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Now that we’re in the preservation stage of our lives we’ve moved a considerable amount into CDs. When we were in the accumulation phase we just rode out the downs. Honestly, we really didn’t watch it as closely as we do now. We still have money in a couple of funds and will not touch them. Hopefully, by the time we need them they will be in great shape. But, we have to sleep at night. And the only way for us to do that is not losing any principal. I know others will say we are losing more in the end, or inflation will eat the little we are making, but we’re ok with it. And, that’s all that matters.
We already planned for this scenario. We are letting the 401K ride, since we are taking 0% draw from investments at this point anyway. This is the one area where no debt, low COL and delayed SS has really helped us. If the market comes back, good. If not, well, nobody said retirement would be safe; just less hassle than working.
Now that we’re in the preservation stage of our lives we’ve moved a considerable amount into CDs. When we were in the accumulation phase we just rode out the downs. Honestly, we really didn’t watch it as closely as we do now. We still have money in a couple of funds and will not touch them. Hopefully, by the time we need them they will be in great shape. But, we have to sleep at night. And the only way for us to do that is not losing any principal. I know others will say we are losing more in the end, or inflation will eat the little we are making, but we’re ok with it. And, that’s all that matters.
This is so true. Yes, you miss out on gains but what if we go into a long bear market and you have to wait for a recovery to get your money without taking a loss. It helps a lot if someone has a stable, consistent pension and SS to ride it out. Pensions are getting fewer and fewer so having a liquid stash of cash is critical in retirement in my opinion. YMMV
a safe withdrawal rate is already based on outcomes far worse then this . we have not had anything as bad as the out comes a 4% safe withdrawal rate is based on since the 1960's .
you really need and should do nothing , most of all trying to time things in and out . .
why ? if you miss the biggest gains by being out it can seriously effect the success rate of the money left .
it is very difficult to be out for the losses because all the biggest drops come when stocks are making new highs and things look fine .
all the biggest gains come from the depths of stock market hell . few get both right .
so as bogle said , best results are always " don't just do something -stand there "
This is so true. Yes, you miss out on gains but what if we go into a long bear market and you have to wait for a recovery to get your money without taking a loss. It helps a lot if someone has a stable, consistent pension and SS to ride it out. Pensions are getting fewer and fewer so having a liquid stash of cash is critical in retirement in my opinion. YMMV
I should have added that we do not have pensions. We only have SS and our investments/savings. Many with pensions (and SS) have more than enough to cover their expenses. They can afford to ride out the bad years. We, though, have to count on our savings and therefore have different investment strategies to consider.
huh ????? when it comes to a safe withdrawal rate it has nothing to do with the amount .. no matter what the amount as an example , a 50/50 mix will have enough in bonds at 4% inflation adjusted draws to support more then a decade. the only thing that changes is the draw amount . success rate stays the same .
4% of a million has the same success rate as 4% of 200k . the bonds portion should last just as long in both . only difference is the draw amounts .
but what does change is the draw based on allocation . if you go below 40% equities you need to take a pay cut .
Last edited by mathjak107; 12-22-2018 at 07:32 AM..
people have to keep things in perspective too . it is like more aggressive models fell from balances that were so much higher that even in the worst drop would they still likely would be a head of the more conservative models .
with the 17-22% drop from the highs the markets had depending on index , the difference ytd between the fidelity insight 100% equity growth model and the 21% equity conservative income model , is the 100% equity model is down just 4.40% more .
but that is down to a balance , that the conservative model would still have not seen in the best year .
While I have no doubt that what you have said is correct, there is no way of predicting whether or not that will continue in the future. My opinion is that you do need to have some in high growth stocks but as you get older and have less time to recover from downturns, you also need some of your portfolio in cash or bonds...in the long run, yes you almost certainly will be better if you stay in the market.
We have a checking account with Oregon Community Credit Union. We have about $20,000 in the account. At this point they Guarantee 1.35% as long as you meet certain conditions. It's a pretty good deal, but I'm not sure how long they can maintain that. I'm thrilled with a positive gain at this point.
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