Norman Retzke

Comments

• As others have pointed out, if you fall short, working longer is an option. Relocation is another option. We have quite a few Californians moving into our area. Real estate is less costly as is gasoline and certain other expenses including taxes (sales, real estate, personal property tax, etc.). Some states don’t tax SS benefits, while some don’t tax other retirement benefits. However, one does have to do their homework. We moved to a state and realized a reduction in taxes and gasoline costs, etc. The decision was driven by health-related issues.

  Post: How Much to Save to Retire?

  Link to comment from September 7, 2025

• Yes, and I'd add "at the most inopportune time". Case in point, we are on a trek of 6,000+ miles. Our Class B is built on a Chevy 3500 chassis, which is well maintained, all preventative maintenance and inspections performed, etc. Quite a robust vehicle. But, as we were preparing for the final leg of 2,000 miles a problem surfaced. It was a front wheel bearing failure over the Labor Day Holiday weekend. This delayed our departure by a week. I noticed the issue mere hours prior to making all of the campground reservations. This spared me from cancelling everything and there may have been some unrefunded fees. It could have been much worse. This failure could have occurred a week earlier while we were touring the UP of Michigan, a a few days later as we were enroute to AZ. In fact, as it happens a very competent mechanic was only about 3/4 mile down the road from our present campground location. He confirmed my diagnosis, ordered the part (two were located nearby) and replaced the bearing assembly in about 3 hours. Last night we were being driven by friends who asked my opinion about the "rumble" that they noticed in their truck, a new experience! As it was, I used my recent experience to discuss the telltale signs of wheel bearing failure (There are other possibilities).

  Post: What They Don’t Tell You About Retirement: Part 1 – Everything Breaks

  Link to comment from September 6, 2025

• Two thoughts come to mind: 1) It really possible to overthink a problem and 2) When something looks too good to be true, it usually is.

  Post: Inventing Problems

  Link to comment from September 6, 2025

• An update. A test drive and inspection on a lift confirmed it was the passenger side front wheel bearing. We were fortunate. A shop conveniently 1 mile down the road was able to replace it in a matter of 3 hours. After driving it for a couple of days all seems well and we'll be returning to our AZ location next week.

  Post: When My Car Broke Down, Our One-Car Plan Passed the Test

  Link to comment from September 5, 2025

• Yes, I owned a few shares of GLD from 2010 to 2020. When I sold it had appreciated 144%. Since then it has doubled in value. I switched to miners. I've noticed that precious metals can languish from time to time. But I'm more comfortable with this than crypto.

  Post: Current status of diversification

  Link to comment from September 5, 2025

• Everything breaks. On the bright side certain replacement costs are lower as things get cheaper. Your flat screen comes to mind. The old 26-inch flat screen in the Michigan "lily pad" needed replacement. The new 32 inch with built-in wi-fi and streaming, etc. was about $90 on sale. At Harbor Freight I can purchase tools that are quite reasonable for those odd jobs. Of course, "the sky is the limit" so I need to match my requirements to the what's available to make a purchase.

  Post: What They Don’t Tell You About Retirement: Part 1 – Everything Breaks

  Link to comment from September 4, 2025

• That’s one of the issues about retirement planning. It is difficult to budget for these types of things and they may be demands rather than requests. We are fortunate that the grandchild is well provided for, but there are the children of other relatives who are not as well off. Our greatest single care expense of this type has been for elderly parents. The precise amount is not insignificant. However, we saved more while working to handle such contingencies and our annual budgets allow for personal adjustments to accommodate these expenses. There are other things we could simply eliminate if necessary and that includes dining out and the “lily pad” in Michigan. 

  Post: What They Don’t Tell You About Retirement: Part 2 – Grandchildren Are Expensive

  Link to comment from September 4, 2025

• The SWR goal is to have sufficient money each year in retirement to fund our lifestyle. The SWR makes assumptions about stock gains and interest rates. That has nothing to do with inflation, per se. Inflation decreases the value of money. It erodes purchasing power and can also reduce bond yields. Since 1982, the value of investments would have to double to keep up with inflation. If I put $100 into an investment account in 1982 I would have to remove $200 to buy the same goods and services today.  If an investment nest egg is increasing in value 2% per year, it cannot keep up with modest withdrawals if we consider the erosion in purchasing power. After all, those withdrawals are used to buy the necessities of retirement. If average inflation is about 3.0% per year, that reduces the value (purchasing power) of a nest egg. If that nest egg appreciates each year by an amount equal to inflation, then purchasing power is maintained. This is before taking any withdrawals. Withdrawals reduce the value of the nest egg. While the average inflation for the period 2000-2024 has been 2.53%, the actual annual inflation has been as low as 0.1% (2015) and as high as 9.1% (2022). I’ve run the numbers with 3.0% inflation. The long-term average real return for the S&P 500 is about 7.0%. Considering inflation the real return is 4.35%.   The long term real return for 10-year U.S. Treasury bonds is 0.96%. If we combine these, then the real return for a 60/40 portfolio is about 2.99%. If I begin with a $1 million portfolio invested at 3% real returns and I withdraw at 4.7% of the balance each year, my portfolio will be depleted in about 38 years. However, inflation would erode my purchasing power and I might not be able to maintain my lifestyle at a constant withdrawal rate of $47,000 each year. If I do the same but increase my withdrawals by 3.0% to accommodate inflation this will maintain my purchasing power ($47,000 withdrawn at the end of year one, $48,410 year two, etc.) Using this approach the portfolio will be depleted in about 30 years. Reality doesn’t provide constant returns or constant inflation. This is why some suggest a “guardrail” approach to withdrawals. If gains are lower in any given year, then the actual withdrawal is reduced. In better years the withdrawal can be increased. Of course, if there were a “lost decade” this could pose great difficulty for a retiree. Keeping some additional cash and saving more are methods to deal with this.  RMDs dictate under IRS rules how much we must withdraw from certain retirement accounts each year. However, that money may be more, or less than our calculated SWR. As noted by others here, any excess withdrawn and unspent can be re-invested in a taxable account, or saved via bonds or a high interest savings account, etc.

  Post: Is 4.7% the New 4% Safe Withdrawal Rate

  Link to comment from September 4, 2025

• Since 2010 the S&P 500 has far exceeded the performance of GLD (SPDR gold shares). I'm not a gold bug, but my equities do include about 3.5% mining/precious metals. I posted the caveats from the article as a warning.

  Post: Current status of diversification

  Link to comment from September 3, 2025

• I posted my comment at the time I edited the post and added the M* data. I assume that anyone who read my prior post would miss this addition. Some will see this twice. Sorry for that inconvenience.

  Post: What Could Possibly Go Wrong?

  Link to comment from September 3, 2025