Wow, I’m really surprised! It’s amazing how persuasive a good advisor can be. I know people often overlook objective data, but I really thought that after you laid out the Boglehead approach and showed the returns, he would have made the switch to Vanguard. I guess sometimes familiarity and personal connections outweigh the numbers. Hopefully, he still ends up in a solid financial position—though as we know, some friendships can come with a hefty price tag!
Great summary and personal story about diet and exercise. I teach exercise science courses like wellness and a variety of nutrition courses at the university. You mentioned some good info and you are correct that lack of knowledge and misinformation is prevalent. Like the fianancial industry, the diet and fitness industry has made eating healthy and being active confusing to a large degree on purpose. One major problem I see is that people tend to choose a diet or exercise based on popularity or what is easiest and not on what is supported by research (ie, peer reviewed scientific studies).
Great discussion article! I would agree with you that running out of time vs. money will be the case for 99% of us. We can almost always find ways to make/get money, but all of us will eventually run out of time. I suggest adding a 3rd suggestion to your two above for improving one's use of time and that is to spend more $ in retirement or to pick a better withdrawal strategy, so one is not spending unnecessary time working longer or being too conservative. I feel this community and Bogleheads are overall very conservative with spending. Nothing wrong with this if leaving a nice nest egg behind is your goal or you are just really worried about running out of money in retirement, but I feel it can and oftentimes leads many, including myself at times, to either work more or not spend money on something of value (e.g., vacation, YMCA membership, etc.). I really like suggestion #2 (prioritizing efforts to maintain and improve your health) and feel "health is wealth". I have read and seen many people who save a lot for retirement to not have the health to use it. Thus, "wealth without health" is unfortunate, but common. Being a university professor of exercise science and thus teaching a variety of courses on wellness, health, nutrition, etc., I am very familiar with the research about American's poor health habits and how they have led to an increase in CVD, some forms of cancer, diabetes, metabolic syndrome, etc, and ultimately to a shorter lifespan and healthspan. Not all people who develop one or more of these diseases or conditions have lived an unhealthy lifestyle, but most have. So, investing in exercise, healthy foods, etc... will greatly, in most cases, improve one's quality and quantity of life (time).
This statement caught my attention, "And all our investments grew. I think that means we didn’t over spend, right?" You didn't overspend for last year, per say, based on this definition (that is your investments grew). However, remember stock did well last year (2024). For example, vanguard total stock market index fund (VTSAX) total return was around 23%. If all you had in your retirement accounts was this one fund (not at all recommending this at your age, but it makes for an easy example), you could have withdrawn 15% or more from your retirement accounts and still seen a growth in your investments. So, whether one has overspent shouldn't be based solely on whether one's investment grew (not saying you are, just pointing it out). Of course, a person can and should adjust one's spending to some degree based on their investment's performance (e.g., using a dynamic withdrawal strategy), but I wouldn't solely (not that you are) base overspending on investment performance. For instance, VTSAX total return in 2022 was -19.53%. Thus, if your retirement accounts included just this one fund (VTSAX), you would have seen a loss of 19.53% (add 0.04% for expense ratio) from your retirement accounts and thus overspent in 2022 when actually you may have spent $0.
How did you decide on a 70% rate of success? I like it, but seldom see people aiming this low. Most people want 90% or higher success rate, which I understand psychology, but as I stated above seems to leave one not spending enough during one's retirement and risking leaving memories and helping others behind.
Out of the 5 you listed, I like #2 (Fixed withdrawal rate 5%) and #3 (RMD) the best. I like these the best because I feel they will lead a person to spend more during their retirement or help the person retire sooner. I feel money is a tool to pay the bills of course, but to also create memories and to help others (family and charities) while the person is alive. The 4% rule, from what I read from other sources, is really conservative and in a majority of cases the person leaves behind more money after they pass than what they started retirement with. I am not against this if that is one's goal, however, my goal is to leave some money behind for my kids and charity, but my ultimate goal is to spend most of it during my retirement while I am alive to help my family (and to create memories with my kids/wife) and to help charities. I rather take a chance of running out of money (e.g., 20% chance of failure vs 5% chance of failure/running out of money in retirement) than running out of time (by working longer than necessary) or creating less memories because of being too conservative. But as many say, personal finance is personal, so my goal may be too aggressive for some :) On a similar note, has anyone heard of Nick Davis and his Risk-Based Guardrails Withdrawal strategy? Here is a link to him describing it: (312) The Withdrawal Strategies Rich Retirees Use (That Poor Retirees Don’t) - YouTube. What are your thoughts? Thanks Jonathan for this article!
