First and foremost....nothing is perfect. Many ways to address inflation involve incurring extra risk. My overall plan is to NOT go all in on anyone solution. So here is what I am doing to combat inflation: 1) Don't assume level spending in retirement. I very much call B-S on the oversimplified mantra of "use 80% of your take home pay before retirement" or any amount of spending before retirement....70%...90%...110%...I dont care....life doesnt work that way. I break up retirement into buckets for spending. They project what our spending will most likely look like. A few categories like healthcare, have VERY high increases from one phase to the next. Then there are categories with modest increases like food, utilities, automotive and family spending (spending on our kids or grandkids). Then everything else stays relatively the same (assuming real costs...not inflation adjusted). What we see....medical cost rise FASTER than our travel and entertainment costs slow down. Also food and fmaily entertainment costs go up with grandchildren as you mentioned. Healthcare is the biggest X factor....we plan for 1% increase in all healthcare categories ABOVE inflation each year. THAT REALLY ads up by time we get to retirement....AND gets VERY VERY big by time we hit end of life (estimated at age 97). So Medigap policies compound up....out of pocket compounds up....unreimbursed medical expenses, premiums and all that other added in stuff. Phase 1: retirement to age 62 (when I will take SS and medicare MIGHT kick in). The travel/adventure years (go-go-go years). We have extra travel baked into this, higher health care costs Phase 2: age 62 - 68 - Less travel, more medical costs, way more food and family spending as we may have grandkids around here. Healthy entertainment budget still...this is still our Go-Go phase. Higher medical than phase 1. Phase 3: 68-78. Slow-Go phase. Less travel, a little less entertainment/eating out. A little more grandkid spending. Higher medical than phase 2. Auto drops a little as we move to one car and drive less. Phase 4: 78-85: Slow-go/no-go. Planning for 2 spouses but much less travel and a bit less entertainment. Grandkids' costs start to reduce. Medical is higher. Extra support (grocery delivery/home cleaner) enters the budget. Phase 5: No-go / 1 remaining spouse. Statistically, its unlikely well both be around (I have some health issues....so 85 is a little generous for me). Grandkid costs are heavily reduced, all variable expenses are reduced. Overall health is reduced because 1 person vs 2...but my wife's share will be more. Driving less. More paid support. Our most expensive phase...phase 2....travel...healthcare....grandkids...then they slowly reduce each phase and then they go down a lot when I pass at project 85 or sooner. Medical ALWAYS goes up though...by a lot. 2) Wait til 70 for the higher earner for SS. Honestly...we are planning for SS age to get bumped back to 73...but this will help us hedge inflation. 3.) Will have an unadjusted annuity (QLAC) for my wife which starts at 80. Between SS and this annuity....80% of her NEEDS will be met from 80-90 roughly. 4.) What about the spending gap for 90 and on...we have our Roth investments for that. We will have a multi-legged stool...investments in the roth with a 75/25 or 85/15 mix (torn on that still). This IS aggressive for a fixed income couple but we also have a large SS from my wife at age 70 (73), my SS and an annuity starting at 80. THIS PIECE....is our BIGGEST protection from inflation in my opinion. 5.) What about SORR - from retirement - 70...one of us could consult or work aprt time if we had a MAJOR meltdown. 6.) Also...we are planning to keep working part-time for 1-3 year PAST when we can retire for extra buffer/travel money. If a market meltdown happens just before we go part-time or during our 1-3 years of part-time work....we can just keep working to keep withdrawals lower during the down years (health permitting of course). We work desk jobs remotely now....but are open to more physical work like being a barista or airline/hotel desk clerk (for the extra travel perks)...health permitting of course. 7.) And if inflation rises above of our investments....simple...we cut back on the wants. We are pretty good at enjoying the simple things....so while big European vacations and eating out is fun and fancy...we can be very happy with a long weekend road trip staying at a hotel we paid with credit card points, packing a lunch from our hotel room and cooking at home when in town. The gets a little trickier in our later phases as we age as there is less budgeted for those things....but also...we also may have less concern of longevity risks in the later years as well (again...I have some health issues....wife may live to 105 though lol). 8.) We dont aim to die with 0 at 97....nor do we aim to live off pure interest or the 4% rule. We aim to have enough at age 97 to be worth about 40% of our starting networth. We can tap this for NEEDED spend (not wants) earlier if we need, or long term care....or longevity insurance (incase I live past 85 or my wife lives past 97). Otherwise...our kids/grandkids will inherit it. 9.) HELOC/Reverse Mortgage - we make NO plans for our home equity...so this is an additional fall back. 10.) Consider moving to medicare advantage from Medigap after I pass. Is it ideal? Not in a million years. BUT if it comes down to risking retiring 3-5 years later to ensure we ALWAYS have medigap and having a high risk of not enjoying ANY retirement.....or having a LAST RESORT of dropping from Medigap to Medicare advantage at age 88-97....we decided to take the later. That is a VERY personal call...especially considering Medigap is MOST beneficial over advantage in the later phases of life when you would use healthcare MORE. But for us...we are less likely to travel out of state for top care or even travel 1-3 hours away for care in our later years. That is one of the large medigap benefits wed want. So that become a mute point. 11.) I would 100% get a roommate if my wife unexpectedly passed. So this would give me a little extra cash, but more importantly, more social interaction and purpose. 12.) We are considering buying a 2 unit home to live in for retirement. Live in one unit rent the other....sell when we hit 75 or too old to maintain it. This could also offer a little inflation protection .
