I can't imagine being comfortable spending 5% of my portfolio/year in the first few years. What if you retire into a down market? That money is gone. I plan on 2 - 3%. I have about 65% in stocks, the rest in near cash investments - very, very little in bonds.
You can always rent a car to for a couple weeks to take to Florida. I wouldn't rush a big decision even if it costs you. You will have the new car for a long time. Take your time, do research, and get what makes sense for you and that you really like
The major things that come to mind from WSJ days are 1. Invest in index funds instead of individual stocks. Not only is this a wise financial move, but it has saved me a ton of time by reducing the need to research each stock and market, and greatly reducing anxiety by not worrying about if I chose wisely. 2. Automating savings outside of my 401K. This move alone accounts a major chunk of my net worth. Thank you so much Jonathan!
Since Humble Dollar came along, I have learned about the huge benefit of doing Roth conversions, and of giving to charity from my 401K. I also like being reminded that time is our most precious asset.
Dick,
We have a completely opposite approach to funding our retirement. Thanks to our frugal nature and high propensity to save, combined with having only one child - very late in life - 50 years old - (after we already saved a large nest egg) we've managed to amass enough savings that we just don't have to worry about it. My husband and I were never super high earners. He closed out his career at the manager level and I touched the Associate Director level for a year. But with 2 incomes, we easily fell into the "affluent" category. We saved from very early on - when we had the good luck of a rising stock market and no negative financial hits like prolonged unemployment or a special needs child. I also had the good luck to discover Jonathan's column in the WSJ so I automated savings outside of our 401Ks. We never sold during a downturn - just looked around for more cash to invest. The result is a pile-o-savings. The pile is the retirement strategy. For retirement, our approach is to target 5-7 years of savings in near cash (stable value funds, CDs, etc.) in case of market downturn. We do that in a completely haphazard way (much like our investing strategy). Reading your post prompted me to look at our cash reserves. It looks like it might be a good idea to sell some stock. If I get around to it. I probably will, maybe. Yes definitely, but I don't feel like it today, maybe tomorrow. Luckily, the pile is big enough that if its cut by 50%, it will still be enough.. What worries me? Inflation. Also, even though we can withstand a prolonged market downturn, I still hate the thought of it. Have we thought about annuitizing? Yes, but doubt we will do it. With the realization of how big the pile is, we have experienced a bit of spending creep. In order to replace a substantial portion of our spending, we would need to spend more that $2,000,000 on annuities. I just can't see us pulling the trigger on that. We saved incrementally, we invested incrementally, I convert investments to cash incrementally. It's just not our nature to make major financial moves. Buying our current home gave me nightmares, even though we could definitely afford it. That single transaction was huge. Buying the annuities would much bigger. I can't see looking at investments daily or even often - I think it would create a lot of anxiety even during normal market fluctuations. Now I only look when I want specific information - like to figure out if is it time to sell some investments. During downturns, I don't look at all - too depressing and since I'm not going to sell, there is not point. And it's been fun seeing the value of the pile jump when you only look once in awhile.
Thanks for the article, you made several good points. However, one I disagree with though is be skeptical of for-sale-by-owner listings. These are potentially a great way for both parties to get a really good deal since either no money or less money goes to agents/agencies. I bought my first condo without an agent on either side of the transaction. After seeing the place for the second time, while standing in the kitchen of the condo, we made a deal in under 5 minutes. Once we agreed on price, I went to a competent real estate attorney to write up the offer. He made sure everything was legit. A good lawyer + title insurance is all that is needed. Since then I sold that condo, and my husband's condo FSBO. For these I used a flat rate listing agent ($450) + paid 2.5 % to the buyer's agent. This is the standard rate for the agent - and much better than the 6% I would have paid if I used an agent on both sides of the transaction. Again, a good attorney and title insurance are standard and necessary. Right now, I am in the midst of selling my late father-in-law's condo with a flat rate listing agent. So far, all the executed transactions have been very straight forward and easy.
