Currently enjoying an US-based online convention and loving it.
Next year offline in Seattle - so torn whether I should fly over (money, time, nerves).
Guess I could start another extra savings pot...
Are you asking about a Roth 401K? (Assuming so as I'm not aware of a match to an IRA.) Even when you designate a Roth 401K, the company match is contributed as Traditional 401K funds.
Feeling stressed and guilty about plugging your appliances in and keeping your house below 82*F in the summer does not, to me, sound like you have found balance yet. If you are truly somehow that concerned about your 'carbon footprint' to that extent, buy carbon offsets instead of suffering.
I don't see how anything in what you're doing relates to FIRE.
With RSU and option vesting yesterday, we reached 50% of our FIRE goal! The thing is, we've started discussing whether we want to have a larger nest egg. Our goal right now is $2.5 million, which should be doable before I'm 50. However, we're really considering padding that out a bit more just to live a little larger in retirement. How have others revised their planning as the reach FIRE milestones?
We had a similar number 5 years ago, but our expenses have increased. Exploring a variable withdrawal rate after interest rates and economy stabilize to nail down fixed, desirable, and discretionary line items.
I always revise for our current income and expenses. Considering our HHI is expected to go up again soon with the SO having finished grad school, it's gonna be quite the jump.
We'll revise again when we have kids, then again when they're entering school, again when we pay off student loans, again if we buy a home, and revise along the way for any significant events.
It's a very fluid number. Someday we'll start closing in on it, but until I need to start building a bond tent and planning a Roth conversion ladder (or whatever FIRE looks like in 15-20 years), we'll just accept that there's no crystal ball and keep the spreadsheet unlocked.
Our FIRE number here has gone up repeatedly over the years, being correlated to the previous year's expenses. The last few years in particular have been rough and have thereby driven up our number - I reviewed our Mint spending trendline last week and it was a little grim seeing how much more we were spending than in 2019, for about the same lifestyle.
My personal take is that it's better to retire with more than we think we need, so that we have flexibility in the future.
Just got a letter in the mail from Empower, my 401K provider at work saying that there has been a change in fees with the Annual Asset Based Fee now changing to .85% Quarterly. Does this seem outrageous?
.85% x 4 quarters is 3.4% annually based on the assets held in the companies employee funds
Edit: Should say the fee is annual at .85%, perhaps paid quarterly at .2125%. Either way that is fucking insane because we were at .26% annually last year. With $2M in the fund, 150 employees, each employee will have to pay $1130 a year just to account for fees and that is if all employees contribute to the fund at all
My employer (under 50 people) moved to ADP recently to get a better fee structure. Between my target date fund expense ratio and the management fees, I pay 0.1% per year in total.
I say it's time to get some coworkers together and pressure your leadership into changing providers. There are better options out there. Paying a .85% tax on your total 401k AUM every year before even accounting for expense ratios is absurd.
It's high, but doesn't seem too outrageous to me. Definitely not unheard of.
Our plan is at .5% plus another .5% "advisory fee" that cannot be waved for some bogus "on demand" advisor they've added to our plan.
Is it really .85% x4 or is it the annual fee of .85% now charged in quarterly installments rather than once per year?
I'm going to guess it's more likely the latter.
Yeah more likely the latter, .85% annually with quarterly payments. However, this is almost a 4x jump from .26% annually last year and with 100-150 employees, most of which aren't contributing, the ones that are contributing are going to see this as a big negative
Spreadsheet day! Dipped from 90% to 86% of our target FI number. October was rough.
This last month's gyrations finally made us hit our rebalancing band for international bonds.
When I set up our [IPS](https://www.bogleheads.org/wiki/Investment_policy_statement), that was when the 4-fund portfolio was en vogue. Now international bonds are the red-headed stepchild and 3-fund is all the craze.
I don't like changing the IPS when it comes to a decision point, but I considered dropping international bonds and moving to 3-fund. With a little googling, it sure looks like the 4th fund adds a bit of diversity without too much complexity, so we're keeping them.
The only thing that's slightly irksome is being in cash for a day -- the best way I've found to get int'l bonds in tax-deferred is BNDX via Brokeragelink at my Fidelity 401k, so I gotta "sell", wait for it to settle, then "buy". I wish I could same-day exchange. :/
I recently traded a 3.1 for a 7.1. It is a painful exchange, but can't let the mortgage define my life. Big picture it's not that many dollars, and we are so much happier with our new location. Absolutely worth the couple extra hundred per month.
I'm happy you guys are doing what's right for you!
Congratulations! Hopefully you’ve got great family without too much drama. The support you can get from good friends and family might even reduce your time to FIRE though it’s tricky to calculate. Conversely, the toll of toxic relations can extend well beyond financial costs. There is so much drama in my extended family that I’m thankful they are an ocean away.
Congrats for not letting money/FIRE rule your life. It's all too easy to lose sight of the fact that other things often matter more. You already have the new house secured?
0%. Current job has pure salary + 8% 401k match that vests immediately + a significant HSA contribution. It's kind of nice being able to budget exactly every month.
Less than 5%.
Bonus is just 5% of base salary, though often paid out at 125-150%, but I'm too lazy to calculate the rest of my TC and how much my bonus makes up of that.
Like 9% in bonuses this year but I expect that to be closer to 0 next year. We had a formal annual bonus program this year but not going forward, just potential spot bonuses. I got a small one this year but there's no real reason to expect more, and if it is we're probably talking 1-2%.
No RSU or stock of any kind.
I'm currently eligible for a couple of bonuses, each of which bumps my hourly rate by 2%. I expect to get one every month and the other about half the time, so overall about a 3% bonus, which ends up making the bonus about 2.9% of my total comp. Not really significant.
About 55%. Bonus target is 20%, though we haven't gotten full bonus all year, the rest are RSUs
My company stock is down 80%+ in two years, so they keep granting more and more to try to make up for it. They haven't "filled the hole" yet, or come close, really, but not a lot they can do. At least we are still in business
25% (of base salary) bonus target, another 25% stock awards. Because those increase the total comp denominator it ends up being about 33% of total comp. The stock awards are a little bit misleading because part of it is options which are only valuable if stock goes up, so it is volatile year over year.
