Bogleheads.org

Are the heirs counting on the exact amount of the inheritance in their financial planning? If not, and the estate is going to be a pleasant surprise, why not put it 100% in stocks? Based on expected returns of different asset classes, that will give them the highest possible returns. If you die when...

Why do you want to calculate net worth? The only reason I can think of, other than that it makes you feel good, is to be allowed to trade options at brokerage. For that purpose, I think they don't count residences. The number you should use for asset allocation purposes is not your net worth. For as...

From the point of view of the highest expected return, 100% stocks is the best allocation. Adding signifcant amounts of bonds, even with rebalancing, will lower your expected return. OK, so why have any bonds or anything else at all? To reduce volatility, the amount that things go up and down. Why d...

Note that no one has proposed a formula for determing safe withdrawal rate. All of the recommendations are based on simulations using data from the historical record using the returns on stocks, various types of bonds and cash. These asset classes differ in both returns and volatility, so they don't...

Alas, the real cause of the rise in college tuition is simple to understand; between the 1970's and today, the number of students attending college has increased by a factor of 3! That means 3 times as many classrooms, 3 times as many professors, 5 times as many parking spaces, etc. If you factor in...

The OP wrote. When I ran Firecalc, there was advantage in the modeling for taking the benefit earlier. If the OP ran Firecalc correctly and the Firecalc output showed advantage in taking SS early given these extremely low current real interest rates, then Firecalc should not be used for retirement ...

The OP wrote. When I ran Firecalc, there was advantage in the modeling for taking the benefit earlier. If the OP ran Firecalc correctly and the Firecalc output showed advantage in taking SS early given these extremely low current real interest rates, then Firecalc should not be used for retirement ...

When you compare investments with delaying Social Security, be sure you use comparably safe investments. You can't really compare to stock returns, since stocks have had negative returns in 40% of five year periods; you might to decide to take Social Security early only to discover than rather than ...

I would expect the trend to lead to index funds doing better and active funds having a harder time. The more that is known publically about company, the less chance there is for people to be able to take advantage of imperfect information. Securities which don't trade publically and don't have to me...

1. All of the "safe" widthdrawal rates studies have been done with fixed allocations, with annual rebalancing. If you do a glidepath strategy, such as age in bonds, you're on your own for figuring out the withdrawal rate. 2. Believe it or not, there's some evidence that a "bonds first...

Before you do anything, have someone else review your calculations, particularly if you use a software spreadsheet. If Prof. Reinhardt and Rogert can make a mistake in a published book, you probably aren't immune. I did the calcuations two different ways, one with a spreadsheet and one with a retire...

There are two different kinds of water based finishes for wood floors: non-catalyzed and ones to which you have to add the catalyst before using the finish. Most home ownders use the former kind because it's less complicated but the catalyzed ones are reputed to be even better than oil based finishe...

A spreadsheet is a good place to start to get a feel for how the numbers affect each other, but it won't give you a very good picture of what's likely to happen. One big problem, as previous poster has mentioned, is that averages don't account for what really happens. Suppose you make a 2% inflation...

Housing it is the lack of substitution. If your good paying tech job is in Silicon Valley, cheap good housing in Texas is irrelevant to you. If you work in tech or the securities industry, then you work in the Bay Area or in New York (or Boston or Chicago to a much lesser extent). Probably more tha...

As Robert Shiller has pointed out, it's "supply and demand" What determines the price of the new houses is the construction cost and construction costs have historically risen only at the rate of inflation. . Source? Try Shiller's 2005 book, Irrational Exuberance . In that book, he claims...

As Robert Shiller has pointed out, it's "supply and demand" that ensures that housing prices don't grow faster than the rate of inflation. In most parts houses but there are also places like Houston where housing prices have either risen slowly or dropped. Overall, though, supply and dema...

