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No one talks about inflation,how many believe we will always have 2% inflation?
With us slapping sanctions left and right ,our goods and services could all be higher in the future.
Mexico>it is not a big country like China and labor skills is subpar.
And we all know SS cost of living adjustment is barely enough,and thats an exageration
the idea is to keep bettering yourself to stay ahead of the curve .
my thing starting as a teen was learning to invest the little bits i could save and get as powerful compounding as i could on it for as long as i could .
those who really want to to stay ahead will find a way .the rest will just find an excuse.
Not to be too personal, but your budgeted phone costs seem awfully high. $435/month? Is that the best plan you can get wherever you are? Or is that a business expense of your side gig maybe? It just stands out to me.
No one talks about inflation,how many believe we will always have 2% inflation?
With us slapping sanctions left and right ,our goods and services could all be higher in the future.
Mexico>it is not a big country like China and labor skills is subpar.
And we all know SS cost of living adjustment is barely enough,and thats an exaggeration
Proper planning for retirement does not count on a 2% inflation rate - it is based on the long term market rate betting the long term inflation rate. As a matter of fact the average inflation rate over the last 90 years is about 3.3% and over the last 30 years is 2.5% - market return is close to 9.9% over the last 30 years - a 60/40 portfolio returned just under 8% per year over the last 30 years. The compounding of the difference means that savings can cover retirement if done correctly.
As far as SS - it keeps up with its index with a lag, that lag impacts more when the inflation is high. The reality is that index also doesn't match senior's typical goods very well either.
actually modern day retirement planning is based on getting thru the worst times we have had to date .
what made these time frames the worst ?
what made them the worst is the fact in every single retirement time frame the outcome of that 30 year period was determined not by what happened over the 30 years but the entire outcome was decided in the first 15 years.
..
so lets look at the first 15 years in those time frames determined to be the worst we ever had.
..
1907--- stocks minus 1.47%---- bonds minus .39%-- rebalanced minus .70% ---inflation 1.64%
.
1937---stocks -- 3.45%---bonds minus 3.07%-- rebalanced 1.23%--inflation 2.82%
.
1966-stocks minus .13%--bonds 1.08%--rebalanced .64%-- inflation 5.38%
it is those 15 year horrible time frames that the 4% safe withdrawal rate was born out of since you had to reduce from what could have been 6.50% as a swr down to just 4% to get through those worst of times.
for comparison the 30 year time frames were pretty average
the math behind the failures says we need to maintain a 2-1/2% real return the first 15 years of a 30 year retirement.
that will let us end 30 years but with very little left , so in practice for 4% inflation adjusted to hold you need more than 2-1/2% so that requires 35-40% equities for at least a 90% chance of not going broke to soon using conventional portfolios.
and that 35-40% equities is based on THE TOTAL LIQUID ASSET POOL , not the bits one may have in a retirement account so it includes all cash
No one talks about inflation,how many believe we will always have 2% inflation?
With us slapping sanctions left and right ,our goods and services could all be higher in the future.
Mexico>it is not a big country like China and labor skills is subpar.
And we all know SS cost of living adjustment is barely enough,and thats an exageration
no one talks about inflation?
retirement planning has always been based around inflation not sure where you come up with this stuff but the very basics of retirement planning include not only planning around inflation , but planning around the worst inflation we have had.
i suggest you learn what the term SAFE WITHDRAWAL RATE means
Last edited by mathjak107; 12-25-2023 at 05:07 AM..
Appreciate the input folks! Been busy with the holidays..
My plan does have a 3% inflation factor built into it and a 2% income escalator.. Won't be perfect, but maybe not horrible.
No interest in living in Costa Rica - not a bit LOL.. Italy now I'd go in a heart beat, but not the boss.. Nope
Phone cost is extremely high and due to the side gig, good eye BTW!!
And waiting to 70 to retire is not for me.. I'd like a few years of reasonably healthy life after work.. FWIW..One might survive into their 90's, but no one is gonna be having a whole lot of fun..
At the end of the day we can live very comfortably on the income, and I intend to work part time for at least three more years.. Might just work a little more part time and wait on SS for a couple more years.. We will see how it plays out.
Thankfully we are healthy (now) and have a plan.. We can pull the trigger when we decide.. Might just be June of 24..
Last edited by OldRook; 12-25-2023 at 06:04 AM..
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