First $10k ibonds, then treasuries or CDs?
For 7 year money, ibonds really the way to go? Aren’t ibond rates going to be like 0.2% again in a year? With treasuries I can lock in ~4.5%.
edit: someone on bogle recommended this product https://www.ishares.com/us/products/312466/ishares-ibonds-dec-2029-term-treasury-etf
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Surveying average Americans about what they will need to retire is like surveying dogs about how to best do calculus.
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By the way the entire “you need a million dollars to retire” is a “fact” that was pushed by the investments industry as a marketing tool. It’s like when Kellogg’s told everyone that “breakfast is the most important meal of the day” and, why blow me down, they sell breakfast products!
I don’t need a few million bucks to retire, but I’d sure love it.
funny thing is that’s a lot of money, to the point of being unattainable for most people, and yet for the top 0.1% in wealth thats about the same amount of money comparatively as if I splurged on a lunch - and while def not wealthy, I am far from destitute.
Someone should post this unironically at bogleheads. I’m sure great entertainment will ensue.
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My dog says Leibniz notation.
Are you saying that’s more than you need or less? What if I want to hang out at the library, have healthcare, and visit my grandkids in Norway once a year?
For the vast majority of people it’s more than you “need”, for other people it will be less than they “need”. What one “needs” to retire is a very personal thing and even if you control for every single variable except one then there’s a wide range of outcomes. Consider two people that are exactly the same in every way except any one of the following:
- Spouse works and earns the same amount vs. spouse works and earns 50% as much
- Has a DB pension from work vs. does not have a DB pension from work
- Has 100% equity in a $1,000,000 home vs. has $400,000 of equity in a $600,000 home
Any of those things could be enough to change whether $1M is “enough” and that’s BEFORE even trying to deal with different life style preferences in retirement.
It is fruitless to try to express retirement needs as a single representative number. If you are really good at retirement planning you MIGHT be able to come up with a single representative number for yourself but even that will involve a whole bunch of unfalsifiable assumptions about the future.
Retirement readiness success has never actually been about setting a Magic Number target and striving toward it. Retirement readiness is a completely habitual thing - form a habit of tucking away a percentage of your earnings in low cost well diversified funds and don’t fuck around with market timing and you’re very likely to be fine when you get to your 50s and start firming up retirement plans. This approach is best by test. The approach of setting a large aspirational savings number has largely backfired on people - the behavioral dynamics are all wrong. If you set a target of getting $1M in retirement you are not going to be motivated to tuck away $50 or $100 or even $500 per pay period because you’re setting yourself up to feel like a failure. You’ll feel like your tiny drips of savings are hopelessly inadequate when compared to your Big Scary Number that you’ve decided you need or you’re a failure. This is all backwards against everything we know about retirement saving behavior.
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The psychology is the hardest part. I’m well aware that x dollars per month is likely to be x,xxx,xxx when I want to retire but it’s so brutally unsatisfying because the bulk of the gains and compounding will happen more than a decade from now and the human brain just isn’t programmed to feel good about something good that might happen that far in advance.
Man, this guy fucks.
I don’t know what that means but thank you!
Term of endearment, trust me. Stole it from John Oliver, I do believe [who apparently stole it from Silicon Valley].
Think the point of origin for “This guy fucks” is Silicon Valley. Interwebs says season 3, episode 2, specifically.
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That’s why you want to take the psychology out of it. You never want to be deciding if you’re going to save. Saving for retirement should be like brushing your teeth - no one gets up every morning and decides if they are going to brush their teeth that day, they just do it. You don’t rely on any sense of long term reward (if I do this 800 days in a row I will avoid a cavity!), you just do it because you do it. Retirement saving works best if you do it the same way. You do it because you do it.
Just want to say that the last few posts are really useful today. I have my 401k on a “set it and forget it” mode where I contribute enough to get the full employer match and put it all in a low cost target retirement date fund. I try to not look at the number too much, but today I got an email saying that the quarterly statement was ready.
Balance on 1/1/2022 = X
Your contribution ytd ~ $7k
Employer contribution ytd ~ $3.5 k
Current balance = X - $10k
It’s a little demoralizing to look at the numbers, so it’s nice to read the conversation about the need to stay calm and focused on the long term goals not the short terms swongs.
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It’s good advice across a whole lotta aspects of life to focus on what you can control and not focus on what you can’t. You can control how much you set aside as savings, you can control how much you pay in fees, etc., but you can’t control the volatility of the stock market. I try to ignore information that doesn’t help me make good decisions.
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