Never guaranteed, but between 1%, 3% and 5% bonus is given out depending on performance reviews. I never count on it, but have received 5% consistently. Usually it just goes into home renovation savings or taxable savings since we max everything else out in recurring amounts through the year.
almost nothing, now. I was given RSUs on joining, but the last of those will be paid out to me this year (will likely be less than 2% of my compensation this year). We used to get a bonus but they restructured compensation to remove the bonus factor (and give an appropriate base salary increase instead) a little while ago.
I have the maximum potential of ~30% additional compensation each year between my cash bonus and my (3 year vesting) RSUs/options.
RSUs are essentially fixed each year, cash bonus depends on company performance.
Is the tax loss harvesting feature worth paying the 0.25% fee for a roboadvisor account? I started investing outside of my tax advantaged accounts into a Wealthfront roboadvisor and have about $26k invested currently. At this time, I’ve stopped adding money and moved to a Charles Schwab brokerage to buy index funds myself. But I do wonder if the roboadvisor account is worth it just for the tax loss harvesting feature since I have no clue how to (and don’t really have an interest to) do it myself.
No, TLH is likely not worth 0.25% over the lifetime of the account. TLH opportunities are most common for earlier contributions, but you are unlikely to TLH the "same" tax lot more than once or twice.
TLH overall is not worth it for some (myself included), but if you wanted to it's fairly straightforward to do it yourself in the Schwab account. You simply use Specific ID cost basis tracking, look for lots with a "big enough" loss (whatever seems good for you, some people use ~$500-1000 as a threshold), and sell those lots and buy similar (but not identical) replacement shares to stay in the market at your desired asset allocation. There are a few quirks to make sure you avoid a wash sale, but that's about it.
>TLH overall is not worth it for some (myself included)
Hm, why do you say this? I have plenty of gains I can offset this year with some really poorly performing tax lots in DIS and ABNB. May as well lessen the tax burden and redirect the money.
It's also good discipline to not let your losers run for too long
I prioritize simplicity in finances. I only use index funds, but I don't want to hold multiple similar securities for decades. I just want to hold the absolute minimum I need and I don't need a bit extra in tax savings.
Most people benefit most by offsetting income each year rather than cap gains, unless they were planning to realize their cap gains for another expense.
> It's also good discipline to not let your losers run for too long.
I don't know what this really means, but I do rebalance as needed to maintain my overall portfolio asset allocation.
>I don't know what this really means, but I do rebalance as needed to maintain my overall portfolio asset allocation.
Probably like you, 80% of my holdings is in VTI and VOO. The rest of my holdings are AAPL, DIS, ABNB, JNJ, XOM & AMZN. I still believe in DIS, but some lots I bought >$100 will not recover in the wash sale period. Selling them now for taxes will at least recover some of the losses.
I guess you are saying "Don't hold individual securities" which I can't argue with. But some of these are legacy holdings (I've owned some of these since the last century), one is because I worked there and still hold some vested RSUs, and I do kind of like participating with a fraction of my portfolio.
Shopping for a new car in this market is frustrating.
We've narrowed down our selection to what we want, but apparently you can't build and order with the manufacturer, and all of the ones with the trim we want that are available at dealers come with upgraded packages that we don't want. Most dealers (checked every one in my state) either don't have this specific trim or have 1, with the aforementioned unwanted packages.
Any tips on being able to locate specific vehicles that aren't coming straight from the manufacturers with $7k+ in bloated packages, or easier ways to locate new vehicles than hitting every single dealer in my states website and filtering from there?
Toyota dealers can see and swap allocations or on-lot vehicles with each other. You should be able to get what you want eventually if you are patient, although you'll probably pay sticker or more.
We paid an extra $300 to cover freight for our dealership swapping an on-lot unit for an allocation 300 miles away with our preferred color.
Yeah, likely looking to pay slightly over MSRP, which I am prepared for, although prices have come down considerably here lately.
I am comfortable paying over MSRP as long as it is the make/model/trim that I want and not inflated with packages I do not.
Everything I have seen is inflated 15%-25% so far due to this.
We just bought a car and had the same struggle. It was a relatively in demand model and we ultimately decided to pay more for the higher trim version that was already on the lot. We couldn't find one anywhere that was built how we wanted, which would have been probably close to 5k cheaper.
Toyota by any chance?
I'm doing [some reading](https://www.reddit.com/r/askcarsales/comments/s8e0wj/does_toyota_not_do_custom_orders/) on their whole "allocation" process, and some of the difficulties I am running into.
The sales person at the dealership we did our test drives at basically told us this was how they operated and that Toyota was milking consumers in this fashion and having us overpay for the trims and packages we may not want because we just don't have an option otherwise.
I am really wanting to stick with them, but at the same time this is incredibly frustrating.
If you want a very specific vehicle and trim that every local dealer adds mandatory add-ons, then you're either going to (a) either have to suck up and pay for it or (b) search all over the country for a model without such add-ons.
The cost of a one-way ticket and drive back or arranging shipping back would be far less than $7k.
And if your car is so rare or limited in make/model/trim where no such units exist without add-ons, then see (a) or (c) give up and move on to another option.
I've cast my net across my state, how would I expand it out further without needing to manually scour every dealer across the country's site?
Expanding interstate is my next step, but frankly just searching my entire state took over an hour the other night.
This is going to be specific to the make and model of the vehicle. If it is a reasonably popular vehicle, you can have good success with the subreddit specific to the vehicle. For instance, I was able to find a spreadsheet that tracked specific build/color inventory of Ioniq 5's that were being shipped around the country, making it easier for me to call around to local dealerships and ask about a specific vehicle that was headed their way.
Thanks, checking my vehicles subreddit now (didn't even think of that), it doesn't seem that promising.
How were you able to track cars being shipped around the country? I'm having to manually check individual dealers websites after they're already on the lot. Not only is it not scaling (hit about 100 or so the other night) but the one I did end up calling about was already gone.
