Bogleheads.org

Blue456 wrote: ↑Mon Mar 20, 2023 7:12 pm I noticed that too and I think this is a brilliant idea. Most people don't know what is 4% rule, how much money they would get from annuity, etc. TSP projecting annuity income is a simple way of checking whether you are on track or not.

By law the plan administrator is supposed to show an illustration of what amount of annuity income the plan participant can generate from their accumulated savings. It’s just an illustration.

Showing what the 4% rule could generate has no good purpose. Annuity income is guaranteed, the 4% rule guarantees “nothing”. You can earn more, less or somewhere in-between.

muffins14 wrote: ↑Mon Mar 20, 2023 8:44 pm

snackdog wrote: ↑Mon Mar 20, 2023 8:42 pm

Grt2bOutdoors wrote: ↑Mon Mar 20, 2023 8:39 pm

muffins14 wrote: ↑Mon Mar 20, 2023 8:38 pm I honestly think any thread titled “should we panic” should be locked, or at least re-titled to something more mature and measured

Should we be “concerned” would be appropriate.

Were SVB customers who pulled their deposits just "concerned"?

They seemed to have been panicked, and made a bank run that destroyed their bank.

That was brought about poor asset liability management, poor management oversight by a board of directors ill-equipped for the task and poor diversification of funding sources.

You are in good company if you are concerned about uninsured deposits at any small or regional back (e.g. small enough to fail). You are fooling yourself if you think “any” bank is too big to fail. Even with all of the extra scrutiny and designation of a G-SIFI, institutions can fail if all the dominoes are in the right order. Hence, if you are unable to shoulder the potential losses, one should diversify holdings including considering lending your money to the federal government by directly purchasing Treasury bills. If SVB was systematically important enough to have its depositors made whole by the government, then it's very hard to see how depositors at Chase, BofA, Citi, etc. are anything other than safe. They weren’t systematically im...

muffins14 wrote: ↑Mon Mar 20, 2023 8:38 pm I honestly think any thread titled “should we panic” should be locked, or at least re-titled to something more mature and measured

Should we be “concerned” would be appropriate.

snackdog wrote: ↑Mon Mar 20, 2023 8:33 pm You are in good company if you are concerned about uninsured deposits at any small or regional back (e.g. small enough to fail).

You are fooling yourself if you think “any” bank is too big to fail. Even with all of the extra scrutiny and designation of a G-SIFI, institutions can fail if all the dominoes are in the right order. Hence, if you are unable to shoulder the potential losses, one should diversify holdings including considering lending your money to the federal government by directly purchasing Treasury bills.

In a typical start of one’s career, the first order of business is to establish a savings account and possibly a checking account to pay bills. Somewhere along the line, this new phrase of an emergency account was phased in. The purpose of the E-fund? To pay bills outside of the normal day to day expenses that arise in situations like job loss, or an unforeseen expense that is atypical. As one gets older and after the E-fund has been fully stocked with sn appropriate amount for your own personal needs, then the opening of other accounts usually comes next. Accounts like your retirement account, taxable account like a brokerage, other savings vehicles like Series I and/or EE savings bonds, etc. If the proverbial blank hit the fan, then all a...

dukeblue219 wrote: ↑Mon Mar 20, 2023 7:04 am An awful lot of wealthy people, like the population at large, aren't rational.

Which is why they are wealthy.

sec yield is 1.57% (source: https://investor.vanguard.com/investment-products/mutual-funds/profile/vtsax#performance-fees) looks like if you (rough estimate) divide 2022 dividends totaling $1.5937/share divided by average of 4 reinvest prices quarterly ($96.7075) = 1.59% dividend yield. not that different and we wouldn't expect anything different unless/until things were to change, i.e. price per share or dividends paid by companies is to fall or rise by significant difference. Thanks. And if I were to take first quarter 2023 total dollar dividends, as will be reported in April 2023, and extrapolate forward (first quarter dollars times four) would I have a rough estimate of my total dollar dividend for 2023? Not exactly. Companies are decl...

Fidelity has a bond ladder tool.