The bigger analysis should be of your personal health. I would go as far to overcomplicate it significantly.....but just make the call...do you have above average health, average, or below average? I forget where I pulled this from, but the standard deviation on US SSA life expectancy is about 8 years. Let's say you adjust 1/2 a standard deviation for below average or above average health, so 4 years. At 62, average female life expectancy is 84, male is 81. Run the numbers with an adjustment. Men in poor health, when is the ideal break-even point if you die at 77? Women, in poor health, 80. Above average health ...men...85, women 89. It will likely work out, that you should wait until 70 for the higher earner. And never forget the odds of 1 of 2 people dying are far higher than the odds of 1 person dying. Meaning for couples, the lower earner should consider taking it at 62 unless both spouses are in very above average health and/or still working and earning over the exempted amount (22.1k I believe).
I agree with this....the breakeven numbers don't matter for the person themselves...but for the surviving spouse and/or estate. That said...you shouldn't put yourself at financial risk for your estate but many poeple have very good reasons to believe that overwhelmingly, they may not be here in 10 years. So yes, "run the damn numbers" lol. Breakeven on SS is not a worthless analysis.
You could but I believe deciding when to start taking SSI is more nuanced. I am not saying either is "the optimal choice" but rather there are multiple scenarios to consider. Usually...pulling from investments makes sense....but as always, there are exceptions and varing levels of different risks for folks. If you are married...the odds that one spouse will pass are much higher, so it makes sense for the lower earner to take earlier. Most people on this forum are keen to this and if you are part of a couple....almost always makes sense for one spouse to start a 62 unless both spouses are still working and earnings would reducing your SS payment. Next is the market. And yes, I am going to put in a little piece about "market timing". IF your portfolio went down or pulled back significantly before when it comes time to decide to take SS or not / stop working...it could make more sense to take SSI and let your portfolio bounce back more. Drawing down your nest egg early in retirement increases SORR risk....so if you take SS earlier because of an early pull back...your making the bet (or market timing) that the next decade or few decades will have a higher inflation adjusted return AT your current risk level based on your CURRENT asset mix than 6-8% the SS increases by annually. In my opinion....its an aggressive bet if things only went down say 20%....but if they dropped 40% or more....its a bet I may personally make. For example, the 10 years AFTER 2008 when the market dropped about 37% in 1 year, (2009-2018) had the following inflation-adjusted compound annual growth rates: 100% US stock market: 4.07%
75% US stock market/25% 10-year TBills: 8.67%
65% US stock market / 35% 10-year Tbills: 7.65%
Inflation-adjusted CAGR of your monthly payment at age 70 versus 62 and 1 month is 7.412% If we took another time cohort and longer post-bear market time frame...we could see it work the other way. 20 Years after 2000 (2001-2019) had the following inflation-adjusted CAGR: 100% US stock market: 4.07%
75% US stock market/25% 10-year TBills: 4.41%
65% US stock market / 35% 10-year Tbills: 4.41%
Inflation-adjusted CAGR of your monthly payment at age 70 versus 62 and 1 month is 7.412% So while an AGGRESSIVE bet...I don't think it is a completely illogical bet. The likelihood of 2 large bear markets in the same decade is on the lower side. I'm not sure I WOULD PERSONALLY make that bet, but I get those taht do. Also...mentally...I can't imagine retiring in early 2009 after seeing such a large dip. Taking SS then could help you make that decision. Of course, some people could opt to work an extra year or two....but not everyone physically has that option. Especially if you expect to have a below-average lifespan. Last...if you have reason to believe you'll have a below-average lifespan AND want to leave as much as possible to your estate. If you are mediocre to poor health now, have a family history of early deaths or are in sub sections of the population with lower life spans (obese, smoker, drinker and so on). Of course you have to be careful and manage risk. If your barely covering expenses the longevity risk could be very high. If your biggest risk is a reduction in discretionary spending if you end up having an above average lifespan...you can consider this.
