i can’t remember the last normal market. It was probably when I traded 2 baseball cards I didn’t want for a model car my friend had that I did want. </p>
<p>The problem with market timing is not getting out of the market (by which I mean the equity market specifically) as much as with getting back in. There are a zillion people still sitting on cash, afraid to put back the money they took out years ago, because the market is “abnormally high.”</p>
<p>I have left money on the table because of diversification and staying the course… for some part of my investment life. Otoh, I have made back every penny (plus some) of every “crash” by hanging in there. “Don’t do something, just stand there!” Works for me. YMMV. </p>
<p>lol, Ixnay. I don’t figure skate but for chart analysis, I am aware of:
Turning Point
Swing Target
Oscillator
Head and Shoulders
Blow-off top
Dead Cross --> Death cross</p>
<p>@Krlilies, all correct, but I think you missed Crack and Snap. I have no idea what that is, but the answer sheet said all odd numbers are Technical Analysis terms; the others skating. I don’t do either , so I’m at a disadvantage. </p>
<p>"I have left money on the table because of diversification and staying the course… for some part of my investment life. Otoh, I have made back every penny (plus some) of every “crash” by hanging in there. “Don’t do something, just stand there!” Works for me. YMMV. "</p>
<p>I’m all for staying the course. Every time I get scared because the market crashes and I take it out, I lose. Probably most of the people who lose money in crashes lost it because they took it out. Those that left it in should be way ahead.</p>
<p>@busdriver11 , I did not have the strength of character to rebalance during the bank debacle, but I didn’t sell any equity funds – just added to bonds (in which I was under allocated). Even that cowardly performance rewarded me well. </p>
<p>My takeaways from this:
If your knees are shaking, your asset allocation is too aggressive
It’s not a loss until you sell</p>
<p>So - I have a question since there seems to be some very knowledgable people on here. What advice would you give to a couple with very little in retirement savings and they are in mid to late 50s? Is the idea that they will be able to live primarily on Social Security for both and a small pension absurd? I am seeing so many articles discussing people in this age range with minimal savings - but not many solutions.</p>
<p>Unfortunately it was all she had. It was her divorce settlement and once she found out she lost all that money she went back to school to get a job to support herself. Not many people know how to manage money and she thought she could trust her adviser. </p>
<p>What helps immediately is where you live. I mean you ought to live in a low cost state (low housing costs and low property taxes) and with no state income tax. For example Florida comes to mind. Or you could possibly move in with your children if you have any? I’m just throwing out some ideas. </p>
Hard to say without knowing more about why they haven’t been saving. How much do they make? Where is their money going?</p>
<p>Social Security will replace around 30-50% of your income, more if you delay retirement as long as possible.</p>
<p>They are probably in for a tough time, although they will be able to survive I think. They will probably have to drastically downsize their standard of living, or pursue a more radical strategy like move to somewhere where it is very cheap to live.</p>
<p>If they make the necessary lifestyle changes now, they have 10+ years that they can save until retirement, and that will make a big difference.</p>
<p>The couple in question are close family friends. So - I know some details, but not all. They do have a good amount of home equity, so they are planning to sell their home, move to a less expensive state and pay cash for a modest home. Their biggest challenge is way too much consumer debt - and they are working to have that all paid off in the next 5-6 years so that they will be debt free once they sell their house. Long story short - they spent way too much on their children’s college education and the wife stayed home for a few years here and there when they truly could not afford to live on one income. What’s done is done. </p>
<p>I’m just curious if there is anything else they could/should be doing right now. I understand their focus on paying off their debt, but the overall situation worries me. If you were in their shoes - what would you do?</p>
<p>Our posts crossed, so some of this prolly makes no sense:</p>
<p>@rockvillemom, they should optimize their SS, work as long as possible. Depending on how much they did save (presumably a non-zero amount) and how much of an emergency fund they need, they probably should purchase a Single Premium Immediate Annuity (SPIA) after they are no longer working. The downside to that is that they will leave no inheritance for their kids, if they have any, but it is what it is. The important thing is to keep working and stay as healthy as possible. </p>
<p>A big risk for people who have not saved enough is to think that they have to swing for the fences; it usually leads to striking out. I remember recommending a prudent plan for a colleague who was behind in his savings, and he told me that he had to do these risky things because he had to have more money. Well, you can imagine how that turned out, as it will 99% of the time. Winning the lottery is not a part of a successful financial plan. </p>
<p>If you know them well, you might suggest that they go to Bogleheads.org. There is a format there for asking these kinds of questions, and there are people there who know a lot and give freely of their knowledge with no financial motive. Posters disagree on the details, and get into funny p1ssing contests, but the advice is remarkably well-informed. I don’t want to sound like a cult member or a true believer, but BH has made a difference in my financial life. </p>
<p>Their plan is not a bad one, but they should accelerate getting out of debt. They doubtless have bad habits, based on their unfortunate choice to overspend on the kids’ education. </p>
<p>Agree that Bogleheads.org is a great site to visit for good ideas about how to save, invest and plan for retirement. Getting out of debt and saving like crazy are both very important. If their kids are working, perhaps the kids can also contribute toward paying down some of the ed loans.</p>
<p>Are the kids well launched? Do the parents have any “status” obligations (cars, clubs, clothing, vacations, etc.)?</p>
<p>As much as I don’t care for Dave Ramsey, he does preach the gospel of getting out debt well. Just avoid his local representatives for investing. </p>
<p>Thank you for the website recommendation - I am going to check it out and suggest to her. I believe they are paying for their children’s student loans in addition to their own consumer debt. My understanding of this is that they promised the kids that they would do so and do not want to renege. Their lifestyle is pretty modest from what I see. I guess I was hoping for some magical solution. Sounds like their best bet would be to try and have the consumer debt paid off in 3 years if possible - which is when the husband turns 60. </p>
<p>Please look into SPIAs, especially if their health is good. Depending on age, it is not unusual to get yields of 6 or 7% on SPIAs (you benefit from mortality credits; annuity purchasers who die younger than average provide the funding for those who live longer). This is as close to a magical solution as you can get legally. Do NOT consider any other kind of annuity – only single premium immediate annuities. </p>
<p>They can check for optimal SS strategy at <a href=“http://www.maximizemysocialsecurity.com”>www.maximizemysocialsecurity.com</a> for $40, although they probably can get the advice for free at BH, or buy/borrow Mike Piper’s book Social Security Made Simple. One of them will probably postpone SS until 70; the other won’t, but it all depends on age, income history, etc. I had it mostly figured out on my own, but tweaked the lifetime expected benefit by a few thousand $ (ie, much more than $40). </p>
<p>I understand their not wanting to renege on their kids’ education. They should do what they can to continue working.</p>
<p>Perhaps they could see if it makes sense to downsize now to a smaller / rental house or condo… especially if the current home has high tax/upkeep costs. That would allow the to put more income toward debt and savings. </p>