What seems to matter

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Robert T
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What seems to matter

Post by Robert T » Mon Feb 19, 2018 4:13 am

.
FWIW - a few thoughts on what seems to matter (investment related).

1. Be thankful. We probably have a broader set of cheaper investment options (mutual funds/ETFs) than any other country.

2. Start investing early. Compounding can be an incredible multiplier.

3. Your savings rate matters. The higher your savings rate, the lower your spending rate. These have a mutually reinforcing effect on your ability to retire early.

4. Find an allocation you can stick with over the long-term – matching your ability, willingness, and need to take risk (including any tilts away from the market).

5. Minimize costs (expense ratios, trading costs, taxes, advisor fees, negative alpha). As an example, in a forwarding looking 4-5 percent portfolio return world, a 1% adviser fee = 20% to 25% of returns, and in a 3-4% sustainable withdrawal world, a 1% advisor fee = 25% to 33% of your annual withdrawal! Expense ratios + taxes on some funds also exceed 1%. As the saying goes - a small leak can sink a big ship. A large leak can do so much faster.

6. Educate yourself on investing – it will itself be a good investment. Bogleheads provides a great resource. Personally, the more certain people sound about investing the more skeptical I am about what they say. There are no certainties (apart from expenses). The earlier books by Bernstein, Swedroe, and Ferri are still great resources (shouldn't be overlooked). Doing simple things very well can often take you further than trying to do complex things less well.

Robert
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oldcomputerguy
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Re: What seems to matter

Post by oldcomputerguy » Mon Feb 19, 2018 7:45 am

I might add: Don't mess with it. Studies have shown that, the more one "diddles" with their holdings (i.e. buying and selling), the more drag on their returns.
It’s taken me a lot of years, but I’ve come around to this: If you’re dumb, surround yourself with smart people. And if you’re smart, surround yourself with smart people who disagree with you.

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Top99%
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Re: What seems to matter

Post by Top99% » Mon Feb 19, 2018 9:01 am

A good solid list I would like to take back in time and share with my 24 year old self. The only thing I would add (perhaps just expand #3 on your list) is to think deeply on what makes you happy so you can balance your spending / saving appropriately and get the best happiness per dollar ratio out of your spending.
Adapt or perish

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Re: What seems to matter

Post by deikel » Mon Feb 19, 2018 10:20 am

Just my opinion:

1 - irrelevant, you can be unthankful and live in a different country and still be successful no problem.'

2 - helpful, but not necessary. The actual compounding is overrated IMO (the ADDITIONAL return of the return is minor, even over long times, compared to the actual saving and simple return) - of course starting early makes it easier. The whole 'invest early and enjoy compounding' is a marketing gimmick IMO

3 - this is the MAJOR contributor to success, I would argue its the only true contributor till the very later days of the game

4 - Nice to have, but not rally needed, even if you make mistakes, you can bounce back - see Nr 3.

5 - Minor helpful contributor when it comes to investment costs, obviously part of the major driver Nr. 3 if meant as a cost control in all things of your life

6 - Nice to have, not needed really as long as you are smart enough to get help from someone, even a paid advisor


I know that BH might not like to see this, but the BH principles are just the second tier of optimization that will further help you along. The major driver (until quite late in the game) is still your actual savings rate and your cost of living reduction. I would argue its in retirement (or lets say at the end of the accumulation phase) that the BH principles make the most sense.
Everything you read in this post is my personal opinion. If you disagree with this disclaimer, please un-read the text immediately and destroy any copy or remembrance of it.

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Re: What seems to matter

Post by goingup » Mon Feb 19, 2018 10:26 am

Robert T-
Loved your post. Agree entirely.

It's like Jack Bogle says: "Get the big things right."

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Re: What seems to matter

Post by Portfolio7 » Mon Feb 19, 2018 12:10 pm

deikel wrote:
Mon Feb 19, 2018 10:20 am
Just my opinion:

2 - helpful, but not necessary. The actual compounding is overrated IMO (the ADDITIONAL return of the return is minor, even over long times, compared to the actual saving and simple return) - of course starting early makes it easier. The whole 'invest early and enjoy compounding' is a marketing gimmick IMO
I have to support Robert T in this, his primary point is critical. The follow-on comment could perhaps use an edit. I understand your point and it's true in isolation, but stating it like that works against the behavioral truth that starting investing early is huge. I believe that when stating it as Robert T did, people are merely conflating simple and compound return effects over time, rather than attempting to isolate the effect that's truly compounding.

