Are you saving enough for retirement?

[MoneyGuy]

Originally Posted by bizaro86

Interesting - thanks for sharing. I actually tried to buy first-to-die insurance once. When were first married, neither my wife nor I could have covered our mortgage, but we had no kids. I figured why pay extra for a second payout, if one of us died the other one probably needed the money, but if we both died I didn't see a big reason to make sure our relatives ended up with a huge windfall. But the difference in cost between two regular term policies and a joint first-to-die was only a few percent, so I just bought the term policies.

As an insurance broker your reasoning is sound. A client-centred agent should have those conversations with clients to make sure they’re using the right type and amount of insurance. I favour loading up on term insurance, in most cases, but not buying the wrong kind that may generate a bigger commission for the seller.

[Johnny199r]

Time for an update a year and half later.

Are people on track? Has COVID or the difficult job market set you back? Are you investing? If so, what are you doing?

[indes]

Dp

[indes]

Originally Posted by indes

No

Still buying 2 lottery tickets a week. It's not going well.

[keratosis]

I know. W T F!

[HockeyIlliterate]

Originally Posted by Johnny199r

Time for an update a year and half later.

Are people on track? Has COVID or the difficult job market set you back? Are you investing? If so, what are you doing?

I’ll say this much:

I got laid off in March. I have not been looking for a job. Wife and I decided to move, so we bought a house in a different city (paid cash, previously only rented for our adult lives).

I haven’t been contributing to any investments since last November, when word of approaching layoffs began.

But I track my net worth every 15 days, and from EOY 2019 to today, my investment balance is up about 2.9% and total net worth (not counting the house, so just investments plus cash) is only off by about $60k, primarily due to the house purchase.

I have been extremely lucky. I got a decent severance which helped to pay for the house, or at least made the purchase price easier to accept. And I have always saved at least 50% of my net when I was working.

My investments are a simple 3 fund Boglehead type portfolio: 50% total us stock market, 10% total international stock market, and 50% bonds. I do not intend to ever sell, except to tax loss harvest, but I’m always invested according to my asset allocation. Going forward, I hope to live off of dividends and interest payments. I guess I’ll see how that plan ends up going....

[Johnny199r]

Originally Posted by HockeyIlliterate

I’ll say this much:

I got laid off in March. I have not been looking for a job. Wife and I decided to move, so we bought a house in a different city (paid cash, previously only rented for our adult lives).

I haven’t been contributing to any investments since last November, when word of approaching layoffs began.

But I track my net worth every 15 days, and from EOY 2019 to today, my investment balance is up about 2.9% and total net worth (not counting the house, so just investments plus cash) is only off by about $60k, primarily due to the house purchase.

I have been extremely lucky. I got a decent severance which helped to pay for the house, or at least made the purchase price easier to accept. And I have always saved at least 50% of my net when I was working.

My investments are a simple 3 fund Boglehead type portfolio: 50% total us stock market, 10% total international stock market, and 50% bonds. I do not intend to ever sell, except to tax loss harvest, but I’m always invested according to my asset allocation. Going forward, I hope to live off of dividends and interest payments. I guess I’ll see how that plan ends up going....

Your planning and discipline has served you well. Well done.

[Mr.Coffee]

Originally Posted by HockeyIlliterate

I’ll say this much:

I got laid off in March. I have not been looking for a job. Wife and I decided to move, so we bought a house in a different city (paid cash, previously only rented for our adult lives).

I haven’t been contributing to any investments since last November, when word of approaching layoffs began.

But I track my net worth every 15 days, and from EOY 2019 to today, my investment balance is up about 2.9% and total net worth (not counting the house, so just investments plus cash) is only off by about $60k, primarily due to the house purchase.

I have been extremely lucky. I got a decent severance which helped to pay for the house, or at least made the purchase price easier to accept. And I have always saved at least 50% of my net when I was working.

