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Like Verizon Media, our partners may also show you ads that they think match your interests. Rob March 6, , am. Another brilliant MMM post.
Nothing, of course, is guaranteed. That why we all need to remain flexible, alert and, well, Mustachian. Not only will we muddle thru, it is my belief we are on the verge of another great bull market. For lots of reasons, not the least of which is simply these things go in cycles.
People always seem to believe the world will end on their watch. But it never does. It is the dark that sets the stage for the dawn. There are lots of adjustments I can make and options to explore. And we have to put up with a lot of shit for delivering such heretical statements. But we will persist in documenting it even as we continue to prosper ourselves. Stay tuned! Shawn May 29, , am. Often I find myself asking how can the machine keep functioning?? Peak oil on the horizon etc???
Were some of our elders thinking in the same vein years ago??
The world keeps adapting and it always has. There may be some bumps here and there. What we are dealing with these days IS different.
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But it was different then too! On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us? BeyondtheWrap May 30, , pm. Perhaps the principle that things tend to return to equilibrium if they are out of balance. Guitarist May 29, , am.
I only hope everyone is as pessimistic about the market. Be a contrarian. The market gaining steam actually hurts more then helps in my case. Short term predictions, like the balance of this year, are far more difficult and no one really knows. Step 1: Make a prediction for a huge short-term swing. Spet 2: Document the time and date you made it. Step 6: Clear your schedule for media interviews. Shilpan May 29, , pm. Most pundits know nothing more than average Joe when it comes to future market swings.
Dodging Chicken Wings May 29, , am. Matt May 29, , pm. Say you own 1 share of each of two stocks, A and B. The total rate of return is the same for both stocks. Dividends are nice in that you get regular payments without having to sell anything similar to holding a bond or a rental property. This was also a topic here on MMM awhile back. Joe May 29, , am. Frugal Toque May 29, , pm. Lily August 9, , pm. With health insurance quite up in the air, especially for people with pre-existing conditions, it is wise to research the protections for your assets in the case of a medical-bill-caused bankruptcy.
It seems that ks have greater legal protections than IRAs from creditors, and, at least in the state of California, house equity is not sufficiently protected in a bankruptcy for those of us that own our homes outright. Also, when I had a recent bout of cancer and had to apply to be a charity patient at the hospital, my retirement accounts did not count as assets that were available to pay my medical bills.
Another consideration: When you fill out FAFSA for financial aid for your children to get grants for college, your retirement accounts will not be considered as assets to be used for college, but savings and brokerage accounts will be counted, and you will receive less financial aid. So I basically had an emotional attachment but never realized it. I will say, there is a rational argument for keeping with the tax-advantaged contributions: if your employer offers any kind of matching e. Unless you have a hugely disproportionate amount of your portfolio in the tax-advantaged accounts e.
Mike May 30, , pm. In any event, when you retire, you can roll your K into a Traditional IRA and have full control over it. Ken May 3, , pm.
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Dragline May 29, , am. Jamesqf May 29, , am. Tyler May 29, , pm. However, I agree totally on how someone in real life will adjust their life accordingly with the economy and beat most any retirement calculator projection. Money Mustache May 29, , pm.
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Instead, take a failing year portfolio, and see how many dollars per month of extra income or reduced spending — same thing , until its probability of success equals that of the year portfolio. Also, note that there is some funny business in there — the range of stock market data available to Firecalc is limited, so there is a much smaller number of testable 60 year periods — the most recent one beginning in or so.
What I said still holds true — when amortizing away any chunk of money, the difference between 30 years and infinity is pretty small. Tyler May 30, , pm. Or it could be an artifact of the Firecalc sample size. Kristi May 29, , pm. Wow, what a lot of outside the box thinking you and your readers are doing. Makes me wish I were thirty something again.
Just kidding! Here is a link to the article by Jonathan Guyton that we first saw in the Journal of financial planning, March One must be careful of using specific data sets that lead them to confirmation bias. I understand we have a number of readers from countries other than the US. For example, our theoretical retiree in enjoyed an astounding Our retiree faced a difficult future with high valuations and rising inflation causing a 3. This is a difference of 3 times the spending capacity from the same nest egg simply because of the date you retired! No, that is not a misprint — 1.
What this means is retirees have serious cause for concern when you consider a healthy couple at 65 has decent odds of one spouse outliving the 30 year lifespan assumption and none of the models thus far include administrative or transaction fees both of these issues are explained in detail below, and they both lower the safe withdrawal rate even further. Suffice it to say, is a tough year to begin retirement.
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Lesson Learned:Safe withdrawal rates vary with market valuations, interest rates, and inflation at the time your begin retirement. This connects to the previous lesson because valuations are a strong indicator of subsequent year investment performance.
When you put these two facts together you have a dynamic model that is more accurate and can be adjusted based on your actual retirement situation. He applied a research methodology similar to Bengen but with the critical change of using historical international data instead of U. The results were alarmingly different.
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You could have run out of money before you ran out of life using the conventional assumptions on foreign country data. Basing your retirement expectation on results from U. It is overoptimistic. This can be proven either by comparing U.
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They both point to the same conclusion — if you bet your retirement on becoming the prom queen you stand a good chance of being disappointed. With the above stated, I believe one of the key requirements as MMM has referred to in earlier posts is flexibility. One can always take a paid position for short periods of time or cut back on expenditures during terms of market turmoil large downturns that may happen early on in retirement , this will insure that your capital with be sufficient over long periods of time.
Dragline May 29, , pm.