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I think I am roughly 50-60% allocated in stocks. At age 75 it is time to keep the volatility down.
At ages 72/63, we are 86% stocks. Rest is short/medium term bonds and cash.
We have 5 years of withdrawals covered by the bond/cash positions.
I am comfortable with mix.
At ages 72/63, we are 86% stocks. Rest is short/medium term bonds and cash.
We have 5 years of withdrawals covered by the bond/cash positions.
I am comfortable with mix.
Yeehaw! Grow that portfolio! With a horizon extending another 20 or more years, especially for your wife, this should work out quite well.
We just refinanced with 2.5 until my husband retires. The rate dropped to 2.5 for a 30 and there were goals we had I was working OT to meet. We were able to give our daughter 80000 so she could own her own home and start building herself. We were getting taxed pretty heavily on that money. It allowed us to meet all those goals and now we don't need extra money so I can max out our TSPs and get the money back out at a lower tax rate when we retire. The PI is only 950 a month which brings our grand total to 2200 a month all fixed expenses. The ability to max out those retirement accounts will allow us to have enough to draw out right up to that higher tax bracket of 105000+2600 (both over 65)+5400 (nontaxable portion of SS)=113000. Subtract 15000 for fed/state and we have way more disposable income than we ever had working.
It freaks my husband out that we only had 7 years left and now we have 30 but he was OK with it when I showed him the math.
I am surprised you think I made a mistake cutting my stock allocation due to Covid. I am several years older than you and had a high stock allocation, about twice your level. It seemed time to back off on the risk. When I sold some of my stock funds, the market had already dropped quite a bit but it was still easy to back off without serious losses. I converted some of my TIAA stock and allocated funds to a short term bond fund that had also taken quite a dump in value. So I sold low but bought low. The short term bond fund recovered nicely. Now it is back to flat but I have no plans to return to a high stock allocation. I have not done an analysis but I think I am roughly 50-60% allocated in stocks. At age 75 it is time to keep the volatility down.
Not exactly the conversation we had ..it had nothing to do with age and everything to do with your fear of covid that made you reduce down as you said this time is different …those were Your words.
You may have bought back but that Was still an emotional change to sell .
You would never have reduced based on age if markets were still up back then
We just refinanced with 2.5 until my husband retires. The rate dropped to 2.5 for a 30 and there were goals we had I was working OT to meet. We were able to give our daughter 80000 so she could own her own home and start building herself. We were getting taxed pretty heavily on that money. It allowed us to meet all those goals and now we don't need extra money so I can max out our TSPs and get the money back out at a lower tax rate when we retire. The PI is only 950 a month which brings our grand total to 2200 a month all fixed expenses. The ability to max out those retirement accounts will allow us to have enough to draw out right up to that higher tax bracket of 105000+2600 (both over 65)+5400 (nontaxable portion of SS)=113000. Subtract 15000 for fed/state and we have way more disposable income than we ever had working.
It freaks my husband out that we only had 7 years left and now we have 30 but he was OK with it when I showed him the math.
Taking on an extra $80,000.00 in debt would freak me out since the increase didn't come with a corresponding increase in home equity. Yeah I see the math working out but I also see pitfalls in that as well. It is lucky you have pension income to soften the blow should the housing market tank. The other aspect that bothers me is you are paying interest on money you borrowed to give to your daughter. Your daughter will benefit as that money becomes the equity upon which she can stabilize her finances. While your example will work for you it isn't quite as lucrative as you think. In my math while you might gain on the stock market, your costs to gain there comes at a cost of interest paid and the tax rebate is a poor return on that.
You may have bought back but that Was still an emotional change to sell .
You would never have reduced based on age if markets were still up back then
Sure it is difficult, if not impossible to avoid emotional responses when making financial and other important decisions. I do think the outcomes to the economy and the stock market were exceptional. Covid, should and would have had a huge impact had the Federal government not propped up the economy with trillions of dollars. I am not convinced we have passed the crisis relatively unscathed. Emotionally or logically I would not want to predict where the economy is headed. I am quite content to be under 60% equity.
Even at 60%, I think I am about twice the allocation you have chosen and advocate. Unfortunately age is indeed catching up with me. I never felt old until the past couple of years. Now the aches, pains, and auto immune disease are taking a toll. My most recent cardiac test results were also very discouraging. I am starting to face reality. Calculators give me about 10 years to live, but my health issues are probably worse than average.
Expenses have also impacted my thinking. We bought a house to share with my daughter and her family. That worked well for several years but just before Covid, they moved into their own house. Not counting the converted oversized double garage and the semi-finished basement, we are paying for a 3500 sf house in an expensive neighborhood. We plan to stay and to do so we will be spending down our portfolio at well beyond 4%.
Anyway, you might want to realize you don't have the facts when you look at someone's decisions.
Sure it is difficult, if not impossible to avoid emotional responses when making financial and other important decisions. I do think the outcomes to the economy and the stock market were exceptional. Covid, should and would have had a huge impact had the Federal government not propped up the economy with trillions of dollars. I am not convinced we have passed the crisis relatively unscathed. Emotionally or logically I would not want to predict where the economy is headed. I am quite content to be under 60% equity.
Even at 60%, I think I am about twice the allocation you have chosen and advocate. Unfortunately age is indeed catching up with me. I never felt old until the past couple of years. Now the aches, pains, and auto immune disease are taking a toll. My most recent cardiac test results were also very discouraging. I am starting to face reality. Calculators give me about 10 years to live, but my health issues are probably worse than average.
Expenses have also impacted my thinking. We bought a house to share with my daughter and her family. That worked well for several years but just before Covid, they moved into their own house. Not counting the converted oversized double garage and the semi-finished basement, we are paying for a 3500 sf house in an expensive neighborhood. We plan to stay and to do so we will be spending down our portfolio at well beyond 4%.
Anyway, you might want to realize you don't have the facts when you look at someone's decisions.
I don’t advocate allocations for anyone ever ….only myself ….why would I tell someone what allocation they should be .. I never say that .
What I do is present different choices in portfolios for conservative investors or research from the brightest minds on the planet as far as what they are suggesting in retirement planning .
So yes , you answered your own question about emotional investing . It can’t be avoided ..,markets only work because each of us have different emotions about fear , greed and perception of what we are buying.. there is always some emotion driving us even if it is to force ourselves to avoid doing a thing
.... there is always some emotion driving us even if it is to force ourselves to avoid doing a thing
Your statements are baffling. First you claim to be looking at the opinions of the greatest minds but then you find that your decisions are driven by emotion. I guess you are wasting your time looking at the opinions of the experts.
Not what I said at all …your interpretation is incorrect .
Following something like kitces research on the red zone for example has nothing to do with emotion ..it is based on data and facts and numbers crunching .
No researcher I post tells you what to buy or when to sell
On the other hand what you decide to own , your personal allocation , what you sell , are all guided by emotion one way or another. .
In fact emotion has me accumulating the inflation oriented assets I am buying to ride along side my portfolio .
So following the advice in the red zone is very different than what you do to accomplish that glide path…
It is no different than the math behind a safe withdrawal rate ..that is purely math ..
How you invest and what ,when and how you accomplish that will have emotions involved as far as what you buy , adding money ,selling investments ,etc
As much as you want to to find fault you are off base here
Last edited by mathjak107; 06-18-2021 at 06:59 AM..
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