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Old 01-15-2016, 07:11 AM
 
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it depends . if we wait until 70 for social security pension makes up 15% , social security 40% , our own investing makes up the rest
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Old 01-15-2016, 07:51 AM
 
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I think Democrat presidential candidate Bernie Sanders says it the best:


https://www.youtube.com/watch?v=c4e9yiuKAmY
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Old 01-15-2016, 07:57 AM
 
Location: Wasilla, AK
7,256 posts, read 4,143,320 times
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Quote:
Originally Posted by PCALMike View Post
I think Democrat presidential candidate Bernie Sanders says it the best:


https://www.youtube.com/watch?v=c4e9yiuKAmY
Sounds wonderful...if you didn't plan for your future. Guess who's going to pay for it all. This is just another pie-in-the-sky promise with no mention of how we will pay for it or who will pay for it. We are $19 trillion dollars in debt and we're just digging the hole deeper and deeper. There will come a day when we will have to pay the piper.
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Old 01-15-2016, 08:02 AM
 
29,782 posts, read 34,871,258 times
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Quote:
Originally Posted by Escort Rider View Post
Of course the more we save the better for the mutual fund industry. Any discussion of income replacement in terms of percentages is almost meaningless because everything is relative. A person earning minimum wage really needs 100% income replacement, but on those wages that's a near impossibility. A person earning $200,000 a year can live a relatively opulent and lavish life in retirement on 50% income replacement, even if that represents a cut-back in spending.

Your statement about the pension covering "most likely....about 15-25% income" puzzles me; if people have worked a normal length career, say 35 years give or take, then the pension is likely to provide much more than that.
A major Bada Bing!
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Old 01-15-2016, 08:10 AM
 
12,843 posts, read 4,648,158 times
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Quote:
Originally Posted by AlaskaErik View Post
Sounds wonderful...if you didn't plan for your future. Guess who's going to pay for it all. This is just another pie-in-the-sky promise with no mention of how we will pay for it or who will pay for it. We are $19 trillion dollars in debt and we're just digging the hole deeper and deeper. There will come a day when we will have to pay the piper.
That is a 30 second ad so it was just a summary, but here he lays out the SS situation in more detail:


https://www.youtube.com/watch?v=FAcv7g3O_iM
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Old 01-15-2016, 08:16 AM
 
7,925 posts, read 5,042,332 times
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Quote:
Originally Posted by Larry Siegel View Post
If you're too terrified to look, you shouldn't in equities.

A quarter century of behavioral finance demonstrates that, if we have a major bear market, you'll sell all or most of your equities when the S&P crosses 1500. Then you won't get back in until it reaches 3000 sometime in the next decade. That amounts to giving away half your money.

Buy and hold both equities and bonds (index funds) for the very long run, and don't trade. Just use newly saved money as a rebalancing tool to a 50-50 portfolio. Anything riskier will cause too much pain when the market falls.

I don't give this advice to everybody but I do give it to naturally conservative investors who don't think it's OK to lose money once in a while. (I am one.)
I've seen the same studies, and I've been around long enough to remember the crash of 1987. I never sell. Ever. Well, that's not entirely true; I sold a bit of NASDAQ holdings in the spring of 2000. But I held on throughout 2007-2009.

But there's an enormous difference between having the fortitude to remain invested, and being able to emotionally withstand it. I won't sell, because I've seen enough oscillations to avoid the mistake of mistiming the market, but neither will I be able to sleep soundly. The more money that I have, the worse I feel. The larger my portfolio, the more powerless I feel.

What this retirement crisis/no-crisis discussion fails to capture is the psychology of the problem. The more theoretically comfortable we might be, in terms of net-worth... the more terrified we become, of losing it all. If this year we had 100,000% inflation and consequently I were to lose everything, I'd feel... relieved. Maybe the solution is to move to Zimbabwe?

And by the way, if it's "sometime in the next decade" that the S&P 500 finally reaches 3000 – call it 2025 – then it will have risen from a high of 2100 in 2015, by an annualized 3.6 percent. And with the year 2000 as our baseline, the annualized gain over the ensuing 25 years will have been 2.8 percent. If that prediction holds, we won't just have a retirement crisis. We'll have a global economic catastrophe.

Or perhaps you mean, "if the S&P 500 finally reaches 3000 before the present decade is out"?
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Old 01-15-2016, 10:06 AM
 
Location: Central Massachusetts
4,800 posts, read 4,848,939 times
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Quote:
Originally Posted by ohio_peasant View Post
I've seen the same studies, and I've been around long enough to remember the crash of 1987. I never sell. Ever. Well, that's not entirely true; I sold a bit of NASDAQ holdings in the spring of 2000. But I held on throughout 2007-2009.

But there's an enormous difference between having the fortitude to remain invested, and being able to emotionally withstand it. I won't sell, because I've seen enough oscillations to avoid the mistake of mistiming the market, but neither will I be able to sleep soundly. The more money that I have, the worse I feel. The larger my portfolio, the more powerless I feel.

What this retirement crisis/no-crisis discussion fails to capture is the psychology of the problem. The more theoretically comfortable we might be, in terms of net-worth... the more terrified we become, of losing it all. If this year we had 100,000% inflation and consequently I were to lose everything, I'd feel... relieved. Maybe the solution is to move to Zimbabwe?

And by the way, if it's "sometime in the next decade" that the S&P 500 finally reaches 3000 – call it 2025 – then it will have risen from a high of 2100 in 2015, by an annualized 3.6 percent. And with the year 2000 as our baseline, the annualized gain over the ensuing 25 years will have been 2.8 percent. If that prediction holds, we won't just have a retirement crisis. We'll have a global economic catastrophe.