We are young and have some time until our intended retirement around 58-62 years old (we are both 41 now). But yes...this whole wild ride of 2025 made me consider a little more diversification. We WERE:
40% Large Cap Blend (my wifes Roth 401k portfolio), she has horrible fees on just about every other investment available to her in this 401k.
60% The mix below: Roth IRA Mix:
75% Large Cap Growth
8% Speculative ETFs and a couple stocks. Mostly sector ETF's in nuclear power, Chinese tech, Chinese clean energy, data security, and (2) 1% of my networth positions in 2 companies I research and believe in, Reddit and Oklo.
10% Mid Cap Value
5% Small Cap Value.
2% Gold. It was a pretty aggressive portfolio, but it was comfortable for us, seeing that when you zoom out...its basically a large cap fund with a strong growth tilt and a few smaller side bets. BUT then 2025 lol. I made the mistake of market timing (and I KNOW better) and sold off my individual ETFs and a third of my large cap growth etf in my Roth. Bought 1/2 gold and kept cash. Worked out really well for a month....shouldnt have been so greedy or better yet....should have left it ALONE lol. Still sitting on a big chunk of cash and gold. The gold is still up so at least there is that....but not nearly as up as the market over the last month. Egg on my face. The reason I have not bought back in..... have been contemplating a SLIGHTLY more diverse and my overly excessive analysis and HOPE that markets pull back a hair has kept me on the side line the last week to week and a half. The new mix 40% Large Cap Blend in wife's Roth 401k at her active employer
60% Rother IRAs Roth Blend: 55% Large Cap Growth
12% Large Cap Value / Dividend ETFs
8% Mid Cap Value
4% Small Cap Value
6% International USD Hedged ETF
4% Other International ETFs
3% Gold
1% Long Term US Gov Bond ETF
3% Global USD Hedged Bond ETF
4% Sector funds and small bets. Rebalance yearly in July. Still aggressive lol....but we are young....and a little more spread out.
I like Nick's article and his blog "ofdollarsandata" is one of my fovorite personal finance blogs out there. Its meaty but digestable. Highly recommended.
For the most part...I have never understood investing in shiny yellow rocks for most of my 41 years of life. I have come to look at it like a tool for currency hedging though. However, I understand gold can be a decent hedge against a falling US dollar/inflation. It is also not heavily correlated to stocks (not negatively correlated either). I am NOT saying anyone should go HEAVY into gold...but it may be worth doing some research and looking into a small position in gold. I don't look at portfolios as 3 funds exclusively (equity/bonds/cash). I look at it like equity and non equity. Equity is stocks, real estate, and private equity. With stocks (low-cost passive ETFs) being the VAST majority of this bucket me for personally. Haven't touched private equity yet but learning about it. Non-equity - bonds, cash, gold, other precious metals, currency/bitcoin. Again, the VAST majority is in long term, US government bonds. But gold has its place too, as does short-term cash. Bitcoin is minimal but I have just a touch. I do not own any other precious metals or currencies or nongovernment bonds at the moment (just diclosing). Currently learning more about foreign bonds. Wont be making big moves hastily though. Buffet says concentrated risk make sense IF YOU KNOW what your doing. Its rubbish to buy everything. EXCEPT for those of us (most of us) who don't know things on a truly professional level....those people should buy low cost ETF's which we do. That said....maybe research or consider a little more diversification.
African Safari during a wildebeest migration. In one of those modified ex military high up trucks moving slowly throw a pack of 10,000 migrating animals. Then soaking in the differences and similarities of cultures that are counter to American cultures. Lots of pictures and talks with locals.
Oh this is fun....going to have to add checking this to my calendar 1. modest gains in inflation. I will say 3.1% (10% increase from today, largely due to tariffs and domestic producers raising prices because foreign competitors' prices went up AND passing higher input costs on).
2. slight bumps in unemployment. In part from layoffs, in part from cooling economy (NOT saying cold or recession), in part from AI advancements.
3.I do think we COULD see a recession in 2025....or have it start in later 2025....not convinced we are there just yet. I do see a bear market or at least a very sideways market for the immediate future. We have to get past the tariffs transitions and on to the next "thing". That's going to take a little bit. IN MY UNINFORMED...having fun guessing...OPINION lol. I am "just some guy at a computer" and acknowledge that. I also see a narrative of "stubborn inflation" ahead and markets losing hope of 2 cuts....we may have to settle on 1 or 0...which at the present rate I think it normal, we ARENT talking 10% mortgages and 7% Fed rates....but as a society I think we are acting like it right now.