That question is hard to answer for the following reasons: How much do you spend today? Now deduct the mortgage payment, but add in the cost of healthcare for a family which I assume the law practice is paying. Next, adjust it by your personal inflation factor. Let's say its 3% per year, if you spend $50K today after-tax dollars, in 5 years you will spend $60-65K and then you'll have to account for income taxes on your withdrawals. While you control the amount you save today, you don't know how the markets will act or provide in terms of future growth. Also, your ages? If you are in your early to mid-50's, you can plan on a withdrawal rate of 3%. Maybe? How is the market for an alternative working arrangement elsewhere? Have you looked as w...

I have two high school age kids. Both are strong students with a reasonable shot at top schools. We will not qualify for any need based aid. We could afford to put the through school from employment cash flow and/or savings in taxable. However, I want to create an incentive for them to take the cost of education seriously, including considering the excellent in-state schools where we live and applying for merit based and other scholarships. I would like to hear about your successful strategies for getting the kids to care about the costs of college. Thank you wise Bogleheads! Let me offer this: You have 2 high school age kids who have put (I'm assuming here because few kids have photographic memory) "considerable effort" in their...

cchrissyy wrote: ↑Fri Mar 10, 2023 4:54 pm

mentos wrote: ↑Fri Mar 10, 2023 4:31 pm What will happen to our PLOC if the bank goes under? I already drew 100k.

i don't know, but i had a business line of credit that got frozen overnight when Wamu became Chase. it was irritating because it made a vendor's check bounce. but it was not a big deal and didn't change my repayment terms or rate.

That's the likely scenario. The availability on the line will be cut to zero. The first lines to get cut by the banks will be the uncommitted lines of credit even if its backed by collateral, they will either freeze the line or cut it to zero if there are no borrowings on it.

Keep day job, CRE is a major problem for the banks, lots of bad paper out there, shaky borrowers.

Build yourself a ladder of 1-5 year US Treasuries, you improve on the yield and avoid the 55bps. That fee is too high and going out 10 years is too long. I wonder how many issues of different companies and in what industries they are buying to justify the fee.

The yield they are quoting, is it net of fees? If not, you earn even less.

I think EE bonds are for those that would like the money in 20 years and are planning for kids college. I bought some EE bonds 20 years ago that are just doubling now. No educational use, so I don't get the tax break, but doubling over 20 years turned out to be a good deal. Over a 20 year period the risk of the market being down is nearly zero. I wonder what your ROI would be in sp 500 Do you want to be 75 and find out your retirement account fell 50%, but don’t worry, it will come back when you have no need for money - in 20 years? That's not what history has shown us. Even if there is a precipitous crash just prior to your twenty year measurement, the previous 19 years more than made up for it. Example: Counting back 20 years from the na...

How stable is your income? That’s the first question.

2) how much are you saving per year with that level of income?

I don't see how a pension would be able to foster any sort of confidence in being able to meet its obligations if it were 90% stocks and 10% short-term treasuries unless it were quite overfunded. If the net present value of the pension liabilities were close to the value of such a portfolio, the pension would have big swings of being overfunded and underfunded as an effect of the volatility of the equity portfolio. The pension will make use of bonds to smooth out the variance in its funding ratio (ratio of portfolio value to net present value of liabilities). The purpose of longer term bonds is to match the duration of the bonds to the duration of liabilities to neutralize interest rate risk, not to exacerbate it. In fact, a pension that w...

aristotelian wrote: ↑Sun Mar 05, 2023 3:54 pm Nope, and I am regretting having bought in '22 and '21 (not sure about '20). Better question is whether it is worth liquidating EE Bonds that are a couple of years old.

If you have a better option, sure, go ahead and liquidate. You can put the bond back with no loss to principal value unlike those holding bond funds the last 2 years.

Dumb question. - An ee in 20 years will return ~ 3.54% - You can buy a 20 year at 4.1 Why buy an EE (outside of education etc...)? One scenario is when you don't have any additional Traditional IRA / 401k / 403b space for fixed income, and only want to dedicate Roth space to equity. Along with I bonds, EE bonds are one option to "expand" tax deferred space for bonds. Another scenario, zero coupon or STRIPs requires the annual reporting of accrued interest if held in a taxable account. For those who are currently employed, the interest declared on your tax return is taxable at your regular income tax rate. For those in higher brackets, you are subject to investment income surtax of 3.8% plus .009% Medicare tax. Those in retirement...

TacoLover wrote: ↑Sun Mar 05, 2023 2:41 pm

Leif wrote: ↑Sat Mar 04, 2023 11:23 pm I think EE bonds are for those that would like the money in 20 years and are planning for kids college. I bought some EE bonds 20 years ago that are just doubling now. No educational use, so I don't get the tax break, but doubling over 20 years turned out to be a good deal.