As Robert Shiller has pointed out, it's "supply and demand" that ensures that housing prices don't grow faster than the rate of inflation. In most parts of the country, when demand increases and prices rise, new houses are built which can be sold at lower prices. Even if these new houses a...

What kills you are poor returns in the first 5-10 years of retirement. Alas, just because the market is up this year says little about the next five years. In fact, hitting a market bottom the year before you retire is arguably more desirable, given the 18 month average duration of bear markets. Wha...

Psst, I know a secret web site with the data you are looking for http://www.bogleheads.org/wiki/Historical_and_Expected_Returns . Don't tell other people, though; it might get too many hits and get shutdown. :D On the basis of current low bond yields and the corresponding reduction in the equity ris...

The fund invests in mining companies which mine gold and other minerals, such as copper. When gold is up, companies which mine gold tend to go up as well; when gold is down or dropping, these companies tend to go down. People buy gold when they're worried about inflation and sell it when they're not...

You might try going to http://www.immediateannuities.com or the Vanguard site and pricing annuities. I suspect that you're getting a pretty good deal from your company. A reason for waiting on any annuity is that fact that annuity payouts increase with age. At age 70 for the same purchase price, you...

The only reason I can think of for calculating your net worth, other than making you feel good, is to be allowed to trade options through a brokerage, or perhaps, to decide whether you should buy long term care insurance. Net worth is not a very useful number. What really should concern most people ...

In fact, the payout from past payments does not depend on current interest rates very much; it depends mostly on the rates at the time you contributed. TIAA makes very long term investments; for example, in the past they have directly owned real estate which they leased out on long term leases. That...

that isnt true for most polices. Most polices have a limit on their payment. Thus it doesnt matter how much ltc costs rise. Its only unlimited polices where this is a big problem and those are rarely sold at this point. ...and that's the problem. If you choose a policy with a limited payments, the ...

I guess I don't understand what you're trying to achieve. The safe withdrawal rate modeling assumes that you adjust your annual withdrawal upward with CPI-W inflation. The 4% number is only used to determine the amount for the first year; each year you adjust the actual amount upward depending on th...

There's no magic in LTCi; it's just another commercial insurance product, like other commercial insurance products Insurance companies need to take in enough revenue to cover their claims; otherwise, they go out of business. If the cost of long term care is rising at 5% a year, then claims will rise...

Sounds a lot like the TIAA Traditional annuity, which has been providing retirement income for educators, including that Princeton economics professor, for decades.

TIAA claims that, unlike most corporate defined benefit plans, Traditional annuity payments have kept up with inflation.

Let me start by repeating the point that LTCi coverage is NOT for medical expenses; Medicare covers medical expenses. It's for care expenses for ordinary living when you are no longer able to completely take care of yourself. Most long term care is given in the home, often by relatives and most of i...

Learn Cobol. I'm not kidding. There's a huge amount of legacy software out there which is written in it or related languages. Banking would come to a halt if banks couldn't run their Cobol programs. The people who maintain these programs are retiring and dying. Even if someone wants to convert their...

Perhaps, a better question is, "what companies should have I invested in 1975 for these technologies?" All of the technologies mentioned have been in active development since the first minicomputers in the 1970s. Prediction of human behavior goes back a decade or two earlier; statistical p...

Focusing on just the question of how much you need to save for retirement, let me suggest a simple approach. Don't try and estimate inflation. Instead, update your calculations annually to reflect past inflation. Example: Suppose you've decided that you want to spend $100,000 in today's dollars in r...

1. If the TIAA annuity is, in fact, the TIAA Traditional annuity, there's a guaranteed amount and an additional amount, based on investment performance. It's TIAA's claim that, because of this, over very long periods of time, the annuity payout has kept up with inflation. 2. It sounds like the infla...

I went and looked at the iShares 2015 AMT-Free Muni Bond ETF. All of the bonds were purchased in 2010; they all mature around June of 2015. There are 318 bonds. Unlike other bond funds or bond ETFs, they never sell or buy bonds during the term of the fund. The average maturity is constantly getting ...

