobs that felt like jobs and having had jobs that did not, I'll take that latter for as long as I can, though I suppose it may lend itself to short-sightedness where retirement is hard to think about. A part of this perspective or question comes from knowing folks who worked until the wheels fell off or still are working well past the typical retirement age, and they seem incredibly content in their lives, and life without hustle, without productivity, isn't really life to them. It's not clear to me that this perspective is any worse than pouring a significant amount of thought and money into planning for some threshold where one's "work" is over.

Not the point of the OP and not at all intending to hijack. This is a struggle in my own mind as to what perspective one should have about work and retirement and savings that would have the most utility in a world that I suspect will be insanely different in 25 years when I am "retirement age".

I have had jobs I liked and jobs I hated. That rarely was the decider on whether I stayed or moved. For me, it is about my family. What is the aggregate best outcome for my wife, kids, and closest family? Sometimes that aligned with my like/hate and sometimes it didn't, but as I approach retirement I wouldn't change a thing. The aggregate well-being of my family is in the end my highest value - of course, my happiness/misery is part of that, but it can't be the only one.

At times I have stayed in a job I hated because it allowed my wife to stay in one she loved. I have passed on huge financial opportunities to be present as my father was nearing his death. I stayed in a job I hated for the immediate need of one of my teens and then found out I actually really like the job (after a leadership change). I am no martyr - these are just where my values are - and for me, values come before FIRE.

I have seen colleagues move their kid across the country on the eve of their senior year for a 15% raise - maybe an ok choice for some kids, but a disaster for others. I have seen folks take their "dream job" far away from their aging parents and regret it after they pass.

Maybe it is a generational thing, maybe it is a hunting forum thing, but I am surprised at how often the dialog is "me and I" focused. Life is short and it is best lived with others in mind, whether working or retired. YMMV.

 

[Deleted member 16014]

Part of it is luck or blessing or privilege or whatever and not available to all, but why not shoot for a job that "trips your trigger" in your 30s and ride that out? Having had jobs that felt like jobs and having had jobs that did not, I'll take that latter for as long as I can, though I suppose it may lend itself to short-sightedness where retirement is hard to think about. A part of this perspective or question comes from knowing folks who worked until the wheels fell off or still are working well past the typical retirement age, and they seem incredibly content in their lives, and life without hustle, without productivity, isn't really life to them. It's not clear to me that this perspective is any worse than pouring a significant amount of thought and money into planning for some threshold where one's "work" is over.

Not the point of the OP and not at all intending to hijack. This is a struggle in my own mind as to what perspective one should have about work and retirement and savings that would have the most utility in a world that I suspect will be insanely different in 25 years when I am "retirement age".

Given how different the world may look in 25 years, and that happiness is often a function of expectations vs reality…I think building toward near maximum flexibility is an attractive (though vague) concept.

 

[Nameless Range]

I have had jobs I liked and jobs I hated. That rarely was the decider on whether I stayed or moved. For me, it is about my family. What is the aggregate best outcome for my wife, kids, and closet family? Sometimes that aligned with my like/hate and sometimes it didn't, but as I approach retirement I wouldn't change a thing. The aggregate well-being of my family is in the end my highest value - of course, my happiness/misery is part of that, but it can't be the only one.

At times I have stayed in a job I hated because it allowed my wife to stay in one she loved. I have passed on huge financial opportunities to be present as my father was nearing his death. I stayed in a job I hated for the immediate need of one of my teens and then found out I actually really like the job (after a leadership change). I am no martyr - these are just where my values are - and for me, values come before FIRE.

I have seen colleagues move their kid across the country on the eve of their senior year for a 15% raise - maybe an ok choice for some kids, but a disaster for others. I have seen folks take their "dream job" far away from their aging parents and regret it after they pass.

Maybe it is a generational thing, maybe it is a hunting forum thing, but I am surprised at how often the dialog is "me and I" focused. Life is short and it is best lived with others in mind, whether working or retired. YMMV.

This is a lot of good insight. Though, I believe that "me and I" is inseparable from the "others in mind" we may be working for, particularly if you live with them. I have been the one with a job I hated, and I have been the one married to the one who hated their job and I have been the son of a parent who disliked their work. Those things fuel the mindset where I find myself antagonistic to ever working a job one dislikes for very long.

I feel obligated to say that so much of it is luck and circumstance and privilege and that whether or not a person loves their work or not, people doing what they gotta do for their families, whether to their own detriment or not, will always be one of the highest virtues.

Anyway, as someone relatively clueless, these retirement threads and the information shared within them are helpful.

 

[AvidIndoorsman]

FWIW, I am of the view that 98% of Americans don't need money managers and are better off using broad-based low load index funds (think Vanguard). The top 2% (about $5million not including home equity) have enough financial complexity and net worth to receive some benefit from a top-notch advisor and some clever tax management approaches.

Esp if you're just using retirement accounts 401k + roth... also a lot of the new investing apps have tax loss harvesting algorithms.

 

[brocksw]

Given how different the world may look in 25 years, and that happiness is often a function of expectations vs reality…I think building toward near maximum flexibility is an attractive (though vague) concept.

This hits home with me and in my opinion is great advice. Lots of uncertainty and presumably, more volatility in the future. We're going to witness some big transitions in major industries in the next couple decades. Transportation, energy/natural resources, tech, just to name a couple. My wife and I each have work retirements, roth vanguard funds, I have a personal trade account, and real estate investments. My thinking in doing all of this was exactly what you highlight, maximum flexibility. Not just with the diversity in type of investments, but also multiple levels of cash flow/payout options along with some of the tax advantages (if you play correctly) that come with real estate.

 

[SAJ-99]

This hits home with me and in my opinion is great advice. Lots of uncertainty and presumably, more volatility in the future. My wife and I each have work retirements, roth vanguard funds, I have a personal trade account, and real estate investments. My thinking in doing all of this was exactly what you highlight, maximum flexibility. Not just with the diversity in type of investments, but also multiple levels of cash flow/payout options along with some of the tax advantages (if you play correctly) that come with real estate.

The latest talk (bipartisan idea) is to make default option in 401k annuities. I will give you three guesses on the big supporters of this idea -the first two don't count and the answer rhymes with assurance. That option looks a lot like a DB plan. It makes your future cash flow projects more stable. Politicians love the idea because it drives the concept of certainty, or at least less uncertainty. Underneath it really doesn't of course, because certain risk can't be eliminated, only transferred. When inflation jumps to 10% every retiree will be looking for a part-time job, but whatever.

 

[AvidIndoorsman]

The latest talk (bipartisan idea) is to make default option in 401k annuities. I will give you three guesses on the big supporters of this idea -the first two don't count and the answer rhymes with assurance. That option looks a lot like a DB plan. It makes your future cash flow projects more stable. Politicians love the idea because it drives the concept of certainty, or at least less uncertainty. Underneath it really doesn't of course, because certain risk can't be eliminated, only transferred. When inflation jumps to 10% every retiree will be looking for a part-time job, but whatever.

Oh lord... and I thought the default target date funds sucked

 

[brocksw]

The latest talk (bipartisan idea) is to make default option in 401k annuities. I will give you three guesses on the big supporters of this idea -the first two don't count and the answer rhymes with assurance. That option looks a lot like a DB plan. It makes your future cash flow projects more stable. Politicians love the idea because it drives the concept of certainty, or at least less uncertainty. Underneath it really doesn't of course, because certain risk can't be eliminated, only transferred. When inflation jumps to 10% every retiree will be looking for a part-time job, but whatever.

If the politicians are behind it, I'm already skeptical.