Second Quarter Net Worth and Retirement Income Plan Review

July has been and will be a busy month for me. I just returned from a two week stay at Lake Barkley in Kentucky. This stay included the ninth in a series of extended family gatherings at the lake. (More about this awesome event later this week.) Towards the end of the month I am traveling to Ithaca, NY for my 45th high school reunion. Finally, I have been busy with an updated assessment of my retirement plan and net worth performance as of the end of the second quarter.

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The Baby Boomer Retirement Crisis: We Are Not Alone

American baby boomers in general are not prepared for retirement. Many experts call this a crisis in the making. The crisis is that many of us will have to work into our 70’s to make ends meet, if we are healthy enough to do so. Others may not be that fortunate. Retirement will be forced upon them by health or other circumstances. They will live in relative poverty. It turns out that we are not alone. The crisis is world-wide.

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Efficient Retirement Income without Bonds?

A researcher (Ph.D. in Economics) with the National Graduate Institute for Policy Studies has recently published a provocative paper on how to most efficiently produce retirement income. A somewhat radical conclusion is that for a 65 year old married couple using a 4% withdrawal rate to meet retirement spending needs, bonds (or bond funds) should not be part of their retirement portfolio.

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Another Flawed Retirement Savings Analysis

I have spent a lot of time thinking about the best way to estimate how large of a nest egg  we will need to retire.  I have concluded that there is only one practical way to do this and it involves creating a comprehensive retirement spending budget. Many so-called experts suggest using an income replacement ratio or an income multiplier to arrive at a retirement “number.” In my humble opinion, that is a flawed approach.

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Another Retirement Income Strategy to Avoid “Money Death”

After the black swan market events of 2008-2009, baby boomers and financial planners continue to search for new strategies for providing a secure retirement income. I have written about many of them, including the “Failsafe Retirement” plan that we are using.  This week I read about another combination strategy for avoiding what the authors refer to as retirement “money death.”

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Stash Cash for a Down Market

If you are a baby boomer contemplating retirement, stock market gyrations are bad for your fiscal and mental health. A common reaction in recent years is to leave the market entirely and put your nest egg in cash and cash equivalents. Regular readers may recall that I agree with this strategy but only in part. More about that in a minute. [Read more…]

Get a Lifetime Investment Income From Your Retirement Portfolio

I’ve written quite a bit about the infamous 4% withdrawal rate rule. I say “infamous” because I don’t like it. It may have worked in the past. Now this rule of thumb is more like a rule of “dumb.” We are more prone to black swan market crashes and burdened by less predictable market returns. This requires alternative strategies for procuring a lifetime of investment income from our retirement portfolio. It starts with liability-focused investing rather than pure wealth building. [Read more…]