I'd recommend that you dial back to 70% equities but no further. If you go to the Wiki and read the articles on safe withdrawal rates, you'll discover that things like "age in bonds" make you feel good but don't reduce your chances of running out of money in retirement! In fact, anywhere b...

To try and answer some of the financial questions: 1. For fixed income, people are buying bank CDs. To delay the tax hit, buy them inside your IRAs and then buy equities in your taxable accounts. The Wiki is a useful source of information on tax efficient placement of investments; generally, equitie...

You might want to look a recent paper by Wade Pfau, http://wpfau.blogspot.com/2012/09/an-efficient-frontier-for-retirement.html , in which argues that you don't need bonds in a portfolio, provided you have other stable sources of income, such as pensions, or, even fixed payout annuities. The only re...

To add on to what nisiprius said, what really matters is not inflation rate, but real (inflation adjusted) return. Inflation of 2% is high if bonds are returning 1%; it's low if bonds are returning 5%. Long term real return numbers are available for stocks and bonds; if I recall correctly, the real ...

These charts show what people are doing . They are not necessarily what people ought to be doing. What they're doing is making themselves feel safe, at the cost of their real safety. I have seen no evidence whatsoever that glidepaths reduce the risk of running out of money in retirement!! In fact, i...

It is not at all unusual for annuities from companies or academic institutions or, even, governments to have higher payouts than annuities purchased from insurance companies. The reason is that these organizations, if they are well run, have been setting aside money for the annuity payments over the...

Now I'm really feeling old. Way back when, before certificates of deposit, at a time when insurance companies were considered safer than banks, people often bought fixed term annuities. You paid a lump sum and they paid you monthly payments until the term was up. The monthly payments were composed o...

I am not an attorney, but I've always been told that if someone does without a will, the courts have to decide, via the probate process, who gets the assets. Having no will might get you out of being an executor but then the estate might have to go through probate. Here's what the Oregon state gover...

There are at least four different things going on: 1. As Sidney pointed out, the market price of an ETF may not be the same as its net asset value (NAV). People may be willing to pay slightly more or less for the ETF than for the equivalent individual stocks. 2. Individual stocks that make up the ET...

Stocks have lost money in approximately 40% of rolling, five year historical periods. How would you feel if two years from now, when your son started college, if the portion of your savings which is in stocks was down by 20%?

Be careful here. The rates for any particular vintage are not fixed. They represent the investment returns of the money invested in a particular year. If, at some later point, the investments for that year don't well, the rate for that vintage will drop. Some of TIAA's investments are extremely long...

I am not a tax attorney but I believe what you believe. As long as the estate is below federal/state estate tax levels, beneficiaries pay no taxes on what they receive, although there may be taxes due on earning from the time of death until the estate is distributed. What probably should be a much b...

If it is truly the TIAA Traditional fund, then it's a variety of stable value fund. The balance never goes down, unless you take money out. Even though the investments which back it include stocks, bonds, REITs, directly held real estate, etc., the investor doesn't see the ups or downs of these inve...

Try contacting Clifford Asness directly. http://www.aqr.com/AboutAQR/OurPeople/Biography.aspx?principalId=57

Let me also point out that TIAA payouts are determined on an individual basis, depending on the specific amounts they contributed in specific years. It could well be the case that, in the same year, one individual's payment declined while another person's payment increased.

I've known from the beginning that TIAA was an insurance company which made investments and that part of my payout depended on the returns from those investments. The additional amounts above the guaranteed minimum were exactly that and were not guaranteed in any way shape or form. Does this mean TI...

You've probably underestimated two significant items: 1. Repairs/upkeep. Think about a new roof and a new furnace every 20 years. Think about new carpet every 10 years minimum if you're going to get top rent. Think about at least an annual plumber's visit to repair leaky faucets and whatnot. Think a...