I worked out for my son that if he invested $2,000 per year starting at 14 ($2K is about what he earned from his summer job), and continued through age 30, excluding his 4 years in college, he'd have $900k - $2.2M by age 67, assuming 8%-10% returns. (Ignoring inflation for the moment... that's lesson 2). Not that $2K is all he should contribute, or that he should stop at 30 (I was showing him how much more savings is required if he starts late), but making the point that what he does now makes a difference. His personal contribution of $26K over those 13 years is between 1-3% of his final total savingsd at age 67 in that scenario. Separating simple return from the compounding of those simple returns misses the point, imho, that starting early enormously decreases the heavy lifting (saving) required to build critical mass in your retirement account.

Maybe you'd agree if Robert had stated something like "Start investing early. Decades of simple and compound returns can be an incredible multiplier."?
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Re: What seems to matter

Post by Sandtrap » Mon Feb 19, 2018 12:16 pm

oldcomputerguy wrote:
Mon Feb 19, 2018 7:45 am
I might add: Don't mess with it. Studies have shown that, the more one "diddles" with their holdings (i.e. buying and selling), the more drag on their returns.
+1
No "Diddling"
No "Vacillating"
j :D

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Watty
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Re: What seems to matter

Post by Watty » Mon Feb 19, 2018 12:26 pm

You can condense it more, I forget where I read it but I read this somewhere and it stuck with me;

The only things you can control in investing are;

1) How much you save or spend each year.

2) Your asset allocation.

3) Keeping investing costs low.


You point about investment education is maybe overstating what you need to know. People can do just fine with a target date fund and regular contributions. Learning how little you actually know if often a bigger challenge for many people.

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Re: What seems to matter

Post by Random Walker » Mon Feb 19, 2018 3:45 pm

Top99% wrote
The only thing I would add (perhaps just expand #3 on your list) is to think deeply on what makes you happy so you can balance your spending / saving appropriately and get the best happiness per dollar ratio out of your spending.
I totally agree. Personally I’ve found that getting clear on needs versus wants has had a big effect on me. The result has been a much less aggressive portfolio and prioritizing sleeping well over eating well. Over the last couple years I’ve taken advantage of Monte Carlo Simulation offered by my advisor. That exercise has really forced me to get clear on goals, needs, wants. One portion of the MCS exercise is to evaluate the effects of changes in saving and spending rates. The exercise has shown that saving and spending affect the likelihood of achieving goals substantially more than asset allocation. And as I said above, the result has been cooling off the AA substantially.

Dave

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Conch55
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Re: What seems to matter

Post by Conch55 » Mon Feb 19, 2018 4:03 pm

The only things you can control in investing are;
1) How much you save or spend each year.
2) Your asset allocation.
3) Keeping investing costs low.
Totally agree with this advice. One can count on seeing ups and downs over the long-haul but discipline and planning matter. Control what you can.

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Re: What seems to matter

Post by Fallible » Mon Feb 19, 2018 4:34 pm

Thanks for an excellent list of what matters. The last line sums it up nicely:

"Doing simple things very well can often take you further than trying to do complex things less well."
Bogleheads® wiki | Investing Advice Inspired by Jack Bogle

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Robert T
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Re: What seems to matter

Post by Robert T » Mon Feb 19, 2018 5:06 pm

.
FWIW - some numbers/experience underlying the above

1. Over the past 10+ years or so I have tried to help a few friends in other countries. When I looked into it, the fees were much higher (trade costs, hidden exchange rate charges etc), and in some countries (EM/Frontier countries) there were no low cost broadly diversified funds. It gave me a much greater appreciation for the choices we have here that we often take for granted, and would have been 'less successful' in these countries than with the investment choices we have here. Perhaps it was a biased sample of countries – but was instructive.

2. Here’s an example. Two people start work at 25 both earning 50,000 per year. Their income increases at 6 percent per year (inflation + human capital accumulation from on the job experience). Lets also assume that they both save 30 percent of their income and achieve a 6 percent annual return. One starts saving and investing at 25, the other starts saving and investing at 35, 10 years later. By age 62 the early saver and investor’s portfolio (having been saving and investing for 38 year vs. 28 years) would be 50 percent larger. Or put another way – the late saver/investor would have to save/invest 45 percent of their income to end with the same portfolio value as the early saver/investor.

