Dow 30,000

Discussion in 'Off-Topic' started by RonBurgundy, Jul 11, 2019.

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Poll: Dow 30,000

  1. By End of This Year

    15 vote(s)
    10.6%
  2. 1st Half 2020

    24 vote(s)
    16.9%
  3. 2nd Half 2020

    21 vote(s)
    14.8%
  4. 2021 - 2022

    18 vote(s)
    12.7%
  5. Won't Hit It In Next 3 Years, Recession Will Knock It Back

    64 vote(s)
    45.1%
  1. farminclone

    farminclone Well-Known Member

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    You stated that it’s silly to expect the money to be the same or higher after 14.5 years. It’s boldes above, your words. Why is it silly to expect the money to at least maintain its principal over 14.5 years? What data in the stock market are you using to state that it’s “silly” to expect even money over 14.5 years?

    Once again I’m anxiously awaiting the facts to back your assertion.
     
  2. AuH2O

    AuH2O Well-Known Member

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    Actually, if a guy is 15 years out from retirement, history says that the money absolutely will be there and then some. If you can find a rolling 15 year period where someone was in a simple S&P Index and didn't make money I'd like to see it, because I don't think it exists for a starting point past maybe 1930 or so.

    And actually your first point - trying to pick out the absolute worst case is still not true. If you look at the absolute peak of the S&P 500 in 2007 and went 5 years out (prob. Oct) he would just about have his money recouped, and within 6 years would have about 30% more than he did at age 57.
     
  3. VeloClone

    VeloClone Well-Known Member

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    Our financial advisor liked the mix of pre-tax and post-tax financial instruments we had put together. Most of the heavy lifting is done by our pre-tax which we will pay our obligations on in retirement. The post-tax stuff will be our mad money for the big trip or automobile purchase that won't skew our tax obligation for the year.
     
  4. SEIOWA CLONE

    SEIOWA CLONE Well-Known Member

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    The guy at 57 doesn't have 15 years more to work to retire, he has 5 if he is going out at 62, before he starts to draw that money out on a monthly basis. People talk about how easy it is, and then the next guy talks about his tax advisor.
    I am not against 401K, have one myself, but I much prefer my retirement in IPERS than anything I could do myself. But that is just me, to each his own opinion. Some champion the markets, that's great for them. I prefer to have less risk, and will take the sure thing.
     
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  5. VeloClone

    VeloClone Well-Known Member

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    I think the point is that a guy who is just putting money in retirement at 57 is in trouble anyway. He has had the previous 30 years to be putting money in and ride the roller coaster. While there are ups and downs his money made money for those 30 years and his money will have grown since he put it in even if there is a downturn coming now. If he is smart he is becoming more conservative knowing a poorly timed downturn now hurts him at the worst possible time.

    I have a pension, but that hasn't stopped me from doing my own thing as well. I'm not putting my eggs all in any one basket. And if Social Security is still around that will be just a bonus because I am definitely not counting on it being there.
     
  6. Sigmapolis

    Sigmapolis Well-Known Member
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    As @VeloClone says, if you start at 57, you are screwed anyways. As to the market screwing up retirement plans for somebody <5 years out from retiring...

    [​IMG]

    ...this Vanguard chart recommends you have roughly 30% of your portfolio in stocks late in life. Losing 15% of your net worth during retirement sucks, but you would survive, and it would likely recover long before you need to use it while drawing off the interest and principal of what should be extensive (compared to stocks) holdings of bonds and other securities that only fail if a nuclear war comes about. Throwing things into a target date fund or manually managing your money into the appropriate asset class mixtures is easy nowadays, too.

    Your infinite trust in pensions to come through is admirable but perhaps misplaced. IPERS is generally good as far as state pension funds go, but it is roughly 80% funded right now and has a liability of something like $7 billion to be fully funded.

    No pension is 100%. You might not feel like you will lose 50% of your net worth in a market dip with a pension, but you could watch the thing meltdown on you and get little to nothing.

    I can only imagine how radioactive American politics are going to be when we have to start making actually difficult decisions about hard issues, like trying to fund Social Security when bond markets tell us to **** off and nobody wants to raise taxes and there are 100+ million Boomers demanding their checks when Social Security has to go pay-as-you-go.

    Think how much strife there is now over largely symbolic issues. Wait until we have to actually talk about some real kitchen table budgeting as a country.
     
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  7. SpokaneCY

    SpokaneCY Well-Known Member
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    I'm not sure we could ever mount a "moon landing" scale event ever again (on ANY issue) and that's sad...
     
  8. Althetuna

    Althetuna Well-Known Member
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    SS is not issue that could cause the upheaval you describe. As it's been pointed out to you repeatedly, if we do nothing, benefits will be reduced. People would get 66 cents on the dollar. That's it. The world would not melt down
     
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  9. Sigmapolis

    Sigmapolis Well-Known Member
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    I thought you were the one telling me how many people are unprepared for retirement? So imagine those people who basically have very little to nothing...

    ...then cut their Social Security benefits by 1/3rd.

    Yes, if you take a really broad perspective about the world, anything short of a meteor and life goes on. Mad Max still had life in it after a nuclear war, but not much of one.

    However, we have actual human history to serve as our guides. Take a look at Greece recently or Argentina in the 1990s (for mild cases) and Venezuela (for an extreme case) for what happens when governments and societies try/fail to deal with budget crises, runs on their debt, and a government that can no longer live up to its promises, especially to dependent populations of public employees and retirees with no other means of supporting themselves besides that monthly check coming in the mail. It is not pretty. I would rather avoid that.