How do I define my dream retirement? Exercising, reading, and eating healthy daily, traveling to other countries, and serving others. How will I prepare for it? By continuing to exercise, read, eat healthy, and save financially. I have done a lot of preparation already, especially financially through saving. It is interesting to read about other's dream retirement, especially when it comes to health and finances. I say this because I know a lot of people (including relatives) who did not plan for retirement and then expect to have a dream retirement (e.g., social security would support all their financial needs and they would still be energetic and healthy even though they weren't active and ate poorly). Because of my education (both formal, that is college, and informal, via personal reading) and my personal experiences, the chances of retiring financially well and physically healthy are pretty slim if no preparations are taken. For instance, I have read several longevity books (also financial books, and textbooks on Wellness, Exercise Physiology, etc.) and find them inspirational because if a person prepares well for retirement (both for physical health and financially), then they have a much higher chance of living their dream retirement. Of course, the opposite (not preparing) often leads to an unfulfilled retirement. I often tell my college students, I want to live to 100 and be healthy (overall) at that age. If I don't prepare, the chances are slim to none. However, If I do prepare my chances increase greatly. I am well aware though, God may have other plans, and I may leave this world early or not be able to do the things I want (e.g., travel, serve others, exercise, etc.), which I am fine with, but I don't know God's plan and thus I plan to control those factors which I have control over (e.g., whether to exercise, eat healthy, save for retirement, etc.). Thus, to live my dream retirement I often think about this phrase, which can be applied to so many things, especially finances..."There are things you can control and things you cannot control...focus on those things you can control and be aware of those you cannot".
Hi Doug! It was interesting to read about your expense tracking method. I have been tracking my expenses for the past 3 years. I track them daily using empower (formerly Personal Capital). Tracking my expenses daily has helped immensely. I am very aware now where my money goes, lol. I also set up my credit cards to alert me via email any purchases over $1. I don't budget per se (mentally maybe) because I track expenses and feel that is sufficient. Tracking expenses has been one of my best financial choices :)
Eludom, I agree there is purpose in suffering; sometimes we find out/figure out the purpose, and other times we don't. The book of Job is a prime example of someone (Job) not knowing why he was suffering. Job did not sin or do anything wrong, so why did he suffer? Ultimately, he suffered because God allowed Satan to test Job's faith. In the end, Job did not get a definite answer to his suffering, but Job continued to have faith in God. It is a great story and one that I led a discussion on. It is a story that I refer to when I go through difficult times, especially when I cannot understand why "this is happening to me." Job was a rich young farmer, who according to God was blameless and upright, which some translate blameless and upright to mean "a man of integrity". Life was going well for him. He was rich, had servants, was blessed with 10 children, and so forth. Then Satan comes along and tells God that the only reason Job is faithful is because you (talking to God) have blessed him so richly and that Job would curse you (talking to God) if everything Job had was taken away. Thus, God allowed Satan to take everything away. A long story short, Job lost his servants, oxen, camels, all 10 children, and finally, his health. His wife even told him that he should "curse God". Three good friends of Job's came to mourn with him, but eventually (I think it was 7 days later), all three accused him of sinning and told him that is why he was suffering. When I go through hardships, I think of this story because all my hardships up to this point have been far less than what Job experienced. If you read the story in the Book of Job, you will get much more from it then what I mentioned above. For instance, towards the end of the Book, chapter 42, God restores most of Job's fortunes. As other's here have hinted about, there is a balance to preparing and having faith. We need to prepare for a long, healthy life by doing things that can help us, as Jonathan pointed out (i.e., exercising regularly, avoiding certain foods, and building a nice financial nest egg). Even though doing these things helps the majority of people live a long, healthy, financially secure life, sometimes things happen (e.g., God has other plans, as was the case for Job). As a person of faith, this is when I tell myself that even though I did all these things (regular exercise, avoid certain foods, prepared financially) that lead to a long, quality, and financially secure life, things happen and if something happens, to have faith there is a purpose in the suffering even if I don't know that purpose.
