Well given I’ve been thinking of pulling the plug fairly soon, the past 2 weeks have been very much a gut check. Of course I’m concerned about SORR and was already planning a relatively cautious SWR in early retirement years.
But I found that during the worst worry I was more focused on the simple cheap things that I want to do rather than the spendy things that might not be affordable in extremis. In fact I think I was more upset at the prospect of having to work longer and miss out on walks, cycling, enjoying nature than I was at financial loss.
Worse case I guess, I take a historic bath because the world has been fundamentally destabilised and I have to return to working in some form.
And I do very much have Jonathan’s and Norman’s circumstances in mind. What if the next 30 years is only 5 or 10? While YOLO is a cliche for younger folk I think for anyone over 50 or 60 it seriously needs to be weighted in.
So not so much financial thinking but more a sign that my thinking has been heavily influenced by research about purpose and mental adjustment to retirement and that finances are the easier part.
The most recent “change” occurred in 2022 when I was diagnosed, but my actions didn’t change [while] my life was put on hold for 2 years.
My financial thinking hasn’t changed much since then. The current market turmoil will make no difference to my plans. Why? Because my reasons for investing the way I have has not changed. I will have the necessary stream of income despite market turmoil and the likely increases to the cost of living. My financial plans were finalized in 2013 with a range of likely outcomes.
I do admit I no longer count pennies. By that I mean I’ve loosened some aspects of the budget. I prefer to spend money enjoying things day to day. That means more restaurants and related costs because that’s an easier way than entertaining a group.
I no longer delay certain things because it is likely I won’t be here, so why delay for a future time next month or next year? My Lifetime Planner extends to 2050. That’s merely a planning tool (but then, it always was just a tool). There is a small possibility G will still be alive at that time.
I am calmer pre-retiree. I discovered Bill Bernstein’s “Four Pillars” book and Paul Merriman’s website and finally built up a TIPS LMP and a well diversified risk portfolio.over the last year.
SORR is a pre retiree or retiree biggest concern. Read the Trinity Study and Bergen’s book on the 4% rule. Unfortunately past history/results is not always a predictor of the future. Running out of money is a retirees greatest challenge
In 2013 Wade Pfau’s research indicated that losses experienced in the first several years of withdrawals are the most detrimental. (Sequence of Returns Risk). He estimated that 77% of the final retirement outcome can be explained by the average return during the first 10 years of retirement. Mr. Pfau is a Professor of Retirement Income. He has a number of books out there as well as YouTube videos. He updated his “Retirement Planning Guidebook” in 2025.
Earlier this year I asked Morningstar’s Jeff Ptak this very question which lead the following article (In our communications he apologized for not crediting me with the concept of the article, which was a question I had been mulling for years, but had never seen an article addressing):
in the article Morningstar’s researchers determined the following:
The study started with assuming an all-equity portfolio, with a 3.1% starting spending rate for retirees making fixed real withdrawals each year from an investment portfolio (assuming a 90% probability of having funds remaining at the end of an assumed 30-year retirement period). There was a far higher risk of exhausting retirement savings when returns were poor in the first five years. If you made it through the first five years of retirement with investment gains, there was only about a 1 in 25 chance you’d subsequently deplete your savings before reaching the end of retirement, assuming you stuck with the system of fixed real withdrawals. Even after one year of retirement, a gain cut your risk of failure in half. If losses occurred at any point in those first five years, the risk of failure shrank to about 1% by year 10 of retirement.
Way to go! Glad you asked this question! I’ve been wondering the same for several years.
In Morningstar’s “2024 State of Retirement Income” report, it states, “…enlarging nonportfolio cash flows with a combination of a modest annuity purchase and Social Security can help protect against sequence of returns risk.”
“The easiest way to mitigate sequence of returns risk is to lower your safe withdrawal rate during down periods”. Benz at Morningstar suggests this and cites sources. Others have suggested using the 10 year bond rate as a guide. One factor is related to expenses. Keeping expenses level in retirement is important, too. If they increase over time that is another risk factor. A tremendous amount has been written about SORR in recent years, much of which I find useful. Concerned about Long Term Care costs? Then get LTC insurance, but bear in mind the initial premiums rise dramatically as we get older; for that reason its better to purchase in our 60s. BTW, I’ve never considered the bond rate as realistic barometer because of very low recent returns. I found a 0.6% withdrawal rate to be ludicrous.
