/ Retirement Planning - Lessons Learned #771
Heck yeah. We continued to live like a couple of college students in the first years. Bought a duplex that pencilled out where the tenant paid all our housing expense so we banked 25% of gross income into IRA's and 403b's (the maximum) plus saved more to pay cash for cars etc - used cars at first then new a little later. That is strategy I recommend for anyone if you don't have wealthy parents.One thing I have to say is that really, all you need in life is food, water and shelter. Everything else is gravy. We're just used to a lot of gravy. ...
I tell young people to live below their means. Enjoy life today, but save something for tomorrow in case you live to be 100. Pay yourself first. Set goals and work towards them. I try and show them the power of compound interest and dollar cost averaging.
I personally don't own any annuities for reasons similar to what it mentioned in the article, but people have different goals and risk tolerance. @MoKelly indicated that he is a fixed income investor, and I believe they are worth investigating for that goal.
So why do people like them?
Fixed annuities prevent losses. You are typically guaranteed that the value of your principal will not go down regardless of what the stock or bond markets do.
Fixed index annuities allow the investor to take part in some upside, though it is usually very limited — about 4% per year in this low interest rate environment. So the investor is trading upside potential for downside protection.
If the market soars 20%, the investor will only make 4%. But if the market falls 20%, the investor won’t lose any money.
yeah, some just don't have much risk tolerance . But if he's still working and investing. When the market is down, he was continuing to buy those stocks /bonds at a reduced price.That is a tremendous comfort for some people. I have a BIL who lost a bunch of money in 2020 because he just couldn't stand to watch the stock market plummeting and he sold all his stuff. It's not for everyone.
People need to accept that investing money in the market is a LONG term investment, at least a decade minimum if you hope to match historic averages. Short term the market moves randomly and can chew you up.I have a BIL who lost a bunch of money in 2020 because he just couldn't stand to watch the stock market plummeting and he sold all his stuff. It's not for everyone.
I have been retired 17 years. I guess I have learned that the amount of money you have monthly during retirement is important, but the amount you spend may be more important. It is important to pay off those bills before you decide to retire.