Over a 20 year period the risk of the market being down is nearly zero. I wonder what your ROI would be in sp 500

Do you want to be 75 and find out your retirement account fell 50%, but don’t worry, it will come back when you have no need for money - in 20 years?

I never understood the 40% in bonds concept, especially over the last 15 years or so when we have known what would be the ultimate outcome -- interest rates would rise, bond values would fall. Bonds, in a way, are more risky than equities: you run a much higher risk of not beating inflation over the mid/long term, and that is a risk I am not willing to be exposed to too much for such a paltry return. I have been 0% in fixed income, and during retirement I will lean towards 10% very short term treasuries, or possibly 20% intermediate treasuries; a 90/10 or 80/20 portfolio gives you essentially the same long term stability of a 60/40 one. You said the key phrase “and in retirement”. What matters is what is important for the needs of the indi...

mrmass wrote: ↑Sun Mar 05, 2023 7:20 am

Grt2bOutdoors wrote: ↑Sun Mar 05, 2023 7:10 am I walk 2.5 miles to work each way including stair climbing. It’s amazing to see how few actually stair climb, preferring an escalator that moves slower than I do.

If I have to be on an escalator I walk up or down it.

The morning slugs just stand there. Though I realize some people really do have issues with mobility.

I’m still buying them. I don’t think the additional yield on a 20 year zero currently offered compensates me for the higher taxes today when I expect to be in a lower tax bracket when they mature. If rates go to 6 or 7% it would be a different story.

GreendaleCC wrote: ↑Sat Mar 04, 2023 10:33 pm

Metsfan91 wrote: ↑Sat Mar 04, 2023 10:26 pm No. I am not into bonds.

That’s ok, I am not into the Mets.

Lol.

I walk 2.5 miles to work each way including stair climbing. It’s amazing to see how few actually stair climb, preferring an escalator that moves slower than I do.

I am confused a bit, Buffet is dissing bonds yet he has large amounts of Berkshire Hathaway in bonds (treasuries). I guess the difference is he's probably talking about passive investing, vs the active investing they do at BH. I believe (under US regulation, this is certainly the case for GEICO's European activities) that the insurance business he underwrites requires him to hold large quantities of the safest possible asset ie a US Treasury bond. Those bonds offset insurance liabilities - eg to annuities. They thus appear on both sides of the balance sheet. What Buffett does is buy low volatility businesses (railways, utilities, consumer products w a "wide moat") using money borrowed very cheaply via his insurance operations. He...

bh1 wrote: ↑Sun Mar 05, 2023 12:44 am If Buffet lost 90% of his portfolio, he would still be fabulously wealthy. He can take a lot of risk. Can you say that you are playing in the same sandbox?

This. Making comparisons to ultra ultra high net worth people is a complete waste of one’s valuable time.

I’m debating it myself. Last year I had to sod my lawn because the lawn had completely died. The landscaper who put it down is quoting me $55 a week including edging and cleanup for 3000 square feet. Seems pricey to me. Weed treatment and fertilizer is another $60 each for 6 times.

I had been doing it myself, i am contemplating continuing it. It’s the fall leaf cleanup which is a pain - no trees on my property yet im still out there bagging other trees leaves!

A house is a place to live. Most people aren't living in $2 million homes. There are some homes that will be good financial investments, depending on timing of the purchase. Most people aren't moving out after 3-5 years either, because the transaction costs will eat up a good chunk of capital.

1) What is your opinion on the use of various asset classes such as Small Cap Value to tilt away from the broad markets in the thought one is able to capture excess returns even with long periods of underperformance in those asset classes?

Thank you.

That isn't actually current law, that is current projection of Social Security funding. That is big distinction in my book. i'm pretty sure its current law but i am willing to be corrected. Current law specifies what happens if there's a shortfall. The timing and amount of that shortfall is a projection, not a feature of law. In other words, there is no law that says "social security will only pay benefits at 77% starting in 2034". To get there, you have to both rely on current law and assume current projections are accurate. The biggest part is IF there is a shortfall. That assumes current projections of funding. Well, there is a shortfall NOW... Every year since 2010, SS has been paying out more than it brings in. But it's usin...