Your articles have given me a lot to think about, and now that I’m retired, I have more time to address some things I’ve been meaning to do.
I simplified our finances by consolidating Traditional IRA accounts (3->1) and Roth IRA accounts (2->1) and closed two accounts we used when we built our home. We also updated our trust since we sold some land, bought some land, and downsized our home.
I created a withdrawal policy statement to determine if we had ‘enough’ for me to retire (my husband is retired). I divided our current & future expenses into four categories and designated a funding source for each category. For example, the first category is our monthly essential and discretionary expenses. These costs are covered by social security, pension, and a laddered deferred annuity. The guaranteed lifetime payments give me peace of mind (worry less) and mitigate longevity risk, cognitive decline, and market risk. It also simplifies the monthly bills for my husband and kids if something happens to me. I repeated this process for categories 2-4.
I’m a more conservative investor, opting for CDs and less volatile stocks. We gifted our four kids in 2022 and last year.
It’s taken me a year to get our ducks in a row, but now I can enjoy retirement ‘after enough’….
Thanks for your comment, David! It was a lot of work!
I was impressed how quickly Fidelity consolidated my IRAs, so they get the credit for that work. I put off moving my Wells Fargo IRA for years because they required me to fill out a 3 page form. Whereas with Fidelity, I just completed a few pieces of information online and they coordinated the transfer from WF to Fidelity within a couple of weeks. Same with my HSA.
The withdrawal policy statement was a fair amount of work coming up with estimates for future expenses (home services, home care, LTC, home maintenance/contingencies, car upgrades, etc.) But once I grouped these costs into 4 categories, determining four funding sources wasn’t so daunting…especially since I had all the building blocks in place – emergency fund, pension, SS, CDs, dividend portfolio, index ETF portfolio. The only thing I changed was to add a small annuity to cover home services. Last step was to determine if there were some actions I should take to mitigate the top retirement risks, i.e., sequence of returns risk, longevity risk, inflation risk, cognitive decline. This process gave me peace of mind that we have ‘enough’.
I’ve learned that the news and following my investment performance is probably 100% a waste of time, beyond setting up a sustainable allocation and regular contributions. There’s really not that much to think about when it comes down to it.
I’ve possibly gotten more conservative. Over the last several months I’ve been thinking about reducing our stock allocation. Never actually pulled the trigger, but the past several days have gotten us partway there…
This is a timely repost. 2021 was my final year working. I continued to max out both my SEP and IRA. If I were still working today, I would do exactly the same. Am I becoming stubborn in my old age? I don’t believe my thinking has evolved at all.
Having “retired early” about twelve months ago, and gone through some significant events including becoming a carer for and the subsequent death of my mother, My mindset is shifting towards focusing on enjoying the present, rather than relentlessly working / hustling for the future.
I found that the wealth I have was more controlled by a macro environment than I thought. Even cash under the mattress loses its value much faster in this inflationary world. I realized that I needed to: a. find out which part I could control, b. focus on it, c. and ignore the rest.
That my Excel skills are now like my Dads “back of the napkin math.” Between phase-outs, shifting tax brackets, sunset provisions, SS, ACA, FPL limits, Medicare IRMMA lookbacks and RMD age extensions Congress and the IRS have made navigating retirement finances a game of 3Dchess. Much more difficult than buying cap-weighted index funds for 30 years and letting it ride!
We planned to retire (and we retired) in 2022, and this included ensuring we protected ourselves from poor sequence of returns during our first 3-5 years of retirement. We are 60% Stocks and 40% bonds which includes large a cash cushion. We’re using the cash to pay taxes on big Roth conversions in lower income tax brackets and living off the remaining cash over the next 1-2 years so no to touch the investments in a down market. I feel comfortable with our safety net and our withdrawal plan.
Possessions are overrated. I recently scored the elders’ hat trick – retirement, relocation and downsizing. That made me confront what I had amassed over my life and forced me to dispose of as much of it as I could. I’d say I was pretty successful. I found I had to buy a few things for my new home, and repurchase a few books I found I really missed. But on balance, I succeeded. I buy very few new things these days, and I always do it with an eye on how I will unload it later if I no longer want it. And, of course, my kids won’t be saddled with a bunch of white elephants they’ll need to get rid of when I die.