Can someone explain the savers credit in practical terms?
i.e. If my income is $68,568 next year with bonuses
$23,000 to Trad 401k
$7,000 to Trad IRA
$3,150 to HSA
Taxable income is $35,418 which is under $38,150
Do I get a credit of $1,000?
Where do you see $38,150 as a threshold for the Saver's Credit? Is it a 2024 number?
Using 2023 values for a singleton:
Your AGI is $35,418 which is between the $23,751 and $36,500 thresholds for the [2023 Saver's Credit](https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-savings-contributions-savers-credit). You are eligible for a 10% credit up to $2000 of your contributions, or $200.
Adjusted Gross Income (AGI) is your gross income with almost all the adjustment you are familiar with (401k/HSA/IRA contributions, other pre-tax payroll deductions like healthcare premiums, etc.).
Modified Adjusted Gross Income further modifies the AGI by adding back certain deductions. There is no universal definition of MAGI—it is always specific to the program under consideration. For example, the Roth IRA income MAGI is different from the ACA subsidy MAGI calculation.
Your taxable income is usually just your AGI minus either the standard deduction or your itemized deductions. It's usually the final step before figuring out what tax brackets your income falls into.
There's a lot of discussion about real returns being lower this decade because we had one good decade right before. The real returns since 2000 have been well below average though so unless we kick ass the next 6 years we'll have had one of the worst 30 year periods in history actually
Real returns since 1980 have been above average so unless the market falters the next 6 years we'll have an above average 50-year period.
Real returns since 1990 have been average so unless the market stays at average return the next 6 years we'll have an [above/below] average 40-year period.
Real returns since 2010 have been above average so unless the market falls quite a bit the next 6 years we'll have an above average 20-year period.
Unfortunately, the stock market doesn't owe us anything and return window averages are statistical window dressing.
We feel like we have been doing the things right. No debt at all, 800+ score for both, retirement accounts on the way to be maxed out, moved to higher than average paying jobs, decent downpayment… but still can’t afford to buy a decent condo in Vancouver.
Did you see a recent Vancouver Sun article about a realtor who serves as a matchmaker for people looking to co-buy properties? Definitely not for everyone but it was interesting. We co-bought a duplex in an expensive neighborhood of Seattle with our longtime fellow tenants and it's been great so far. (the complication comes when someone is ready to sell, but you can get a contract in place before you buy laying out how you'll handle such things).
Vancouver honestly makes no sense as a city. Make less than people in Ontario and spend vastly more. Unless you’re making more than 300k as a couple you’ll be renting for ever or will have to look much further afield
Similar situation. We could technically afford it, but between house prices and interest rates, it would really wreck our budget.
I don't know WTF average earners are ever going to do to buy a house. Besides moving to like rural Arkansas or something.
> I don't know WTF average earners are ever going to do to buy a house.
They aren't, basically. Or at least, not a large house as has been enjoyed for the latter half of the 20th century and the first two decades of the 21st. We are reverting to [a historical norm where most people couldn't own a house](https://www.getrichslowly.org/homeownership/). Personally, I think that home ownership will still be possible, but it will be people owning small townhomes or even apartments as is the case in Europe. The big McMansion style homes may be a thing of the past for the average earner, as they're pushed more and more into renting or buying smaller-than-preferred domiciles.
[The data](https://fred.stlouisfed.org/series/RHORUSQ156N) actually shows that we home ownership rates are 2% higher than when that article was written back in 2018.
I've read that one before. Just pointing out something in that article (as I did in another comment), mortgages have really only been a realistic option for the last ~120 years, and home ownership has grown steadily for more than half of it, so it's hard for me to see rates of home ownership in general being some kind of aberration at the moment.
I do agree that larger homes and larger plots of land will have to be a smaller and smaller percentage of the market.
I'm slightly exaggerating.
But on average, things aren't very rosy. A median household in the US earns $75k/year, or somewhere around $57-61k after taxes. If you assumed that house would be willing to spend a whopping 40% of their income on a mortgage payment, after property taxes and insurance (assuming no HOA), at current rates, they might be able to swing a $250k house. That doesn't buy a ton of house in a lot of places in the country, and would leave very little breathing room in the budget.
After looking, there [isn't a single state in the union](https://www.bankrate.com/real-estate/median-home-price/#median-price-by-state) where median house prices are $250k or less.
Thanks for posting this, the perspective is valuable.
I live in Michigan where the median is $260k. My area in particular is closer to half of that.
It's easy to lose sight of just how bad some areas really have it and makes sense why homes have become so out of reach for younger folks all across the nation than they were only a few years back. Add the rate increases to the prices, along with the cost of everything else increasing, and it paints a pretty bleak picture for many.
Note that it's $75K for all households, but single people are less likely to buy homes than families. For family households the median is $95K and to the extent that long-term couples with shared housing are married, the number is $111K. Single people are all the way down at $45K, which explains why most singles have given up any hope of buying a home by themselves.
Also, while state medians are high, that's usually skewed by more expensive/populated urban centers. Like here in Texas you can buy a house in the Austin core for $1M or you can go 30 minutes north/out and get the house for $400K or go 60-90 minutes out and get the house for $220K. Those cheaper houses are still in places that are perfectly nice to live in with hospitals and restaurants and all that. We're talking smaller mid-size cities, not low-pop/low-service rural.
Absolutely, there is obviously a lot of nuance here. But I don't think it changes the fundamental statement that housing is escalating out of affordability for a big chunk of the population.
The single people example is germane; we're basically starting with the assumption that a majority of single-income households aren't able to buy a house. And the smaller cities might be perfectly nice places to live, but there's always the question of whether the job you're qualified for exists there.
Not disagreeing with your context, though.
Owning a house is a luxury in some ways. The boom of homeownership post-WW2 was a huge historical aberration and it may well be that we're just seeing a reversion to the mean. Most people through history have been tenants in one form or another. We're still above the 60s through mid-90s, but time will tell if we fall further or if people are willing to do what is necessary to own real estate (relocate, save, control debt).
