Bogleheads.org

Unless one really can’t find a way to make ends meet, taking SS at 62 is foolish. My dad took this route, and now my mom has a much lower monthly benefit than she otherwise would have. Dad was a terrible investor, and so their IRAs performed poorly. He would have been better off taking distributions and banking a larger Social Security benefit.

A lot of my investing took place during the 2000 - 2010 timeframe, which was not exactly rewarding. My feeling was more a “steady as she goes, just keep plowing ahead maxing out the retirement accounts.” I have felt pretty good the last few years as my portfolio approached and then intermittently passed my “goal amount,” which I adjust upwards every year for inflation. As i have continued to invest, I have come to view my portfolio as more like a machine that keeps chugging along. It may need occasional tuneups, but as long as it keeps going things will be ok. (Relatedly, I view the economy and the markets to be kind of like a machine as well. I think sometimes people stress a lot about what happens if markets break down and go to heck, but...

OP here - thanks for all the terrific thoughts. After years of seeing the quality of responses for others' posts, I have to say I was still surprised to have my expectations exceeded by this group. Several of you have given me a lot to think about - well beyond the basic financial aspects of early retirement I was focused on. This is a complicated decision that will take me some time to sort through. Thank you a lot for that. I am digesting all of these thoughts and will be back to respond to several of them once I have a little more clarity on some of these points. P.S. To the poster who viewed my post as a humblebrag, I'm truly sorry for that impression and can tell you I am genuinely seeking advice. You're now at $7.5M. Next year it'll ...

Without going into the details, my conclusion was (and still is) that i f I were to set the LTC insurance premiums aside and invest them, I would be able to self-cover the LTC needs if I need any. My personal research has come up with the same conclusion for my situation. I've never seen an attractive LTC insurance deal. I came to essentially the same conclusion. Also, I'll still be collecting my pension and social security, so it's not like the entire amount would be coming out of savings. Some portion of the cost would be able to be covered by ongoing income. Perhaps one option would be to invest the equivalent of the LTCI premium for some years, and then eventually (as the date of when it might be necessary to have LTC gets sufficiently...

Thanks for the interview, it was worth a listen. Just one teeny piece of advice: when discussing return assumptions, it wasn’t always clear to me whether they were real or nominal. I like to think in terms of real expected returns for, e.g., stocks, so that I don’t need to keep track of the inflation assumption as well.

Without going into the details, my conclusion was (and still is) that i f I were to set the LTC insurance premiums aside and invest them, I would be able to self-cover the LTC needs if I need any. My personal research has come up with the same conclusion for my situation. I've never seen an attractive LTC insurance deal. I came to essentially the same conclusion. Also, I'll still be collecting my pension and social security, so it's not like the entire amount would be coming out of savings. Some portion of the cost would be able to be covered by ongoing income. Perhaps one option would be to invest the equivalent of the LTCI premium for some years, and then eventually (as the date of when it might be necessary to have LTC gets sufficiently...

Maybe yes, maybe no. We’ll know by the end of the year.

As you get older, the chances of needing long-term care decrease since you may not have any many years of life remaining. I disagree. The only way to avoid needing LTC is to die. If you start with a group of 50 yr olds, a lot will not need LTC because they will die relatively young (50 to say 80). Once you get to the group of 90+, a larger percentage of the remaining people will need LTC. I know we talk about only a very small percentage of folks will need many years of LTC. People have said they would like a policy that kicked in after 3 years of LTC and paid for future years. That sounds reasonable. However, I have read that the LTC insurance folks say that would not significantly reduce premiums. @prd1982, if you have links to anything ...

It seems that a reasonable thing for the Treasury to do during the period when the debt ceiling is binding is to suspend the payment of all tax refunds owed now that we are in the tax filing season. That would conserve cash and lengthen the time to the so-called “X date” when there is a default. Presumably many voters would be unhappy if they did not receive tax refunds in a timely fashion.

An obvious actionable conclusion if this is a possibility is that there is value in revisiting tax withholding to ensure that one is not due a refund that may get paid at an uncertain time.