Not much change in the last year, but when Covid hit in March of 2020, with nothing but uncertainty as to what it meant for the economy and my income over the next 12 months, I realized that I was not comfortable with the amount of my cash savings, despite the fact that the previous amount seemed fine before the pandemic. That changed my thinking about keeping enough savings to weather a worst-case scenario, rather than just a likely or anticipated one.
My wife and I have spent a lot less during pandemic. No travel, no eating in restaurants, less shopping, etc. We are in great shape financially and look forward to some travel and visiting family again.
Inflation has made keeping money in savings accounts and other low interest earning ways much less tolerable. We need to figure out how to deal with inflation, which is enemy #1 for retirees like us.
I enjoy my work, so I invested to be able to retire in my early sixties, while planning to work as long as my health permitted. Given the stress of 2020, I took a close look at whether it’s really feasible to retire at age 62. It is, but I have too much in tax deferred accounts and too little in Roth accounts.
I’ve increased contributions to my Roth accounts and started planning for Roth conversions. I’ve started building my cash reserves. I’ve also signed up for accounting clerk classes, with the goal of taking temp jobs when I retire. I’d like to retire from management, not retire completely.
Diversification (across equities) is overrated. When the stock market crashes there are few hiding places. Nevertheless, in spite of market crashes or perhaps because of them equities are the place to be. A good business is capable of adjusting to changing economic environments and therefore is most likely to be the best all weather investment.
I’ve gotten more conservative. Part of that is just stage of life (late 60s and retired), but not all of it. Right now I’m reading The Investor’s Manifesto by William Bernstein and he stresses the fact that the pain from a loss greatly exceeds the happiness from an equivalent gain. I know that’s true in my case so I’ve nudged our investments in a more cautious direction—though it’s not easy with bonds’ current performance, not to mention the (non) yield on savings and money market accounts!
To my own surprise I have lightened up on spending. The pandemic has changed my thinking a bit. Eleven years after retiring I’m no longer saving for retirement, so I have started spending a portion of interest and dividends on special projects and looking forward to spending again in travel.
I’m so proud to have maxed out my 401(k) / TSP (federal employee version) contributions over the years. Set it and forget it, combined with low cost indexing. In passive hindsight, it’s been the best type of investing. My younger version might have wanted to tinker or pay an outside professional to do the same tasks. I see little upside now.
I am less judgmental on myself when I come in over or under my budget. The past year has shown me that many things are not under our control and if I come in slightly better or worse on a small budget to begin with, what does it really matter? What matters is to keep investing, focus more on diversification as I just hit 50, keep learning about retirement topics I’m not very familiar with like LTC and SS strategies in the future, etc. Coming off of a trial retirement and realizing I have more to give in the workplace, I need to figure out how long I will work and until then, be intentional with our money. The rest will sort itself out…
I have more tolerance for things not going to plan. In fact, I fully expect life not to follow my plans. There’s a tremendous amount of freedom that comes with being okay with things not being okay. Hakuna matata.
I have financial aid letters denoting first year costs for my twins starting college in five months, and I am no longer employed full-time. My financial perspective has become foreshortened. I have set aside sufficient funds for “further out there” per my current understanding of my future needs and am letting those ride. Meanwhile, my front burner financial thinking concerns the adequacy of cash/cash equivalents and cash flow necessary to get the kids through college and on their own. When I spend time thinking about “retirement” and my money “further out there,” it’s questions of how to use money to make my life easier/better now and later. I don’t believe it will run out, so I think I can let bits of it go now in ways that help me. That’s a new perspective after decades of saving first and foremost.
I think it is very wise every few years to reread The Intelligent Investor by Benjamin Graham. The is the “Bible” of value investing and it always reinforces my sense of fear when others are greedy. I not sure how these crazy SPAC/NFT/Bitcoin manias will play out but I really like sleeping at night without the sense of excessive risk.
The past year has reinforced what I’ve come to learn over thirty years of investing – nobody (especially me) can predict the future, and how markets will react. Develop a well diversified portfolio with an asset allocation you can sleep with. Continue to invest through highs and lows (dollar coast average) and have faith in the future.
