What's the number?

[Benny Profane]

Low interest rates.

Edit: And get used to it. Most predict low inflation, therefore low interest rates, for years.

[GeezerSteve]

Low interest rates.

Edit: And get used to it. Most predict low inflation, therefore low interest rates, for years.

Yeah, could be the new normal. Numerous contributors, e.g., globalization, which has resulted in a set of deflationary trends per the cheap labor race to the bottom; baby boomers getting older turns upside down long term housing demand trends; modern central bank monetary policy seems to have figured out how to curb inflation, although gotta wonder if low (in places, negative) central bank rates will provide insufficient room for stimulus in the next recession.

Kinda sucks for guys our age that we can't get super safe 5%+ debt return thus gotta keep more of our portfolio in securities or settle for paltry returns. OTOH, low inflation (in most segments) helps things pencil out.

It's that time of year to recalculate our number. Things are penciling out at least as well as a year ago, on track for Honey to retire and for me to fully retire in 3-1/2 or 4 years, then live 100% off savings for a few years until I take max SS at 70 and Honey takes min SS at 62, then draw < 3% annually from savings, possibly as low as 2% per year. (Being 8 years apart in age has its advantages.) This assumes Congress doesn't completely trash SS, which seems politically impossible for the foreseeable future.

[AdironRider]

By all means, don't take this as a you should spend more than you need type thing, but an under 3% withdrawal rate is super conservative. Good on ya if you don't need to take any more, but you can't take the money with ya either.

I can't see an environment in the US that would support 5%+ CD's and such in the next 50 years or so. Social security isn't going anywhere, but the cap at the first 112k or whatever it is now certainly is going to disappear.

[GeezerSteve]

By all means, don't take this as a you should spend more than you need type thing, but an under 3% withdrawal rate is super conservative. Good on ya if you don't need to take any more, but you can't take the money with ya either.

Agree IF one stays healthy. The 4% rule is the starting place. But shit sometimes happens. I have a family member with a very serious health issue that will likely soon be forced to start drawing 6%+. Fortunately, she was a good earner and a good saver.

[Benny Profane]

Yeah, could be the new normal. Numerous contributors, e.g., globalization, which has resulted in a set of deflationary trends per the cheap labor race to the bottom; baby boomers getting older turns upside down long term housing demand trends; modern central bank monetary policy seems to have figured out how to curb inflation, although gotta wonder if low (in places, negative) central bank rates will provide insufficient room for stimulus in the next recession.

Kinda sucks for guys our age that we can't get super safe 5%+ debt return thus gotta keep more of our portfolio in securities or settle for paltry returns. OTOH, low inflation (in most segments) helps things pencil out.

It's that time of year to recalculate our number. Things are penciling out at least as well as a year ago, on track for Honey to retire and for me to fully retire in 3-1/2 or 4 years, then live 100% off savings for a few years until I take max SS at 70 and Honey takes min SS at 62, then draw < 3% annually from savings, possibly as low as 2% per year. (Being 8 years apart in age has its advantages.) This assumes Congress doesn't completely trash SS, which seems politically impossible for the foreseeable future.

Last time I did some Monte Carlo simulations, inflation was like poison to my savings, so, glad that's low.

A huge factor you didn't mention is debt. The world financial industry has figured out how to saddle everyone and many sovereigns with enormous debt, and that ain't going away soon. China is sputtering, finally, because they have so much debt nobody really knows how much, with their shadow banking system. Here, we're borrowing tremendous amounts of money to pay for a still inflated housing market, but, student debt is a real problem. It's absurd. 1.5 trillion, and growing by the day. (I was talking to a woman on Xmas day and she informed me that, in her college shopping, she found out that U of Miami is 70 grand a year. U of Miami! That's 280 grand for a party school degree that will essentially be worthless, or, at least, worthless in a job market that can pay off over six figure debt before, oh, age 40.) Nobody is doing anything about this problem, and, meanwhile, the rich are paying zero taxes in many cases, and own our and many other governments.

And, yeah, demographics are a huge issue. 73 million boomers won't be dead until about 2035 or 40, and, contrary to myth, most don't have jack for savings, and will cost the rest of us trillions in health care alone. And, yeah, they all seem to be stuck in place in their homes. I have shopped recently in some markets, and, there's nothing for sale. Nice little town in Maryland I've driven through a lot, and, nothing. Same in a lot of other places in the east. They either won't, or, more likely, can't sell, because they're still underwater on a Heloc they took in '04, or living off a reverse mortgage, maybe. Stagnant. Kids with student debt can't afford those houses, anyway.