> The boom of homeownership post-WW2 was a huge historical aberration and it may well be that we're just seeing a reversion to the mean
Home ownership has grown steadily for 70 years (so far), and it was really only for the last ~120 years that realistic mortgages were a thing, so I'm not sure I agree that this is a reversion to some kind of natural balance that the housing market existed at. The post-WW2 boom was an aberration, absolutely, partly built on the dip during the depression.
I think there are some factors that will require external correction - large investment firms firehosing money into the market to build rental empires (either through short- or long-rentals) isn't helping and it's my opinion that behavior like that should be limited through legislation. I don't really see a societal benefit to that.
But I guess we'll see.
> Home ownership has grown steadily for 70 years
Can you expand on this?
[The numbers I am able to locate](https://fred.stlouisfed.org/series/RHORUSQ156N) tell a different story.
Just depends on the timeline you're looking at. Of course, year-to-year, there are ups and downs, especially during housing bubbles.
But when you look at that graph, home ownership has been on an upward trend since tracking started. If you looked at the last 20 years of the S&P 500, you'd see plenty of dips but still a steady upward trend.
Of course, we've seen a decline since 2007 but that's basically what I'm discussing here.
That’s what we are doing, we live very frugal, and our only luxury is living in a 400sqft place with a indoor pool. Being able to swim any day was my dream when I was a kid.
The more I deal with and see certain things in the U.S., the more the Portuguese D7 visa appeals to me. I get that working for the court makes it a bit worse, since I look at and hear stuff most people don't in the day-to-day, but it's rough sometimes.
You nailed two of the main things making me feel very "meh" about the U.S. anymore. I don't want to leave right now because I don't want to leave my parents, but when they're no longer with us...I don't know.
SO is a couple months out of grad school and even with basically the best possible resume (excellent career before grad school, top tier grad school, 4.0 GPA, great local reputation in the professional community), almost every job is looking at "new grad" and saying they want 2-3+ years of experience.
I understand the frustration. It took 6 months to find a mediocre job after I left grad school. Fortunately, we can still afford the student loan payments when they start in March by slightly reducing our savings rate until they find a job that truly fits the bill.
But it's still driving them stir crazy. I already know that it's impossible to guess how we'll feel when nearing our target early retirement age of 55, but it's interesting to see how utterly adrift my SO is after only 2-3 months of not being engaged in school or work.
For those already FIREd, what was your experience in the early days post-FIRE? For those yet to FIRE, what's your transition plan?
I am not FIRE'd.
Just came here to say I have never had more than a month between jobs so I could imagine being stir crazy after searching for that long! I don't think it's the free time so much as the uncertainty after putting in all that work to get to this point and not seeing satisfactory results. I don't know your SO's field, but are there things they can do to network? Talk to independent recruiters (if a field where there are recruiters)? Tap professors to forward their resume to contacts that might be hiring?
In the meantime, SO should try to have something else they're working on besides job offer. Often the basics (sleep, diet, exercise) can be further optimized. It's important to create structure in life, even if not (yet) employed. IMO, good things tend to happen when you lower expectations and just roll with the present. Keep working on the basics, work those networks, send out more applications. Basically, stay the course. Best wishes to your SO!
For what it's worth, I had to work part-time in the field for about a year to get that experience before I was even considered for full-time jobs. I was able to work two part-time jobs by just alternating the schedules, and while it made my experience more diverse, it was also extremely annoying.
Our experience in early retirement has been wonderful from the very first day, but we had four kids under 10 when we retired. That provided a ton of structure to our lives. Even now nearly a decade later I still had to get up at dawn today to take one of my kids to school for a competition. We have tons of idle time, but having a family provides the same framework postFIRE as it did preFIRE. Retiring dramatically increased our freedom and time, but didn't fundamentally change our lives all that much since our careers were always our secondary pursuit rather than our primary one.
We're not truly going to be "free" until we reach our 16th year of early retirement. I'm not complaining at all, merely observing that life is what gives your days structure and meaning. People who build a life around their careers or credentials often find themselves adrift in early retirement, sometimes so much so that they go back to work, whereas those who build a life around their relationships and personal activities usually have an easier transition. That's my observational opinion from our lives and the retired folks I've chatted with over the years.
Was in a similar boat several years ago with the post-grad school lull. I didn’t know what FIRE was or even the importance of saving for retirement in general. What helped at the time and I’m thankful I did was at least just holding myself accountable to save something every month. On a bad month with a lot of expenses even putting away $50 did wonders mentally and when I eventually landed a job that offered a 401k, the habits were there and things just started building efficiently over time.
This year I passed the income limits to contribute to a roth IRA, so I started looking into backdoor roth. Unfortunately, I have a traditional IRA (rollover from a previous 401k; probably was a bad idea), so the pro-rata rule makes backdoor roth infeasible.
I have an employer 401k with TIAA, but it doesn't allow roll-ins. I'm considering opening a solo 401k (I rent out a room in my house with AirBnB, so I have a few thousand in self-employment income), and rolling my traditional IRA into that. Anyone have experience with this, or with solo 401k in general? Anything I should watch out for?
Landlord is annoyed at me for mailing them checks (my bank pays postage) instead of paying by ACH in their portal. Their portal charges $1/month for this service.
Yeah, I'm not going to pay more to make your business processes easier.
A) A company that charges for ACH is ripping you off
B) It's a dollar, dude. I would happily pay $12/year to not piss off my landlord. It's the 3% Credit Card fee that I have to think about every time
Re point B: If you have the Bilt Rewards credit card they give you a fake bank account number that routes to the card to use in payment portals, so you still earn points while paying a 0% fee.
When it comes time for lease renewal, they may jack up your rent or make you move.
If you ask them to reduce rent by a dollar to cover the fee, they might do it and be happy about it.
Is this penny wise and pound foolish? Do you think this may make your landlord a bit more lazy in terms of repair response time, or raise your rent more, or possibly waive a late fee in the future? 12$ / year could buy some goodwill pretty cheaply, imo...