Too many talking heads like to say cash is trash these days. I disagree cuz I may know I’m going to lose $$ after inflation but at least I don’t risk a significant stock market decline or harm from interest rate increases. So I’ll stick with my 60% stock, 40% cash allocation thank you very much.
Oh and don’t even get me started on the whole “People are investing in stocks because there is no alternative (TINA)” garbage.
With ultra-low interest rate and an all-time high stock valuations, I think the 4% rule (25x rule) may create a false sense of retirement readiness. Until the dust settles and the rate goes back up to a sensible level, I’m using more conservative numbers for planning purpose.
For over 30 years I’ve kept a diverse mix of stock funds and bond funds. We’re approaching retirement age at a moment when bond prices and rate risks are not attractive. Since our portfolio is close to target, and I won’t retire with a pension, I’m saving new money this year in low-cost deferred income annuities from the two strongest mutual insurers, with annual increases to account for inflation. The income should help us defer Social Security until I’m 70 and helps with longevity risk. Would never have imagined buying annuities until now.
Thanks for your comment. Can you share as to how a deferred income annuity is better to bridge the gap to social security from say 62 to 70 than just using the money to cover expenses? Are the insurance companies giving a much better rate than money markets (.5% currently)? Does the annuity end at 70?
Hi there. I’m almost 60 and am planning to retire some years before age 70. I have a few savings buckets to use as income between stopping a paycheck and starting SS or tapping retirement savings. Deferred income annuities are like fixed immediate annuities in that you pay a premium in exchange for committed income amounts paid to you each month which continue until you and your partner both die (if you purchase joint annuities). Like all investments they have drawbacks and benefits. You can read how I thought about those in this HumbleDollar article. My first annuity purchase was aimed mostly at longevity risk. This year’s purchase is also aimed at boosting income between the end of full-time work and the start of my full retirement.
Well given I’ve been thinking of pulling the plug fairly soon, the past 2 weeks have been very much a gut check. Of course I’m concerned about SORR and was already planning a relatively cautious SWR in early retirement years.
But I found that during the worst worry I was more focused on the simple cheap things that I want to do rather than the spendy things that might not be affordable in extremis. In fact I think I was more upset at the prospect of having to work longer and miss out on walks, cycling, enjoying nature than I was at financial loss.
Worse case I guess, I take a historic bath because the world has been fundamentally destabilised and I have to return to working in some form.
And I do very much have Jonathan’s and Norman’s circumstances in mind. What if the next 30 years is only 5 or 10? While YOLO is a cliche for younger folk I think for anyone over 50 or 60 it seriously needs to be weighted in.
So not so much financial thinking but more a sign that my thinking has been heavily influenced by research about purpose and mental adjustment to retirement and that finances are the easier part.
The most recent “change” occurred in 2022 when I was diagnosed, but my actions didn’t change [while] my life was put on hold for 2 years.
My financial thinking hasn’t changed much since then. The current market turmoil will make no difference to my plans. Why? Because my reasons for investing the way I have has not changed. I will have the necessary stream of income despite market turmoil and the likely increases to the cost of living. My financial plans were finalized in 2013 with a range of likely outcomes.
I do admit I no longer count pennies. By that I mean I’ve loosened some aspects of the budget. I prefer to spend money enjoying things day to day. That means more restaurants and related costs because that’s an easier way than entertaining a group.
I no longer delay certain things because it is likely I won’t be here, so why delay for a future time next month or next year? My Lifetime Planner extends to 2050. That’s merely a planning tool (but then, it always was just a tool). There is a small possibility G will still be alive at that time.
I am calmer pre-retiree. I discovered Bill Bernstein’s “Four Pillars” book and Paul Merriman’s website and finally built up a TIPS LMP and a well diversified risk portfolio.over the last year.
SORR is a pre retiree or retiree biggest concern. Read the Trinity Study and Bergen’s book on the 4% rule. Unfortunately past history/results is not always a predictor of the future. Running out of money is a retirees greatest challenge
In 2013 Wade Pfau’s research indicated that losses experienced in the first several years of withdrawals are the most detrimental. (Sequence of Returns Risk). He estimated that 77% of the final retirement outcome can be explained by the average return during the first 10 years of retirement. Mr. Pfau is a Professor of Retirement Income. He has a number of books out there as well as YouTube videos. He updated his “Retirement Planning Guidebook” in 2025.