4.5200. Not enough to officially enter us into a bear....but shedding some frothiness.
5.)NASDAQ could feel some more pain this year. I am betting on 15,000 by Oct 1.
6.Yes I do believe they will. Foreign governments will be forced to spend more on military and tech/industrial infrastructure as US tech and military supplies get limited and/or more expensive. In the short term, this will help them create jobs. In the longer term...who knows. Our tariffs may help them more than us lol. Not the worst thing...but it will surely increase global competition.
7.I think value will lose LESS than growth. My guess is BOTH fall. Growth should fall more as AI and the mag 7 are likely overvalued. Longer term....most mag 7 will continue to press upward...but they will likely lose a little more steam in the shorter term because they grew too fast. The question I am asking....what cap of value will do best...large has more insulation and more likey to take on institutional money leaving growth large caps....small cap is more nimble to shift fast....I am betting mid cap value large cap value. I worry small cap value companies wont get the presidents/congress attention for favorable treatments and tariff reliefs..
8.Yields will be a wild ride. Fed will likely hold rates, spook fixed income, US will likely cheese off the rest of the world and may reduce foreign investment so I am saying yields go up. I am saying 4.5-5%.
9.Now the ones that weren't asked. Gold. Spot price is now $2985. I see that going up to $3135. 5% increase. For my ETF friends (which is where I hold my gold), GLDM is now $62...and I am GUESSING well see 65. I think US bonds will look a LITTLE riskier...hence yields going on....institutions will have an increasing preference to reduce risk profile and will see gold as a partial solution to park funds.I also see more nations wanting independence from the US dollar (BRIC nations especially) and looking to increase gold holdings.
10.Bitcoin. you would think BTC would go up with the uncertainty of the US...and the current administration being more crypto friendly...I don't though. I see a drop to 63k from its present 84k.I dont thnk China loves BTC because they would struggle to control it. Russia may embrace it to trade in, but US institutions hold a good amount and they are looking to reduce risk and brace for impact. I dont think it will be as deep of a sell off as 2022 and institutions now know how hard it could bounce back....but I am not bearish for this year for sure.
11.)Residential real estate. According the the St. Louis Fed ( https://fred.stlouisfed.org/series/MSPUS). US home price is now 419k. I see that softening to 410k. Biggest drop may be felt in tech-centric cities, cities with high insurance costs and low taxes (most of florida). Tech will have more and more AI based lay offs and falling sales. Tax friendly, high insurance cost places like florida will lose population BACK to DC and government hubs at return to office mandate for federal agencies come back.
2025 so far....is not chaos. Now I am not calling you wrong or a liar....you certainly are neither. You are lost in the forest because you are standing too close to 1 tree. Here is a short list of FAR more chaotic times for the United States. -When the capital of the US was stormed.
-When the world shut down in response to a new virus.
-When banked melted down in 2007-08.
-When planes hit the world trader centers (plural) and we invaded 2 countries after.
-When the markets melted down from overvaluing the internet
-When school shootings started to be come a norm
-LA Riots in 1992
-Black Monday in 1987(DOW dropped 22.6% ....in a DAY) Then we have MUCH bigger historic and disruptive events
-Mass inflation in the 70's-80s....DOUBLE DIGIT mortgages!!!!
-Oil shortages
-Vietnam and a draft....you literally got a piece of mail and were shipped halfway around the world with a gun to fight in a brutal and confusing war.
-Cold War - every scared senseless a city leveling bomb could be dropped on them
-WW2 - the death toll and life disruption of all involved is UNIMAGINABLE. NO ONE ALIVE TODAY under 95...has ANY idea.
-Great Depressions....people literally put signed on their kids "please take them, I cannot feed them".
-WW1
-Pre Industrial revolution.....every day....disease, filth, rough rough standards, working 70 hours weeks was the norm
-Civil War. And so on. This is not chaos. We are all waking up and doing our regular routine, seeing loved ones, speaking freely, eating enough and living. This is discomfort. Mild discomfort.
