I have no idea whether Mark Twain actually said it, but its my favorite quote attributed to him. I liked your discussion about comparing CAPE ratios today with those from the past, and also Ben Grahams evolved opinion on stock picking. As you know, Jonathan discussed withdrawal strategies in "Spending It" eight days ago. (Sorry, I'm unsure how to link the post). In his response to a comment from "baldscreen", he wrote that each individual can weigh the relative importance of a predictable annual income, and protection from inflation, portfolio depletion and rough markets. Then choose the most suitable option. Thanks for another interesting post, Adam.
I retired about seven years ago and RMDs will begin for us next year. Until then, to manage my taxes and postpone eventual IRMAA I have taken distributions from my IRA and also from a taxable brokerage account. When I tap the IRA, I withdraw from a money market account near year end so that the interest earned during the year remains tax sheltered, and it is replenished via rebalancing. Of course, now the full year's withdrawal will earn taxable interest well into the next year. I wonder if some take monthly IRA distributions to minimize this?
Most of us learn what our actual risk tolerance is over time. Bernstein, Jonathan and others have written that in addition to our tolerance of risk, we must consider our capacitance and our need to take risk. This helps explain why one's portfolio allocation does not necessarily correlate with one's risk tolerance.
I agree. Apart from casting my vote in every election, there is little else I can do. My portfolio allocation is designed to survive whatever expected or unexpected future events may occur. Nothing else for me to do, apart from occasional rebalancing except to enjoy living exactly as before.
This is an excellent resource. Go to the site and click on "American Retirement Savings by Age: Averages, Medians and Percentiles". Under "methodology", note their definitions of "Strict" and "Expansive". An interactive calculator will give you a percentile ranking for your age cohort. I was both surprised and concerned by how little half of American households of all age cohorts have to fund their retirement, beyond unmeasured social security and pension benefits. Various reasons have been suggested to explain why many have saved so little. We also have heard stories about some who earned a modest income over their careers, saved and invested diligently and left a fortune to charity. Was it Jonathan who once wrote something like "Give me a saver and an investor, and I'll bet on the saver every time"?
Well said, John. In my opinion there is no one best age for people to begin drawing their benefits. There are different tradeoffs, depending on which age one begins to draw benefits. It is how one views those tradeoffs which will help them choose the best option, for them.
I don't think there is a national strategy, so by default we are doing what Mankiw wrote about. Sort of like the cash-starved young family which tries to cope by going deeper into debt, as long as they can make the minimum monthly payments. And I agree with your comments concerning the illegal immigrants' influence on the economy.
We bought our present home nearly 37 years ago. Some of my peers at that time favored buying as much home as you could qualify for, because of expected future price appreciation. My senior partner and mentor suggested I avoid buying a larger, more expensive home than I needed (and invest the difference, I inferred). We took his advice, are still happy living in the same home, and it worked out well for us financially. The median price of a home in my city was below the national median, both then and now, so my path was comparatively easy. I do not envy young people living in expensive markets looking for a home today. Some have a family member financially able to help them, but many do not.
Comments:
You may have already done this, but if not, consult a qualified trainer on the proper technique in performing a deep knee bend.
Post: Keep Moving by Edmund Marsh
Link to comment from January 20, 2025
I have no idea whether Mark Twain actually said it, but its my favorite quote attributed to him. I liked your discussion about comparing CAPE ratios today with those from the past, and also Ben Grahams evolved opinion on stock picking. As you know, Jonathan discussed withdrawal strategies in "Spending It" eight days ago. (Sorry, I'm unsure how to link the post). In his response to a comment from "baldscreen", he wrote that each individual can weigh the relative importance of a predictable annual income, and protection from inflation, portfolio depletion and rough markets. Then choose the most suitable option. Thanks for another interesting post, Adam.
Post: Reality Check
Link to comment from January 19, 2025
I retired about seven years ago and RMDs will begin for us next year. Until then, to manage my taxes and postpone eventual IRMAA I have taken distributions from my IRA and also from a taxable brokerage account. When I tap the IRA, I withdraw from a money market account near year end so that the interest earned during the year remains tax sheltered, and it is replenished via rebalancing. Of course, now the full year's withdrawal will earn taxable interest well into the next year. I wonder if some take monthly IRA distributions to minimize this?
Post: Is there a best time to take an RMD? Does matter when?
Link to comment from January 19, 2025
Most of us learn what our actual risk tolerance is over time. Bernstein, Jonathan and others have written that in addition to our tolerance of risk, we must consider our capacitance and our need to take risk. This helps explain why one's portfolio allocation does not necessarily correlate with one's risk tolerance.
Post: Do you understand your tolerance for risk? Really, honestly? I’m not sure most of us do. By RDQ
Link to comment from January 18, 2025
I agree. Apart from casting my vote in every election, there is little else I can do. My portfolio allocation is designed to survive whatever expected or unexpected future events may occur. Nothing else for me to do, apart from occasional rebalancing except to enjoy living exactly as before.
Post: Limits of Power by Jonathan Clements
Link to comment from January 17, 2025
This is an excellent resource. Go to the site and click on "American Retirement Savings by Age: Averages, Medians and Percentiles". Under "methodology", note their definitions of "Strict" and "Expansive". An interactive calculator will give you a percentile ranking for your age cohort. I was both surprised and concerned by how little half of American households of all age cohorts have to fund their retirement, beyond unmeasured social security and pension benefits. Various reasons have been suggested to explain why many have saved so little. We also have heard stories about some who earned a modest income over their careers, saved and invested diligently and left a fortune to charity. Was it Jonathan who once wrote something like "Give me a saver and an investor, and I'll bet on the saver every time"?
Post: The Que sera, sera retirement planning strategy.
Link to comment from January 16, 2025
Well said, John. In my opinion there is no one best age for people to begin drawing their benefits. There are different tradeoffs, depending on which age one begins to draw benefits. It is how one views those tradeoffs which will help them choose the best option, for them.
Post: Open Social Security – interesting finding on optimization and mortality tables
Link to comment from January 14, 2025
I don't think there is a national strategy, so by default we are doing what Mankiw wrote about. Sort of like the cash-starved young family which tries to cope by going deeper into debt, as long as they can make the minimum monthly payments. And I agree with your comments concerning the illegal immigrants' influence on the economy.
Post: Quinn ponders taxes, debt, interest payments and other minor issues we face
Link to comment from January 12, 2025
Your final sentence is timeless advice, and the details preceding it explain why.
Post: Look Both Ways
Link to comment from January 12, 2025
We bought our present home nearly 37 years ago. Some of my peers at that time favored buying as much home as you could qualify for, because of expected future price appreciation. My senior partner and mentor suggested I avoid buying a larger, more expensive home than I needed (and invest the difference, I inferred). We took his advice, are still happy living in the same home, and it worked out well for us financially. The median price of a home in my city was below the national median, both then and now, so my path was comparatively easy. I do not envy young people living in expensive markets looking for a home today. Some have a family member financially able to help them, but many do not.
Post: Rent Forever?
Link to comment from January 9, 2025