Retirement, investments, and yield vs. growth

[Here's Looking At You, Kid]

I might be the only Boomer here.  I retired not long ago after serving in the military and then working for a building supplies distributor for the same number of years.  The company pension pays me today.  Social Security will kick in not too long from now.  I also can draw from an IRA that I was funding for years.  I kept a balanced portfolio.  Growth outperforms yield in general.  The end game was important for me.  The way you benefit from growth stocks, which now are typically technology businesses, is through the increase in value and then sell to fund your retirement.  I wanted move value investments that paid higher yield so that I can fund my retirement without having to sell shares.  I believed then and still do that it was the best way I can pass wealth to my daughters.  I sold most of the growth stocks years ago and replaced with higher yielding stocks from Coca Cola, McDonalds, Altria, and the like.  I know I missed out on the growth of Microsoft and Apple but I'm ok with that.  I have something to pass down to the daughters. 

What is your investment strategy to fund your retirement?

[Larry of the Lawn]

I think my contract says they use that cattle thingy from No Country For Old Men on me the day I can't work anymore.  I hear it's quick.  

[Derfel Cadarn]

10 hours ago, Here's Looking At You, Kid said:

 

What is your investment strategy to fund your retirement?

Not live in America.

I’m 44. I’ve got a work pension I’ve been paying into since 2008. Local government scheme, so it’s pretty good. State pension’s not complete shit, since the Tories can’t afford to lose the pensioner vote.

My wife and I have about 15 years left on a mortgage of a 4-bedroom semi-detached house in a pretty expensive area (due to the schools). 
 

Our daughter will inherit that (or whatever asset it transforms into), plus eventually two other houses in same area (my parents in law and brother in law live in same area, my daughter’s the only grandkid). From my side, she’ll get half my mum’s house and half my aunt’s apartment (assuming equal split between children, and not counting any losses due to funding care)

 

Edited September 26, 2023 by Derfel Cadarn

[A wilding]

7 hours ago, Here's Looking At You, Kid said:

I might be the only Boomer here. 

Definitely not true!

[Luzifer's right hand]

This thread makes me wonder what happened to Hammer. 

[Alarich II]

Not American; 42yo; my strategy is basically three pillars -

1. My own firm: I will sell half of it this year,and what remains after taxes will first be used to pay off the mortgage and whatever remains then will go into the portfolio I've been saving. Upon retiring, I will sell the other half. That's (hopefully) going to be just luxury money, for whatever hobbies and travels my wife and I will want to do or maybe a little house in Tuscany or southern France. It's too far ahead to tell, maybe it'll all crash and burn before and nothing will come of it. 

2. I put monthly savings into a portfolio of different ETFs. 20% are American and European property ETFs, 80% goes into a diversified stock portfolio; The portfolio consists mainly of an ETF on the FTSE All-World (70%) and some additional ETF on Developing Countries (5%), Europe STOXX 600 (10%) and in equal parts (3* 5%) Dividend Aristocrats ETFs from Northern America, Europe and Asia.   Parts of the saved the mortgage payments will go into this as well. About 5 years before retirement I'll start reallocating more of it into high yield ETFs and the payments from those will be used for smaller indulgences or necessities should we need care for example or just additional help in the house. The portfolio itself may have to be liquidated to renovate/upgrade the house so that we can have in-house care, should we come to need it later on in our retirement. 

3. I have to pay into a compulsory pension fund scheme which is basically German CPAs Pension fund. From the looks of it, we are quite well funded and in theory, without the mortgage, with the kids having finished university, and with my wifes pension this should suffice to live comfortably, if not in great luxury.

 

Our kids will inherit their parental home and about 6.5 acres of land, some family trinkets and history, a good education and (hopefully) the mental fortitude and preparedness to make their own way in life. And whatever money we couldn't or wouldn't consume ourselves. 

[Ormond]

On 9/26/2023 at 12:06 AM, Here's Looking At You, Kid said:

I might be the only Boomer here.  I

What is your investment strategy to fund your retirement?

No, you are not the only Boomer on this forum. I was born in 1951 and Fragile Bird is also definitely a Boomer, and there are probably others.

I retired in September 2020. I was a professor at a small university and my retirement funds were almost exclusively invested through TIAA/CREF, which I have always been told was one of the best run organizations for that. So I generally just trust them to know what they are doing. So far that's worked out OK. 

[Jeor]

Australian, 37 years old and my wife's 42. We have two kids (10 and 2) but are still hoping we might be able to retire relatively early in the piece.

In Australia, the retirement system (superannuation) basically mandates all employers to pay 10.5% of your salary each year into a superannuation fund which invests your money for you (or you can choose to manage it yourself). When you turn 60 you are then able to access this money as an income stream. Given my wife is 5 years older, I've been doing spousal transfers to her superannuation account so we can access the money sooner (assuming she doesn't divorce me before then!).

Beyond super, we're also fortunate to have had incomes that allow us to save money and invest it. My wife has put hers into an investment property while I have a share portfolio. We still have a mortgage on our home (low fixed rate) but hope to pay it off in the next 3-5 years after which we can really boost our savings/investments even while looking after the kids for the next 15 years.

I'm a high school teacher working in a management role, and so I expect when I retire I'd probably still do a couple of days of casual (supply) teaching on the side which is not bad money for relatively low-level work ($500/day). Assuming we downsize our house once the kids move out (hah!) we should be able to retire early (55-60) with money in superannuation, downsizing, investment property and shares, especially if I reduce our drawdown rate by doing casual teaching for a few more years.