I am approaching retirement, and I am close to completing a position in Ibonds that will allow me to withdraw about $1000/month from the age of 62 to 70, helping to bridge the period before I begin taking my Social Security benefit. If financial markets are strong I might just liquidate stocks, but it helps me cope with sequence of returns risk. Yeah, I could use TIPS, but I don’t have a lot of tax deferred space where I could hold them, and the Ibonds effectively expand the size of my tax deferred space. I know I might not be optimizing, but I am fine with satisficing. But isn't that tax deferral only on the interest? It wasn't on the $10,000 you spent to purchase the bond. So while holding onto to some that have a high fixed rate purchas...

I am approaching retirement, and I am close to completing a position in Ibonds that will allow me to withdraw about $1000/month from the age of 62 to 70, helping to bridge the period before I begin taking my Social Security benefit. If financial markets are strong I might just liquidate stocks, but it helps me cope with sequence of returns risk. Yeah, I could use TIPS, but I don’t have a lot of tax deferred space where I could hold them, and the Ibonds effectively expand the size of my tax deferred space. I know I might not be optimizing, but I am fine with satisficing.

I was wondering what some Bogleheads thought about the era we are are in now compared to the 1970’s as far as stock returns. I know there are some similarities with inflation, interest rates , world tensions , etc. As a whole that was a tough decade for stocks. Some market Technicians that I follow are pretty bearish for the foreseeable future. I realize most people on these message boards are of a “ set it and forget it” mindset. Why worry what you can't change? I have not found anyone who can predict the future consistently, so who to believe? Every big name that makes a prediction is making a bet. When the future become the past, those who made a certain bet will have bragging rights that may rope in some new investors because they had ...

I don’t have additional substantive information to add to what has already been offered, but I will say that (in my opinion) it is not necessary to apologize in advance for posting this kind of question. We have a very complex tax system in the United States, and there is nothing to be ashamed about when seeking information on how to comply with it. I am glad that Bogleheads is the kind of place where people of all levels of experience and knowledge can obtain useful information and be treated with respect.

We purchased a new home in 2020, with a 7/1 ARM, intending to pay it off before the rate unlocks. We've been aggressively paying it down, but now that we can get more interest in CDs than the 2.625% mortgage rate, that is giving away free money. I'm trying to figure out the best course of action to still give us the psychological boost of having a paid off house. We were willing to trade the risk premium for piece of mind before, but now that risk free investments outpace the mortgage interest, we need a new plan. What I'm thinking of doing is buying brokered CDs that mature in the month before the fixed rate term ends (ie Aug 2027) until we have a total par value equal to the remaining principal as of that date from amortizing at the regu...

We purchased a new home in 2020, with a 7/1 ARM, intending to pay it off before the rate unlocks. We've been aggressively paying it down, but now that we can get more interest in CDs than the 2.625% mortgage rate, that is giving away free money. I'm trying to figure out the best course of action to still give us the psychological boost of having a paid off house. We were willing to trade the risk premium for piece of mind before, but now that risk free investments outpace the mortgage interest, we need a new plan. What I'm thinking of doing is buying brokered CDs that mature in the month before the fixed rate term ends (ie Aug 2027) until we have a total par value equal to the remaining principal as of that date from amortizing at the regu...

Thank you very much for the replies! They are all useful and makes me think. A bit more details. 75K will pay off our mortgage. Only 4 years left anyway. We are planning to retire in 4 years or so. We don’t itemize when we file Federal tax but we still get some tax deductions for California tax from the mortgage interest we are paying. And interest I get from T Bill is California tax free so either way there’s some California tax benefit. I have 10 months emergency fund that include some I bonds. Either way, maybe there’s not much difference? Our monthly mortgage is not that high but I like better cash flow if we pay off. With better cash flow, I should start investing extra money to make more sense? On the other hand maybe it’s good to ha...

