Retirement-Era |OT| How to Invest For Retirement

Prax

Member
Oct 25, 2017
1,617
do you have them invested in ETFs?
For the majority of it, yes (or whatever the roboadvisor is doing haha--a lot of VTI, XEF, EEMV etc), but at least some of it is just employee company stock, which performed very well. I'm pretty sure a lot of the "lift" came from the performance of all the past underlying ETF pruchases.

They do say once you hit 100k in investments, things start snowballing. The money starts making more money than you can put in manually.
 

Elepsis

Member
Oct 30, 2017
3
So, for a clueless beginner, the generally agreed upon first step would be to start with a Vanguard index fund and start dumping money in? Based on what I've seen, your investment doubles in around 7 years given the average return rate and re-investing your gains to get compounding interest, correct? I've only had 401k going since I turned 30, for about 4 years now (and not nearly the income available to do like some are suggesting and max that out, that would be half my take-home pay). Basically I'm looking at being able to invest $10k a year, and I dont want to get too involved with the specifics because I will only do more harm than good, most likely.
Unless your 401k is egregiously bad, the most likely thing you'll want to do is to just throw that additional money into your 401k. If you're just saving for retirement, you want to take advantage of favorable tax treatment on your 401k as best you can. If you need that money for something else, then yes, starting with an index fund would be a good idea.
 

reKon

Member
Oct 25, 2017
5,064
Tesla slaying right now, but not yet in the S&P 500... feels bad man (I only own index funds)
 

Yaboosh

Member
Oct 25, 2017
7,189
My wife has various retirement accounts from past jobs. We want to finally get them all rolled over. She uses vanguard. Do we just call them up or do we try to get an in person meeting to do this right? It seems confusing to try to do it over the phone. Not sure how it works at all.
 
Oct 25, 2017
1,387
Am I overlooking something important?

My wife and I always joke about how we'll never be able to retire, but we're close enough to it that I decided to try to run some rough numbers (I mean, it's still 20+ years away, but it used to be 40+.) In the absolute worst case scenario (SS/pension gutted and investments don't grow at all,) it's still... livable. Not great, but with just the two of us and no mortgage (though still taxes and insurance,) it'd be fine. I know someone living on a third of what I've calculated, and she makes due even with rent (granted, it's only one person in her case.) Mid and best case scenarios are both "what cruise do we want to take this month?" kind of money.

My worst case calculations are based on:
  • >$1k/mo*2 for SS payments (even if SS collapses, my understanding is that SS revenue will support ~70% benefits)
  • Wife's pension cut in half of the lowest estimated benefit
  • Withdrawing the growth in investments (used 3% in my calc, even if there's no growth, that rate of withdrawl would last ~33 years.)
I know that's way overly simplified, but can that really be in the ballpark?

And yes, I realize that if my wife leaves me, I'm boned.
 

Yaboosh

Member
Oct 25, 2017
7,189
Am I overlooking something important?

My wife and I always joke about how we'll never be able to retire, but we're close enough to it that I decided to try to run some rough numbers (I mean, it's still 20+ years away, but it used to be 40+.) In the absolute worst case scenario (SS/pension gutted and investments don't grow at all,) it's still... livable. Not great, but with just the two of us and no mortgage (though still taxes and insurance,) it'd be fine. I know someone living on a third of what I've calculated, and she makes due even with rent (granted, it's only one person in her case.) Mid and best case scenarios are both "what cruise do we want to take this month?" kind of money.

My worst case calculations are based on:
  • >$1k/mo*2 for SS payments (even if SS collapses, my understanding is that SS revenue will support ~70% benefits)
  • Wife's pension cut in half of the lowest estimated benefit
  • Withdrawing the growth in investments (used 3% in my calc, even if there's no growth, that rate of withdrawl would last ~33 years.)
I know that's way overly simplified, but can that really be in the ballpark?

And yes, I realize that if my wife leaves me, I'm boned.
Do retired people typically stay in the market?
 

jstevenson

Developer at Insomniac Games
Verified
Oct 25, 2017
1,135
Burbank CA
Do retired people typically stay in the market?
While older school of thought was you'd be mostly out by then - given longer lifespans and earlier retirements, you pretty much have to be partially invested still at retirement for the funds you'll need 10+ years from now (or even 20-25 years from now).

So far less invested than you would be at say age 40, but being totally out at say age 62 if you're healthy and expect to live another 20-25 years is likely not optimal.
 
Oct 25, 2017
1,387
Do retired people typically stay in the market?
Even if we cash out our investments, withdrawing 3% a year lasts 33 years. The investments don't even really move the dial on a yearly basis, if they were $100k, it'd only be $3k/yr. They're not quite that bad, but we've been neglectful on saving for retirement. It seems like SS and her pension - even if absolutely gutted - are going to serve us pretty well.

I guess I've never really looked in to it, does SS really pay out an average of ~$1.4k per person per month (assuming of course they both worked all their lives) or is there some sort of adjustment for married double-earners?
 

tokkun

Member
Oct 27, 2017
1,812
Do retired people typically stay in the market?
That is typically what financial advisors would recommend. As one data point, the Vanguard Target Retirement 2010 fund is 30/70 ratio of stocks / bonds right now, and that is ostensibly intended for people 10 years into retirement.

With lower bond yields these days people are considering high stock percentages to compensate. I hear more people talking about 60/40 or higher.
 

FliXFantatier

Master of the Reality Stone
Avenger
Oct 25, 2017
4,940
Los Angeles
Depending how big my cushion is at time of retirement I would consider just staying in stocks...
¯\_(ツ)_/¯
I still have a few years to debate that with myself though. 😛
 
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TheTrinity

TheTrinity

Member
Oct 25, 2017
343
Why would you leave the market because you're retired? I get that you'd want significantly less volatility because there's no backup of job income but it's leaving a ton of money on the table if you just pack it up completely.

I haven't completely solidified my plan but I expect to end with something like a 2-3 years of expenses cash cushion to help weather downturns through the risky first years of retirement. You can lower that a lot the further into retirement you are, and then keep a healthy mix of stocks in your investments to capture the market gains. I'd think at least 50/50 in perpetuity is reasonable unless bonds become a lot more attractive.