Wow! Great article. Well researched, great links and well written! As I am in the same boat - retired in my early 60s and not planning to take SS until age 70, no meaningful pension, and worried about inflation, this is incredibly useful. Thanks so much for sharing.
I had it for a few years in my 40s. It was pricey to start with and then quickly got much more expensive. I did the math - how much I would be paying until the age when I would be most likely to need it, and dropped it, figuring I would have to self fund.
Plan B: Divorce; I told my husband if I ever had a serious stroke or similar issue, to immediately divorce me so at least part of our assets would remain for him and our daughter. Not kidding. My father had it, and by the time he could have used the homecare benefit, it was very complicated to get approved. My stepmother finally managed to get the mountain of paperwork done, but my dad died shortly thereafter. So it was definitely a financial loss. But I know having the policy gave my father peace of mind - he was very nervous about LTC costs, so in that regard, his peace of mind, it may have been worth it.
I've used Fidelity and Schwab. I prefer Schwab because you can easily see and vary the variables (inflation rate, taxes, rate of return, etc). Since I am very conservative I did a lot of pressure testing -higher inflation rate, lower rate of return, what happens if the market crashes tomorrow and stays there (decreased account values by 50% to simulate), spending higher than expected - I added a cushion of 20%. Also be very careful with spending since it can vary so much. I looked back over a year to be sure to include major repairs, tax bills, better-than-usual vacation, etc. I still underestimated for this year (unexpected new car, daughter's bat mitzvah, greater than typical health care costs, major plumbing work that will involve digging up the front yard.) I am very grateful for the very conservative estimates I made. I am still sleeping well - but only because of the pressure testing and large cushion.
Comments
Thank you both! I decided to skip this year because I have several trips planned for this year. But I will try to go in the future
Post: Boglehead Conference
Link to comment from July 2, 2025
I can't imagine being comfortable spending 5% of my portfolio/year in the first few years. What if you retire into a down market? That money is gone. I plan on 2 - 3%. I have about 65% in stocks, the rest in near cash investments - very, very little in bonds.
Post: Bengen’s updated 4% rule
Link to comment from May 24, 2025
You can always rent a car to for a couple weeks to take to Florida. I wouldn't rush a big decision even if it costs you. You will have the new car for a long time. Take your time, do research, and get what makes sense for you and that you really like
Post: I Need Car Advice
Link to comment from January 24, 2025
Cash, since you have it. Do you really love the loaner? If not, don't get it. You will be owning this car for a long, long time. Get what you like.
Post: I Need Car Advice
Link to comment from January 24, 2025
The major things that come to mind from WSJ days are 1. Invest in index funds instead of individual stocks. Not only is this a wise financial move, but it has saved me a ton of time by reducing the need to research each stock and market, and greatly reducing anxiety by not worrying about if I chose wisely. 2. Automating savings outside of my 401K. This move alone accounts a major chunk of my net worth. Thank you so much Jonathan! Since Humble Dollar came along, I have learned about the huge benefit of doing Roth conversions, and of giving to charity from my 401K. I also like being reminded that time is our most precious asset.
