chinaco
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Feb 14, 2007
- Messages
- 5,072
I am at an age where retirement is an open discussion with certain co-workers I have known for years.
Several of them have been talking about it for a long time. ER to them will be at the earliest 62.
I noticed a couple of major mistakes some of these people made and I will share them... just in the hope that others learn from the errors.
These two error have cause several to delay their retirement. I told them about holding bonds 10 years ago... and being too concentrated in a company's stock but they did not heed the warning.
The market cycle has disrupted their plans.
Still they are better off than most boomers because they do have pensions. But it does not cover their spending levels.
The odd part is while they have recognized mistake no. 1 (since they sharpened the planning pencil)... They still do not accept that bonds (fixed securities) make sense. They think the stock market will bail them out. Bonds are not considered. Even if the stock market repaired their portfolio... they would probably stay 100% equity... The reason it does not make sense.... the way they describe their situation... they want to lock-in their lifestyle (certainty of income as opposed to growing assets) , but yet they risk it...
I believe many people struggle with the transition from accumulation to decumulation. They think the market will fix their past mistakes... instead they are likely to repeat their past mistakes.
Several of them have been talking about it for a long time. ER to them will be at the earliest 62.
I noticed a couple of major mistakes some of these people made and I will share them... just in the hope that others learn from the errors.
- Doing mental accounting and not checking out the facts. - Fortunately these people have pensions. Unfortunately they used the example calculation and were assuming it would be slightly more money. The same with certain benefits they were relying on... they cost more.
- This is the biggest mistake. They stayed 100% in the stock market (no bonds). In certain cases had too much concentration in company stock which in one case has not recovered since the boom in the tech bubble (off significantly).
These two error have cause several to delay their retirement. I told them about holding bonds 10 years ago... and being too concentrated in a company's stock but they did not heed the warning.
The market cycle has disrupted their plans.
Still they are better off than most boomers because they do have pensions. But it does not cover their spending levels.
The odd part is while they have recognized mistake no. 1 (since they sharpened the planning pencil)... They still do not accept that bonds (fixed securities) make sense. They think the stock market will bail them out. Bonds are not considered. Even if the stock market repaired their portfolio... they would probably stay 100% equity... The reason it does not make sense.... the way they describe their situation... they want to lock-in their lifestyle (certainty of income as opposed to growing assets) , but yet they risk it...
I believe many people struggle with the transition from accumulation to decumulation. They think the market will fix their past mistakes... instead they are likely to repeat their past mistakes.