Nouriel Roubini was Joe Weisenthal and Tracy Alloway’s guest on the most recent episode of their Bloomberg podcast called OddLots To say he was negative about the next several years is putting it mildly. (Available here: https://podcasts.apple.com/us/podcast/odd-lots/id1056200096?i=1000583274967) He is pushing a new book called “MegaThreats” about all of the challenges facing financial markets and policy makers. I tend to believe that humans are very enterprising chimps that will have an incentive to solve problems that appear, but it seems undeniable that there are serious challenges. I’m not sure there is much I can do to address it other than living below my means and being willing to cut back when conditions dictate that I need to, and ...

Watty wrote: ↑Mon Oct 17, 2022 4:56 pm

One thing to watch out for is that with some pension plans when you leave early then your pension benefit amount is not adjusted for inflation until you start the pension even if they have a COLA adjustment for people that are receiving the pension.

This is super important. OP should definitely makes sure that he/she understands the situation with regard to this issue.

The U.S. government sells a lot of debt. A lot of it is short maturity debt that gets rolled over. Over the last several years, the Fed has bought a lot of that debt, providing liquidity. Foreign central banks and investors have historically bought a lot of that debt, but they are buying less. (If you Google “Chinese U.S. Treasury purchases,” you will probably find articles about how that source of liquidity has declined to essentially zero.) So as some historic purchasers of debt withdraw, other purchasers must come forward. Speaking personally, I have greatly increased my purchases of fairly short-dated Treasuries and Series I savings bonds. Maybe other individual investors will step forward. If they don’t, it seems that either rates woul...

thenewestguy wrote: ↑Mon Jul 04, 2022 3:54 pm Anyone know how long before I can apply for recast on a new WF mortgage loan?

Thanks

Wells Fargo’s basic requirement for a mortgage recast is that you need to have paid at least $20,000 extra in principal to do it. I just completed a recast because I had made substantial extra payments of principal when interest rates were lower, but interest rates are so much higher now that I wanted to restore the mortgage to its original term. It is pretty amazing to be in a situation where the spread between two-year Treasuries and my mortgage rate is significant, on an after-tax basis.

The lion’s share of my bond allocation is in G fund (and everything else is short duration), so I feel pretty lucky.

SnowBog wrote: ↑Fri Sep 16, 2022 12:44 pm

IMHO I Bonds are about the safest investment you can have, including protection from inflation. In nominal terms, there's nothing right now that matches the safety and return. But in "real" terms, with the current fixed rate of 0%, you aren't really "making" money... You just aren't losing any to inflation...

I love I Bonds also, and wish I had been buying them for more than a couple of years, but just to quibble a bit, if you pay Federal tax on the interest, isn’t it true that you really are losing to inflation, given the 0% fixed rate? (Assuming your inflation rate is similar to the index that is used to adjust i Bonds.)

Whether you can assign ‘transact’ rights to an electronic bond in your TD account depends on the I-Bond registration. Are the electronic I-Bonds registered in one spouse’s name only or are the I-Bonds registered to you and spouse as co-owners? You can grant ‘view’ rights only for an I-Bond registered only in your name to any individual with a TD account, such as your spouse. You can grant ‘transact’ rights to the secondary owner (who has a TD account) of an electronic I-Bond held in your account. You can add online your spouse as a secondary owner of an individual I-Bond in order to then be able to assign ‘transact’ rights. The TD FAQs linked below explain how to assign ‘view’ and ‘transact’ rights as well as how to add a co-owner to an el...

I am reviving this thread because I am a little unclear on how the Durable POA works. My spouse and I each have a TD account to hold our electronic Series I bonds. We wish to be able to execute transactions on each other’s accounts in case of a need. We downloaded the Durable Power of Attorney forms, filled them out, and had them witnessed at our bank. Do we file these now at the P.O. Box in Minnesota? Just hold on to them in case we need them at some point? At other financial institutions, it seems to be the case that you have a POA on file, but I am not sure if how that works for TD. I want to do the same thing for my Mom’s account, as well, so there aren’t any difficulties in case I need to access the funds on her behalf. Thanks for any ...

Antti Ilmanen was also recently on the Rational Reminder podcast. That was an interesting conversation, so I look forward to the discussion with Rick.

Zeno wrote: ↑Sun Aug 21, 2022 3:04 pm There is another way.

