Reposted a corrected version.
I met a new friend in my community who just had to go back to work because his 401k lost too much money in the financial downswing.
He is a smart guy in his engineering area, and excellent management abilities. IMHO he didnāt know how high his risk was, or how to lower his risk in an effective way. I think he went back to work while he still was able to (still fresh in his skills and connections). He probably is building up a bigger nest egg while trying to reduce his risk and also hoping for recovery of some of his losses. He told me he had 70% in equities. Obviously his 401k instrument did not have the investment options to do well enough in a down market.
I shared with him what DH and I did to reduce our risk - we have no pensions (over 4 different times/years between 2013 and 2021 we moved a total of $650K from DHās 401k into purchasing annuities), and our Roth IRAs are managed by our Financial Advisor - we consolidated all our loose ends - Sar-Sep, IRAs, etc. I also have an annuity as well. I had a lot of years out of the job market (husband extensive work travel, and raising DDs right), and I only returned to last 5 year sunset career (not great pay, but OK pay considering). The friend is considering talking to our FA group.
In the 1990ās, I was well aware of the swings of 401ks with investment options we had available (and learning how these investments worked in market conditions at the time) - and when DHās 401k grew too big after we climbed out starting in 2010; we liked the strategy of purchasing the right annuities. I believe I developed the fine tuning skills with the four investment ābundlesā in DHās 401k to adjust the investment percentages after seeing which had less loss in a downswing. Of course comparing 5 year and 10 year return percentages on these fund groups between last year and this year - last yearās loss had quite an impact.
DHās 401k has moved up $26k since the downturn of $270K, but yet our overall financial picture only varied about $100k. Have the āsafe harborā so to speak. Having the retirement set up correctly is important if you have a big nest egg or a more modest nest egg - but a modest nest egg means much more care in spending during retirement as well as avoiding any further risks.
When I shared with DH my friendās predicament, DH said there was no way he could return to the job/work he had been doing - it would be too hard on him. That is in part why he left the job 11 months before planned (7 months before he turned 65, and 11 months before I retired at 65).
Key is minimizing the losses on a downturn, even if you donāt get the full upswing. We are content with our lifestyle. When DD1ās household moves (maybe at the end of this year) I may have more travel in 2024 - but not expensive trips; I foresee a bit more US travel.
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Anybody else here really noticing inflation? Price of everything is up, property taxes through the roof, everybody and their mother wants a big tip (on top of the service charge). Iām always paying the bill when I go out to eat with family (donāt mind my own kids, Iām usually trying to give them money anyways), but nobody else has money and my mom is no longer willing to even pay the tip, though she is very well offā¦.weāre on a fixed income, and Iām getting weary of this!! Iām feeling like Iām done being the moneybags now that weāre retired. Didnāt seem to matter before.
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Property tax increases have been absolutely crazy here, yes, because the assessment was done last May when RE frenzy was full blown. I donāt expect the values to go down. Never happens. We just got a quote for deck repair, and it is quite insane. Sadly, the quote is not unreasonable, it is within the ballpark of the other bids.
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I notice it, especially at the grocery store. Fortunately weāve not had to cut back on anything ourselves (except on principle - āthat just seems to priceyā). But it does make me feel for big families on limited income trying to buy enough food for the week.
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Iāve mentioned that dh got a retirement job at a grocery store. That has helped us keep costs down as he gets a 10% discount on store brands, including prepared meals. Four times a year, he gets 25% off. We stock up on meats and such at those times. We expected property taxes would continue to go up, though our taxing entity lowered the rate so our taxes actually went down slightly.
Talking to my sister this week, she is considering putting off her retirement, originally scheduled for June.
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I was wondering when that was going to start happening, ie people delaying retirement or picking up retirement jobs.
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The plan always was for dh to have a part-time retirement job until 65. In fact, he has TWO!
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Seriously, two? What else does he do? Plus, why not get a full time job if heās working that much? Seems like at least heād get health care benefits, which are crazy expensive.
@busdriver11, I am not seeing it so much but that is partly not looking (I donāt monitor food purchases for example to compare) and partly complexity. I did notice property taxes going up but then again property values have skyrocketed (a teardown ranch house on my street that is not on the river sold for close to what I paid 3 years ago for a pretty nice house ā that needed some work but was very livable as it was ā without the beautiful lot that we have). We have had a very expensive year as weāve been paying for a big renovation but and am just contracting for solar panels. So it is hard to do an apples to apples comparison on costs without looking at specific objects.