    If you want to see what real social and economic upheaval looks like, this is a good way to bring it about, not any of the stupid things talked about on cable networks.

    So back to following the money...

    The same demographic changes (the aging of the U.S. population) and economic trends (slower productivity growth meaning slower economic growth) driving the shortfalls in Social Security are the same trends driving the problems in public and private pensions, state budgets, and the rest of the federal budget through healthcare entitlements.

    Social Security is not the cause of anything but is an indicator, a canary in the coalmine when everything else is being driven off the same factors that influence it. I figure all these issues will come to a nasty head sometime around 2030 like CBO says.

    Life will go on, but it is going to be a heck of a ride and very different afterwards.
     
  10. aeroclone

    aeroclone Well-Known Member

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    To be fair, IPERS is a government provided pension. It needs to bring in contributions and invest that money across all employees, basically like a big shared 401k. That helps smooth out the risk more than a single person's 401k. That said, they still need to achieve certain returns to be able to pay their benefits, they aren't free of the market. And of course, they have essentially unlimited backing from the taxpaying public to bail them out if things go south.
     
  11. ArgentCy

    ArgentCy Well-Known Member
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    He just doesn't see the gains and loses that the pension takes.
     
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  12. SEIOWA CLONE

    SEIOWA CLONE Well-Known Member

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    You are correct on the first part, give me an example of the second in which the state paid what they were suppose to be paying into the fund and did not borrowed from it. Just like SS is in trouble, because the Federal government took money out and left a nice big IOU. States with public union finance problems like Illinois and Kentucky did not put in their required payments or borrowed money out of them, instead of raising taxes.

    Those states just like the federal government made a promise that those funds would be there when needed. Now they want to pull back on that promise.
     
  13. farminclone

    farminclone Well-Known Member

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    I think recommendations moving into bonds/cash/money markets this early are far too conservative. The average retirement length is getting longer and longer with longer life expectancies - I think we need to adjust our thinking to fit a 30 or 40 year retirement vs 10-20 year retirements people saw a few decades ago.

    My other thought on that is if you are aggressive from day one and build a huge nest egg, just keep it aggressive forever and take the bumps in the road knowing the market will correct and come back eventually. I doubt a retiree with $4-$5M in stocks is sweating too much on down days. He will be just fine.
     
  14. SEIOWA CLONE

    SEIOWA CLONE Well-Known Member

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    Where did I say that he started saving for retirement at 57? Say he has been putting money in there the past 30 years, plans on retiring at 62 and the economy turn downward. He will never have time to earn that money back, and still retire at 62.
    That is what the people pushing 401K plans keep forgetting, if you can cash out on top great, but how many did not get out in 2008 and lost up to half of their retirement plan.

    I tell my students that retirement is like a 3 legged chair, you need three forms of retirement to be able to retire. For me, one leg of that chair is IPERS, another is SS and the 3rd is my annuity. For others it might be SS, their companies 401K and then another annuity or 401K plan. If you plan on retiring on just SS you are screwed, like many older Americans are today. If you plan on SS and your 401K you better be maxing out each year and hope your company is matching. Some do match others do not.
     
  15. ricochet

    ricochet Well-Known Member
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    You realize there are actually people who retired in 2008 with 100% of their money in equities, immediately lost a big chunk, but are now a decade into retirement with more money than they started with, right? Personally I wouldn't recommend being 100% in stocks at that point but some people do.

    The guy in your example was totally fine too. By the time he got to 62 he had made all his money back plus he had 5 years of buying stocks at a discount. He also would have more money today than he started with at retirement. He only got screwed if he got scared after the drop, sold his stock, put the money in cash and missed the recovery.

    Why would you ever cash out a 401k? You might roll it into an IRA but that isn't the same thing.
     
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  16. cyclone101

    cyclone101 Well-Known Member

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    People have been trying to explain all afternoon, I don't think it's going to stick.

    "The only people that get hurt on rollercoasters are the ones who jump off"
    https://www.cnbc.com/2015/08/27/the-inspiring-story-of-the-worst-market-timer-ever.html
     
  17. CTTB78

    CTTB78 Well-Known Member

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    No doubt technology and demographics play a significant part, but I think you're selling the effects political policies on the economy just a tad short.
     
  18. AuH2O

    AuH2O Well-Known Member

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    #158 AuH2O, Jul 13, 2019
    Last edited: Jul 13, 2019
    I might be misunderstanding your post, but you said a guy at 57 in 2007 looking to retire at 62 wouldn't come close to recouping his money after being cut in half at the crash. My point was that even from the absolute peak prior to the crash within 5 years the S&P had in fact recouped nearly back to that peak level, and within another few months was 30% higher.

    You also said it was silly for someone at 45 to expect the money in his 401k to be there or more when retiring at 59.5. When in fact history shows that it absolutely will. If you timed the market to the absolute worst day in the past 50 years you still made money over 15 years. Every single 15 year period without exception. In fact the absolute worst timing 15 year rolling period in that time still averaged well over what you can get right now on most guaranteed rate investments.
     
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  19. Sigmapolis

    Sigmapolis Well-Known Member
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    You are a gentleman and a scholar, @AuH2O.
     
  20. DurangoCy

    DurangoCy Well-Known Member

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    You’re telling kids about this, Jesus it’s worse than I thought.
     
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