3. Yes savings rate is very important but investment return is not unimportant (together with when you start investing). Using the above example of the early saver, the investment return exceeds annual savings in year 16 (at age 40). Or put another way, for most (58 percent) of the 38 year time period, investment return exceeded annual savings. Obviously this is sensitive to savings rate and investment return.

4. Investment expenses. A 1.5% lower expense cost (no 1% advisor fee, lower trade costs, taxes etc) – all else held equal - would lead to a portfolio with a 33% larger end value.

5. Getting more educated, including lessons from history of financial markets helps stay the course. Some of the education comes with experience/time invested in the market. Helps stay the course

From the above: starting 10 years earlier increased portfolio end value by 50 percent, investment return exceeded annual savings for more than 50 percent of the investment period, and lower expenses increases portfolio value by 33 percent. All are significant IMO. And when taken together can add up to large differences. Obviously these results are sensitive to assumptions – and you can test this by changing some of the assumptions. If you start later, achieve lower return at higher costs, then obviously savings would matter much more. Happy for others to check the math.

Robert
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Re: What seems to matter

Post by bobcat2 » Mon Feb 19, 2018 6:13 pm

Other things that matter for achieving a financially successful retirement

- Work until at least age 64, if possible. The advice many people don’t want to hear, but working a few extra years is more powerful than saving a slightly higher percentage of income every year.

- Own, don’t rent, and pay off the mortgage at or before retirement. In retirement you won’t have to pay rent and there is also a significant tax advantage. You not only don’t have to come up with the income to pay the rent, you also don’t have to pay the income tax on that extra income spent to pay the rent. For most home owners this is a bigger lifetime tax advantage than the home mortgage interest deduction!

- Once the mortgage is paid off, don’t spend that income, but instead make it an additional part of your retirement savings.

- Once the kids have left the nest, don’t spend the income previously spent on the kids, but instead make it an additional part of your retirement savings.

- Delay taking Social Security benefits for at least two years after retirement, unless you are retiring after turning 68. Delaying Social Security benefits is especially beneficial in a low interest rate environment. Social Security benefits are implicitly tied to average LT real interest rates, not current prevailing interest rates.

- If possible delay taking defined benefit pension benefits for the same reasons delaying Social Security benefits is a good idea. Most people aren’t aware that pension benefits can be delayed and that it is actuarially advantageous to do so. But usually they can be delayed.

- Use home equity in retirement. Seriously consider taking out a reverse mortgage line of credit.

- Stay together or get together. It’s true that two can live considerably cheaper than one on a per person basis. The economies of shared living are significant.

While many people focus on developing somewhat exotic asset allocation strategies in efforts to solve the retirement problem, the solution has little to do with the allocation of investible assets – other than to avoid extreme allocations that are either heavily weighted toward risky assets or heavily weighted toward very short-term low return assets that may seem low risk, but are risky in terms of meeting long-term retirement spending goals- mainly because of the mismatch between the duration of the assets and the liabilities (retirement income).

BobK
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Re: What seems to matter

Post by deikel » Mon Feb 19, 2018 6:40 pm

Portfolio7 wrote:
Mon Feb 19, 2018 12:10 pm
deikel wrote:
Mon Feb 19, 2018 10:20 am
Just my opinion:

2 - helpful, but not necessary. The actual compounding is overrated IMO (the ADDITIONAL return of the return is minor, even over long times, compared to the actual saving and simple return) - of course starting early makes it easier. The whole 'invest early and enjoy compounding' is a marketing gimmick IMO
I have to support Robert T in this, his primary point is critical. The follow-on comment could perhaps use an edit. I understand your point and it's true in isolation, but stating it like that works against the behavioral truth that starting investing early is huge. I believe that when stating it as Robert T did, people are merely conflating simple and compound return effects over time, rather than attempting to isolate the effect that's truly compounding.

I worked out for my son that if he invested $2,000 per year starting at 14 ($2K is about what he earned from his summer job), and continued through age 30, excluding his 4 years in college, he'd have $900k - $2.2M by age 67, assuming 8%-10% returns. (Ignoring inflation for the moment... that's lesson 2). Not that $2K is all he should contribute, or that he should stop at 30 (I was showing him how much more savings is required if he starts late), but making the point that what he does now makes a difference. His personal contribution of $26K over those 13 years is between 1-3% of his final total savingsd at age 67 in that scenario. Separating simple return from the compounding of those simple returns misses the point, imho, that starting early enormously decreases the heavy lifting (saving) required to build critical mass in your retirement account.

