Investing for Retirement

[Swirls]

IMO as human beings we've made the choice to consume more at the expense of free time. I think it's crazy we demand larger homes and junk we don't need over a 25-30 hour work week.

Is there somebody offering 25-30 hour work week jobs with good hourly wages?

I think 30ish hour work weeks are kind of the norm for FTE in EU, aren't they?

[Michael]

IMO as human beings we've made the choice to consume more at the expense of free time. I think it's crazy we demand larger homes and junk we don't need over a 25-30 hour work week.

Is there somebody offering 25-30 hour work week jobs with good hourly wages?

No, not in my career, which is why I'm working to "retire" early. If I had the option to reduce my pay for fewer hours worked I'd strongly consider it. That said, I like a lot of things about my job so I might not.

FWIW, I define retirement as financially independent. I may still work when I hit FIRE, but I'll do it because I want to and on my terms.

Here's the societal choice I'm referring to:

In the classic 1930 essay “Economic Possibility of Our Grandchildren,” the economist John Maynard Keynes forecast a future governed by a different set of expectations. The 21st century’s work week would last just 15 hours, he said, and the chief social challenge of the future would be the difficulty of managing leisure and abundance.

“For the first time since his creation man will be faced with his real, his permanent problem,” Keynes wrote, “how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well."

Link

[Arthur Dent]

Right, I agree with Keynes and think it's nuts that we are unable to stop putting in so many hours.

Just wanted to point out that this exists almost exclusively as a social choice not one we can make as individuals as the terms are set to prevent it.

[Michael]

I'm going to humbly nit pick something popeye said earlier:

* I make the assumption that social security won’t help me. Maybe it will still be around, but I don’t trust the GOP to not raid it or significantly alter it. Ditto for Medicare.

I see this sentiment a lot on financial planning message boards/threads and I think it's excessively conservative. I seriously doubt something we've been paying in to all our lives will all of a sudden produce nothing. I'm 40 and I figure about 2/3 of the projected SS payments to be safe, but planning on absolutely nothing is a bit too much for me. If you're younger maybe 1/2 makes more sense. However, I seriously doubt completely ending SS and Medicare is going to fly in this country.

Taking a step back, I think it's important when planning for retirement to implement modern portfolio/retirement theory to increase your probability success. However, to AD's point, it's also important to weigh that theoretical probability of success against living your life. For example, too often I see threads where someone with a healthy portfolio who can retire from a job they don't care for, but don't because of some imagined extremely low probability doomsday scenario. Conservative is good but excessively conservative can be a tragedy.

[Popeye_Card]

I tell you what, I won't plan for getting anything from SS, but if I do it will help finance the purchase of one of those nice Porsches I lust for.

[lukethedrifter]

That Porsche reminds me of that scooter i used see you riding to work in Webster on.

[Popeye_Card]

Black and chrome with classic rounded lines. I’m consistent.

[AWvsCBsteeeerike3]

I'm going to humbly nit pick something popeye said earlier:

* I make the assumption that social security won’t help me. Maybe it will still be around, but I don’t trust the GOP to not raid it or significantly alter it. Ditto for Medicare.

I see this sentiment a lot on financial planning message boards/threads and I think it's excessively conservative. I seriously doubt something we've been paying in to all our lives will all of a sudden produce nothing. I'm 40 and I figure about 2/3 of the projected SS payments to be safe, but planning on absolutely nothing is a bit too much for me. If you're younger maybe 1/2 makes more sense. However, I seriously doubt completely ending SS and Medicare is going to fly in this country.

Taking a step back, I think it's important when planning for retirement to implement modern portfolio/retirement theory to increase your probability success. However, to AD's point, it's also important to weigh that theoretical probability of success against living your life. For example, too often I see threads where someone with a healthy portfolio who can retire from a job they don't care for, but don't because of some imagined extremely low probability doomsday scenario. Conservative is good but excessively conservative can be a tragedy.

Oh my gosh, I just had a huge response typed out and hwen i went ot post it, it didn't go through. So, here's the abridged verson.

I've been meaning to post this for some time.

It goes without saying that people should contribute to 401ks, IRAs, and other vehicles geared towards retirement in an attempt to take advantage of the tax laws as they are written today. As probably the biggest critic of this approach on the board, I take advantage of them and it's simply foolish not to if you can afford to contribute.