Post: Lessons you have learned from articles by Jonathan
Link to comment from January 23, 2025
Dick, We have a completely opposite approach to funding our retirement. Thanks to our frugal nature and high propensity to save, combined with having only one child - very late in life - 50 years old - (after we already saved a large nest egg) we've managed to amass enough savings that we just don't have to worry about it. My husband and I were never super high earners. He closed out his career at the manager level and I touched the Associate Director level for a year. But with 2 incomes, we easily fell into the "affluent" category. We saved from very early on - when we had the good luck of a rising stock market and no negative financial hits like prolonged unemployment or a special needs child. I also had the good luck to discover Jonathan's column in the WSJ so I automated savings outside of our 401Ks. We never sold during a downturn - just looked around for more cash to invest. The result is a pile-o-savings. The pile is the retirement strategy. For retirement, our approach is to target 5-7 years of savings in near cash (stable value funds, CDs, etc.) in case of market downturn. We do that in a completely haphazard way (much like our investing strategy). Reading your post prompted me to look at our cash reserves. It looks like it might be a good idea to sell some stock. If I get around to it. I probably will, maybe. Yes definitely, but I don't feel like it today, maybe tomorrow. Luckily, the pile is big enough that if its cut by 50%, it will still be enough.. What worries me? Inflation. Also, even though we can withstand a prolonged market downturn, I still hate the thought of it. Have we thought about annuitizing? Yes, but doubt we will do it. With the realization of how big the pile is, we have experienced a bit of spending creep. In order to replace a substantial portion of our spending, we would need to spend more that $2,000,000 on annuities. I just can't see us pulling the trigger on that. We saved incrementally, we invested incrementally, I convert investments to cash incrementally. It's just not our nature to make major financial moves. Buying our current home gave me nightmares, even though we could definitely afford it. That single transaction was huge. Buying the annuities would much bigger. I can't see looking at investments daily or even often - I think it would create a lot of anxiety even during normal market fluctuations. Now I only look when I want specific information - like to figure out if is it time to sell some investments. During downturns, I don't look at all - too depressing and since I'm not going to sell, there is not point. And it's been fun seeing the value of the pile jump when you only look once in awhile.
Post: Obsessed with a financial stress-less retirement
Link to comment from January 8, 2025
Thanks for the article, you made several good points. However, one I disagree with though is be skeptical of for-sale-by-owner listings. These are potentially a great way for both parties to get a really good deal since either no money or less money goes to agents/agencies. I bought my first condo without an agent on either side of the transaction. After seeing the place for the second time, while standing in the kitchen of the condo, we made a deal in under 5 minutes. Once we agreed on price, I went to a competent real estate attorney to write up the offer. He made sure everything was legit. A good lawyer + title insurance is all that is needed. Since then I sold that condo, and my husband's condo FSBO. For these I used a flat rate listing agent ($450) + paid 2.5 % to the buyer's agent. This is the standard rate for the agent - and much better than the 6% I would have paid if I used an agent on both sides of the transaction. Again, a good attorney and title insurance are standard and necessary. Right now, I am in the midst of selling my late father-in-law's condo with a flat rate listing agent. So far, all the executed transactions have been very straight forward and easy.
Post: Who Stole My Home?
Link to comment from November 11, 2024
Wow! Great article. Well researched, great links and well written! As I am in the same boat - retired in my early 60s and not planning to take SS until age 70, no meaningful pension, and worried about inflation, this is incredibly useful. Thanks so much for sharing.
Post: Laying Down a Floor
Link to comment from September 14, 2024
I had it for a few years in my 40s. It was pricey to start with and then quickly got much more expensive. I did the math - how much I would be paying until the age when I would be most likely to need it, and dropped it, figuring I would have to self fund. Plan B: Divorce; I told my husband if I ever had a serious stroke or similar issue, to immediately divorce me so at least part of our assets would remain for him and our daughter. Not kidding. My father had it, and by the time he could have used the homecare benefit, it was very complicated to get approved. My stepmother finally managed to get the mountain of paperwork done, but my dad died shortly thereafter. So it was definitely a financial loss. But I know having the policy gave my father peace of mind - he was very nervous about LTC costs, so in that regard, his peace of mind, it may have been worth it.
Post: Long-Term Care? Who Has It?
Link to comment from September 8, 2024
I've used Fidelity and Schwab. I prefer Schwab because you can easily see and vary the variables (inflation rate, taxes, rate of return, etc). Since I am very conservative I did a lot of pressure testing -higher inflation rate, lower rate of return, what happens if the market crashes tomorrow and stays there (decreased account values by 50% to simulate), spending higher than expected - I added a cushion of 20%. Also be very careful with spending since it can vary so much. I looked back over a year to be sure to include major repairs, tax bills, better-than-usual vacation, etc. I still underestimated for this year (unexpected new car, daughter's bat mitzvah, greater than typical health care costs, major plumbing work that will involve digging up the front yard.) I am very grateful for the very conservative estimates I made. I am still sleeping well - but only because of the pressure testing and large cushion.
Post: Retirement Calculators
Link to comment from August 28, 2024