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Retirement funds are different for everyone. I know one poster on the ERF that said he needs 30k a year for travel. Well that will make it hard for many to retire if you need that much for travel. What it takes for Robert Redford to retire on and two people living in Missouri to retire in a paid for 3/2 is very different. You have to sort out those who come here to boast or crow about how much they have or need, the Bull crap from the real people looking for answers.
If the interest rates were not so artificially low I could do very well at 5 percent.
Lets say you have a million bucks cash and a home paid for at 55. You put that million to work in a CD at 5 percent and your making 50k a year no house payment. 90 percent of the population can survive nicely on that. No your not going to take trips down to see the Titanic wreck but you can have a good life. If you want to drive a Tesla or BMW and travel at 500 dollar a night hotels you not going to have enough.
Interest is going to go up. This is the worry that is tanking the market right now. Its the elephant in the room.
Interest going up is actually good for a large sector of the economy. If a lot of elderly people can invest into fixed income instruments and get a solid monthly return, they will buy cars, trips and other things they are now not buying.
The only reason the market is doing so well is because there is nothing else to put your dollar into. As far as how much you need to retire that depends on your spending habits. If you keep up with the Jones then you will need much more than if your like the millionaire next door type. I drive a Nissan, the cheapest one I could buy. It gets great MPG, has an excellent service record and is rated as one of the highest cars for bang for the buck. So why do I need a Tesla or BMW so people I don't care about can point and say "look at that butt hole in the Tsla"
Keep it simple. You can have a nice life on a lot less if you do this. Look for value in homes. Get it paid for. Keep it paid for. I know people who during one of the bull markets in the 90s took out equity loan on a paid for home to buy into stocks. My feeling is get your home paid for, keep it paid for and never worry about the snow bank. All this crap about "but I can deduct the interest from my income tax. " So what. If you have a home paid for look for a rental to buy. Right now is the time to buy rentals in good markets. I bought one in Ft. Myers Fla and its paying me about 8% return after I pay all the insurance and dues. Its went up in value about 30 percent since I bought at the bottom. Once you get a piece of real estate get it paid for and don't mortgage it ever.
Live on 50 percent of what you bring in if you can. Don't live past what you earn if at all possible. Save for the rainy day mentality is best.
I don't have the facts. For the past 10 years and a 60/40 or 50/50 mix, do you know what the return rate actually averaged? As much time as you spend on investments, I would hope your return was way over 2%.
Going forward I would like to see a decent 3-4% over inflation. Of course that means not doing stupid things like over investing in bonds as interest rates increase and not over investing in stocks in their is a major correction.
think going forward , forget the past.... we are talking this moment on. from right now for maybe the next decade i see 2% pretty much a struggle for a diversified mix of equities and bonds.
again, with bond and cash instruments negative the weight is huge.stocks are fairly valued to a little over vlued so we need lots of growth to offest things and personally i don't know if it will happen . i rather set my sights lower for planning as i am retiring very soon.
do you think retirees are going high equity positions? i doubt it . even if one had very high equity positions and little bonds they may still be barley higher than 13 years ago if they were indexing ..
I am retired and have little problem with a pretty high equity position. Right now I see the stock market as fickle but pretty secure. It is the bond market that concerns me. Interest rates will increase and bonds will drop. There will also be another financial crisis of some sort related to the mortgage market. Basically all mortgages are now at ridiculously low long term rates. There will be a crisis or correction of some sort and I would like to understand that better. I also do not understand the effects of QE. That seems to be partly driving the stock market.
So rather than wring my hands about some future investment issues it seems better to invest wisely meaning buy low and sell high rather just invest and let it ride. Personally I have not decided where I am going with my investments. That is one reason I have started to pay attention to investment advice and forums. I certainly think we are not in a good position to move money back and forth between stocks and bonds. Instead I am prepared to pull a large amount of my nest egg and put it into cash with no risk and no return. I suspect it is getting close to time to be cautious...but then that stock market just keeps humming and more and more unwise investors are investing. Maybe we still have another year or so of solid returns.
think about this. at the historical average of 5% interest if markets fell 10% in 2 years your were whole again ready to forge ahead. how many years now would you need to be whole again from your interest.
I see your point but I guess neither of us has the hard facts on what happened to those investors who let their investments ride without intervention for the past 10 years. I suppose the net would indeed be 2% or probably less. Of course many investors did much worse since they panic sold at the bottom of the market when I was starting to reinvest.
BTW, I seem to remember you were big on photography. Are you still shooting? I don't post much on the internet anymore, but I did start a webpage that I need to work on: www.specialplacesphoto.com Next weekend I am going with a group to the Rhinebeck aerodome. That will be shooting something totally different than what I normally shoot.
we will talk via d/m , my wife and i are avid photographers sitting here planning out the summer photoshoots and are looking for places to go . we just got back from the roses at brooklyn botanical so i have loads of photos to deal with today.
The inflation-adjusted-safe-withdrawal-rate approach mentioned earlier in this thread has been widely criticized and discredited, and should probably be thought of as more or less meaningless as a guide to the future.
Rather than rely on this kind of obsolete thinking, read a monograph titled "The Ages of the Investor: A Critical Look at Life-cycle Investing" by William J. Bernstein, @ 2012 -- available through Amazon (and other places) at a low price, something like $12.
it is funny how you mention the inflation adjusted safe with-drawal rate being meaningless yet it agrees with bill bernsteins data exactley.
bill says without equities ,tips ,short term bonds and the use later on of immeadiate annuities can create a pretty bullet proof 3% withdrawal rate . 4% is dicey and 5% good luck.
that is just what the trinity data shows as well as firecalcs conclusion...
I see your point but I guess neither of us has the hard facts on what happened to those investors who let their investments ride without intervention for the past 10 years. I suppose the net would indeed be 2% or probably less. Of course many investors did much worse since they panic sold at the bottom of the market when I was starting to reinvest.
I am one of those investors who let my investments ride the stock market from 1997 to 2012. However, during most of that time I kept adding money from every paycheck into my 401k.
My account value is up about 620% since March of 2000, and up about 60% since October of 2007. The bear market from October 2007 to March 2009 hurt me the hardest. I didn't know to get out of the stock market and raise cash back then. The market went down 56%. Ouch. But next time will be different. Live and learn.
Last edited by BigCityDreamer; 06-01-2013 at 02:41 PM..
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