Comments
First and foremost....nothing is perfect. Many ways to address inflation involve incurring extra risk. My overall plan is to NOT go all in on anyone solution. So here is what I am doing to combat inflation: 1) Don't assume level spending in retirement. I very much call B-S on the oversimplified mantra of "use 80% of your take home pay before retirement" or any amount of spending before retirement....70%...90%...110%...I dont care....life doesnt work that way. I break up retirement into buckets for spending. They project what our spending will most likely look like. A few categories like healthcare, have VERY high increases from one phase to the next. Then there are categories with modest increases like food, utilities, automotive and family spending (spending on our kids or grandkids). Then everything else stays relatively the same (assuming real costs...not inflation adjusted). What we see....medical cost rise FASTER than our travel and entertainment costs slow down. Also food and fmaily entertainment costs go up with grandchildren as you mentioned. Healthcare is the biggest X factor....we plan for 1% increase in all healthcare categories ABOVE inflation each year. THAT REALLY ads up by time we get to retirement....AND gets VERY VERY big by time we hit end of life (estimated at age 97). So Medigap policies compound up....out of pocket compounds up....unreimbursed medical expenses, premiums and all that other added in stuff. Phase 1: retirement to age 62 (when I will take SS and medicare MIGHT kick in). The travel/adventure years (go-go-go years). We have extra travel baked into this, higher health care costs Phase 2: age 62 - 68 - Less travel, more medical costs, way more food and family spending as we may have grandkids around here. Healthy entertainment budget still...this is still our Go-Go phase. Higher medical than phase 1. Phase 3: 68-78. Slow-Go phase. Less travel, a little less entertainment/eating out. A little more grandkid spending. Higher medical than phase 2. Auto drops a little as we move to one car and drive less. Phase 4: 78-85: Slow-go/no-go. Planning for 2 spouses but much less travel and a bit less entertainment. Grandkids' costs start to reduce. Medical is higher. Extra support (grocery delivery/home cleaner) enters the budget. Phase 5: No-go / 1 remaining spouse. Statistically, its unlikely well both be around (I have some health issues....so 85 is a little generous for me). Grandkid costs are heavily reduced, all variable expenses are reduced. Overall health is reduced because 1 person vs 2...but my wife's share will be more. Driving less. More paid support. Our most expensive phase...phase 2....travel...healthcare....grandkids...then they slowly reduce each phase and then they go down a lot when I pass at project 85 or sooner. Medical ALWAYS goes up though...by a lot. 2) Wait til 70 for the higher earner for SS. Honestly...we are planning for SS age to get bumped back to 73...but this will help us hedge inflation. 3.) Will have an unadjusted annuity (QLAC) for my wife which starts at 80. Between SS and this annuity....80% of her NEEDS will be met from 80-90 roughly. 4.) What about the spending gap for 90 and on...we have our Roth investments for that. We will have a multi-legged stool...investments in the roth with a 75/25 or 85/15 mix (torn on that still). This IS aggressive for a fixed income couple but we also have a large SS from my wife at age 70 (73), my SS and an annuity starting at 80. THIS PIECE....is our BIGGEST protection from inflation in my opinion. 5.) What about SORR - from retirement - 70...one of us could consult or work aprt time if we had a MAJOR meltdown. 6.) Also...we are planning to keep working part-time for 1-3 year PAST when we can retire for extra buffer/travel money. If a market meltdown happens just before we go part-time or during our 1-3 years of part-time work....we can just keep working to keep withdrawals lower during the down years (health permitting of course). We work desk jobs remotely now....but are open to more physical work like being a barista or airline/hotel desk clerk (for the extra travel perks)...health permitting of course. 7.) And if inflation rises above of our investments....simple...we cut back on the wants. We are pretty good at enjoying the simple things....so while big European vacations and eating out is fun and fancy...we can be very happy with a long weekend road trip staying at a hotel we paid with credit card points, packing a lunch from our hotel room and cooking at home when in town. The gets a little trickier in our later phases as we age as there is less budgeted for those things....but also...we also may have less concern of longevity risks in the later years as well (again...I have some health issues....wife may live to 105 though lol). 8.) We dont aim to die with 0 at 97....nor do we aim to live off pure interest or the 4% rule. We aim to have enough at age 97 to be worth about 40% of our starting networth. We can tap this for NEEDED spend (not wants) earlier if we need, or long term care....or longevity insurance (incase I live past 85 or my wife lives past 97). Otherwise...our kids/grandkids will inherit it. 9.) HELOC/Reverse Mortgage - we make NO plans for our home equity...so this is an additional fall back. 10.) Consider moving to medicare advantage from Medigap after I pass. Is it ideal? Not in a million years. BUT if it comes down to risking retiring 3-5 years later to ensure we ALWAYS have medigap and having a high risk of not enjoying ANY retirement.....or having a LAST RESORT of dropping from Medigap to Medicare advantage at age 88-97....we decided to take the later. That is a VERY personal call...especially considering Medigap is MOST beneficial over advantage in the later phases of life when you would use healthcare MORE. But for us...we are less likely to travel out of state for top care or even travel 1-3 hours away for care in our later years. That is one of the large medigap benefits wed want. So that become a mute point. 11.) I would 100% get a roommate if my wife unexpectedly passed. So this would give me a little extra cash, but more importantly, more social interaction and purpose. 12.) We are considering buying a 2 unit home to live in for retirement. Live in one unit rent the other....sell when we hit 75 or too old to maintain it. This could also offer a little inflation protection .