I agree the tax code needs simplified. I have also realized though many people don't even try to understand taxes (educate themselves). For example, my parents never put forth any effort (that I saw) to educate themselves about taxes. I feel it was a mix of being lazy and not having interest in doing so. Thus, they always had a tax preparer do their taxes. I did the same in my early 20s and was always hoping, like my parents, to get a refund. However, since late 20s (I am now in my forties), I have educated myself on taxes and am still doing so. The education was a result of interest in taxes and effort. I have now completed my own taxes for the last 20 years and am so thankful and grateful that I learned about taxes because it has saved me thousands of dollars and stress. Plus, I now don't hope for a refund, since now through planning, via understanding taxes, I try to break even so I don't have to pay or get a refund. So, yes, I wish the tax code was more straightforward, but that is out of my control, unfortunately. What is in my control is educating myself so I can make better decisions on how to manage my money and avoid paying "extra" in taxes and when it comes to tax time, not having to hope/stress about getting a refund or paying. Thus, it is awesome that several HumbleDollar readers and writers help people with their taxes. Thank you for doing so. I hope to do so someday myself.
Comments
Wow, I’m really surprised! It’s amazing how persuasive a good advisor can be. I know people often overlook objective data, but I really thought that after you laid out the Boglehead approach and showed the returns, he would have made the switch to Vanguard. I guess sometimes familiarity and personal connections outweigh the numbers. Hopefully, he still ends up in a solid financial position—though as we know, some friendships can come with a hefty price tag!
Post: Among Friends
Link to comment from March 1, 2025
Great summary and personal story about diet and exercise. I teach exercise science courses like wellness and a variety of nutrition courses at the university. You mentioned some good info and you are correct that lack of knowledge and misinformation is prevalent. Like the fianancial industry, the diet and fitness industry has made eating healthy and being active confusing to a large degree on purpose. One major problem I see is that people tend to choose a diet or exercise based on popularity or what is easiest and not on what is supported by research (ie, peer reviewed scientific studies).
Post: Money Grows Up
Link to comment from January 18, 2025
Great discussion article! I would agree with you that running out of time vs. money will be the case for 99% of us. We can almost always find ways to make/get money, but all of us will eventually run out of time. I suggest adding a 3rd suggestion to your two above for improving one's use of time and that is to spend more $ in retirement or to pick a better withdrawal strategy, so one is not spending unnecessary time working longer or being too conservative. I feel this community and Bogleheads are overall very conservative with spending. Nothing wrong with this if leaving a nice nest egg behind is your goal or you are just really worried about running out of money in retirement, but I feel it can and oftentimes leads many, including myself at times, to either work more or not spend money on something of value (e.g., vacation, YMCA membership, etc.). I really like suggestion #2 (prioritizing efforts to maintain and improve your health) and feel "health is wealth". I have read and seen many people who save a lot for retirement to not have the health to use it. Thus, "wealth without health" is unfortunate, but common. Being a university professor of exercise science and thus teaching a variety of courses on wellness, health, nutrition, etc., I am very familiar with the research about American's poor health habits and how they have led to an increase in CVD, some forms of cancer, diabetes, metabolic syndrome, etc, and ultimately to a shorter lifespan and healthspan. Not all people who develop one or more of these diseases or conditions have lived an unhealthy lifestyle, but most have. So, investing in exercise, healthy foods, etc... will greatly, in most cases, improve one's quality and quantity of life (time).