Earlier this year I asked Morningstar’s Jeff Ptak this very question which lead the following article (In our communications he apologized for not crediting me with the concept of the article, which was a question I had been mulling for years, but had never seen an article addressing):
https://www.morningstar.com/retirement/how-avoid-outliving-your-retirement-savings-its-all-sequence?utm_source=eloqua&utm_medium=email&utm_campaign=MorningDigest&utm_content=None_61700&utm_id=31953
in the article Morningstar’s researchers determined the following:
The study started with assuming an all-equity portfolio, with a 3.1% starting spending rate for retirees making fixed real withdrawals each year from an investment portfolio (assuming a 90% probability of having funds remaining at the end of an assumed 30-year retirement period).
There was a far higher risk of exhausting retirement savings when returns were poor in the first five years.
If you made it through the first five years of retirement with investment gains, there was only about a 1 in 25 chance you’d subsequently deplete your savings before reaching the end of retirement, assuming you stuck with the system of fixed real withdrawals. Even after one year of retirement, a gain cut your risk of failure in half.
If losses occurred at any point in those first five years, the risk of failure shrank to about 1% by year 10 of retirement.
Way to go! Glad you asked this question! I’ve been wondering the same for several years.
In Morningstar’s “2024 State of Retirement Income” report, it states, “…enlarging nonportfolio cash flows with a combination of a modest annuity purchase and Social Security can help protect against sequence of returns risk.”
“The easiest way to mitigate sequence of returns risk is to lower your safe withdrawal rate during down periods”. Benz at Morningstar suggests this and cites sources. Others have suggested using the 10 year bond rate as a guide. One factor is related to expenses. Keeping expenses level in retirement is important, too. If they increase over time that is another risk factor. A tremendous amount has been written about SORR in recent years, much of which I find useful. Concerned about Long Term Care costs? Then get LTC insurance, but bear in mind the initial premiums rise dramatically as we get older; for that reason its better to purchase in our 60s. BTW, I’ve never considered the bond rate as realistic barometer because of very low recent returns. I found a 0.6% withdrawal rate to be ludicrous.
Your articles have given me a lot to think about, and now that I’m retired, I have more time to address some things I’ve been meaning to do.
I simplified our finances by consolidating Traditional IRA accounts (3->1) and Roth IRA accounts (2->1) and closed two accounts we used when we built our home. We also updated our trust since we sold some land, bought some land, and downsized our home.
I created a withdrawal policy statement to determine if we had ‘enough’ for me to retire (my husband is retired). I divided our current & future expenses into four categories and designated a funding source for each category. For example, the first category is our monthly essential and discretionary expenses. These costs are covered by social security, pension, and a laddered deferred annuity. The guaranteed lifetime payments give me peace of mind (worry less) and mitigate longevity risk, cognitive decline, and market risk. It also simplifies the monthly bills for my husband and kids if something happens to me. I repeated this process for categories 2-4.
I’m a more conservative investor, opting for CDs and less volatile stocks. We gifted our four kids in 2022 and last year.
It’s taken me a year to get our ducks in a row, but now I can enjoy retirement ‘after enough’….
Wow, that was a lot of hard work.
Thanks for your comment, David! It was a lot of work!
I was impressed how quickly Fidelity consolidated my IRAs, so they get the credit for that work. I put off moving my Wells Fargo IRA for years because they required me to fill out a 3 page form. Whereas with Fidelity, I just completed a few pieces of information online and they coordinated the transfer from WF to Fidelity within a couple of weeks. Same with my HSA.
The withdrawal policy statement was a fair amount of work coming up with estimates for future expenses (home services, home care, LTC, home maintenance/contingencies, car upgrades, etc.) But once I grouped these costs into 4 categories, determining four funding sources wasn’t so daunting…especially since I had all the building blocks in place – emergency fund, pension, SS, CDs, dividend portfolio, index ETF portfolio. The only thing I changed was to add a small annuity to cover home services. Last step was to determine if there were some actions I should take to mitigate the top retirement risks, i.e., sequence of returns risk, longevity risk, inflation risk, cognitive decline. This process gave me peace of mind that we have ‘enough’.
I’ve learned that the news and following my investment performance is probably 100% a waste of time, beyond setting up a sustainable allocation and regular contributions. There’s really not that much to think about when it comes down to it.