ShawSon and his wife have a pretty high combined income and wealth, even if on paper at the moment. So, we alternate picking up dinners. With ShawD who has no spouse, we tend to pick up certain expenses (dinners, plane tickets if she is traveling with us and Iām making the reservation, items she requests if ShawWife tells her Iām going to Costco). But, she is doing decently and has just decided to do another program online that could add a significant slug to her income. Fortunately, we have enough left in the kids 529 funds for that new program.
The tipping is really out of hand. I got a request for a tip from the terminal at a convenience store that also makes sandwiches.
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I am definitely sick of people asking for tips just for taking your money. We just came from a trip to south Florida, and do they have a scam going on in the restaurants there. Many of them automatically add a service charge of 17-18%, and then they also leave the blank for the tip, with the āhelpfulā suggested amounts of 20-25 and 30% figured out for you. They figure out the percentage including tipping on the service charge. So if you arenāt looking closely at your bill, youāre double tipping and not even knowing it. So now Iāve been looking a lot closer at my bills, and just noticed that the waitress added an additional $8 for coffee that we didnāt have. No big deal, anyone can make a mistake, but she seemed surprised that we asked her to take it off the bill. āOh, you want me to fix it?ā Well, yeah. Sure, itās only eight bucks, but come on!
We always pay for our kids, just as a way to pass on some money, even when our older son has more money than we do in his account. No problem with that. I just donāt want to pay for everyone else, every time. When people get older, they should have the common sense to realize that itās time to start spending their money (as opposed to their kids spending money on them), even if they arenāt willing to pass it down to the younger generation. I am definitely planning to start giving our kids funds when the time is right.
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The FA said he had to bring in $1,500/month if he retired from his FT job. His old job had become so stressful. He wanted something with absolutely no stress so he got a mindless job at a grocery store chain for which heās always wanted to work. And then this other position at his old place came up. The pay is good, and itās only 15 hours/week. He doesnāt need to do the grocery job, but he enjoys it. Heās doing a total of about 30 hours/week between the two so itās not like heās working THAT much, but he does say sometimes he doesnāt feel that retired!
The tipping IS insane!
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Itās nice he found lower stress semi-retirement jobs. Will he be able to be full retired at some point when old enough to draw SS (and/or pension)?
Yeah. This is just until we can get on Medicare instead of his current retiree insurance. At that time, out premiums will be lower, and Iāll start drawing my pension from my old job. One of us may start taking SS then, too. Once we are both getting our pensions and SS we will be making more money than we ever have. Still hoping to never touch my 401k.
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Our new financial planner (paid hourly) designed a far more aggressive portfolio than expected (80/20 for IRAās and 95/5 for Roths!). His view is that the traditional 60/40 mix has been a huge disappointment as of late (agreed), and that bonds just donāt perform over time, compared to equities. Instead, he suggested we always keep 2 years of living expenses in cash, with most of the remaining in equities.
Our intent was to simplify retirement accounts, but he chose a completely new blend of funds for the Roth and IRA accounts ā many more funds than we currently hold in each account.
Current accounts are with Fidelity and each includes a mix of funds. Do any of you have targeted or blended funds with Fidelity, that you truly do not feel the need to monitor?
I realize equities typically preform best long term ā but what do you consider ālong termā? 10 years?
Is the old rule of thumb dead ā that of keeping the equity/bond mix equal to your age (when 30, keep 30% in bonds, and when 80, keep 80% in bonds)?
I wish I knew the answer to the question of how much to keep in bonds. I believe itās true that over time going with the overall market instead of individual funds has had a better outcome over time. I have kept over 4 yrs worth of ācash,ā which I know is stupid.
How far are you from retirement?
Really depends on yoru risk tolerance, what level of equities make it easy to sleep at night, as well as what the accounts are for. Personally, I donāt see much reason for a 30-year old to hold any bonds. I certainly didnāt buy any until after age 60. If the Roths are for your heirs, go 100% equities. If they are part of your retirement, put the bond portion more in the IRA.
btw: IMO, the purpose of bonds is not to āperformā but provide a ballast.
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Agree that as a 30yo I sure didnāt have 30% in bonds. I donāt think I even have that now, and Iām 60. Our goal is to not have to touch the 401k so I probably take more risks than most. I also have more in cash than I probably should, but all the things are 20ish years old ā just replaced the roof and expect to do a new AC and water heater soon. Thatās why all the cash.
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Bonds have been so dead in the water of late, but when markets go down, that ballast can be welcome. With better interest rates currently for CDs, I would think that security can be provided by stacking CDs, at least for the next 4 years or so.
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