So been getting the vibe that all these things are in our future along with the bullshit of the last 18 months. So what is your plan? How do you plan to make the most of that situation.

If you are a younger family. Tightening your belt. Living with in your means will be important. Stay out of debt. Ect.

If you are about to retire make sure you do what you can to lesson the impact of these things to your retirement nest egg or income before it negatively impacts it.

If you are retired hopefully you are in a safe location and had planned for all kinds of scenario's.

Please explain what you have done, plan to do or make suggestions of what one can consider doing.

We have. Been buying realestate and things of real enduring value. We think holding on to cash is a losing proposition.

Same as before... Stock market/inflation/interest/etc. go up and they go down. Doesn't change the fundamentals.

No debt (other than mortgage). Live within my means. Stick to my budget. Keep contributing to my pension, and to my Roth IRA investing in diversified index funds every paycheck. Keep adding to a healthy emergency fund for unexpected car/house/medical expenses. Keep paying extra towards principal to pay my house off early. Hold 10% of my net worth in precious metals.

I plan to partially retire by 50 and fully retire by 57, and am well on track to do that, really no matter what the economy does in the short term. History has shown that despite bouts of short term problems, the economy still wins in the long run. For every dip there's an eventual rise.


Old Rugged Cross... This is the 2nd similar thread you've started in the last week or two. Sounds like you might be pretty concerned about your financial situation. Have you spoken with a financial advisor lately? They might have some suggestions, tailored to your specific situation, that could put your finances on a more solid foundation, or at least help you feel more confident in your decisions.

Do you have a budget and a solid retirement plan for the future?

It may also help to take a step back from so much of the news and the internet. There's a lot of doom and gloom out there. Some of it justified (short term), and much of it not. Tune out the noise. Develop a solid plan, and stick to it. And you'll be alright.

This message has been edited. Last edited by: RogueJSK,

Thanks guys, Darth, I think that is a good component to ones portfolio.

Rogue, got a lot more time on this rock than you. While your posts are mostly spot on and well thought out. And you are planning wisely for your future.

You do not need to question me or speculate about my situation.

My interest in asking questions are two fold. One, Even though history is important in looking to the future. I do feel we are in for unprecedented times in our countries future. Exactly what that is I do not know. Neither does anyone else.
But just saying that things go up and down and it is an inevitable cycle might be true. But it also might be naive. I think many are to dependent on the stock market as the end all do all to their financial well being. Lured into a since of security, so to speak.

The second part is that if people reading these kinds of threads might think and talk with their families about things they can and maybe should do that might benefit them as we go forward.

This not about me. It is about sharing thoughts and idea's for where we might be heading and the ways we can adjust if need be to make the most out of a situation that could negatively affect us if we do not prepare.

Nothing more, nothing less. But I do think it is prudent to learn as much as we can from each other.

When a loaf of bread is $10 and a gallon of Milk is $10 and going up. That is not the time to be thinking about a plan.

And if you feel the need, go ahead and tell everyone we need a financial planner, Again.

quote:

Originally posted by darthfuster:
We have. Been buying realestate and things of real enduring value. We think holding on to cash is a losing proposition.

Go to Vegas, they will help you with your cash.

quote:

Originally posted by old rugged cross:
And if you feel the need, go ahead and tell everyone we need a financial planner, Again.

Hey, I may sound like a broken record to you, since I've mentioned that in both of your recent "uncertain financial future" threads, but I've done so because I truly do believe it.

Advice from your interweb friends is fine, in general. Advice from someone like the Dave Ramsey podcast or a retirement planning blog is fine, in general.

But I strongly believe that once one gets serious about securing their financial situation and dialing in a plan for retirement, one ought to closely examine the specific fine details of one's own individual situation, in order to come up with a plan for what's best specifically for you. Not just what's best for the average person or what are good ideas in general.

General tips and practices can help one make good decisions, but only by looking at all the intricacies of one's own specific situation can the best individualized decisions be made. And that's simply not something that can be hashed out on a casual messageboard.

(It's no different from someone posting a complex electrical question on the forum, about something like rewiring their entire house, and the best suggestion being "Call an electrician", because there's no way for someone to know all the specific details of that one house just based on a few sentences in a forum post, nor could they go into great enough detail about how specifically to accomplish it in just a forum post.)

So in many/most cases, this will require the help of a trusted professional. It doesn't even have to be someone you pay, necessarily. Your job may offer you access to a financial planner at no cost. My pension system does. Or you may have a friend or a relative in the business that can run through your plan with you for the cost of some steak and beer.

When I just want basic or general health advice, I read it off the interweb. When I want specific advice about a more serious medical issue, I talk to a doctor. Same with plumbing, car repair, electrical work, etc. Big, complex financial decisions are no different.

Another thing I might add is that I know many here spend their entire work career (decades) "working for the man" and are planning on the gov pension. Which is only a decision that can be made individually. But if that is you. Every single person I know felt like as soon as they quit working for him. They hated the union and everything about it. And feel the system is hell bent of screwing them through out their time receiving the benefit.