Maybe you'd agree if Robert had stated something like "Start investing early. Decades of simple and compound returns can be an incredible multiplier."?
I am not even disagreeing with the original post (or your replay), but I just don't like throwing this compounding around like a magic bullet. Because, if you turn the argument around, someone in his late 40s who did not invest earlier is than screwed for life because the compounding will only be for a too short a time ?

No, its still the savings rate that will get you there (rate because it means both Expense and Income/Saving are optimized) and its multiple times more important than the compounding.

As you stated in the post what he does now makes a difference - that is true at any age, independent of compounding. That's all I was trying to impress, the majority of BH mantra is a secondary helper if you get the savings rate right to begin with.
Everything you read in this post is my personal opinion. If you disagree with this disclaimer, please un-read the text immediately and destroy any copy or remembrance of it.

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Re: What seems to matter

Post by Angst » Mon Feb 19, 2018 6:48 pm

Great post Robert for putting both the current market and all markets in perspective. People would probably also enjoy Taylor's recent post linking to Jonathan Clements' latest blog entry at www.humbledollar.com titled "The Morning After".

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Re: What seems to matter

Post by dwickenh » Mon Feb 19, 2018 7:06 pm

Angst wrote:
Mon Feb 19, 2018 6:48 pm
Great post Robert for putting both the current market and all markets in perspective. People would probably also enjoy Taylor's recent post linking to Jonathan Clements' latest blog entry at www.humbledollar.com titled "The Morning After".
'
+1
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

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Re: What seems to matter

Post by Johnnie » Mon Feb 19, 2018 7:29 pm

Portfolio7 wrote:
Mon Feb 19, 2018 12:10 pm
Separating simple return from the compounding of those simple returns misses the point, imho, that starting early enormously decreases the heavy lifting (saving) required to build critical mass in your retirement account... "Start investing early. Decades of simple and compound returns can be an incredible multiplier."
Useful distillation. I've been tussling with how to convey that to the kids, so they know it takes a long time before you enter the "bonus rounds" where persistent habits adopted early really pay off. The simplistic "compounding" was falling short.
"I know nothing."

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Re: What seems to matter

Post by skor99 » Mon Feb 19, 2018 7:43 pm

deikel wrote:
Mon Feb 19, 2018 6:40 pm
Portfolio7 wrote:
Mon Feb 19, 2018 12:10 pm
deikel wrote:
Mon Feb 19, 2018 10:20 am
Just my opinion:

2 - helpful, but not necessary. The actual compounding is overrated IMO (the ADDITIONAL return of the return is minor, even over long times, compared to the actual saving and simple return) - of course starting early makes it easier. The whole 'invest early and enjoy compounding' is a marketing gimmick IMO
I have to support Robert T in this, his primary point is critical. The follow-on comment could perhaps use an edit. I understand your point and it's true in isolation, but stating it like that works against the behavioral truth that starting investing early is huge. I believe that when stating it as Robert T did, people are merely conflating simple and compound return effects over time, rather than attempting to isolate the effect that's truly compounding.

I worked out for my son that if he invested $2,000 per year starting at 14 ($2K is about what he earned from his summer job), and continued through age 30, excluding his 4 years in college, he'd have $900k - $2.2M by age 67, assuming 8%-10% returns. (Ignoring inflation for the moment... that's lesson 2). Not that $2K is all he should contribute, or that he should stop at 30 (I was showing him how much more savings is required if he starts late), but making the point that what he does now makes a difference. His personal contribution of $26K over those 13 years is between 1-3% of his final total savingsd at age 67 in that scenario. Separating simple return from the compounding of those simple returns misses the point, imho, that starting early enormously decreases the heavy lifting (saving) required to build critical mass in your retirement account.

Maybe you'd agree if Robert had stated something like "Start investing early. Decades of simple and compound returns can be an incredible multiplier."?
I am not even disagreeing with the original post (or your replay), but I just don't like throwing this compounding around like a magic bullet. Because, if you turn the argument around, someone in his late 40s who did not invest earlier is than screwed for life because the compounding will only be for a too short a time ?

No, its still the savings rate that will get you there (rate because it means both Expense and Income/Saving are optimized) and its multiple times more important than the compounding.

As you stated in the post what he does now makes a difference - that is true at any age, independent of compounding. That's all I was trying to impress, the majority of BH mantra is a secondary helper if you get the savings rate right to begin with.