Post: Focusing on the Real Threat
Link to comment from January 11, 2025
This statement caught my attention, "And all our investments grew. I think that means we didn’t over spend, right?" You didn't overspend for last year, per say, based on this definition (that is your investments grew). However, remember stock did well last year (2024). For example, vanguard total stock market index fund (VTSAX) total return was around 23%. If all you had in your retirement accounts was this one fund (not at all recommending this at your age, but it makes for an easy example), you could have withdrawn 15% or more from your retirement accounts and still seen a growth in your investments. So, whether one has overspent shouldn't be based solely on whether one's investment grew (not saying you are, just pointing it out). Of course, a person can and should adjust one's spending to some degree based on their investment's performance (e.g., using a dynamic withdrawal strategy), but I wouldn't solely (not that you are) base overspending on investment performance. For instance, VTSAX total return in 2022 was -19.53%. Thus, if your retirement accounts included just this one fund (VTSAX), you would have seen a loss of 19.53% (add 0.04% for expense ratio) from your retirement accounts and thus overspent in 2022 when actually you may have spent $0.
Post: First year of retirement by Chris
Link to comment from January 11, 2025
How did you decide on a 70% rate of success? I like it, but seldom see people aiming this low. Most people want 90% or higher success rate, which I understand psychology, but as I stated above seems to leave one not spending enough during one's retirement and risking leaving memories and helping others behind.
Post: Spending It
Link to comment from January 11, 2025
Out of the 5 you listed, I like #2 (Fixed withdrawal rate 5%) and #3 (RMD) the best. I like these the best because I feel they will lead a person to spend more during their retirement or help the person retire sooner. I feel money is a tool to pay the bills of course, but to also create memories and to help others (family and charities) while the person is alive. The 4% rule, from what I read from other sources, is really conservative and in a majority of cases the person leaves behind more money after they pass than what they started retirement with. I am not against this if that is one's goal, however, my goal is to leave some money behind for my kids and charity, but my ultimate goal is to spend most of it during my retirement while I am alive to help my family (and to create memories with my kids/wife) and to help charities. I rather take a chance of running out of money (e.g., 20% chance of failure vs 5% chance of failure/running out of money in retirement) than running out of time (by working longer than necessary) or creating less memories because of being too conservative. But as many say, personal finance is personal, so my goal may be too aggressive for some :) On a similar note, has anyone heard of Nick Davis and his Risk-Based Guardrails Withdrawal strategy? Here is a link to him describing it: (312) The Withdrawal Strategies Rich Retirees Use (That Poor Retirees Don’t) - YouTube. What are your thoughts? Thanks Jonathan for this article!
Post: Spending It
Link to comment from January 11, 2025
How do I define my dream retirement? Exercising, reading, and eating healthy daily, traveling to other countries, and serving others. How will I prepare for it? By continuing to exercise, read, eat healthy, and save financially. I have done a lot of preparation already, especially financially through saving. It is interesting to read about other's dream retirement, especially when it comes to health and finances. I say this because I know a lot of people (including relatives) who did not plan for retirement and then expect to have a dream retirement (e.g., social security would support all their financial needs and they would still be energetic and healthy even though they weren't active and ate poorly). Because of my education (both formal, that is college, and informal, via personal reading) and my personal experiences, the chances of retiring financially well and physically healthy are pretty slim if no preparations are taken. For instance, I have read several longevity books (also financial books, and textbooks on Wellness, Exercise Physiology, etc.) and find them inspirational because if a person prepares well for retirement (both for physical health and financially), then they have a much higher chance of living their dream retirement. Of course, the opposite (not preparing) often leads to an unfulfilled retirement. I often tell my college students, I want to live to 100 and be healthy (overall) at that age. If I don't prepare, the chances are slim to none. However, If I do prepare my chances increase greatly. I am well aware though, God may have other plans, and I may leave this world early or not be able to do the things I want (e.g., travel, serve others, exercise, etc.), which I am fine with, but I don't know God's plan and thus I plan to control those factors which I have control over (e.g., whether to exercise, eat healthy, save for retirement, etc.). Thus, to live my dream retirement I often think about this phrase, which can be applied to so many things, especially finances..."There are things you can control and things you cannot control...focus on those things you can control and be aware of those you cannot".