Accept that the future is unknowable. Truly, accept that. That isn't a financial talking point. It is reality.

I think that there is a lot of wisdom in this point of view. I think a lot of people want certainty that their plan “is safe” or “won’t fail.” There is no certainty. There is always a chance of [insert zombie apocalypse style event]. I think that the best one can hope for is success based on the distribution of known past events. Given that some day the sun will expand and wipe out life on earth, we have by definition not had the worst possible outcome for terrestrial investing. (But maybe people will be debating including ex-
Earth ETFs in their portfolios by the time that is a live possibility.)

There have already been a number of useful comments/observations on this thread, but I would just ask if OP has considered whether he or she is adequately building in a buffer for potentially needing more assistance or care later in life. I am not that much older than OP, and I am pretty self sufficient, but I have seen instances where a lot more help has been required. I think there can be some value in at least mentally sequestering a portion of a portfolio to cover longer term needs, and then assessing whether the remainder can cover baseline expenses. This might not loom so large if we had better social insurance for, e.g. long term care, but we don’t, and given what will be ballooning future costs I’m not sure we will move in that dire...

I have been using 8 and 13 week t-bills. Very liquid (so I can sell if I need the cash), mature quickly (if I can wait), higher interest than a “high-yield” savings account or money market, and interest is not state taxable, so the after-tax yield is even better. (I live in a high tax jurisdiction, so that matters.)

deanmoriarty wrote: ↑Mon Jul 25, 2022 11:16 am Thanks All.

I guess it makes sense, though I will put in my to do list to dig some data to understand how an investor with average tax rate obligations performed, on a real-term after-tax basis, while investing in treasury notes. If the market is indeed efficient, I was just wondering if my personal circumstances significantly deviate from the ones of the average investor (i.e. maybe the average investor does not have tax obligations, ...).

It is the marginal Treasury buyer who sets the rate in the market. Certainly there are some buyers who don’t need to worry about taxes, such as nonprofits, and people who hold Treasuries in Roth IRAs. Foreign sovereigns also wouldn’t need to pay tax on U.S. Treasury interest.

As has already been stated, individuals and other economic agents hold Treasuries for a variety of reasons. Some are required to for regulatory reasons. Others because they think yields will fall in the future and hence expect capital gains. Some individuals are just trying to transfer purchasing power from today to a future period. Those folks would love for their money to not get eroded by inflation, but that might not be possible on an after-tax basis, given available rates in the market. If you lose money on an after-tax, real basis holding Treasuries, but you hold them nonetheless, that just means you are paying a fee to transfer purchasing power from today to some point in the future.

Based on the info OP provided, Redding does sound logical. I have family in Redding, and have visited frequently over the last thirty years, most recently in April. It appears to be growing steadily, and amenities of all kinds are more apparent. (Microbreweries, attractions like the Sundial Bridge (definitely check it out if you visit!), and then the booming marijuana dispensary businesses). It is near many outdoor things that I love, like Lassen National Park (has some great volcanic features; Mt. Lassen erupted spectacularly in the early part of the 20th century), the Trinity Alps, and not to far from the coast (where there is a cool respite from the scorching summer). Redding’s airport also has much better service than it did 30 years ag...

If you are interested in hearing him talk about his views, Antti Ilmanen was recently on the Rational Reminder podcast: https://rationalreminder.ca/podcast/202

I am a married Fed approaching retirement age (though earlier than Medicare age), and I am assessing options for an overseas retirement. While Medicare does not cover healthcare ex-US AFAIK, several FEHB plans do. Because Feds can decline Medicare and just use FEHB even after they turn 65, it seems that this is a way to get medical coverage after 65 even if one lives primarily outside the U.S. (There may be other reasons to just stick with FEHB and decline Medicare, e.g., for IRMAA reasons.) I searched the forum but did not see threads that specifically addressed this issue, so I was wondering if anyone was either pursuing this strategy or had considered it and had thoughts about its advisability. Thanks for any insights you might have.

