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Old 12-14-2015, 11:09 AM   #21
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Good catch, I didn't pick up on that on my first read, but I see you're right after re-reading. Thanks.

My Dad exited the markets completely in his late 80's, he could never spend what he has left, much like the OP's friend. I hope we all have that problem one day...

I think so too. Some people are aggressive until they die. While some are worriers, and being retired they have plenty of time to worry. I could see 80 year olds feeling a bit vulnerable and worrying about their investments. If they have enough that is one less thing to worry about by laddering the ol CDs.


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Old 12-14-2015, 11:10 AM   #22
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to something like 90% equities/10% bonds. I believe this is what Buffett plans for his wife.
I feel pretty confident saying that Astrid, even being 15+ years younger, will be financially comfortable even if Warren were to bury her inheritance in a coffee can in the back yard. They do make 10,000 gallon coffee cans, don't they?
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Old 12-14-2015, 04:26 PM   #23
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DOD is 98 has always been/still is 100% individual equities (self managed). Never owned Bonds, bought a CD once back in the late 70's so my Mother could get a free big screen color TV. Near as I can figure, he has 100x expenses in net worth. Has always told his three kids that he is "our retirement plan". All three of us are retired and have not seen a cent yet. In all fairness it is probably my fault, as he has been praying to pass on every night for 8 years.

We speak once a week and I bet him a liter of Jack Daniels (5 years ago) that he would live to be 100.
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Old 12-14-2015, 05:12 PM   #24
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If I was 80, like your friend, maybe take a bit out. Capital gains taxes might be steep, so that's a reason to leave it in.
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Old 12-14-2015, 07:20 PM   #25
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The issue for me would be how can I be 100% sure I have all the money I would ever need. I imagine that determination would be easier for someone in their 80s. Sometimes I do consider what I would do if I were as wealthy as Bill Gates,but then it's a bummer to come back to reality. But at some point I would consider leaving the market entirely, but I would probably assume an annual inflation rate of at lewst 10% to be cautious.
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Old 12-14-2015, 08:41 PM   #26
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The issue for me would be how can I be 100% sure I have all the money I would ever need...
I'm not sure this really should be the issue though. Maybe it should be something like...Is it more likely that high inflation develops in the next 15 years, eating away my purchasing power, or instead that the market tanks in the next 15 years and evaporates half of my networth, eating away my purchasing power? Staying in the stock market doesn't give a 100% guarantee of having all the money one needs. I don't think that should be the criterion for a cash investment either.

Anyway, the OP asks a good question, and I think the answer for each of us is a personal one that centers around how we view the risk of market losses versus the risk of inflation (or of just "drifting" which a lot of people just couldn't handle). After much discussion, I helped get my parents 90% out of the stock market (they are in their mid-late 80's) a few years ago for just this line of reasoning. The risk of high inflation looked lower to us than the risk of stock market volatility over the 10-15 year timeframe we were looking at.
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Old 12-14-2015, 09:03 PM   #27
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I'm not sure this really should be the issue though. Maybe it should be something like...Is it more likely that high inflation develops in the next 15 years, eating away my purchasing power, or instead that the market tanks in the next 15 years and evaporates half of my networth, eating away my purchasing power? Staying in the stock market doesn't give a 100% guarantee of having all the money one needs. I don't think that should be the criterion for a cash investment either.