My investments are a simple 3 fund Boglehead type portfolio: 50% total us stock market, 10% total international stock market, and 50% bonds. I do not intend to ever sell, except to tax loss harvest, but I’m always invested according to my asset allocation. Going forward, I hope to live off of dividends and interest payments. I guess I’ll see how that plan ends up going....

Would you ever stray from your investment strategy (adds up to 110% by the way, assumed typo on bonds?). By this I mean given the direction on US, and that people like Buffett who’s always historically been a pro US stocks kinda guy and seems to be distancing himself slightly from that strategy combined with the future of that nation, would you ever move away from US markets and shift to more international?

[HockeyIlliterate]

Originally Posted by Mr.Coffee

Would you ever stray from your investment strategy (adds up to 110% by the way, assumed typo on bonds?). By this I mean given the direction on US, and that people like Buffett who’s always historically been a pro US stocks kinda guy and seems to be distancing himself slightly from that strategy combined with the future of that nation, would you ever move away from US markets and shift to more international?

Sorry about the typo: meant 40% on US stocks. So essentially a 50/50 stock bond split.

I don’t really see straying from my current split except as noted in the ETA below. 10% international is 20% of my total equity allocation, and I’m comfortable with that. A lot of people (experts, real and armchair) suggest anywhere from 10 to 33% of equities be in international, so 20% is a happy medium for me.

Plus, many US companies have a lot of international exposure already, so even my 40% us stock holding has a bit of a hidden and embedded international component to it.

ETA: also, at some point, one cares more about maintaining the portfolio than growing it significantly. I may be there now, where I care more about a return of the portfolio than a return on the portfolio, which explains the rather conservative asset allocation. I could end getting killed by inflation, for example, but I’m willing to take that risk now. If inflation really spikes or I feel comfortable with the annual spend, I may drift to a 60/40 portfolio, but I don’t think anyone can really market time inflation and portfolio drift is probably a few years away anyway.

[Enoch Root]

Originally Posted by HockeyIlliterate

Sorry about the typo: meant 40% on US stocks. So essentially a 50/50 stock bond split.

I don’t really see straying from my current split except as noted in the ETA below. 10% international is 20% of my total equity allocation, and I’m comfortable with that. A lot of people (experts, real and armchair) suggest anywhere from 10 to 33% of equities be in international, so 20% is a happy medium for me.

Plus, many US companies have a lot of international exposure already, so even my 40% us stock holding has a bit of a hidden and embedded international component to it.

ETA: also, at some point, one cares more about maintaining the portfolio than growing it significantly. I may be there now, where I care more about a return of the portfolio than a return on the portfolio, which explains the rather conservative asset allocation. I could end getting killed by inflation, for example, but I’m willing to take that risk now. If inflation really spikes or I feel comfortable with the annual spend, I may drift to a 60/40 portfolio, but I don’t think anyone can really market time inflation and portfolio drift is probably a few years away anyway.

That is a US centric view, by the way. Outside the US, the balance between US and non-US is more proportional.

Currently, the US stock market is a little more than 50% of the global market (because the US has performed well over the last year), but as a general rule, the US is about half the global market. And that being the case, 50/50 exposure seems more appropriate (and is what you are more likely to see from asset managers outside the US).

Are you American or Canadian?

The reason I ask is the fact that, if you are Canadian, you are also carrying a lot of USD currency exposure. Yes, it is easily hedged, but a) most people don't hedge, and b) hedging isn't free. However, if you go 50/50 global/US, you also have a more balanced currency exposure (most currencies move against the USD, and being weighted 50% US, 50% global, tends to balance pretty well over time).

Just some things to think about.

[HockeyIlliterate]

Originally Posted by Enoch Root

Are you American or Canadian?

I’m an American.

But often wish I were Canadian. Sure do miss living there.

ETA: I get your point about a market weighting between US and International. At the same time, though, due to quirks in the US tax code, the foreign tax credit becomes less valuable or unrealizable (at least fully) in lower tax brackets, and potentially worthless if you are living completely (or mostly) off of dividends and capital gains and stay in the 0% tax bracket. In that instance, the extra “risk” that one may get from international holdings may not be fully compensated for.

