Finance Dave
Thinks s/he gets paid by the post
- Joined
- Mar 29, 2007
- Messages
- 1,861
Ok, this is a variation of the "one more year" topic...but let me put a different slant on it.
I'm in a position where I have two choices (actually I have about 20 choices, but for this argument let's assume only 2).
1) I can retire at age 50, follow all the rules about 4% W/D rate, asset allocation of 60/30/10, and LBYM and probably be ok.
2) Retire at age 51, and invest in a much more conservative portfolio of perhaps 20% equities and 80% laddered CDs/MM funds.
For this argument, let's assume the two outcomes produce the same income in retirement.
The obvious con of #1 is that, depending on your risk tolerance, you may have trouble sleeping at night if the market drops precipitously. The upside is obviously one more year of FIRE.
On the other side, option #2 gives you "peace of mind" about much more steady returns...in exchange for working "just one more year."
Another way to look at this is that some of us are complaining today about rates being very low on CDs/MM funds....but with my one extra year of work, this would not be an issue...even at very low rates I'd have enough income...without the volatility of an equity-laden portfolio.
This is not my exact situation...but this type of thinking does enter in. Do I work slightly longer to significantly reduce the volatility/risk in my portfolio?
Dave
I'm in a position where I have two choices (actually I have about 20 choices, but for this argument let's assume only 2).
1) I can retire at age 50, follow all the rules about 4% W/D rate, asset allocation of 60/30/10, and LBYM and probably be ok.
2) Retire at age 51, and invest in a much more conservative portfolio of perhaps 20% equities and 80% laddered CDs/MM funds.
For this argument, let's assume the two outcomes produce the same income in retirement.
The obvious con of #1 is that, depending on your risk tolerance, you may have trouble sleeping at night if the market drops precipitously. The upside is obviously one more year of FIRE.
On the other side, option #2 gives you "peace of mind" about much more steady returns...in exchange for working "just one more year."
Another way to look at this is that some of us are complaining today about rates being very low on CDs/MM funds....but with my one extra year of work, this would not be an issue...even at very low rates I'd have enough income...without the volatility of an equity-laden portfolio.
This is not my exact situation...but this type of thinking does enter in. Do I work slightly longer to significantly reduce the volatility/risk in my portfolio?
Dave