Anyway, the OP asks a good question, and I think the answer for each of us is a personal one that centers around how we view the risk of market losses versus the risk of inflation (or of just "drifting" which a lot of people just couldn't handle). After much discussion, I helped get my parents 90% out of the stock market (they are in their mid-late 80's) a few years ago for just this line of reasoning. The risk of high inflation looked lower to us than the risk of stock market volatility over the 10-15 year timeframe we were looking at.
I actually never thought of it exactly that way. Thanks for sharing. If only we had a crystal ball and knew what the next 15 years would bring!
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Old 12-14-2015, 09:49 PM   #28
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If you can cover your expenses you have enough.
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Old 12-15-2015, 12:05 AM   #29
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The issue for me would be how can I be 100% sure I have all the money I would ever need.
Other than liability matching and leaving a big buffer for living longer than expected, there are also concepts such as never spending principal. Or live like Nun and others here and just spend way less than your combined retirement income streams.
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Old 12-15-2015, 05:40 AM   #30
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My question has anyone here gotten to the point where they pulled out the markets because they calculate they do not need anymore portfolio growth or income from the portfolio to live the way they want for their balance of time on the planet and did not want to take anymore risk? Hence Game Over!
I recently switched most of my portfolio to a government guaranteed fixed interest position pulling a little over inflation for this reason. I struggle to spend my COLA-indexed pension as it is, so I figured there is no need to put my rainy day stash at any notable volatility risk. I sleep better at night now.
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Old 12-15-2015, 06:59 AM   #31
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@Ozstache - would you mind sharing what FI position you picked up that's .gov guaranteed? I'm looking for reliable, safe harbors at the moment and am thinking the market is not headed for a great outcome in '16.

Tx..
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Old 12-15-2015, 07:56 AM   #32
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@Ozstache - would you mind sharing what FI position you picked up that's .gov guaranteed? I'm looking for reliable, safe harbors at the moment and am thinking the market is not headed for a great outcome in '16.

Tx..
All this pessimism about near-term stock market returns I keep hearing from posters are starting to form a bright "buy" signal.
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Old 12-15-2015, 08:14 AM   #33
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All this pessimism about near-term stock market returns I keep hearing from posters are starting to form a bright "buy" signal.
+1
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Old 12-15-2015, 10:25 AM   #34
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I probably don't need any more growth but being only 65 and 58 who knows? Inflation could be an issue for a remaining period of say 30 years. Pension covers half our spending and rest is covered by 100% equity portfolio. I am staying in equities to maximize both our spending capacity and the legacy to daughter. I view it almost as an option on a very nice future for daughter. Our future is pretty well assured, I think.
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Old 12-15-2015, 10:44 AM   #35
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All this pessimism about near-term stock market returns I keep hearing from posters are starting to form a bright "buy" signal.
It's not just the short-term..after hearing Bernstein (and others) project <2% "Real" return on equities for the next 20 years or so, the risk/reward ratio is rapidly not becoming worth it to me.

Converting big chunks of our portfolio to cash is a risk adversion / protect the assets move..Wall Street IMHO is becoming increasingly detached from fundamentals and is becoming more like Vegas day by day - and I say that as a 30+ year investor..
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Old 12-15-2015, 11:01 AM   #36
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If you can cover your expenses you have enough.
That's probably a bit glib. If you have a liability matching portfolio then you are done. If you need to generate income from riskier investments then you probably need at least 25 times your annual income.....after things like SS are taken into account.
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Old 12-15-2015, 11:39 AM   #37
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Wall Street IMHO is becoming increasingly detached from fundamentals and is becoming more like Vegas day by day - and I say that as a 30+ year investor..
+1

Unfortunately, I'm a gambler so the market is becoming very attractive to me and I don't have to travel to a casino.
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Old 12-15-2015, 12:01 PM   #38
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Nice problem to have in my 80s, I'll probably go into cash. Don't want to worry at that age.


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Old 12-15-2015, 12:06 PM   #39
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I had a thought about all the forecasts this morning. Some scoff at the "this time it is different" crowd and then there are the forecasts by Bogle, Shiller, Bernstein and others stating this time it really is different - interest rates and dividends aren't what they used to be - even globally. They are at historic lows. I think the difference is that Firecalc relies on the actual data repeating, while the Bogle crowd is counting on the formulas and ratios to repeat, not the data.

I don't know who is right, though if I had to bet I would bet on the formula types. For me, I am simply more concerned with avoiding big losses in retirement than going for big gains.
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Old 12-15-2015, 12:11 PM   #40
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In the Bogle interview I saw, he was talking about US stocks, and I don't think he was saying this time would be different. He was saying the current PE10 is high, so that dings stocks, of course. But if the the ratio gets healthy by a big price correction, he'd be singing a different song, I'm sure.
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