The 4% Rule has become the equivalent of Middle Ages debates over how many angels could dance on the head of a pin. Variable withdrawals solves the problem, but few people want to talk about them. This is exactly right. I have produced two retirement budgets for me and my spouse: Hi and Lo. Saving and investment plan is aimed at supporting the “Hi” budget with even some buffer for safety. The “Lo” budget is about 25% less, and would require a 50% smaller draw on investments (b/c pensions and SS cover a fair amount of spending). I would vastly prefer to be in the ‘Hi” budget world, but if investment returns are poor we will: (1) give smaller gifts, (2) travel less, (3) give less to charity, (4) drink lower quality wine. (And probably not bu...

I always think it is fun to revisit Louis Rukeyser’s Wall Street Week episodes from around Black Monday in October 1987 during market turmoil.

https://youtu.be/XFn1G2goDQw

On January 1, 2017, the S&P 500 was at 2275. At the time, Vanuard predicted U.S. equity returns in the 7% or so range. If 1.5% is dividends, so that the price return is 5.5%, then the S&P 500 would be trading at 3054 today. If a person’s investment plan was designed to withstand low returns, he or she should be ok now. (Need to adjust for inflation, etc., of course, but my point is that this bear market just brings us into the range of the forecasts that people had been making for some time.)

Da5id wrote: ↑Mon Jun 13, 2022 8:36 am At least we have our non-correlated with the stock market bonds as ballast in a down market! Such a comforting thought. (Checks BND NAV). Oh wait....

Well, at least we don't hit bands needed to rebalance because bonds AND stocks are falling. And maybe some tax loss harvesting is in my future, yay!!!

For Federal employees, this is when having a slug of G fund is calming. Bonds and stocks can both be falling, but G is stable.

ResearchMed wrote: ↑Mon Jun 06, 2022 8:21 pm

tim1999 wrote: ↑Mon Jun 06, 2022 8:18 pm I'd neither attend nor give an additional gift. I'd make up another event as an excuse not to go if I needed to.

I wouldn't make up some other event.
I'd thank them for having invited me already to a graduation party for the kid, and try to look a bit confused...

RM

Could layer on “I hope that Grad enjoys the gift I gave him/her at the first party, which I assume he/she has received by now, though there has been no acknowledgement.”

If I attended (which I would only do if I actively wanted to spend time with some people who I knew were going to be there), I would be tempted to bring a gift-wrapped copy of an etiquette guide, with an inscription that said something like “Dear Grad, I know that this will come in handy as a reference as you grow into adulthood.”

WillRetire wrote: ↑Mon Jun 06, 2022 8:34 am Just warn him that if he wears a tux, little old ladies will surround him all evening long, oohing and ahhing over his adorable handsomeness.

Is that what he wants?

If he could learn to waltz before the event, he might leave the wedding with several proposals.

An organization I am involved in that has an endowment has a policy of taking a distribution of a fixed percentage of the average value of the endowment over the most recent 12 quarters. If individuals applied a similar policy for how they calculated their 25x, that would smooth out the fluctuations. But I have never seen anyone suggest that individuals adopt such a policy (though I might just have missed it.) I think Wade Pafu analyzes this in his book. Of course, it's guaranteed to not run out of money. The down side is, a long bear market means you suddenly have a lot less to live on, maybe 1/3 less, so your $40k has turned into $27k. But you have a lot of fixed expenses. For example, your real estate taxes and grocery bills. Most peopl...

An organization I am involved in that has an endowment has a policy of taking a distribution of a fixed percentage of the average value of the endowment over the most recent 12 quarters. If individuals applied a similar policy for how they calculated their 25x, that would smooth out the fluctuations. But I have never seen anyone suggest that individuals adopt such a policy, until I saw the post from @sean.mcgrath.

This. It's not talked about enough on Bogleheads. This is possibly because we haven't seen marked inflation until very recently. But even in a low inflation environment, debt holders win. Provided, of course, you can cash flow the payment :) "Inflating away" your debt only works if your wage increases with inflation. Not everyones wage keeps up with the inflation rate. Even if your wages are frozen and do not respond to inflation, if your home price goes up in response to inflation, you are benefiting by acquiring this now-inflating-higher-priced-house while paying a fixed numerical mortgage payment that was calculated and frozen prior to the onset of inflation. This benefit is purely due to the fixed-price of your mortgage contr...