MMiroir wrote: ↑Thu Mar 02, 2023 7:47 pm

srt7 wrote: ↑Thu Mar 02, 2023 5:49 pm Did you know that sticker at NYU is $100K in tuition not to mention the living costs?

NYU is more like $87,182 including living costs.

https://www.nyu.edu/admissions/financia ... dance.html

If you are living downtown NYC, your personal expenses will run more than $3k a year.

lakpr wrote: ↑Thu Mar 02, 2023 3:24 pm

stoptothink wrote: ↑Thu Mar 02, 2023 12:34 pm Ask your child if they want to go to cheap local U or expensive private U (all other things being equal), but if they go public they'll get a car the first year and then $25k/yr for the next three to spend as they wish.

I just had to respond to this part of the quote. I live in NJ, so let me take this to mean Rutgers vs. Princeton. Absolutely no comparison at all, my kids would choose Princeton over Rutgers ..

You would still need to buck the odds of getting in, with a low 4% admittance rate, it’s a high hurdle to overcome. It also costs more than $63k a year to attend. Agree, there is no comparison between a very large Rutgers experience and a small cozy university like Princeton.

In a taxable or tax deferred account?

It’s a costly fund. I’d rather buy a Reit index. Commercial real estate is going into a bear market, delinquencies are rising, rental prices are falling and a lot of valuations are stretched. You’d have to read the details but an opportunistic approach in the investment strategy would be preferable than being fully invested from the onset. A 3 year lock-up seems low, typical pe funds have longer lock-ups. The low 5% hurdle rate seems low - before performance fees are assessed.

Do it! Your kid will only be 10 once. Take plenty of pictures to record the memories.

This isn’t a question of affordability, it’s just that you’ve conditioned yourself to save and not spend. You have the funds - sell the I bonds with a 0% fixed rate. Have a great time!

Visual Artist wrote: ↑Wed Mar 01, 2023 11:15 pm
Retirement savings are designed to be de accumulated in retirement.

Two thoughts: 1) Savers are conditioned to always be saving and accumulate.
2) Defined contribution plans are geared towards wealth generation as opposed to defined benefit plans which are income generators.

The most difficult part in retirement is the switching of the savings mindset to one of spending.

You're not leaving money on the table unless you live past the breakeven year, as you know. Otherwise, it's designed to give you approximately the same total dollars over the years, whether you collect at 62 or 70. People who claim at 62 are probably more likely to really need the money more than someone who can afford to wait, so they have no regrets because there wasn't any alternative! There are so many individual factors, it's hard to say. Waiting until 70 is a luxury that many don't have. You'd have to find someone who could afford to wait but didn't, and then was sorry when he reached 70 and wished he had a better benefit. The people who wait until 70 because it provides a higher survivor benefit likely did not save enough money to c...

What are your immediate and intermediate needs for liquidity? Few; this is extra money that I don't want idling around. What is the need for the cash you are saving now? It's a small EF for me; my wife and I have a larger joint EF that also gets fed monthly. Is your career/employment secure? If not, how long would it take for you to reasonably replace said "lost income"? Job is pretty secure. What are your long-term goals? Will investing in a taxable account help or hurt you in achieving those goals? Can you accept a temporary decline in valuation of 20, 30, 40 or 50%? It could happen. I've lived through the '08 and Covid crashes without panicking. If my investments dropped 50% tomorow, I wouldn't blink. Based on the responses ab...

2Scoops wrote: ↑Mon Feb 27, 2023 11:29 am Thanks for the replies thus far.

Unfortunately, quiet quitting is not an option. The demands of the job and the expectation of 55+ hours/week plus travel, and then catch up on weekends doesn't allow for it. On top of that, we have some other family health dynamics going on that add to the already stressful situation. I know workplace complaints aren't liked on this forum so trying to steer this to the financial side of the discussion.

I hadn't considered short term disability/FMLA and unsure what the end result of that would look like.

What industry pays so little on base and requires that level of hours/travel?

What are your immediate and intermediate needs for liquidity? What is the need for the cash you are saving now?
Is your career/employment secure? If not, how long would it take for you to reasonably replace said "lost income"?
What are your long-term goals? Will investing in a taxable account help or hurt you in achieving those goals? Can you accept a temporary decline in valuation of 20, 30, 40 or 50%? It could happen.