Post: How are you dealing with or plan to deal with inflation in retirement? By R Quinn
Link to comment from June 12, 2025
The bigger analysis should be of your personal health. I would go as far to overcomplicate it significantly.....but just make the call...do you have above average health, average, or below average? I forget where I pulled this from, but the standard deviation on US SSA life expectancy is about 8 years. Let's say you adjust 1/2 a standard deviation for below average or above average health, so 4 years. At 62, average female life expectancy is 84, male is 81. Run the numbers with an adjustment. Men in poor health, when is the ideal break-even point if you die at 77? Women, in poor health, 80. Above average health ...men...85, women 89. It will likely work out, that you should wait until 70 for the higher earner. And never forget the odds of 1 of 2 people dying are far higher than the odds of 1 person dying. Meaning for couples, the lower earner should consider taking it at 62 unless both spouses are in very above average health and/or still working and earning over the exempted amount (22.1k I believe).
Post: Breaking even? Why should anyone care? I don’t
Link to comment from May 15, 2025
I agree with this....the breakeven numbers don't matter for the person themselves...but for the surviving spouse and/or estate. That said...you shouldn't put yourself at financial risk for your estate but many poeple have very good reasons to believe that overwhelmingly, they may not be here in 10 years. So yes, "run the damn numbers" lol. Breakeven on SS is not a worthless analysis.
Post: Breaking even? Why should anyone care? I don’t
Link to comment from May 15, 2025
You could but I believe deciding when to start taking SSI is more nuanced. I am not saying either is "the optimal choice" but rather there are multiple scenarios to consider. Usually...pulling from investments makes sense....but as always, there are exceptions and varing levels of different risks for folks. If you are married...the odds that one spouse will pass are much higher, so it makes sense for the lower earner to take earlier. Most people on this forum are keen to this and if you are part of a couple....almost always makes sense for one spouse to start a 62 unless both spouses are still working and earnings would reducing your SS payment. Next is the market. And yes, I am going to put in a little piece about "market timing". IF your portfolio went down or pulled back significantly before when it comes time to decide to take SS or not / stop working...it could make more sense to take SSI and let your portfolio bounce back more. Drawing down your nest egg early in retirement increases SORR risk....so if you take SS earlier because of an early pull back...your making the bet (or market timing) that the next decade or few decades will have a higher inflation adjusted return AT your current risk level based on your CURRENT asset mix than 6-8% the SS increases by annually. In my opinion....its an aggressive bet if things only went down say 20%....but if they dropped 40% or more....its a bet I may personally make. For example, the 10 years AFTER 2008 when the market dropped about 37% in 1 year, (2009-2018) had the following inflation-adjusted compound annual growth rates: 100% US stock market: 4.07% 75% US stock market/25% 10-year TBills: 8.67% 65% US stock market / 35% 10-year Tbills: 7.65% Inflation-adjusted CAGR of your monthly payment at age 70 versus 62 and 1 month is 7.412% If we took another time cohort and longer post-bear market time frame...we could see it work the other way. 20 Years after 2000 (2001-2019) had the following inflation-adjusted CAGR: 100% US stock market: 4.07% 75% US stock market/25% 10-year TBills: 4.41% 65% US stock market / 35% 10-year Tbills: 4.41% Inflation-adjusted CAGR of your monthly payment at age 70 versus 62 and 1 month is 7.412% So while an AGGRESSIVE bet...I don't think it is a completely illogical bet. The likelihood of 2 large bear markets in the same decade is on the lower side. I'm not sure I WOULD PERSONALLY make that bet, but I get those taht do. Also...mentally...I can't imagine retiring in early 2009 after seeing such a large dip. Taking SS then could help you make that decision. Of course, some people could opt to work an extra year or two....but not everyone physically has that option. Especially if you expect to have a below-average lifespan. Last...if you have reason to believe you'll have a below-average lifespan AND want to leave as much as possible to your estate. If you are mediocre to poor health now, have a family history of early deaths or are in sub sections of the population with lower life spans (obese, smoker, drinker and so on). Of course you have to be careful and manage risk. If your barely covering expenses the longevity risk could be very high. If your biggest risk is a reduction in discretionary spending if you end up having an above average lifespan...you can consider this.