Yes the late 40s yr old is screwed unless their saving rate is much higher than who started at 25. Familial financial responsibilities reach their peak in the late 40s for most people with kids in college or getting ready to go to one and the mortgage typically still not paid off. I am a first hand example of this and my savings rate was higher in my 20s and 30s than it is in my late 40s. I have been a bogleheader all along, so for the typical American the their late 40s is probably much lower than in their 20s.
This would be true for most people following a typical career trajectory where the peak earnings are in the late 40s and the income is growing somewhat higher than inflation, but the expenses are growing much faster. This should also be coupled with the blatant age discrimination prevalent in the job market where one has a higher chance of being laid in their late 40s and 50s than in the 20s or 30s. I can also vouch for the compounding effect, where my NW grew more in 2017 than in 2013 with roughly the same asset allocation, but the S&P index growth was 10 points more 2013 than in 2017.
Last edited by skor99 on Mon Feb 19, 2018 7:52 pm, edited 1 time in total.

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Re: What seems to matter

Post by Dottie57 » Mon Feb 19, 2018 7:50 pm

Robert T wrote:
Mon Feb 19, 2018 5:06 pm
.
FWIW - some numbers/experience underlying the above

1. Over the past 10+ years or so I have tried to help a few friends in other countries. When I looked into it, the fees were much higher (trade costs, hidden exchange rate charges etc), and in some countries (EM/Frontier countries) there were no low cost broadly diversified funds. It gave me a much greater appreciation for the choices we have here that we often take for granted, and would have been 'less successful' in these countries than with the investment choices we have here. Perhaps it was a biased sample of countries – but was instructive.

2. Here’s an example. Two people start work at 25 both earning 50,000 per year. Their income increases at 6 percent per year (inflation + human capital accumulation from on the job experience). Lets also assume that they both save 30 percent of their income and achieve a 6 percent annual return. One starts saving and investing at 25, the other starts saving and investing at 35, 10 years later. By age 62 the early saver and investor’s portfolio (having been saving and investing for 38 year vs. 28 years) would be 50 percent larger. Or put another way – the late saver/investor would have to save/invest 45 percent of their income to end with the same portfolio value as the early saver/investor.

3. Yes savings rate is very important but investment return is not unimportant (together with when you start investing). Using the above example of the early saver, the investment return exceeds annual savings in year 16 (at age 40). Or put another way, for most (58 percent) of the 38 year time period, investment return exceeded annual savings. Obviously this is sensitive to savings rate and investment return.

4. Investment expenses. A 1.5% lower expense cost (no 1% advisor fee, lower trade costs, taxes etc) – all else held equal - would lead to a portfolio with a 33% larger end value.

5. Getting more educated, including lessons from history of financial markets helps stay the course. Some of the education comes with experience/time invested in the market. Helps stay the course

From the above: starting 10 years earlier increased portfolio end value by 50 percent, investment return exceeded annual savings for more than 50 percent of the investment period, and lower expenses increases portfolio value by 33 percent. All are significant IMO. And when taken together can add up to large differences. Obviously these results are sensitive to assumptions – and you can test this by changing some of the assumptions. If you start later, achieve lower return at higher costs, then obviously savings would matter much more. Happy for others to check the math.

Robert
.
Just a note. I can control savings rate. I cannot control market returns. Which is why I think savings rate is so important.

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Re: What seems to matter

Post by Miriam2 » Mon Feb 19, 2018 11:18 pm

Robert T wrote: FWIW - a few thoughts on what seems to matter (investment related). . . .
Robert
Thank you for posting these thoughts, Robert. Your thoughts come from your wealth of experience, so I read them carefully (as I've read all your posts over the years) :happy

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Re: What seems to matter

Post by NibbanaBanana » Tue Feb 20, 2018 11:31 pm

skor99 wrote:
Mon Feb 19, 2018 7:43 pm
This should also be coupled with the blatant age discrimination prevalent in the job market where one has a higher chance of being laid in their late 40s and 50s than in the 20s or 30s.
Ummmm....... I haven't experienced that myself.

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Re: What seems to matter

Post by joeblow » Tue Feb 20, 2018 11:40 pm

NibbanaBanana wrote:
Tue Feb 20, 2018 11:31 pm
skor99 wrote:
Mon Feb 19, 2018 7:43 pm
This should also be coupled with the blatant age discrimination prevalent in the job market where one has a higher chance of being laid in their late 40s and 50s than in the 20s or 30s.
Ummmm....... I haven't experienced that myself.
LOL! I see what you did there.