[bizaro86]

My net worth is likely down this year. I've had an exceptionally great year in my investment accounts, but my over-allocation to Calgary real estate has offset that and then some. Plus my primary income is my business which is related to travel, so my income has been down big as well. Ah 2020.

[RichieRich]

Originally Posted by HockeyIlliterate

I’m an American.

But often wish I were Canadian. Sure do miss living there.

ETA: I get your point about a market weighting between US and International. At the same time, though, due to quirks in the US tax code, the foreign tax credit becomes less valuable or unrealizable (at least fully) in lower tax brackets, and potentially worthless if you are living completely (or mostly) off of dividends and capital gains and stay in the 0% tax bracket. In that instance, the extra “risk” that one may get from international holdings may not be fully compensated for.

Am trying to understand why such a large reliance upon the bond market? 50% is huge for something that according to many pundits (and FIRE blogs) probably doesn’t have a lot of upside. Instead it’s considered way less risky but also return averse.

[Enoch Root]

Originally Posted by HockeyIlliterate

I’m an American.

But often wish I were Canadian. Sure do miss living there.

ETA: I get your point about a market weighting between US and International. At the same time, though, due to quirks in the US tax code, the foreign tax credit becomes less valuable or unrealizable (at least fully) in lower tax brackets, and potentially worthless if you are living completely (or mostly) off of dividends and capital gains and stay in the 0% tax bracket. In that instance, the extra “risk” that one may get from international holdings may not be fully compensated for.

Correct, which is why I asked. Being an American, due to the US tax code, and also considering that you don't have currency risk with domestic stocks, your over-weighting of US stocks is not only normal, it makes sense.

For everyone else, it doesn't.

Just another example of US protectionism.

[Lubicon]

Originally Posted by Johnny199r

Time for an update a year and half later.

Are people on track? Has COVID or the difficult job market set you back? Are you investing? If so, what are you doing?

Trying to stay on track but it's tough. Covid and the resultant downturn in the energy industry has resulted in the double whammy of my employer eliminating their RRSP program. It was small (matched max 2% of my income) but I still need to make up for that to keep my contributions even. And we took a 20% pay cut so the make up has to come from less take home pay. I should add we've been on a pay freeze since 2014 so my 20% pay cut is 20% of what I was making in 2014.

[rotten42]

My divorce took care of any reasonable retirement. That's ok thought because I love my job and can keep doing it.

[Enoch Root]

Originally Posted by rotten42

My divorce took care of any reasonable retirement. That's ok thought because I love my job and can keep doing it.

That reminds me of this...

Why is divorce so expensive?

Because it's worth it!

[Erick Estrada]

Originally Posted by Lubicon

Trying to stay on track but it's tough. Covid and the resultant downturn in the energy industry has resulted in the double whammy of my employer eliminating their RRSP program. It was small (matched max 2% of my income) but I still need to make up for that to keep my contributions even. And we took a 20% pay cut so the make up has to come from less take home pay. I should add we've been on a pay freeze since 2014 so my 20% pay cut is 20% of what I was making in 2014.

Jeez that sucks. I guess these days we can be just happy to have a job but I assume it's a good place to work given how much they have stripped from you going back to 2014?

[Ozy_Flame]

For retirement preparedness, I use a country cost-of-living scale.

Ideally I could retire at level comfortable in Norway, Switzerland, or Canada. I am shooting for nothing less than a Costa Rica, Portugal or Estonia. Currently I'm sitting at about a Kazakhstan/Moldova/Sri Lanka level of readiness.

So in other words, I have a ways to go

[Lubicon]

Originally Posted by Erick Estrada

Jeez that sucks. I guess these days we can be just happy to have a job but I assume it's a good place to work given how much they have stripped from you going back to 2014?

It's a good place, but also right now there are no alternatives. All our competitors are in a similar position and I'm in a pretty specialized field so there isn't really anywhere to go.