Inflation is 8 percent. Your mortgage principal is inflating away at the same rate. I have a long term fixed mortgage. I love it. This. It's not talked about enough on Bogleheads. This is possibly because we haven't seen marked inflation until very recently. But even in a low inflation environment, debt holders win. Provided, of course, you can cash flow the payment :) "Inflating away" your debt only works if your wage increases with inflation. Not everyones wage keeps up with the inflation rate. Even if your wages are frozen and do not respond to inflation, if your home price goes up in response to inflation, you are benefiting by acquiring this now-inflating-higher-priced-house while paying a fixed numerical mortgage payment th...

A lot of the answer to this depends on whether you have a particular airline or alliance you will be focusing on. Most of my flying is on Star Alliance carriers, and I have found it valuable to be able to access the United Club, which has impacted card choice. But if you are actually going to be purchasing business class tickets for international, that might be less valuable to you. I have definitely used Priority Pass lounges, which Chase Sapphire Reserve comes with (including in some remote locations like obscure airports in Eastern Europe), and that has been a nice benefit to have, but access to a Lufthansa or Singapore Business Class Lounge (which I get through a United Club membership from their Chase Club card) has been a lot more val...

AnnetteLouisan wrote: ↑Fri Jun 03, 2022 6:00 am Is there any safety difference between treasuries and insured HYSAs, while we are on the subject? HYSAs are insured so that may be one reason to keep them. Treasuries are widely considered safe and backed by the full faith and credit of the U.S. govt. not sure if there is a meaningful distinction there and what would be the effect of a ratings downgrade. No fees to buy treasuries unless you withdraw early.

Ultimately it is the borrowing ability and creditworthiness of the U.S. Treasury that backstops FDIC insurance, so I don’t think that there is a material difference in safety.

I have made the same shift with most of the funds that I had previously stashed in a HYSA. I am still fine-tuning durations, but the core of the position is a large slug of 8 week T-bills that auto roll using FIDO’s auto roll feature. I have added some 13 week and six month bills as well. I am thinking of sweeping the yield into our mortgage, which will be retired in about three years. That represents an after-tax yield of about 3%, since we don’t itemize any more.

Given that you have a mortgage and a home, and have not told us that monthly cash outlay for the mortgage is objectionable to you, your question is whether you should put new money into investments, broadly speaking, or into your primary residence (real estate). An incremental dollar used to pay down the mortgage returns at the rate of market appreciation for your home in your area, plus the mortgage interest avoided on that incremental dollar. This is not correct. The mortgage paydown returns exactly the mortgage rate, because the home appreciates by the same dollar amount regardless of whether it has a mortgage. For example, suppose that your home is worth $500K, with a $400K mortgage at 4%. Next year, your home is worth $550K, and you p...

I lament that our unbelievably complex tax code is particularly complex for older retirees (at least of the upper-middle-income and above variety), and at the time in life when cognitive skills might ordinarily be expected to decline! If your financial life isn't complicated, it is more tedious than complicated. Probably the one most often missed "complexity" is the hump in the marginal tax rate (27%) which isn't even in the tax brackets. Often missed by people when they do Roth conversions. so I am not familiar with what you are talking about - care to elaborate? (I am a ways from retirement - but always looking to learn) The one that is most prominent is the way that Medicare IRMAA (Income Related Monthly Adjustment Amounts) le...

I was idly wondering if the bump in inflation rates may have any effects on planning when to file for benefits. Or do the COLAs mean inflation is a "don't care" to a first order? There are some sneaky effects of increased inflation rates. COLA + high inflation will bump up effective tax rates due to our progressive federal income tax system, for example. I don’t have a well-thought-out view on whether high inflation will affect my SS filing (my guess is not, that I will stick with claiming at 70 unless something changes), but I thought it might be worth pointing out that tax brackets are indexed for inflation. Your comment that high inflation will “bump up effective tax rates” made me think you might not realize that. That said, ...