[BFD]

Carter 2020

[wooley12]

You can't take it with you.

[Benny Profane]

I used to ski with a 65 yr old guy who retired to a one bedroom condo in Tahoe city but got 100 days in a yr.

I think those are the numbers we should really be talking about.

This season I've been regretting one thing I never did. Hindsight, sure, but, listen up, kiddies. If you want to ski until you die (which you probably won't, but, we won't go there now), buy yourself a condo somewhere you like to ski, and consider it retirement savings. Hell, AirB&B it and never use it, but, you'll be really happy it's there when you get old.

[AdironRider]

Careful, 4matic will be here soon to tell you you are a fucking moron if you even entertain the idea of having a second place, or god forbid, renting it to cover some costs. Like parking cash in an ETF doesn't have risk also. Stocks can go to zero, so can bonds, but I've yet to see a piece of real estate be worth nothing, ever.

[The AD]

but I've yet to see a piece of real estate be worth nothing, ever.

And desirable places to live have a tendency to remain desirable over time.

[dunfree]

but I've yet to see a piece of real estate be worth nothing, ever.

There are plenty of pieces of real estate worth less than nothing.


but those aren’t where people on this message board are interested in buying. desirable changes quite a bit depending on your timeframe. 40 years ago NYC and Seattle were shitholes no one wanted to live in. All depends on your horizon.

[Benny Profane]

I just heard that somebody I know is AirB&Bing a room, not an apartment, for 350 a night in Summit county. A buddy is paying 1100 bucks a month long term for a room in a three bedroom there, and, Haven't seen it, but, he's not one to splurge.
Those people who jumped in and bought all those bankrupt condos there in the early nineties for relative pennies after the S&L crash are pretty happy right now.

[Ted Striker]

There's a reason they call it real property.

[Benny Profane]

There are plenty of pieces of real estate worth less than nothing.


but those aren’t where people on this message board are interested in buying

Yeah. Detroit, for one.

[iceman]

Now hold on. Less than nothing? You'd have to pay somebody to take it? Other than superfund sites I can't think of anyplace that fit the bill. Even the most barren block in Detroit has value, it's just not much.

[Ted Striker]

People who own negative equity property aren't retiring. Ever.

[dunfree]

Now hold on. Less than nothing? You'd have to pay somebody to take it? Other than superfund sites I can't think of anyplace that fit the bill. Even the most barren block in Detroit has value, it's just not much.

If you can’t sell it, it has no value and is costing you money. Lots of shithole flyover country like that. Family has property like that, just chewing up cash in tax payments.

you buy a home in Detroit for $1 and how much do you pay in taxes and upkeep?

[Benny Profane]

People who own negative equity property aren't retiring. Ever.

Well, that's not true, if they have savings and pension and SS. I bought a condo five years ago because I wanted stability when it came to housing costs and living situation. Probably never be around for the final payment, but, hey, not my problem. Good deal, so far.

[Benny Profane]

If you can’t sell it, it has no value and is costing you money. Lots of shithole flyover country like that.

you buy a home in Detroit for $1 and how much do you pay in taxes and upkeep?

Gotta think big, like Bezos. Promise 25,000 jobs or something. They pay you.

[Ted Striker]

So you are saying that you plan on dying with even less equity than your down payment? If so, my hat's off to you.

[AdironRider]

If you can’t sell it, it has no value and is costing you money. Lots of shithole flyover country like that. Family has property like that, just chewing up cash in tax payments.

you buy a home in Detroit for $1 and how much do you pay in taxes and upkeep?

Carrying costs and inherent value are not the same thing.

[Benny Profane]

So you are saying that you plan on dying with even less equity than your down payment? If so, my hat's off to you.

Of course not. But, what's the difference? At least I won't get kicked out on the street at an old age because my landlord went AirB&B.

[Ted Striker]

Well, the difference is exactly that. People with true negative equity, i.e they have borrowed more against a property than its market value, usually end up evicted, homeless, and penniless.


What you're describing is not paying the full mortgage, and sticking it to the bank. To that I say play ball.

[Benny Profane]

Well, the difference is exactly that. People with true negative equity, i.e they have borrowed more against a property than its market value, usually end up evicted, homeless, and penniless.

Why does one lead to the other? Do you realize that there are millions and millions in that situation, still, ten years after the crash? They're getting by, paying the man, maybe trying to renegotiate, but, far from destitute. One asset went bad, that's all.

[skaredshtles]

I'm not exactly sure what the number is... but I think I may be getting close.