What's worse than lottery tickets?

[syke6]

@iampops5

Which means you kept 3 years’ worth of money in underperforming cash which is also a drag on returns. True?

I’m not a fan of holding lots of cash. If you have standard balanced portfolio (80/20 or whatever your number is) in that event normal rebalancing rules say you would selling the bond portion anyway to bring your portfolio back into balance. Other than keeping enough cash on hand to pay for irregular expenses (e.g. water heater goes out, car needs new struts, etc.) I don’t really hold much cash.

In a practical sense, what I would probably do in that situation is just start taking SS.

[MoneySlob]

@darrellquock

I will designate the SS as travel funds. You only get one shot at your 60s. Enjoy the money while you still have your health.

On retiring you have the:
Gogo years
Goslow years
Nogo years
OhOh years

¯_(ツ)_/¯

[intercst]

@MarkR

And the math (actuarial and probability and risk) tells us that for the vast majority of such people, it is better to spend your savings and take the social security later. Basically, it’s stating that it is better to take a guaranteed level annual 8%, inflation adjusted, tax deferred, no-fee, return for 8 years (age 62 to 70) than to invest in some variable return, taxable, not necessarily inflation adjusted, with fees, investment for those 8 years.

Saying someone should deny themselves gratification now in return for gratification in the future is an entirely different discussion (heck, it’s the very basis of saving for retirement!). And the age at which denied gratification should end is also another discussion.

I started reading the Society of Actuaries magazine shortly after I quit working in 1994 at age 38.

https://www.soa.org/future-actuaries/affiliate/us/?utm_source=google&utm_medium=paid_search&utm_campaign=domestic_us&utm_term=brand&gad_source=1&gclid=CjwKCAiAudG5BhAREiwAWMlSjOqkv9wVqL8NrFtvqoAxya6bgnHoYOUSA4gd4Awnky6f5FiqYRkHChoCvLsQAvD_BwE

There I learned all the ways the health insurance industry is trying to screw with you, and that delaying Social Security to age 70 is effectively allowing you to 'buy" an inflation-adjusted life annuity at as little as half the price a commercial insurer would charge for the same increase in your monthly benefit from age 62 to age 70 depending on interest rates at the time . I’ve saved hundreds of thousands of dollars over the past 30 years with this knowledge.

The only thing that was more useful was that 3-day Investment Philosophy course I took as an 18-yr-old Freshman in engineering school. The gist of it was that stock brokers, mutual fund salesmen, insurance agents, and estate planning lawyers weren’t going to do much to help you, and to “Never pay a load”. (At the time, way back in 1975, a mutual fund purchase typically came with a 5% to 8% commission to the salesmen, though if you looked hard enough there were a few direct investment firms that eliminated the load.)

Obviously, as an 18-year-old freshman with a growing student loan balance, I had no money to invest. But by the time I paid off my student loans at age 25 and started putting 25% of my gross salary into the stock market, I had the knowledge to avoid most of the mistakes people make by dealing with “investment professionals”. Rather than lose a decade or two of compounding to excessive fees and commissions before recognizing I was getting screwed, I hit the ground running with super low fees averaging around 2 or 3 basis points. If you’re paying the 2% of assets per year that Wall Street’s business model demands, you need to save twice as much money for retirement.

The 2% Rule for Retirement Savings

intercst