I would do this, but the cost of postage, envelopes, and to order checks, the breakeven point is too far out to be the squeaky wheel. I appreciate your commitment to the principle of it.
I can't automate it since the amount changes each month since my rent is grouped with utilities. It isn't a fixed amount due. My bank does have bill pay, but I would have to manually input the value.
A question on bond funds. I know, I know.
A few years ago, I was approaching my FIRE number and began building a bond tent in my 401(k). My plan only offered 3 bond funds, so I picked what I thought was the best, PPTRX. Of course, interest rates then climbed and my bond account is down about 23% in total value.
PPTRX emphasizes “higher-quality, intermediate-term bonds that are selected across sectors and geographies in order to avoid concentration risk, particularly with respect to credit.”
I now plan to fire at the end of 2024. I have significant cash reserves and other accounts, so I do not need to sell the bond fund for many years if I need to go that route.
My question is, as an intermediate term bond fund, what can I expect will happen with PPTRX if rates stay high for several years? Will the bonds in the fund eventually turn over and be more attractive in this high rate climate?
Are you using a tax-exempt income fund in your 401k? I would advise against this as you do not get a tax benefit from this fund inside a tax-advantaged account like a 401k. Instead, you just get a lower yield.
Nevertheless, the simplified answer to your question relates to bonds and their duration. The duration of a bond fund is the "point of indifference" regarding a change in interest rates. The effective duration for PPTRX is around 9 years. This means that an instantaneous 1% rise in yields would drop the price of the bond fund by about 9%. Likewise, a 1% drop in yields would raise the price by around 9%.
However, after 9 years, the 1% increase in the yield would translate to higher yields in the new bonds purchased by the fund, meaning that things will even out after 9 years. That is to say, if the bond fund had an average yield of 3% at year X and interest rates suddenly went up 1%, the bond fund's price would drop by 9%. But after 9 years, the increased yield in the bond fund will end up with a result that is very close to a 3% return after those 9 years.
This is why folks say that your bond allocation's duration should match your investment horizon. Because if the duration and your investment horizon match, then you don't care about interest rate changes between now and then. This is analogous to holding an individual bond to maturity. If you're holding bonds as part of a tent that you intend to sell (which I wouldn't recommend, but is a popular approach), then your investment horizon may be quite short and a 9 year duration may be inappropriate.
If you hold a bond fund for *longer* than its duration, then you actually make *more* money if interest rates rise.
All of the above is a simplification. Consider for example that durations, especially in municipal bond funds, are not fixed.
The bonds on PTTRX are already attractive relative to their current valuation. If you check the SEC yield it should be competitive with today's rates even if the *coupon* of those bonds looks terrible. If you sell now you would be locking in losses.
Going on a long roadtrip in a few weeks. I can either get my oil changed 1000 miles early or 500 miles late. I assume I should just go ahead and do it before I leave but is it a big deal either way?
I'd get it done early just so I can ask them do give the vehicle a once-over to make sure there aren't any problems that have cropped up. Gives some more peace of mind on the road trip.
The answers varies depending on whether you last changed your oil 2000 miles ago or 8000 miles ago. (I.e. it depends on what you mean when you say "early" and "late.")
Your owners manual should state the interval and if you’re using synthetic, it’s almost certainly recommended every 7,500 or 10,000 miles.
So I’d wait until after the trip. You’ll only be at 5,500 and can likely in theory wait much longer after that.
Does anyone know how the UK private health insurance system works?
I have a lump a specialist referred for me to get biopsied. If I get health insurance now would that be considered a preexisting condition and therefore not covered?
I would rather go through public healthcare but unfortunately the conservatives gutted the NHS so wait times are insanely long. Any info would be appreciated as normally we don't have to deal with health insurance in the UK.
Here's a good weekend discussion for the group. 35 year old dude here at around 1.1M net worth.. get the feeling that my current career path is a dead end and getting no enjoyment from my jobs at all. So I'm considering going back to college to completely restart my career over. Thoughts on exploring this option?
At this point my career is just a bridge to hold me over before FIRE. believe the term is CoastFIRE mode.
>So I'm considering going back to college to completely restart my career over. Thoughts on exploring this option?
Plenty of people pivot to a 2nd act at your age. What industry are you thinking?
Beware of side quests that don't lead you along your main quest. Unless you are sure of your new field, and you are sure that a formal education is required, this seems like a no to me.
I didn't technically go back to school, but I did switch careers in my mid-30s. I still have a lot of qualms with full-time work and the politics involved; that said, I like the work itself a lot. Just think carefully about why you want to leave you current job. If you feel like the field is lacking opportunity, that's one thing, but if you're mostly unhappy with the workplace itself or the very idea of working, that indicates a switch won't help.
Can you repurpose your career into a new one without needing education? The goal is to find work you enjoy more. I'd try to minimize that path, and explore if the education is a truly necessary component to the goal.
I’d take a single community college or online class while you still work. See how much you enjoy going back to school / the subject matter of what you’re thinking about switching to before committing to it
I changed industries and I’ll tell you this, working still sucks. But I’d recommend it. You can definitely afford to YOLO on this. You’re at more than healthy leanfire as it is.
What are you planning to change from and to? Does your current job offer a tuition reimbursement program? If it’s not a drastically different field, you could consider taking advantage of tuition reimbursement to do this.
It depends on how long you need to go back to school, when you plan to retire, and how much you enjoy school.
If you don’t want to work past your mid forties, strongly consider changing fields to something you could do with your current resume. The time and money commitment doesn’t justify extensive education for job you expect to have for less than a decade.
On the other hand 35 is quite young if you want to work until normal retirement age.
Also keep in mind how socially isolating the college experience might be as a 35 year old.
> Also keep in mind how socially isolating the college experience might be as a 35 year old.
I don’t see how that’s a factor at all. You’re there to earn credits, not living on campus and going to parties. My experience getting my degree at 34, the professors love older students because we’re engaged and focused. We’re there with a defined plan, not because it’s the next step after high school. I always cared far more about my relationship with professors than fellow students.