[Iskaral Pust]

I’ll admit that I’m in a weird place undeserving of any sympathy: mid-forties* with some minor defined benefit pension plus a very healthy accumulated 401k from maxing contributions for a long time, plus a large amount of other investments.  But my income (and lifestyle) has continued to grow strongly all these years such that my accumulated savings don’t look especially large as a % of income.  The typical aim is to accumulate retirement assets of 10-15x income to retire comfortably but that math is pretty much impossible for me now.  My early savings were a % of a much smaller income then than now.  Even the magic of compounded returns does not make up that ground.  And the majority of my savings have to be from post-tax income with taxable returns, which is just much less efficient.  So I have to realistically plan that my retirement funds will not be able to replace my current level of income, even if it doesn’t go up any further, unless I work well into my 70s.  So I need to decide instead what is the plausibly attainable retirement income that looks acceptable and allows me to retire or at least scale back to a much less stressful job perhaps ten years from now.

I’m very lucky my career has provided the financial security that it has and yet I still worry about saving enough to secure our current lifestyle for the rest of our lives.  It’s due to financial trauma in my childhood — that stuff shapes your relationship with finances forever.

*shit, that seems old when I just type it like that.

[Here's Looking At You, Kid]

Folks your comments are much appreciated.  Not to be a downer but what I got are domestic stocks.  US stocks.  I wasn't sophisticated enough to buy into emerging market ETFs.  Vanguard and most firms like that have funds in companies based in developing parts of the world.  Taiwan semiconductor, Ali Baba, Tencent and what have you.  I don't regret ignoring the Latin American region funds because they never got their economies where they needed to be.  The Asian Pacific funds though are worth a look. 

 

[Here's Looking At You, Kid]

9 minutes ago, Iskaral Pust said:

I’ll admit that I’m in a weird place undeserving of any sympathy: mid-forties* with some minor defined benefit pension plus a very healthy accumulated 401k from maxing contributions for a long time, plus a large amount of other investments.  But my income (and lifestyle) has continued to grow strongly all these years such that my accumulated savings don’t look especially large as a % of income.  The typical aim is to accumulate retirement assets of 10-15x income to retire comfortably but that math is pretty much impossible for me now.  My early savings were a % of a much smaller income then than now.  Even the magic of compounded returns does not make up that ground.  And the majority of my savings have to be from post-tax income with taxable returns, which is just much less efficient.  So I have to realistically plan that my retirement funds will not be able to replace my current level of income, even if it doesn’t go up any further, unless I work well into my 70s.  So I need to decide instead what is the plausibly attainable retirement income that looks acceptable and allows me to retire or at least scale back to a much less stressful job perhaps ten years from now.

I’m very lucky my career has provided the financial security that it has and yet I still worry about saving enough to secure our current lifestyle for the rest of our lives.  It’s due to financial trauma in my childhood — that stuff shapes your relationship with finances forever.

*shit, that seems old when I just type it like that.

It hurts missing out on the benefits of a Roth IRA.  I got into it late.

Can you handle the risk?  Technology firms like Nvidia have unbelievable growth.  That might take you where you want to go. 

[Iskaral Pust]

9 minutes ago, Here's Looking At You, Kid said:

It hurts missing out on the benefits of a Roth IRA.  I got into it late.

Can you handle the risk?  Technology firms like Nvidia have unbelievable growth.  That might take you where you want to go. 

My career has been in investments and I know I don’t have the time or energy to do active stock trading on my own behalf in a quality way.  I buy index funds and wait.

Roth IRAs aren’t available to us.  A lot of the tax-efficient savings options are designed to only work for middle class incomes.  But I’m not a corrupt property developer either to avail of those tax advantages.

[BigFatCoward]

I retire in 7 years at 55 on approx 60% of my final salary. But my wife is 9 years younger and will have to work until 65 so she is my additional retirement fund.  My state pension is dogshit and I won't get it until 67, but with having no mortgage, we will actually be better off when I retire.

I might work for 5 more years so that my wife can retire 5 years earlier, otherwise I'll just be sat around drinking too much. My old boss retired on a Friday and went straight back into consulting for the police on the Monday on nearly double his previous salary. I might have to change my role on my final few years to up skill. Getting a pension and a salary is quite an attractive proposition. 

We also own a flat in London which we argue about. She wants to sell it and enjoy the money, i think its a licence to print money.

I do invest in stocks and shares isas but the returns for 5 years have been shocking and I'm thinking of pulling it but I don't know what I'll transfer it into yet, I'm too lazy to really spend the time managing my money. 

 

[Whitestripe]

Like Ormond, I’ve spent my career in education, so my investments are through TIAA/CREF they’ve worked out pretty well.  We tend to love pretty modestly, so I think we’ll be ok.  

[Whitestripe]

2 hours ago, Madame deVenoge said:

My retirement plan is my inheritance. My family has a really awesome track record of getting stage 4 cancer and dying six weeks after diagnosis, with no major medical intervention. I know my parents have living wills declining all feeding tubes and heroic measures. Should my parents follow the path of great grands and grands, I should get around $2 million in today’s dollars by the time I’m 70. 

I got half that at age 50 when my mom died 13 months after my dad.  Honestly, I'd give it all back to have another few years with her.  She wasn't going to last much longer than that, because she had dementia, but she was happy and safe and living her best life at a retirement community after too many years of increasing isolation due to the  pandemic and her declining mental state. 

Edited October 3, 2023 by Whitestripe

[Whitestripe]

42 minutes ago, Madame deVenoge said:

Gosh, I think I remember that - didn’t you have to go to Las Vegas for a bit, to straighten out the estate?

Yes. I spent all of January 2021 in Las Vegas, all of June 2021 and January 2022 in California (where we moved my mom). Three cheers for working in academia since we were out of session all three of those months.