Post: Breaking even? Why should anyone care? I don’t
Link to comment from May 15, 2025
We are young and have some time until our intended retirement around 58-62 years old (we are both 41 now). But yes...this whole wild ride of 2025 made me consider a little more diversification. We WERE: 40% Large Cap Blend (my wifes Roth 401k portfolio), she has horrible fees on just about every other investment available to her in this 401k. 60% The mix below: Roth IRA Mix: 75% Large Cap Growth 8% Speculative ETFs and a couple stocks. Mostly sector ETF's in nuclear power, Chinese tech, Chinese clean energy, data security, and (2) 1% of my networth positions in 2 companies I research and believe in, Reddit and Oklo. 10% Mid Cap Value 5% Small Cap Value. 2% Gold. It was a pretty aggressive portfolio, but it was comfortable for us, seeing that when you zoom out...its basically a large cap fund with a strong growth tilt and a few smaller side bets. BUT then 2025 lol. I made the mistake of market timing (and I KNOW better) and sold off my individual ETFs and a third of my large cap growth etf in my Roth. Bought 1/2 gold and kept cash. Worked out really well for a month....shouldnt have been so greedy or better yet....should have left it ALONE lol. Still sitting on a big chunk of cash and gold. The gold is still up so at least there is that....but not nearly as up as the market over the last month. Egg on my face. The reason I have not bought back in..... have been contemplating a SLIGHTLY more diverse and my overly excessive analysis and HOPE that markets pull back a hair has kept me on the side line the last week to week and a half. The new mix 40% Large Cap Blend in wife's Roth 401k at her active employer 60% Rother IRAs Roth Blend: 55% Large Cap Growth 12% Large Cap Value / Dividend ETFs 8% Mid Cap Value 4% Small Cap Value 6% International USD Hedged ETF 4% Other International ETFs 3% Gold 1% Long Term US Gov Bond ETF 3% Global USD Hedged Bond ETF 4% Sector funds and small bets. Rebalance yearly in July. Still aggressive lol....but we are young....and a little more spread out.
Post: Ch-Ch-Changes?
Link to comment from May 14, 2025
I like Nick's article and his blog "ofdollarsandata" is one of my fovorite personal finance blogs out there. Its meaty but digestable. Highly recommended.
Post: Bogle has saved us a Trillion Dollars through Vanguard’s 50th Anniversary
Link to comment from April 30, 2025
For the most part...I have never understood investing in shiny yellow rocks for most of my 41 years of life. I have come to look at it like a tool for currency hedging though. However, I understand gold can be a decent hedge against a falling US dollar/inflation. It is also not heavily correlated to stocks (not negatively correlated either). I am NOT saying anyone should go HEAVY into gold...but it may be worth doing some research and looking into a small position in gold. I don't look at portfolios as 3 funds exclusively (equity/bonds/cash). I look at it like equity and non equity. Equity is stocks, real estate, and private equity. With stocks (low-cost passive ETFs) being the VAST majority of this bucket me for personally. Haven't touched private equity yet but learning about it. Non-equity - bonds, cash, gold, other precious metals, currency/bitcoin. Again, the VAST majority is in long term, US government bonds. But gold has its place too, as does short-term cash. Bitcoin is minimal but I have just a touch. I do not own any other precious metals or currencies or nongovernment bonds at the moment (just diclosing). Currently learning more about foreign bonds. Wont be making big moves hastily though. Buffet says concentrated risk make sense IF YOU KNOW what your doing. Its rubbish to buy everything. EXCEPT for those of us (most of us) who don't know things on a truly professional level....those people should buy low cost ETF's which we do. That said....maybe research or consider a little more diversification.
Post: Trying To Think Through the Bond Situation
Link to comment from April 15, 2025
African Safari during a wildebeest migration. In one of those modified ex military high up trucks moving slowly throw a pack of 10,000 migrating animals. Then soaking in the differences and similarities of cultures that are counter to American cultures. Lots of pictures and talks with locals.
Post: Where Next? What Next?