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Re: What seems to matter

Post by MandyT » Thu Feb 22, 2018 9:44 pm

bobcat2 wrote:
Mon Feb 19, 2018 6:13 pm
Other things that matter for achieving a financially successful retirement

- Delay taking Social Security benefits for at least two years after retirement, unless you are retiring after turning 68. Delaying Social Security benefits is especially beneficial in a low interest rate environment. Social Security benefits are implicitly tied to average LT real interest rates, not current prevailing interest rates.

- If possible delay taking defined benefit pension benefits for the same reasons delaying Social Security benefits is a good idea. Most people aren’t aware that pension benefits can be delayed and that it is actuarially advantageous to do so. But usually they can be delayed.
I'm curious whether this rationale applies to a non-inflation-adjusted pension. I did some calculations which revealed that my DB pension is actuarially neutral, on a nominal basis, to several options (immediate start with level payments, immediate start with a reduced initial payment but a 2% increase each year, delayed start) on the assumption that I would live to be 75. Despite the fact that my life expectancy might be higher than that, I can see several advantages to delaying Social Security to 70 but starting the level-payments pension option at retirement.

(1) On a real basis, the break-even point is later than 75 because money I receive earlier is worth more than money I receive later when inflation is taken into account.

(2) Perhaps more importantly, any option that delays pension payout results in collecting more pension money while I am collecting SS, increasing the chances that the combination of the pension and SS will increase my Medicare premiums and the tax on my SS income. (Well, either that or I died and I was definitely better off starting the pension early!)

(3) It's true that there could be changes to SS, but it's also true that my pension could run into financial difficulty, in which case I'm better off collecting sooner than later.

The suggestion to delay the pension after retirement seems to assume that the portfolio is sufficient to fund the period before the pension starts. On that assumption, the combination of late SS and early pension seems very attractive to me. Am I overlooking anything? The main argument I can see for delaying the pension is to do Roth conversions of large amounts of pre-tax money before it starts.

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Re: What seems to matter

Post by bobcat2 » Thu Feb 22, 2018 10:41 pm

MandyT wrote:
Thu Feb 22, 2018 9:44 pm
bobcat2 wrote:
Mon Feb 19, 2018 6:13 pm
Other things that matter for achieving a financially successful retirement

- Delay taking Social Security benefits for at least two years after retirement, unless you are retiring after turning 68. Delaying Social Security benefits is especially beneficial in a low interest rate environment. Social Security benefits are implicitly tied to average LT real interest rates, not current prevailing interest rates.

- If possible delay taking defined benefit pension benefits for the same reasons delaying Social Security benefits is a good idea. Most people aren’t aware that pension benefits can be delayed and that it is actuarially advantageous to do so. But usually they can be delayed.
I'm curious whether this rationale applies to a non-inflation-adjusted pension.
Nominal pension benefits are often based on nominal corporate bond rates from the 1980s and also life expectancy from the 1980s. This makes the delay of pension benefits often very attractive as nominal interest rates were much higher in the 80s than they are today and life expectancy at 65 was shorter. At my firm for every year you delay the benefit from age 65 to age 70 the benefit increases by about 13%, or just over 1% per month.

Why are pension benefits often based on data from over 30 years ago? Probably because updating the life expectancy and interest rate data would decrease the funded ratio of corporate pension funds. :wink:

In general, how much the payouts increase by delay determines the attractiveness of delaying pension benefits. But delay should definitely be considered if the payouts increase markedly, even if you only delay for a year or two. Not only do people rarely consider delay, most people are not even aware that the option to delay pension benefits is available.

BobK
In finance risk is defined as uncertainty that is consequential (nontrivial). | The two main methods of dealing with financial risk are the matching of assets to goals & diversifying.

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Re: What seems to matter

Post by michaelsieg » Thu Feb 22, 2018 11:59 pm

Thanks for posting Robert. Really appreciate your input to the forum.

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Re: What seems to matter

Post by MandyT » Fri Feb 23, 2018 1:00 am

bobcat2 wrote:
Thu Feb 22, 2018 10:41 pm
In general, how much the payouts increase by delay determines the attractiveness of delaying pension benefits. But delay should definitely be considered if the payouts increase markedly, even if you only delay for a year or two. Not only do people rarely consider delay, most people are not even aware that the option to delay pension benefits is available.
I just verified that my plan doesn't work this way, but it's interesting, and good to know, that some others do. Thanks!

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