Money in the bank vs paying down/off the mortgage (social security, coverage)
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Is 2.5% really paying interest when a person factors in inflation? Lol Right or wrong that's how my mind works.
Leaving some sort of legacy for my daughter was mostly what I had earmarked that TSP money for. I hadn't looked at it as income generating before. The difference in tax is between being in the 15% bracket or 22% ( for now). I look at it s s spreading out the taxes and utility of the money ( as a whole). I'm justifying being able to do something or my daughter that at one time was only a dream by saying I have savings to back that up. She's getting some of it now while its useful to her at 24 rather than waiting until she's in her 60s and gets an inheritance.
I get people that would rather have their mortgage paid. I don't think it matters either way.
Don't get me wrong. You are okay doing it how you did but you have the underwritten resource should things go a bit sour. I gave my daughter $80k over the last 3 years in helping her buy her first home and for getting married. I am all for helping our children, especially daughters (LOL since I have only one child).
I do understand the workings of how it can be lucrative. I just don't like going into debt if I can help it. It is a personal preference. My wife and I worked out what our income was and how best to maximize what we had while speculating on one side and banking on the other we managed to get to retire at 60 for her and 58 for me and still manage to grow our wealth.
I guess that I fall into the optimist camp. I'm planning on another 20-25 years
Ha, I guess I hope for that myself. I thought mathjak was talking about longer term than that, though when referencing riding through the ups and downs of the market.
We still would have to to three decades of investing time which as you saw in my example smooths out to an almost risk free return ..you just have volatility not risk ..they are quite different
For others it is a brilliant way of entering retirement and instead of shedding equities like you did emotionally ,you actually go higher over time once the danger zone passes.
...
Your logic is baffling. You are years into retirement with, what? a 35% allocation. You think that makes sense because you are afraid of losing a nickel. Meanwhile I was running about 75% equities and cut back to about 50-60% because of the Covid risks and you think that made no sense but was just emotion.
Your logic is baffling. You are years into retirement with, what? a 35% allocation. You think that makes sense because you are afraid of losing a nickel. Meanwhile I was running about 75% equities and cut back to about 50-60% because of the Covid risks and you think that made no sense but was just emotion.
I am not afraid of losing a nickel , I don’t need to have a higher equity level 35-40% works fine, I don’t need the volatility anymore of higher equity levels …the dollar changes at higher equity levels are insane on multiple 7 figure portfolios …… our real estate made all the money we need for a lifetime. I don’t need to deal with 50k changes or more in a day
If i remember correctly you were lower than that when you bailed.. I think you told me you were about 40-50 or maybe lower
Last edited by mathjak107; 06-18-2021 at 01:12 PM..
It wasn't about decades of retirement though. It was about decades of riding out ups and downs of the market.
If one retires at age 65 and believes they will live to age 95, that's 3 decades. Some retire younger than 60, some retire at 50. People are living longer with all the advances in medicine and science. A 35-year retirement is not rare.
It takes growth on one's investments to cover the full retirement horizon for most people.
If one retires at age 65 and believes they will live to age 95, that's 3 decades. Some retire younger than 60, some retire at 50. People are living longer with all the advances in medicine and science. A 35-year retirement is not rare.
It takes growth on one's investments to cover the full retirement horizon for most people.
OK, that really wasn't my point, but as I already said, perhaps I misunderstood mathjak's post.
Yes, people are living longer, we all know that. Yes, people may have 20, 30 or more years of retirement, we all know that. Unclear as to why everyone is leaping up and yelling that as if it's not a given in this forum. I am almost 63. Retired five years ago. Hope to live a couple of decades myself.
But during those, say 30 years, do people who are retired and not working have the ability to withstand fluctuations in the market that could make a huge difference in how much their investments are worth?
I was, as I already said, under the impression that mathjak's point about time, specifically DECADES, being necessary to withstand market fluctuations referred to investments BEFORE RETIREMENT while one was building their retirement fund, not investments during retirement.
The long term money in retirement is not being spent down for decades so that portion is like the money we had pre retirement when all that applied to it was the average return .
So that money can certainly be invested in a comfortable equity level because odds are almost certain by the time you are up to it , it will have grown nicely
Last edited by mathjak107; 06-18-2021 at 02:30 PM..
For someone who uses a bucket system picture they have
7 years of safe money in cash instruments or annuities .
Another 7 years of bonds of all types , perhaps reit income funds , strategic income funds , etc .
And the rest in a long term bucket going out from 15 years to decades .
That bucket can be all equities
While it would take us out 15 years before we had to sell stock .
in practice you would be refilling the cash and bond buckets when stocks were up so in reality you would likely never be selling stocks at a loss assuming diversified funds and not individual stocks which come with different risks
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