My point in bringing this up is that a gov pension is not impervious to weathering these types of things, ie: Taxes, interest rates, inflation.

quote:

So in many/most cases, this will require the help of a trusted professional. It doesn't even have to be someone you pay, necessarily. Your job may offer you access to a financial planner at no cost. My pension system does. Or you may have a friend or a relative in the business that can run through your plan with you for the cost of some steak and beer.

^^^^^^^^^^^^
Let me add that more professionals may be needed. Tax accountants and estate attorneys have a role as well. It also beneficial to keep up to date on tax legislation, the stock market and financial matters in general.

quote:

Originally posted by old rugged cross:
My point in bring this up is that a gov pension is n ot impervious to weathering these types of thing, ie: Taxes, interest rates, inflation.

True. Which is why I have hedged my retirement plan. I will be able to afford to retire on just my pension, which is one of the more stable and solid government pension systems in the country, and is therefore more of a sure thing than most. And I will be able to afford to retire on just my investments and savings, even if factoring in an extremely conservative rate of return, below the worst the market has ever done over such a period. Plus my investments are in a Roth IRA, which shields them from any income taxes or capital gains taxes.

But chances are very good that I will have both sources of income, which will let me retire very comfortably, and years ahead of schedule. Plus any remaining Social Security as extra gravy.

This message has been edited. Last edited by: RogueJSK,

My mother is 78 and she and my Dad saved and sacrificed and invested a lot of money. My sister and I are okay, but it just burns me up that an increase in capital gains and estate taxes may take a substantial portion of what they worked for away from us.

Yep, I see Wa. St. Just yesterday passed legislation to do just that Melissa. So it is coming. People who think this is some weird conspiracy type thing or it will never happen better come to their sense's. It this is not something for the rich. This affects everyday ordinary American's.

In my case, I start with no debt whatsoever. No mortgage, no car loans, no CC debt, nothing.

Then I have a diversified portfolio of stocks and bonds.

I keep my income down to only around 25% more than I need to live in order to keep my income taxes down. If I need more money, I can draw it from my investment accounts or from the savings/slush account I have with my local bank.

I have a relatively inexpensive PPO for insurance that covers almost everything. I don't pay co pays and don't have a deductible plus we have dental insurance and vision insurance.

I'm in my mid 70s and Mrs. Flash is early 70s.

This message has been edited. Last edited by: Flash-LB,

We budget for one paycheck and have rainy day funds to cover 12 months of bills/mortgage.

We are looking at taking some of free liquidity we have into precious metals as a hedge. We both have 401K as well.

We are also investing in our home through remodeling and planning an early payoff.

I wish I could take credit but my SO is the real brains behind our $ security

With the huge amount of $ printing, great reset, cryto, global pushing for a cashless society I do believe we are moving into rough waters.

If one is certain to live forever, then the stock market is a sure bet as even though it may dip, it will go up eventually.

The problem is we will die and if a crash happens especially near the end of our life, then we'll have to tighten our belts really tight and not really enjoy our retirement years.

At this point, I've done all the planning I could have done. Now, I just have to be nimble as things develop. And if I'm not nimble enough, oh well.

It's like I'm taking the test I've been preparing for my whole life. Additional studying isn't going to help me. Either I pass or I don't.

Which is why they ideally want to be able to move a good chunk of their investments out of the stock market and into safer investments like bonds as they enter retirement.

The decades leading up to retirement are for growing your investments in the stock market.

The decades of retirement are for protecting your investments, though you can still continue to grow a portion of your investments as long as a dip in them isn't going to put you in the poorhouse.

For example, this is what Vanguard recommends for a fairly conservative investment allocation "glide path" over time, in general:



Notice that, as you're nearing and then entering retirement, your investment in stocks drops to a minority, and more of your portfolio goes into bonds and other similar safer investments. 90% stocks when you're young for the growth, tapering to 40ish% stocks a little after retirement to minimize your risk from a stock market dip.

But your individual situation may differ. For example, if you're relying 100% on your investments for retirement income, you're probably going to want to be much more conservative than someone whose pension covers most/all of their expenses and the investments are just supplements or "fun money". The latter person can likely afford to let more of their money continue to ride in riskier stock exposure, and hopefully continue to grow at a higher rate for their kids to inherit, knowing that even if their stocks drop it's not going to hurt their financial situation.

This message has been edited. Last edited by: RogueJSK,

And if you have stocks and don't need the money for your retirement, you stay with higher risk stocks and keep playing. That's pretty much what all the retired friends I have are doing and I am as well.

There is no one size fits all thing with regard to retirement planning.

quote:

Originally posted by RogueJSK:
Plus my investments are in a Roth IRA, which shields them from any income taxes or capital gains taxes.