Last week, a week earlier than the traditional Open the Bottle Night, I cracked open a bottle of a 2003 Napa Cab from Stelzner that had been gifted to me in 2005, it cost about $20 back then. I had it stored away in a cabinet facing an outside wall and was rarely opened, the bottle remained untouched. It was one of the best wines I've had in quite a while, the fruit and depth was still there. It was delicious! The more recent vintages from the same vineyard are a bit out of my range, so it truly made the bottle even more memorable.

So yes, there is the potential for a moderately priced wine to be delicious even 20 years later.

Silk McCue wrote: ↑Fri Feb 24, 2023 10:12 am

Grt2bOutdoors wrote: ↑Fri Feb 24, 2023 9:11 am

Kenkat wrote: ↑Wed Feb 22, 2023 8:24 pm

TwstdSista wrote: ↑Wed Feb 22, 2023 3:45 am re: JoeRetire - I saw him on Reddit maybe a week ago or so (or at least someone using his George avatar)

Yes the Reddit user name was JoeRetire as well; I’ve seen him active there recently.

Edited: Actually, the Reddit user is GeorgeRetire but using the same avatar…

Same - he posted in the last few days.

Who did you see JoeRetire or GeorgeRetire? That’s what the post above yours was referring to. Ignore the avatar, focus on the name.

Cheers

GeorgeRetire

hudsoner wrote: ↑Fri Feb 24, 2023 1:37 pm Hi,

My wife and I (52 & 49) are both applying to this: https://wealthforlife.net/tax-free-matching-overview/... which seems like it's a no-brainer, if we can pay into the 5x annual installments. The downsides I can see are:

+ The distributions are fixed, not adjusted for inflation
+ There are 5 years of paying in, with penalties if those payments aren't made

This seems like an excellent option to augment our retirement income. Am I missing something?

Are you ultra high net worth?

cadreamer2015 wrote: ↑Fri Feb 24, 2023 8:44 am

We decided to gift each child an identical amount each year, disregarding their different financial situations.

+1

Although we may not gift each year, when we do gift we send all three the same amount.

This is the way. There are no assumptions or ideas or accusations flung at each other down the road. Jim received $100, his sister Jane also received $100 that same day/week/month.

It’s clear there is no favoritism, no unequal distributions. The gift is for the person.

Kenkat wrote: ↑Wed Feb 22, 2023 8:24 pm

TwstdSista wrote: ↑Wed Feb 22, 2023 3:45 am re: JoeRetire - I saw him on Reddit maybe a week ago or so (or at least someone using his George avatar)

Yes the Reddit user name was JoeRetire as well; I’ve seen him active there recently.

Edited: Actually, the Reddit user is GeorgeRetire but using the same avatar…

Same - he posted in the last few days.

What/where are you reading that tax treatment differs in a joint w right of survivorship account such that it’s not advantageous to do so when compared to a community property account?

I’m interested in reading it myself.

OP - notify your employer plan administrator you no longer wish to grant any external party (the advisor) access to your account. Notify your financial advisor, thank them for their service but you are relieving them of their services to you. Take the savings, buy yourself a dinner or coffee and invest the rest.

Hi all, a popular amount you always see is 15% of gross income saved for retirement. How much do you guys put away for retirement? For 22 years, I saved/invested 50-70% of my (about median) salary annually. Low/medium-COL area, early retired. Working out fine, so far. 15 percent is for middle income I think. It’s kind of a realistic, attainable starter rate to not scare or discourage people. Problem with it is, it makes some people comfortable that it’s all they need to do. Initially, I started out with $2,000 in an IRA because my employers offered no retirement plan. I saved/invested that and the rest in a taxable account. The "rest" meaning anything after necessary expenses. Once my employer offered a retirement plan, I did 15%...

Total investments of 6.5 million. Home paid off. No debt. 70/30 equity/fixed and cash 24% tax bracket for foreseeable future. May go up if investments do well. Not converting IRA to Roth; see minimal benefit. Retired 3/21. Lump sum pension included in the total investments. Receiving $1244/month in small additional pension. Monthly expenses including property taxes, insurance, etc average about $11,000. Dividends greater than $20,000 average per month. Any other info needed to pass a comment? thanks How are you funding your $131K of annual expenses now? Pension $1,244 Dividends of $20,000 Have you begun drawing social security yet? If not, what is the estimate for monthly social security? It doesn't appear you have an income problem here. ...