Retirement goal changed due to inflation?

[Straight Arrow]

Keep your health while you have it.

Priceless!

 

[OverlordBear]

This is an interesting trend that I've noticed.

When my grandparents retired they downsized, sold their 4 bed 3 bath, and moved to a small apartment closer to their kids, and or health services.

I know at least 6 different boomers/boomer couples that are retiring and building... and building bigger no less (not sure if that last part is your plan)

Just seems interesting, I can't imagine any other generation in history has had "start construction on a new large home" as part of their retirement plan.

Seems like something that 35-55 year olds do... 3 of the 6 from above are in their mid 70s.

Literally was talking to one of my dad's friends yesterday about lumber prices... he's 74 and building a 4000 sqft house.

74 years old and building a 4000 square foot home is stupid. He won’t live long enough to enjoy it. My Grandpa just turned 81 and dementia has just started. Can’t imagine restarting at that age.

 

[AlaskaHunter]

Sounds like you took a pretty wise approach to covering those three years.

Cheers to you man. $24k a year just in premiums really eats away at your retirement. Makes working a couple extra years more acceptable

I did not work those couple extra years...the plan always to retire at 62,
with Obamacare, health insurance cost is minimal and we are saving more in retirement
than when we were working and maxing out our 401Ks every year.

 

[wolfpup]

I did not work those couple extra years...the plan always to retire at 62,
with Obamacare, health insurance cost is minimal and we are saving more in retirement
than when we were working and maxing out our 401Ks every year.

Yes the key to this scenario is to not earn very much money on the subsidized health plan. A non-issue for 2020 because of stimulus bills not requiring payback if you made too much money, but anyone thinking about this scenario better talk to a tax advisor to make sure they don't have to pay the subsidy back as it is dependent upon your income. It will bite you in the ass if you are not sure of your revenue streams and the taxability of those.

 

[AlaskaHunter]

Yes the key to this scenario is to not earn very much money on the subsidized health plan. A non-issue for 2020 because of stimulus bills not requiring payback if you made too much money, but anyone thinking about this scenario better talk to a tax advisor to make sure they don't have to pay the subsidy back as it is dependent upon your income. It will bite you in the ass if you are not sure of your revenue streams and the taxability of those.

For us, as Alaska residents the threshold was an adjusted gross income of $89k...so each year as long as our gross income was
less than that, a subsidized Blue Cross Gold policy was very affordable.

 

[wolfpup]

For us, as Alaska residents the threshold was an adjusted gross income of $89k...so each year as long as our gross income was
less than that, a subsidized Blue Cross Gold policy was very affordable.

Yes it is a great tool to use if you understand your income. I have a lot of clientele surprised at year end when they have a huge tax bill because of this that and the other. Mostly self-employed clients.

 

[Pucky Freak]

Last few years my investments have gone bananas. County just reassessed my house and the value is WAY up. Looks good on paper, but when you consider inflation the overall gain is more modest. So what does all this mean in the grand scheme of my life goals? Not much

My wife wants a new house someday and I want undeveloped land. If/when we buy anything it will be in cash. We see everyone around us leveraging their assets and credit to get the things they want now. HELOC is selling as fast as the banks can underwrite it. We’re going to wait out the buying frenzy and buy in a downturn. If one doesn’t come for a long time we might be out of luck, but oh well we haven’t lost anything except opportunity. There’s a little FOMO simmering, but we refuse to give in to that and do something foolish.

Re: investment strategy - ours is aggressive, and will stay that way until we’re knocking on death’s door. The conventional wisdom is that you “need” bonds, and the older you get the more bonds you need as a percentage of your assets. I disagree. We do stocks, real estate, plus 6 months of income in cash. This can work if you’re willing to clamp down on spending during a downturn to avoid a death spiral of assets.

Edit: The reason for the aggressive investment strategy is to compensate for inflation, which is fairly predictable and inevitable; it’s even a goal of the FED to have inflation.

 

[AlaskaHunter]

Last few years my investments have gone bananas. County just reassessed my house and the value is WAY up. Looks good on paper, but when you consider inflation the overall gain is more modest. So what does all this mean in the grand scheme of my life goals? Not much

My wife wants a new house someday and I want undeveloped land. If/when we buy anything it will be in cash. We see everyone around us leveraging their assets and credit to get the things they want now. HELOC is selling as fast as the banks can underwrite it. We’re going to wait out the buying frenzy and buy in a downturn. If one doesn’t come for a long time we might be out of luck, but oh well we haven’t lost anything except opportunity. There’s a little FOMO simmering, but we refuse to give in to that and do something foolish.

Re: investment strategy - ours is aggressive, and will stay that way until we’re knocking on death’s door. The conventional wisdom is that you “need” bonds, and the older you get the more bonds you need as a percentage of your assets. I disagree. We do stocks, real estate, plus 6 months of income in cash. This can work if you’re willing to clamp down on spending during a downturn to avoid a death spiral of assets.

Edit: The reason for the aggressive investment strategy is to compensate for inflation, which is fairly predictable and inevitable; it’s even a goal of the FED to have inflation.

What is HELOC, FOMO?

 

[Pucky Freak]

What is HELOC, FOMO?

HELOC is Home Equity Line of Credit. When property values spike, it starts a feeding frenzy of homeowners converting their overnight asset into spending money. Can also be via mortgage refinance or 2nd mortgage, although HELOC is quick and easy. I have been receiving written offers weekly from my bank since this time last year.