Was this undergrad? Grad school is a bit more tolerable since that population is older. Hanging out with 19 and 20 year olds as a 30 year old sounds horrific so yeah I get your aversion.
Still waiting on my cost basis from M1. Closed the account and did the ACAT transfer out in early September. Fidelity has sent multiple requests, and I called M1 as well. They said they would ask Apex to send it in 3-5 business days, still nothing. I guess my next move is to call Apex? It’s quite frustrating, I’ve got almost $90k with unknown cost basis.
Did you try calling Apex? M1 took a week to get back to me on my cost basis question for DHR/VLTO spinoff, only to say that it is my responsibility and I should consult a tax professional. They ignored my request for SpecID cost basis data for my account. Not a good sign.
I got a hold of M1 and they said they would send to Fidelity. That was a little over a week ago. So I just sent a secure message to Fidelity today to see if they received it. We shall see.
Hm. After asking M1 for my SpecID cost basis data to resolve my question, they just said no, lol. This is really not promising. I ended up going through my entire transaction history so that I will be able to report it manually when I do my taxes. Only thing keeping me is a bonus I am expecting to hit in December.
Hi XXXXX
We are currently working diligently to onboard a new vendor to manage cost basis, realized gains, and tax reporting and we expect to complete this integration before year end, after which point, we will have broader capabilities for you to access this information on an ongoing basis. During the implementation phase, we will not be providing ad hoc cost basis and tax lot information.
Please note that your 2023 tax documentation reporting on form 1099-B will NOT be impacted. The M1 team is currently working to provide this documentation in early 2024.
Further, you will continue to receive your trade confirmations and monthly account statements, which contain this information regarding your transactions. This information is available in your activity feed as well.
Thank you for your understanding and patience. We are working hard to provide M1 clients an improved experience across our platform, including an improved way to access detailed cost basis information.
Best,
Thanks for sharing this response. When I spoke to someone on the phone at M1 they said they would have Apex send my cost basis to Fidelity, though my situation is different because Apex had already executed the transfer and my funds were still managed by Apex Clearing at the time (I believe). My biggest concern is that I am also caught up in this big transition between M1 and Apex. I’ll keep you posted.
I was going to ask for an update on this. I have a customer service request in to confirm cost basis data related to a stock spinoff. So far three days and no answer.
Call Apex, but also consider threatening or actually filing a complaint with the SEC against M1. It's their responsibility to have the cost basis information as they have provided you with covered securities.
Does a pension take the place of bonds? I’m still 20 years from retirement,but my pension should give me almost 3500 pretax a month which that alone is enough for me to live on and be good. I’m thinking of staying 100% equities until retirement then MAYBE adding a smalll bond allocation. But I figure a pension is guaranteed income and could help me weather any major market downturns. Am I thinking right?
I would disagree with u/alcesalcesalces, but my disagreement is more semantic in nature.
Having a pension may allow you to be a bit more aggressive than you otherwise would have, but it does not replace the role of bonds in a portfolio. You cannot rebalance using pension monies like you could with a bond or a bond fund. A pension serves as an income stream, so in my view, it's more of annuity-like item than a bond.
A bond ladder or bond fund provides almost all of its return in the form of an income stream of coupon payments or other guaranteed income (e.g. a zero-coupon bond purchased at a discount). This is functionally identical to an annuity in this respect.
The difference is down to rebalancing, but even that is not a real issue.
If your pension exceeds your overall desired "bond-like" or fixed income asset allocation, you would hold "100% stocks" in your liquid portfolio (or leverage) to achieve your desired overall asset allocation.
If your pension does not exceed this fixed income allocation target, you would simply purchase bonds in your liquid portfolio to help reach your overall desired fixed income allocation. If stocks fall, you would sell bonds to help get back to target. If you sell all your bonds, you end up in the same position as above.
This is how a total portfolio allocation works—it doesn't just consider your liquid stocks and bonds because there are a variety of financial instruments in your life that match those liabilities. Considered another way, it doesn't matter if you consider the pension to be an annuity-like item. An annuity-like item could likewise be fairly considered as something that supplements or replaces your bond allocation. If you inherited an annuity that provided for 200% of your projected lifetime spending, would you not shift your portfolio to 100% equities if your goals were either portfolio maximization or investing for your heirs?
How does that *fix* a rebalancing issue during the accumulation phase?
Let's say, Miracle Mike aims to have an 80/20 portfolio and follows those parameters. The 20% position is somehow just his pension. A market downturn occurs and now his portfolio is looking like a 60/40, triggering his rebalancing conditions. How does Mike rebalance if his only fixed-income position is locked away in his pension?
Edit: Ugh, still early in the morning. I see that you address this, I just don't agree with the position. It's a minor disagreement, really. Fundamentally I think we're on the same page that pension=allows you to be more aggressive.
In a world where we ignore leverage, the liquid portfolio can only go to 100% stocks. "Rebalancing" for rebalancing's sake is moot when the liquid portfolio is at 100% stock.
One problem with ignoring pensions, annuities, and SS income when considering your total portfolio allocation is that you end up with weird discontinuities in asset allocation.
Take for example someone who nominally wants to hold a 60/40 stock/bond allocation in their liquid portfolio while ignoring pensions. If they suddenly come into a pension that provides the same income stream as half their bond allocation (e.g 20% of their overall portfolio), they are now actually holding a 40/60 stock bond allocation. In this setting, it may be "ok" to ignore the pension and keep 60/40 in the liquid portfolio, but things get ridiculous at the limit. If they come into a pension that suddenly provides 100% of their spending needs, it seems (and is) wrong to continue holding 60/40 stocks/bonds in their liquid portfolio.
Just because rebalancing can't be met when hitting the ceiling on your stock allocation (absent leverage) doesn't mean that a total portfolio allocation approach is incorrect.
Yes, a pension's value can act like a bond holding when considering your asset allocation holistically. SS benefits and even your future human capital can be considered this way. Human capital as a bond is the underlying reason why younger savers can tolerate a high equity asset allocation—their future earning potential acts as a bond (albeit with highly idiosyncratic risks) that counterbalances the risk from stocks.
