I'd also probably show them this chart, and they'd promptly sell all of their stock for cash during a 51% drawdown. https://darrowwealthmanagement.com/wp-content/uploads/2020/04/History_of_20_Drawdowns-SP.png
In fairness, for the financially literate, the biggest retirement risk is sequence of return risk. When the market's in the tank, with this year being the worst-ever for a 60/40 portfolio, then the probability increases that near-term returns (5 years) will be normal or good. In other words, sequence of return risk is lessened. And there's a reason I would never try to be a financial advisor, because I lack empathy and would just tell them the above 😉
This isn't going to be a popular tip, but you can just travel internationally for healthcare as needed. Example: LASIK is $8,000-$10,000 in the US. A week in Cancun at a luxury hotel including flights for 2 will cost you about $2,000. Lasik in Cancun cost me $800 (both eyes). You'd end up $5,000 ahead, and much more if you travel solo and skip the luxury hotel. Then you could try a cash pay doctor for the US.
While it won't reconcile exactly with your travel account, the IRS-standard $0.50/mile is a useful rule of thumb for your car costs, which include insurance and depreciation, not just gasoline. For 7,000 miles, that's $3,500, not just the $1,000 in gas.
The problem with lifestyle creep is that if you avoid it you can just retire. Let's say you're making $60K/year at your first software engineering job, and you're spending $30K and saving $30K (50% savings rate). You're 17 years away from retirement, according to MMM. When your pay increases to $100K, you keep saving 50%, so now you have an extra $20K to spend ($50K - $30K) each year. Awesome! But if you don't spend that money, and keep living off of $30K a year, you'd have a 70% savings rate. With a 70% savings rate, you can retire in 8.5 years -- nearly half the time! Yeah, lifestyle creep is actually awful, sorry Luke.
As a PT, I should mention that the rate of injury in racket sports is really low compared to most other sports, especially running. That said, seniors often have bad posture and/or rotator cuff injuries, so I'd definitely recommend some thoracic extension exercise and strength training for the back and rotator cuff as preventive measures.
Yes, that's my actual budget. Very few people should aim to pay off student loans aggressively when there is income-based payment available, and remote workers can cut housing and transportation way back.
Comments:
I'd also probably show them this chart, and they'd promptly sell all of their stock for cash during a 51% drawdown. https://darrowwealthmanagement.com/wp-content/uploads/2020/04/History_of_20_Drawdowns-SP.png
Post: How About a Tutu?
Link to comment from November 28, 2022
In fairness, for the financially literate, the biggest retirement risk is sequence of return risk. When the market's in the tank, with this year being the worst-ever for a 60/40 portfolio, then the probability increases that near-term returns (5 years) will be normal or good. In other words, sequence of return risk is lessened. And there's a reason I would never try to be a financial advisor, because I lack empathy and would just tell them the above 😉
Post: How About a Tutu?
Link to comment from November 28, 2022
It seemed pretty bad before too, "johny." Ever heard of Europe? Lol. No one fears dying because they got fired.
Post: On My Own—But Not
Link to comment from November 28, 2022
This isn't going to be a popular tip, but you can just travel internationally for healthcare as needed. Example: LASIK is $8,000-$10,000 in the US. A week in Cancun at a luxury hotel including flights for 2 will cost you about $2,000. Lasik in Cancun cost me $800 (both eyes). You'd end up $5,000 ahead, and much more if you travel solo and skip the luxury hotel. Then you could try a cash pay doctor for the US.
Post: On My Own—But Not
Link to comment from November 28, 2022
While it won't reconcile exactly with your travel account, the IRS-standard $0.50/mile is a useful rule of thumb for your car costs, which include insurance and depreciation, not just gasoline. For 7,000 miles, that's $3,500, not just the $1,000 in gas.
Post: America the Drivable
Link to comment from November 28, 2022
Who wants to work for 37 years until retirement with a 20% savings rate? That doesn't sound great to me.
Post: Go Ahead, Spend It
Link to comment from November 28, 2022
The problem with lifestyle creep is that if you avoid it you can just retire. Let's say you're making $60K/year at your first software engineering job, and you're spending $30K and saving $30K (50% savings rate). You're 17 years away from retirement, according to MMM. When your pay increases to $100K, you keep saving 50%, so now you have an extra $20K to spend ($50K - $30K) each year. Awesome! But if you don't spend that money, and keep living off of $30K a year, you'd have a 70% savings rate. With a 70% savings rate, you can retire in 8.5 years -- nearly half the time! Yeah, lifestyle creep is actually awful, sorry Luke.
Post: Go Ahead, Spend It
Link to comment from November 28, 2022
As a PT, I should mention that the rate of injury in racket sports is really low compared to most other sports, especially running. That said, seniors often have bad posture and/or rotator cuff injuries, so I'd definitely recommend some thoracic extension exercise and strength training for the back and rotator cuff as preventive measures.
Post: 1,000 Days at a Time
Link to comment from November 9, 2022
I'd recommend these allocations:
- Housing and utilities: 5%
- Student loan payments: 0%
- Transportation: 0%
- Discretionary expenses: 10%
- Additions to savings: 85%
Yes, that's my actual budget. Very few people should aim to pay off student loans aggressively when there is income-based payment available, and remote workers can cut housing and transportation way back.Post: Better Than a Budget
Link to comment from November 4, 2022
Arguably, the 2 funds for life strategy from Merriman addresses Kevin's "holes" while being even simpler than the 3 funds strategy.
Post: Own It All
Link to comment from November 4, 2022