Please explain that if you would. Roth exposes you to future taxes, shielding you from current ones. If future rates go up, you will pay that higher rate. Like if the huge national debt suddenly makes them wake up and raise taxes to cover it.

quote:

Originally posted by RogueJSK:
Which is why most folks will move most of their investments out of the stock market and into safer investments like bonds as they enter retirement.

The decades leading up to retirement are for growing your investments in the stock market.

The decades of retirement are for protecting your investments, though you can still continue to grow a portion of your investments as long as a dip in them isn't going to put you in the poorhouse.

This is what Vanguard recommends for a fairly conservative investment allocation over time, in general:


Notice that, as you're nearing your retirement date, your investment in stocks drops to a minority, and more of your portfolio goes into bonds and other similar conservative investments. 90% stocks when you're young for the growth, tapering to 40% stocks a little after retirement to minimize your risk from a stock market dip.

But your individual situation may differ. For example, if you're relying 100% on your investments for retirement income, you're going to be much more conservative than someone whose pension covers most/all of their expenses and the investments are just supplements or "fun money".

You say "most foks will move out of their investments out of the stock market and into safer investments... as they enter retirement."

I'm going to challenge your assumption. This article says the median savings of Americans in their 60s is $172,000. The average retirement savings for ages 65 to 69 isn't much better $206,819. Even substituting $206,819 as the median retirement saving for those aged 65, this amount is not sufficient to fully fund retirement in the US.

So, in real life, a good number of people in retirement still require a significant exposure to the stock market in order to finance their retirement.

quote:

Originally posted by rburg:
Please explain that if you would. Roth exposes you to future taxes, shielding you from current ones. If future rates go up, you will pay that higher rate. Like if the huge national debt suddenly makes them wake up and raise taxes to cover it.

Nope, you have it the wrong way around.

Traditional IRAs shield you from current taxes, but expose you to future ones. Contributions made today to a Traditional IRA are not taxed, but later withdrawals are.

Whereas Roth IRAs are funded using post-tax contributions. You've already paid current income taxes on that money. You are then not taxed for any withdrawals or gains in your investment. No future income taxes or capital gains taxes on money inside Roth IRAs.

quote:

Originally posted by Rey HRH:
So, in real life, a good number of people in retirement still require a significant exposure to the stock market in order to finance their retirement.

Good point. A lot of folks haven't saved enough for retirement, and may therefore have to risk the greater stock exposure to be able to afford to retire at all.

But for those who have more than sufficiently saved for retirement, they'll likely want to go with the safer bet (but lower growth) of bonds, with whatever portion they're needing to protect in order to cover their expenses, leaving their stock exposure to a lesser amount than pre-retirement, primarily in "extra" money.

You're correct that this won't be everyone, though. It's more the ideal situation, provided you've planned/saved sufficiently.

(I mean, you'd really hate to be in the midst of retirement, with a large stock exposure just to be able to afford it, and get hit with something like the Great Depression or Great Recession, without enough time left to wait for the recovery. That'd just be devastating.)


It also highlights how individual retirement saving was initially intended only as a part of one's retirement income, but has become the primary source of retirement income for many people, and people may not have adapted their planning to account for that.

The adage used a generation or two ago was the "three-legged stool" for retirement. One leg is your pension from your career. One leg is Social Security. One leg is personal retirement savings/investments. The three of those together gave you enough to retire comfortably after a lifetime of work.

And when you have all three legs, $175k-$200k in personal savings come retirement age could be more than sufficient. But the thing is, everyone cannot rely on having all three any more.

Currently, many folks can only rely on two, with pensions having gone away in most careers (especially non-governmental ones), replaced with stuff like company 401k matching and the like. Or in some cases, the pension systems themselves have become insolvent - or are heading there - through mismanagement.

And then, in the very near future, folks will likely only have one leg on their stool, with Social Security being such a mess.

So without the other two legs of a pension and SS to rely on, that means people planning for retirement need to greatly beef up personal retirement savings plans, since it's likely to be your sole source of retirement income. And apparently, many folks have not. Resulting in them having to keep working until they drop, or else risk barely retiring with a risky overly-large stock exposure and just cross their fingers.

This message has been edited. Last edited by: RogueJSK,

quote:

Originally posted by rburg:

Please explain that if you would. Roth exposes you to future taxes, shielding you from current ones. If future rates go up, you will pay that higher rate. Like if the huge national debt suddenly makes them wake up and raise taxes to cover it.

Traditional IRA allows you to contribute pre-tax dollars into the IRA account. What you contribute to the IRA account is deducted from your taxable income so you pay less taxes on your current income. When you start to withdraw from the IRA account, you are taxed at whatever tax rates are in effect.

Roth IRA allows you to contribute post-tax dollars to the IRA account. So whatever you contribute is still taken into account when figuring out what your current income tax is. When you withdraw, since the money coming in has already been taxed, then the benefit is that the withdrawals are not taxed even any capital gains or earnings you may have incurred inside of the Roth IRA.