I’ve possibly gotten more conservative. Over the last several months I’ve been thinking about reducing our stock allocation. Never actually pulled the trigger, but the past several days have gotten us partway there…
This is a timely repost. 2021 was my final year working. I continued to max out both my SEP and IRA. If I were still working today, I would do exactly the same.
Am I becoming stubborn in my old age? I don’t believe my thinking has evolved at all.
I have come to realize that I can’t predict the future and I’m not the smartest guy in the world. I’m sticking with life cycle funds for the future.
Having “retired early” about twelve months ago, and gone through some significant events including becoming a carer for and the subsequent death of my mother, My mindset is shifting towards focusing on enjoying the present, rather than relentlessly working / hustling for the future.
This is where I’m hoping to be in the next few years!
I found that the wealth I have was more controlled by a macro environment than I thought. Even cash under the mattress loses its value much faster in this inflationary world. I realized that I needed to:
a. find out which part I could control,
b. focus on it,
c. and ignore the rest.
That’s a smart strategy!
That my Excel skills are now like my Dads “back of the napkin math.”
Between phase-outs, shifting tax brackets, sunset provisions, SS, ACA, FPL limits, Medicare IRMMA lookbacks and RMD age extensions Congress and the IRS have made navigating retirement finances a game of 3Dchess.
Much more difficult than buying cap-weighted index funds for 30 years and letting it ride!
You speak the truth. And we’re not even dealing with Medicare yet.
We planned to retire (and we retired) in 2022, and this included ensuring we protected ourselves from poor sequence of returns during our first 3-5 years of retirement. We are 60% Stocks and 40% bonds which includes large a cash cushion. We’re using the cash to pay taxes on big Roth conversions in lower income tax brackets and living off the remaining cash over the next 1-2 years so no to touch the investments in a down market. I feel comfortable with our safety net and our withdrawal plan.
Possessions are overrated. I recently scored the elders’ hat trick – retirement, relocation and downsizing. That made me confront what I had amassed over my life and forced me to dispose of as much of it as I could. I’d say I was pretty successful. I found I had to buy a few things for my new home, and repurchase a few books I found I really missed. But on balance, I succeeded. I buy very few new things these days, and I always do it with an eye on how I will unload it later if I no longer want it. And, of course, my kids won’t be saddled with a bunch of white elephants they’ll need to get rid of when I die.
Not much change in the last year, but when Covid hit in March of 2020, with nothing but uncertainty as to what it meant for the economy and my income over the next 12 months, I realized that I was not comfortable with the amount of my cash savings, despite the fact that the previous amount seemed fine before the pandemic. That changed my thinking about keeping enough savings to weather a worst-case scenario, rather than just a likely or anticipated one.
My wife and I have spent a lot less during pandemic. No travel, no eating in restaurants, less shopping, etc. We are in great shape financially and look forward to some travel and visiting family again.
Inflation has made keeping money in savings accounts and other low interest earning ways much less tolerable. We need to figure out how to deal with inflation, which is enemy #1 for retirees like us.
I enjoy my work, so I invested to be able to retire in my early sixties, while planning to work as long as my health permitted. Given the stress of 2020, I took a close look at whether it’s really feasible to retire at age 62. It is, but I have too much in tax deferred accounts and too little in Roth accounts.
I’ve increased contributions to my Roth accounts and started planning for Roth conversions. I’ve started building my cash reserves. I’ve also signed up for accounting clerk classes, with the goal of taking temp jobs when I retire. I’d like to retire from management, not retire completely.
Diversification (across equities) is overrated. When the stock market crashes there are few hiding places. Nevertheless, in spite of market crashes or perhaps because of them equities are the place to be. A good business is capable of adjusting to changing economic environments and therefore is most likely to be the best all weather investment.
Almost any money since I got married spent on family vacations or experiences with my family was money well spent.
I’ve gotten more conservative. Part of that is just stage of life (late 60s and retired), but not all of it. Right now I’m reading The Investor’s Manifesto by William Bernstein and he stresses the fact that the pain from a loss greatly exceeds the happiness from an equivalent gain. I know that’s true in my case so I’ve nudged our investments in a more cautious direction—though it’s not easy with bonds’ current performance, not to mention the (non) yield on savings and money market accounts!