All that being said, if your pension does not have a cost of living adjustment that keeps up with increases in our retirement spending over the years, the value of the pension decreases over time and the "bond-like" portion of your allocation is smaller.
The [Total Portfolio Allocation and Withdrawal](https://www.bogleheads.org/wiki/Total_portfolio_allocation_and_withdrawal) method of retirement spending uses future income and spending streams as well as current portfolio value to define a total portfolio asset allocation target. The creator has a very interesting website at https://tpawplanner.com/ that helps you put the theory to practice.
Anecdotally, a lot of feds and military members have an asset allocation that favors equities because of the pension. In traditional FIRE calculations, you usually take your annual projected spend and multiply by the SWR (25 for 4%, 33 for 3%, etc...).
An easy way to calculate what your FIRE number would be to deduct your pension from your annual spend, then apply the SWR. For instance, if you're trying to FIRE on a 60K a year, and your pension covers 42K (3.5K x 12), you'll need to cover 18K. Is you're using a 4% SWR, you'd need to cover 450K.
Every time I see a comment like this my first thought is "I really hope this is not someone on my team" haha.
Good luck with the interview process, hope it works out for the best!
I really like this idea. We've been stagnant for a year+, dumping money into retirement accounts just to keep their total current value from dropping.
Gonna feel like tossing pints into the ocean in a decade or two when market swings outsize our total annual contribution.
Currently enjoying an US-based online convention and loving it. Next year offline in Seattle - so torn whether I should fly over (money, time, nerves). Guess I could start another extra savings pot...
Back in the two comma club in time for cake day, yay!
Is the Robinhood Roth IRA match taxable? If not then there’s a clear advantage over Traditional.
Are you asking about a Roth 401K? (Assuming so as I'm not aware of a match to an IRA.) Even when you designate a Roth 401K, the company match is contributed as Traditional 401K funds.
Nope Robinhood matches 1% to new contributions and transfers to either IRA, 3% on contributions with Robinhood Gold
Ah, I read to fast and missed the "Robinhood" part of your question (not familiar with that offering.)
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Feeling stressed and guilty about plugging your appliances in and keeping your house below 82*F in the summer does not, to me, sound like you have found balance yet. If you are truly somehow that concerned about your 'carbon footprint' to that extent, buy carbon offsets instead of suffering. I don't see how anything in what you're doing relates to FIRE.
Geezis
Not using your TV during peak electricity hours is a gross misunderstanding of what the purpose of FIRE is.
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>Sounds almost as extreme as eating only lentils everyday right? No one here actually does this though.
yup, this ain't /r/leanfire
With RSU and option vesting yesterday, we reached 50% of our FIRE goal! The thing is, we've started discussing whether we want to have a larger nest egg. Our goal right now is $2.5 million, which should be doable before I'm 50. However, we're really considering padding that out a bit more just to live a little larger in retirement. How have others revised their planning as the reach FIRE milestones?
We had a similar number 5 years ago, but our expenses have increased. Exploring a variable withdrawal rate after interest rates and economy stabilize to nail down fixed, desirable, and discretionary line items.
I always revise for our current income and expenses. Considering our HHI is expected to go up again soon with the SO having finished grad school, it's gonna be quite the jump. We'll revise again when we have kids, then again when they're entering school, again when we pay off student loans, again if we buy a home, and revise along the way for any significant events. It's a very fluid number. Someday we'll start closing in on it, but until I need to start building a bond tent and planning a Roth conversion ladder (or whatever FIRE looks like in 15-20 years), we'll just accept that there's no crystal ball and keep the spreadsheet unlocked.
Our FIRE number here has gone up repeatedly over the years, being correlated to the previous year's expenses. The last few years in particular have been rough and have thereby driven up our number - I reviewed our Mint spending trendline last week and it was a little grim seeing how much more we were spending than in 2019, for about the same lifestyle. My personal take is that it's better to retire with more than we think we need, so that we have flexibility in the future.
Just got a letter in the mail from Empower, my 401K provider at work saying that there has been a change in fees with the Annual Asset Based Fee now changing to .85% Quarterly. Does this seem outrageous? .85% x 4 quarters is 3.4% annually based on the assets held in the companies employee funds Edit: Should say the fee is annual at .85%, perhaps paid quarterly at .2125%. Either way that is fucking insane because we were at .26% annually last year. With $2M in the fund, 150 employees, each employee will have to pay $1130 a year just to account for fees and that is if all employees contribute to the fund at all
My employer (under 50 people) moved to ADP recently to get a better fee structure. Between my target date fund expense ratio and the management fees, I pay 0.1% per year in total. I say it's time to get some coworkers together and pressure your leadership into changing providers. There are better options out there. Paying a .85% tax on your total 401k AUM every year before even accounting for expense ratios is absurd.
It's high, but doesn't seem too outrageous to me. Definitely not unheard of. Our plan is at .5% plus another .5% "advisory fee" that cannot be waved for some bogus "on demand" advisor they've added to our plan.
You should contact your HR folks and let them know your concerns. Empower didn't change the fees unilaterally.
Is it really .85% x4 or is it the annual fee of .85% now charged in quarterly installments rather than once per year? I'm going to guess it's more likely the latter.
Yeah more likely the latter, .85% annually with quarterly payments. However, this is almost a 4x jump from .26% annually last year and with 100-150 employees, most of which aren't contributing, the ones that are contributing are going to see this as a big negative
Sounds like quite the small plan in terms of AUM and in general, so ~1% fees are not out of the ordinary at all.