Or perhaps you mean, "if the S&P 500 finally reaches 3000 before the present decade is out"?

Just a point here. If the S&P reaches 3000 before the decade those percentages that you put out of 3.6 percent per year mean absolutely nothing in terms of even an index fund based on that index. There are rules inside each fund on how much cash is kept and how much of any one stock that fund manager buys. All you are looking at when you see the index rise is the combined price share of the stocks within that index. That does not include dividends and payouts as well as purchases made when the stock itself was low.

People can look at the indexes NASDAQ, DOW, and whatever and get a general idea if their portfolio of mutual funds has gained or lost value for that day. The smart ones if they are invested properly and have some liquidity with their funds should buy additional shares if they can while the market drops. I am not saying change your systematic deposits. Just buy additional if you can while the market is lower.
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Old 01-15-2016, 10:32 AM
 
Location: SoCal
13,229 posts, read 6,335,450 times
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Quote:
Originally Posted by Escort Rider View Post
Of course the more we save the better for the mutual fund industry. Any discussion of income replacement in terms of percentages is almost meaningless because everything is relative. A person earning minimum wage really needs 100% income replacement, but on those wages that's a near impossibility. A person earning $200,000 a year can live a relatively opulent and lavish life in retirement on 50% income replacement, even if that represents a cut-back in spending.

Your statement about the pension covering "most likely....about 15-25% income" puzzles me; if people have worked a normal length career, say 35 years give or take, then the pension is likely to provide much more than that.
It's not for people with 35 years at the state or federal employers. My sister worked at one company for 7 years, 1/5 of the 35 years and she only got $200 a month when she retires. If you multiply that to 5 it would be $1000 per month. Not a huge amount, certainly not 70% of her pre retirement income. But she's lucky to have that pension. She's certainly is not relying solely on that amount. She did save like crazy, so she has a nice 401k account, and she also has rental income, and social security.
My husband works at one place for 6 years that will give him $560 per month, again just 1/7 of 35 years, not replacing 70%, far from it. He is still considered lucky to get this pension, it helps him purchase health insurance.
I think it's best to look at your expense and see what you need, not just following the 70% rule.
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Old 01-15-2016, 10:36 AM
 
Location: Albuquerque NM
1,660 posts, read 1,525,919 times
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Quote:
Originally Posted by golfingduo View Post
People can look at the indexes NASDAQ, DOW, and whatever and get a general idea if their portfolio of mutual funds has gained or lost value for that day. The smart ones if they are invested properly and have some liquidity with their funds should buy additional shares if they can while the market drops. I am not saying change your systematic deposits. Just buy additional if you can while the market is lower.
So if I could interject a quick question about rebalancing and/or taking advantage of market drops. I have my 401k contributions going into equity index funds and am getting ready to fund my Roth IRA and HSA for 2016 while the market is down. My 401k was at 60/40 asset allocation equities/stable value (2 years from retirement) until the recent market drop but is probably down some in equities (I try not to look because I also have problems sleeping at night if I see the actual drop). At this point do you rebalance to 60/40 while the market is down, perhaps move 5-10% of the stable value into equities at a time, or move most of the stable value into equities (I probably would not do this because I'm risk adverse)? Or do you just buy additional shares with new contributions and funding of Roth and HSA and rebalance at some later predefined time? The dividing line between "staying the course" and "playing the market" has always been a little fuzzy to me.

My 401K will fund about 25% of my retirement, all discretionary funding. It's important but not the bulk of my retirement.

Last edited by ABQ2015; 01-15-2016 at 10:46 AM..
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Old 01-15-2016, 10:44 AM
 
7,925 posts, read 5,042,332 times
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Quote:
Originally Posted by golfingduo View Post
There are rules inside each fund on how much cash is kept and how much of any one stock that fund manager buys. All you are looking at when you see the index rise is the combined price share of the stocks within that index. That does not include dividends and payouts as well as purchases made when the stock itself was low.
Yes, there are caveats. But other than dividends, my index-funds' annual return tracks that of the "official" indices remarkably accurately. Daily fluctuations can differ.

Quote:
Originally Posted by golfingduo View Post
The smart ones if they are invested properly and have some liquidity with their funds should buy additional shares if they can while the market drops. I am not saying change your systematic deposits. Just buy additional if you can while the market is lower.
Part of the confusion, I think, is that we're assuming that most people neatly fall into one of two categories:

1. Retirees or near-retirees, who have a large ratio of portfolio-to-income, and don't have enough future-earnings to cover sharp losses in their portfolio. They can buy on the dips, but it's not going to make a large impact on their overall portfolio. But that's OK, because being older, they are less exposed to the stock market.

2. Younger people who have decades of future earnings from which to recoup any portfolio losses, because their ratio of portfolio-to-earnings is not so large, and their biggest asset is their own future earning-potential.

Well, there is a third category: an amalgamation of the above two. This would be middle-aged people who don't retire for several more decades, and yet, who have such a large ratio of portfolio to annual salary, that they can't possibly recoup losses – even over the course of fanatical savings and deft buying on the dip. These folks are stuck. They can't go all-cash, because they have maybe another 50 years to live, and consequently need the compounding that only equities can provide. But neither can they save their way to recouping of losses.

Who are these people? Maybe 1990s dot-com millionaires who sold their stock-options just in time, and have spent the past 15 years working as say community-college adjunct professors.
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