To my own surprise I have lightened up on spending. The pandemic has changed my thinking a bit. Eleven years after retiring I’m no longer saving for retirement, so I have started spending a portion of interest and dividends on special projects and looking forward to spending again in travel.
I’m so proud to have maxed out my 401(k) / TSP (federal employee version) contributions over the years. Set it and forget it, combined with low cost indexing. In passive hindsight, it’s been the best type of investing. My younger version might have wanted to tinker or pay an outside professional to do the same tasks. I see little upside now.
I am less judgmental on myself when I come in over or under my budget. The past year has shown me that many things are not under our control and if I come in slightly better or worse on a small budget to begin with, what does it really matter? What matters is to keep investing, focus more on diversification as I just hit 50, keep learning about retirement topics I’m not very familiar with like LTC and SS strategies in the future, etc. Coming off of a trial retirement and realizing I have more to give in the workplace, I need to figure out how long I will work and until then, be intentional with our money. The rest will sort itself out…
I have more tolerance for things not going to plan. In fact, I fully expect life not to follow my plans. There’s a tremendous amount of freedom that comes with being okay with things not being okay. Hakuna matata.
I have financial aid letters denoting first year costs for my twins starting college in five months, and I am no longer employed full-time. My financial perspective has become foreshortened. I have set aside sufficient funds for “further out there” per my current understanding of my future needs and am letting those ride. Meanwhile, my front burner financial thinking concerns the adequacy of cash/cash equivalents and cash flow necessary to get the kids through college and on their own.
When I spend time thinking about “retirement” and my money “further out there,” it’s questions of how to use money to make my life easier/better now and later. I don’t believe it will run out, so I think I can let bits of it go now in ways that help me. That’s a new perspective after decades of saving first and foremost.
I think it is very wise every few years to reread The Intelligent Investor by Benjamin
Graham. The is the “Bible” of value investing and it always reinforces my sense of fear when others are greedy. I not sure how these crazy SPAC/NFT/Bitcoin manias will play out but I really like sleeping at night without the sense of excessive risk.
The past year has reinforced what I’ve come to learn over thirty years of investing – nobody (especially me) can predict the future, and how markets will react. Develop a well diversified portfolio with an asset allocation you can sleep with. Continue to invest through highs and lows (dollar coast average) and have faith in the future.
Right on!!
With each year that passes I become ever more convinced of one investing truism:
Simpler is Better.
Too many talking heads like to say cash is trash these days. I disagree cuz I may know I’m going to lose $$ after inflation but at least I don’t risk a significant stock market decline or harm from interest rate increases. So I’ll stick with my 60% stock, 40% cash allocation thank you very much.
Oh and don’t even get me started on the whole “People are investing in stocks because there is no alternative (TINA)” garbage.
With ultra-low interest rate and an all-time high stock valuations, I think the 4% rule (25x rule) may create a false sense of retirement readiness. Until the dust settles and the rate goes back up to a sensible level, I’m using more conservative numbers for planning purpose.
For over 30 years I’ve kept a diverse mix of stock funds and bond funds. We’re approaching retirement age at a moment when bond prices and rate risks are not attractive. Since our portfolio is close to target, and I won’t retire with a pension, I’m saving new money this year in low-cost deferred income annuities from the two strongest mutual insurers, with annual increases to account for inflation. The income should help us defer Social Security until I’m 70 and helps with longevity risk. Would never have imagined buying annuities until now.
Thanks for your comment. Can you share as to how a deferred income annuity is better to bridge the gap to social security from say 62 to 70 than just using the money to cover expenses? Are the insurance companies giving a much better rate than money markets (.5% currently)? Does the annuity end at 70?
Hi there. I’m almost 60 and am planning to retire some years before age 70. I have a few savings buckets to use as income between stopping a paycheck and starting SS or tapping retirement savings. Deferred income annuities are like fixed immediate annuities in that you pay a premium in exchange for committed income amounts paid to you each month which continue until you and your partner both die (if you purchase joint annuities). Like all investments they have drawbacks and benefits. You can read how I thought about those in this HumbleDollar article. My first annuity purchase was aimed mostly at longevity risk. This year’s purchase is also aimed at boosting income between the end of full-time work and the start of my full retirement.