Link to comment from April 2, 2025
Oh this is fun....going to have to add checking this to my calendar 1. modest gains in inflation. I will say 3.1% (10% increase from today, largely due to tariffs and domestic producers raising prices because foreign competitors' prices went up AND passing higher input costs on). 2. slight bumps in unemployment. In part from layoffs, in part from cooling economy (NOT saying cold or recession), in part from AI advancements. 3.I do think we COULD see a recession in 2025....or have it start in later 2025....not convinced we are there just yet. I do see a bear market or at least a very sideways market for the immediate future. We have to get past the tariffs transitions and on to the next "thing". That's going to take a little bit. IN MY UNINFORMED...having fun guessing...OPINION lol. I am "just some guy at a computer" and acknowledge that. I also see a narrative of "stubborn inflation" ahead and markets losing hope of 2 cuts....we may have to settle on 1 or 0...which at the present rate I think it normal, we ARENT talking 10% mortgages and 7% Fed rates....but as a society I think we are acting like it right now. 4.5200. Not enough to officially enter us into a bear....but shedding some frothiness. 5.)NASDAQ could feel some more pain this year. I am betting on 15,000 by Oct 1. 6.Yes I do believe they will. Foreign governments will be forced to spend more on military and tech/industrial infrastructure as US tech and military supplies get limited and/or more expensive. In the short term, this will help them create jobs. In the longer term...who knows. Our tariffs may help them more than us lol. Not the worst thing...but it will surely increase global competition. 7.I think value will lose LESS than growth. My guess is BOTH fall. Growth should fall more as AI and the mag 7 are likely overvalued. Longer term....most mag 7 will continue to press upward...but they will likely lose a little more steam in the shorter term because they grew too fast. The question I am asking....what cap of value will do best...large has more insulation and more likey to take on institutional money leaving growth large caps....small cap is more nimble to shift fast....I am betting mid cap value large cap value. I worry small cap value companies wont get the presidents/congress attention for favorable treatments and tariff reliefs.. 8.Yields will be a wild ride. Fed will likely hold rates, spook fixed income, US will likely cheese off the rest of the world and may reduce foreign investment so I am saying yields go up. I am saying 4.5-5%. 9.Now the ones that weren't asked. Gold. Spot price is now $2985. I see that going up to $3135. 5% increase. For my ETF friends (which is where I hold my gold), GLDM is now $62...and I am GUESSING well see 65. I think US bonds will look a LITTLE riskier...hence yields going on....institutions will have an increasing preference to reduce risk profile and will see gold as a partial solution to park funds.I also see more nations wanting independence from the US dollar (BRIC nations especially) and looking to increase gold holdings. 10.Bitcoin. you would think BTC would go up with the uncertainty of the US...and the current administration being more crypto friendly...I don't though. I see a drop to 63k from its present 84k.I dont thnk China loves BTC because they would struggle to control it. Russia may embrace it to trade in, but US institutions hold a good amount and they are looking to reduce risk and brace for impact. I dont think it will be as deep of a sell off as 2022 and institutions now know how hard it could bounce back....but I am not bearish for this year for sure. 11.)Residential real estate. According the the St. Louis Fed ( https://fred.stlouisfed.org/series/MSPUS). US home price is now 419k. I see that softening to 410k. Biggest drop may be felt in tech-centric cities, cities with high insurance costs and low taxes (most of florida). Tech will have more and more AI based lay offs and falling sales. Tax friendly, high insurance cost places like florida will lose population BACK to DC and government hubs at return to office mandate for federal agencies come back.
Post: How’s Your Crystal Ball? By Jonathan Clements
Link to comment from April 1, 2025
2025 so far....is not chaos. Now I am not calling you wrong or a liar....you certainly are neither. You are lost in the forest because you are standing too close to 1 tree. Here is a short list of FAR more chaotic times for the United States. -When the capital of the US was stormed. -When the world shut down in response to a new virus. -When banked melted down in 2007-08. -When planes hit the world trader centers (plural) and we invaded 2 countries after. -When the markets melted down from overvaluing the internet -When school shootings started to be come a norm -LA Riots in 1992 -Black Monday in 1987(DOW dropped 22.6% ....in a DAY) Then we have MUCH bigger historic and disruptive events -Mass inflation in the 70's-80s....DOUBLE DIGIT mortgages!!!! -Oil shortages -Vietnam and a draft....you literally got a piece of mail and were shipped halfway around the world with a gun to fight in a brutal and confusing war. -Cold War - every scared senseless a city leveling bomb could be dropped on them -WW2 - the death toll and life disruption of all involved is UNIMAGINABLE. NO ONE ALIVE TODAY under 95...has ANY idea. -Great Depressions....people literally put signed on their kids "please take them, I cannot feed them". -WW1 -Pre Industrial revolution.....every day....disease, filth, rough rough standards, working 70 hours weeks was the norm -Civil War. And so on. This is not chaos. We are all waking up and doing our regular routine, seeing loved ones, speaking freely, eating enough and living. This is discomfort. Mild discomfort.
Post: I’m concerned about the stock market. How concerned are you? Jonathan, any comforting words?
Link to comment from March 28, 2025