FOMO is Fear of Missing Out. Lots of folks see recreational properties getting snapped up, and home values skyrocketimg in hot locations like Bozeman. The feeling is you have to act fast and buy because if you wait another year or so the price is going to be far higher (sometimes it is, sometimes it’s not).

 

[Shangobango]

Inflation will make it harder.

If I could get rid of my outdoor habits I would have more leeway, but you only live once.

I am 43 and lucky enough to have my little old house and 35 acres paid for. The house needs some work so that I won't have much to do to it when I get older.

I am planning on maxing out my 401K again after I get the house up to snuff, depending on market conditions.

I will have to by another vehicle before I retire.

It would be easier with a partner I think but I am having no luck finding a woman who doesn't run from the idea of living an outdoor lifestyle complete with livestock. It appeals to a lot of women until they find themselves smack in the middle of the cycle of hunting season, then trapping season, then lambing season, then crappie spawn, then catfish/bream spawn, then hay season, then hunting season, etc. and so on all why working a 60 hour a week job LOL. The fact that I work all the time and that my hobbies are pretty much work and then the fact that I don't have much of a social life outside of old hunting buddies and work buddies probably doesn't help that situation either.

I am planning on doing some sort of conservation easement on the 35 acres so that it doesn't get developed once I am gone. Not that my son would but I would like to make sure it is set up to where it isn't a burden for him.

I think I am sitting ok barring some unforeseen developments.

 

[AlaskaHunter]

HELOC is Home Equity Line of Credit. When property values spike, it starts a feeding frenzy of homeowners converting their overnight asset into spending money. Can also be via mortgage refinance or 2nd mortgage, although HELOC is quick and easy. I have been receiving written offers weekly from my bank since this time last year.

FOMO is Fear of Missing Out. Lots of folks see recreational properties getting snapped up, and home values skyrocketimg in hot locations like Bozeman. The feeling is you have to act fast and buy because if you wait another year or so the price is going to be far higher (sometimes it is, sometimes it’s not).

Thank you! I read a Harvard report that a year ago was a record $10 trillion in home equity - debt in the US.

 

[BigHornRam]

My first job when I retire in about 3 years will be to build a new house. It will be small but nice. Hopefully the building material shortages will sort itself out by then. Sold my Missoula county property recently and reinvesting in some Wyoming acreage. Left over cash may get "invested" in a pack string. Spend the next 10 years looking over every nook and cranny in the Absarokas, Beartooths, and Wind Rivers. The Washington goofballs can KMA!

Just closed on the Wyoming acreage. Look out Bill Gates! I'm a farmer now.

 

[Bowmannate2000]

Just closed on the Wyoming acreage. Look out Bill Gates! I'm a farmer now.
View attachment 186402
View attachment 186403

Beautiful land!

 

[VikingsGuy]

No one is taking away 401ks. Neither party has ever even hinted at it. They may play with max contributions, minimum withdrawals, inheritance step-up rules etc., but if it's in there it's yours.

As for inflation eroding your value in the 401k, a properly designed 401k setup will withstand most inflation scenarios. 80-20 broad market low-load index equities to broad mix low-load bond funds is a good general approach when young, moving to 60-40 when closer to retirement. If you are truly focused on inflation risk that can not be matched by market growth ("stagflation"), buy Inflation Protected Treasuries into your non-equity position. Not a great investment in most environments, but an easy hedge if you are certain stagflation is coming back. Bank savings, money market cash, and CDs are essentially worthless ways to hold money in the current market - you will keep losing every year basis inflation. And FWIW, I refuse to own municipal bonds given how shaking many cities/counties budget situations are - Detroit is just the beginning.

 

[Allenkoz]

I remember reading somewhere that the Dems would take away your 401K if they were to win the presidency. Given the current cries of inflation and the devaluing of the dollar due to "printing money", how does that impact retirement goals? The cash that sits in the 401K now keeps losing value as the dollar value declines so basically the Dems aren't taking it away, they are basically making it worthless.

Really getting sick of the shiznizzle that is going on here at work (family owned business and I am not family) and would like to walk away from the drama. Would walk away today making pretty good money a year just going to the mailbox (other sources of income). Don't live high on the hog and am debt free.

Suck it up and take a wait and see approach to see if the inflation is just a blip on the radar or walk? What would HT do?

Inflation is transitory- sometimes it goes in reverse as well. The long term average is 2-3% and that will most likely not change. Look at the longer term. If you are invested in good companies, your returns will ultimately outpace inflation.

 

[Beanland_fan]

Elitists..........if you did not figure inflation into your methods/formulas/plans,you did not plan.
If your concerned about inflation in this market,your way off what inflation is. Try the 70's....
Just ask Hank,he knows nothing & has nothing to prove it. Except I own my place & am debt free & poor.

PS,don't expect your insurance to be the same when you retire as promised. Or believe the promises.
Keep your health while you have it. If not become a millionaire and just pay for nothing.....

The millionaire I know pays over $300k/year in federal income taxes and has paid over a million to the IRS in the last 3 years.

 

[markwilks]

Buy mutual funds

 

[markwilks]

I used to be a advisor. Blue chips with dividends is never a bad call

 

[SAJ-99]

The millionaire I know pays over $300k/year in federal income taxes and has paid over a million to the IRS in the last 3 years.

Are they looking for sympathy?

 

[Sam Colt]

Are they looking for sympathy?

No, just empathy.