I think retirees are much better off if they:
1) Develop a strong understanding of the math behind retirement models.
2) Ignore retirement guidance from experts and develop your own guidance.
Just like I ignore “financial experts” in the media. Keep in mind that these retirement guys have been trained with the same education as the financial experts. It’s too narrow minded. It’s faulty, just like “modern portfolio theory”.
Like I mentioned in an earlier post, plan as if you’re going to live for a million years and you need a growing portfolio. And BUILD A GROWING PORTFOLIO with LONG term in mind. Not this “it only needs to last for 30-40 years.”
In doing so, you avoid self limiting portfolio design. No bonds. No mutual funds. No CD ladders. Build for growth.
You’ll find out you don’t need to save as much as the retirement people will tell you……
Spend some time examining this “rule breaking” thinking. If you can figure it out, you’ll find it well worth your time.
small different point of view
- most people who reach retirement age are investors or not. Most are not. Developing that skill late in life is unlikely
- the market hasn’t had a major decline since the 1st quarter of 2009. Eventually it will. Going for growth in a 2% treasury world is great but some prudence is required too, esp. if the retiree lives on the income and has regular drawdowns - 99% do.
- at some point, you don’t want the mantra here to go too far, esp. when the vast majority who post are unverified success stores - there are plenty of good mutual funds which do well, bonds that fit specific time horizons and return goals, and CD ladders that at least provide stability. Most people are not stock pickers - I’m thrilled Saul has done well but there is a downside to his approach if we get any sort of drop - he’ll more than likely go down considerably more (no great shakes there) but he knows that but most investors, ESP. older ones, don’t handle volatility well.
- going into debt even at 4% when you are retired sounds like a poor decision for most; glad it has worked out for you, but again you’ve been investing in an absolutely charmed market environment
I think retirees are better off if they 1) get rid of 100% of their debt, 2) carefully budget for expenses and assume things are going to be more expensive than they are, 3) plan for declines in the market and design the portfolio accordingly, and 4) if they do manage their own portfolio, measure the performance accurately (hardly anyone does) and have a least one or two knowledgeable people give them a 2nd opinion on the approach and style. In my experience, maybe 1 in 1,000 retirees do this.
Ignore retirement guidance from experts and develop your own guidance.
I feel differently - you read ALL YOU CAN from experts - like this one:
And then you carefully consider whether you agree with what has been said. ‘Developing your own guidance’ sounds wonderful but many people will get infected with a bull market - know a guy on our neighborhood whose investing plan is not day trading options. I hope it works for him…