That said, and this will be met with resistance the same as it has been every time I've broached the subject, it's worth everyone's time to learn how to actively manage a percentage of their own money. The reasons are multiple. 1. It's a skill that once learned, and everyone will have their own system, will stay with them forever. 2. It should earn money in an account that is immediately accessible. 3. It is more risk averse than 401ks/IRA.* 4. It forces people to pay attention without spending a ton of time. Personally, I probably spend an hour or two a week dealing with this stuff on average and the biggest part of that is reading a couple articles online and a newsletter that I subscribe to complete with trade recommendations that have an entry, exit, and stop.

The reason I do this is simple. I want financial independence and stashing money away in an accessible account where I can make money while learning how to manage it for the future is the simplest, easiest, and imo most surefire way to attain independence short of winning the lottery.

*Excuse me while I climb up on a soapbox here. Actively trading stocks, ETFs, and/or derivatives is not without risk. This is obvious. Anytime a person buys AMZN, FB, BOFI, TZA, TNA or opens a position, that money is at risk. If it's a derivative like an option, all of that money is inherently at risk. But, by putting a stop loss on the trade and/or not risking a sizeable portion of a portfolio, it at least minimizes that risk. And, yes, getting stopped out of trades hurts. It sucks. Options expiring hurts. It sucks. Unexpected news swinging trades from profit to loss hurts. It sucks. But, once a trade is over, the portfolio reverts to cash. Regardless of how diversified a portfolio is, it can't be less risk averse than trading. There are two forks to go down here so I'm starting a new paragraph even though this still falls under the asterisk.

I certainly understand the argument or fact or whatever that diversified portfolios are more profitable than trading. Though, I would say there is certainly a bell curve of traders that is much more spread out than funds tend to be. So, if a person is on the right side of that curve, I think the argument falls apart pretty quickly.

Also, there's no way a 401k unless actively managed by owner (you or me or whoever's 401k/IRA it is) can withstand the downturns, especially the colossal downturns, that traders can. Sure, getting shorted out of a position in an Armageddon scenario is a nightmare, it's still only going to be a couple % overall loss...while funds are going to more closely follow the market as it sinks. And, to evidence this point, I'll just point to all the fund managers that have been discovered as frauds by consistently posting profits even when markets fall apart. And, this is why trading is so much safer than sitting in positions for years on end. Traders don't have to predict the downturn, they just have to react whereas funds have to unload gobs of shares, further depressing prices, just to get out of positions.

Okay, off my soapbox. I really don't consider myself a trader, though, I guess that's more or less how I have to do it. I mean, I make a couple trades a month anymore. Maybe 20 a year.

[Radbird]

If I had the option to reduce my pay for fewer hours worked I'd strongly consider it.

That's an option for me. Pick a hard retirement date. Until then, work 2/3 of regular hours for 3/4 salary. So it would only be a 27 hour week. I could probably make more money and have greater flexibility doing consulting work, but it is something I'm looking at.

[Michael]

<snip>

Yikes, I'm glad I got the abridged version!

I think you're making the following points (correct me if I'm wrong):

1) John Q Public should learn how to actively trade stocks, etc because long term those people they'll beat the market (ie a total market index fund). I'm going to have to ask you to produce a study that shows this. I've only seen the opposite.

2) Actively managed portfolios should have lower downside variation risk than and index fund containing 1000's of equities. Study after study has shown this is not true.

3) People should have a taxable account with stocks, etc. It depends who/what you're referring to. For example, I think folks should have an emergency fund. Also with a Roth Ira and 401k you can withdraw for emergencies. Generally, tax deferred is better, but there are cases where this isn't always true. Home finances are very case by case dependent.

4) It's a good thing when people pay attention to the market. I disagree. I've seen studies where the more folks disengage with the day to day market spin and follow a low cost diversified portfolio the better they'll do.


I'm going to end this by saying this - ultimately it's your money and you should do with it as you wish, however be careful. I remember people quitting their jobs in the go go 2000's because they were doing so well day trading stocks. Then a crash happened and a lot of those previous strategies ended up being a huge wet fart. That said, I sincerely wish you the best.