Post: Dream Retirement – Is it fading away?
Link to comment from November 2, 2024
Hi Doug! It was interesting to read about your expense tracking method. I have been tracking my expenses for the past 3 years. I track them daily using empower (formerly Personal Capital). Tracking my expenses daily has helped immensely. I am very aware now where my money goes, lol. I also set up my credit cards to alert me via email any purchases over $1. I don't budget per se (mentally maybe) because I track expenses and feel that is sufficient. Tracking expenses has been one of my best financial choices :)
Post: Tracking My Progress
Link to comment from November 2, 2024
Eludom, I agree there is purpose in suffering; sometimes we find out/figure out the purpose, and other times we don't. The book of Job is a prime example of someone (Job) not knowing why he was suffering. Job did not sin or do anything wrong, so why did he suffer? Ultimately, he suffered because God allowed Satan to test Job's faith. In the end, Job did not get a definite answer to his suffering, but Job continued to have faith in God. It is a great story and one that I led a discussion on. It is a story that I refer to when I go through difficult times, especially when I cannot understand why "this is happening to me." Job was a rich young farmer, who according to God was blameless and upright, which some translate blameless and upright to mean "a man of integrity". Life was going well for him. He was rich, had servants, was blessed with 10 children, and so forth. Then Satan comes along and tells God that the only reason Job is faithful is because you (talking to God) have blessed him so richly and that Job would curse you (talking to God) if everything Job had was taken away. Thus, God allowed Satan to take everything away. A long story short, Job lost his servants, oxen, camels, all 10 children, and finally, his health. His wife even told him that he should "curse God". Three good friends of Job's came to mourn with him, but eventually (I think it was 7 days later), all three accused him of sinning and told him that is why he was suffering. When I go through hardships, I think of this story because all my hardships up to this point have been far less than what Job experienced. If you read the story in the Book of Job, you will get much more from it then what I mentioned above. For instance, towards the end of the Book, chapter 42, God restores most of Job's fortunes. As other's here have hinted about, there is a balance to preparing and having faith. We need to prepare for a long, healthy life by doing things that can help us, as Jonathan pointed out (i.e., exercising regularly, avoiding certain foods, and building a nice financial nest egg). Even though doing these things helps the majority of people live a long, healthy, financially secure life, sometimes things happen (e.g., God has other plans, as was the case for Job). As a person of faith, this is when I tell myself that even though I did all these things (regular exercise, avoid certain foods, prepared financially) that lead to a long, quality, and financially secure life, things happen and if something happens, to have faith there is a purpose in the suffering even if I don't know that purpose.
Post: The Risks We Miss
Link to comment from July 13, 2024
I agree the tax code needs simplified. I have also realized though many people don't even try to understand taxes (educate themselves). For example, my parents never put forth any effort (that I saw) to educate themselves about taxes. I feel it was a mix of being lazy and not having interest in doing so. Thus, they always had a tax preparer do their taxes. I did the same in my early 20s and was always hoping, like my parents, to get a refund. However, since late 20s (I am now in my forties), I have educated myself on taxes and am still doing so. The education was a result of interest in taxes and effort. I have now completed my own taxes for the last 20 years and am so thankful and grateful that I learned about taxes because it has saved me thousands of dollars and stress. Plus, I now don't hope for a refund, since now through planning, via understanding taxes, I try to break even so I don't have to pay or get a refund. So, yes, I wish the tax code was more straightforward, but that is out of my control, unfortunately. What is in my control is educating myself so I can make better decisions on how to manage my money and avoid paying "extra" in taxes and when it comes to tax time, not having to hope/stress about getting a refund or paying. Thus, it is awesome that several HumbleDollar readers and writers help people with their taxes. Thank you for doing so. I hope to do so someday myself.
Post: Many Unhappy Returns
Link to comment from July 6, 2024