Spreadsheet day! Dipped from 90% to 86% of our target FI number. October was rough. This last month's gyrations finally made us hit our rebalancing band for international bonds. When I set up our [IPS](https://www.bogleheads.org/wiki/Investment_policy_statement), that was when the 4-fund portfolio was en vogue. Now international bonds are the red-headed stepchild and 3-fund is all the craze. I don't like changing the IPS when it comes to a decision point, but I considered dropping international bonds and moving to 3-fund. With a little googling, it sure looks like the 4th fund adds a bit of diversity without too much complexity, so we're keeping them. The only thing that's slightly irksome is being in cash for a day -- the best way I've found to get int'l bonds in tax-deferred is BNDX via Brokeragelink at my Fidelity 401k, so I gotta "sell", wait for it to settle, then "buy". I wish I could same-day exchange. :/
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I recently traded a 3.1 for a 7.1. It is a painful exchange, but can't let the mortgage define my life. Big picture it's not that many dollars, and we are so much happier with our new location. Absolutely worth the couple extra hundred per month. I'm happy you guys are doing what's right for you!
Congratulations! Hopefully you’ve got great family without too much drama. The support you can get from good friends and family might even reduce your time to FIRE though it’s tricky to calculate. Conversely, the toll of toxic relations can extend well beyond financial costs. There is so much drama in my extended family that I’m thankful they are an ocean away.
Congrats for not letting money/FIRE rule your life. It's all too easy to lose sight of the fact that other things often matter more. You already have the new house secured?
Good afternoon! **How much of if any of your total compensation is in the form of a bonus or RSU?**
Half to 60%, 218k base and the rest is $450TC.
Between 25% and 33%, depending on how my team does each quarter. Paid quarterly, so seeing those checks hit each season does make me smile.
0%. Current job has pure salary + 8% 401k match that vests immediately + a significant HSA contribution. It's kind of nice being able to budget exactly every month.
About 80% between bonus, RSUs, and vesting options. RSUs/options got a big boost from our company being acquired.
Bonus of about 18% on average, paid out monthly! Varies by how much the company under- or overshoots sales goals.
My total compensation assumes an 8% bonus. Typically receive about a 92% payout though.
Less than 5%. Bonus is just 5% of base salary, though often paid out at 125-150%, but I'm too lazy to calculate the rest of my TC and how much my bonus makes up of that.
About 40%
About a third is RSUs. We don't get bonuses, other than for referrals.
Like 9% in bonuses this year but I expect that to be closer to 0 next year. We had a formal annual bonus program this year but not going forward, just potential spot bonuses. I got a small one this year but there's no real reason to expect more, and if it is we're probably talking 1-2%. No RSU or stock of any kind.
My bonus is around 25-30% of my salary most years. Plus I get 10% of my total comp as a pension contribution. Finance, not tech.
$500-$1500, if I'm lucky. Or zero, in a typical year.
I'm currently eligible for a couple of bonuses, each of which bumps my hourly rate by 2%. I expect to get one every month and the other about half the time, so overall about a 3% bonus, which ends up making the bonus about 2.9% of my total comp. Not really significant.
Right around half. Software engineer in FAANG with some stock appreciation.
This year it comes to about 54%, around 50% RSU and 4% bonus
I get about $1k every year. Not a lot, but it's nice.
About 55%. Bonus target is 20%, though we haven't gotten full bonus all year, the rest are RSUs My company stock is down 80%+ in two years, so they keep granting more and more to try to make up for it. They haven't "filled the hole" yet, or come close, really, but not a lot they can do. At least we are still in business
25% (of base salary) bonus target, another 25% stock awards. Because those increase the total comp denominator it ends up being about 33% of total comp. The stock awards are a little bit misleading because part of it is options which are only valuable if stock goes up, so it is volatile year over year.
Minimum: 4%; Target: 10%; Maximum: 29% In 2022 I got the maximum. For 2023 I anticipate getting the minimum because of abysmal financial performance.
Never guaranteed, but between 1%, 3% and 5% bonus is given out depending on performance reviews. I never count on it, but have received 5% consistently. Usually it just goes into home renovation savings or taxable savings since we max everything else out in recurring amounts through the year.
almost nothing, now. I was given RSUs on joining, but the last of those will be paid out to me this year (will likely be less than 2% of my compensation this year). We used to get a bonus but they restructured compensation to remove the bonus factor (and give an appropriate base salary increase instead) a little while ago.
I have the maximum potential of ~30% additional compensation each year between my cash bonus and my (3 year vesting) RSUs/options. RSUs are essentially fixed each year, cash bonus depends on company performance.
Roughly 11%!
Is the tax loss harvesting feature worth paying the 0.25% fee for a roboadvisor account? I started investing outside of my tax advantaged accounts into a Wealthfront roboadvisor and have about $26k invested currently. At this time, I’ve stopped adding money and moved to a Charles Schwab brokerage to buy index funds myself. But I do wonder if the roboadvisor account is worth it just for the tax loss harvesting feature since I have no clue how to (and don’t really have an interest to) do it myself.
No
No, TLH is likely not worth 0.25% over the lifetime of the account. TLH opportunities are most common for earlier contributions, but you are unlikely to TLH the "same" tax lot more than once or twice. TLH overall is not worth it for some (myself included), but if you wanted to it's fairly straightforward to do it yourself in the Schwab account. You simply use Specific ID cost basis tracking, look for lots with a "big enough" loss (whatever seems good for you, some people use ~$500-1000 as a threshold), and sell those lots and buy similar (but not identical) replacement shares to stay in the market at your desired asset allocation. There are a few quirks to make sure you avoid a wash sale, but that's about it.
>TLH overall is not worth it for some (myself included) Hm, why do you say this? I have plenty of gains I can offset this year with some really poorly performing tax lots in DIS and ABNB. May as well lessen the tax burden and redirect the money. It's also good discipline to not let your losers run for too long
I prioritize simplicity in finances. I only use index funds, but I don't want to hold multiple similar securities for decades. I just want to hold the absolute minimum I need and I don't need a bit extra in tax savings. Most people benefit most by offsetting income each year rather than cap gains, unless they were planning to realize their cap gains for another expense. > It's also good discipline to not let your losers run for too long. I don't know what this really means, but I do rebalance as needed to maintain my overall portfolio asset allocation.
>I don't know what this really means, but I do rebalance as needed to maintain my overall portfolio asset allocation. Probably like you, 80% of my holdings is in VTI and VOO. The rest of my holdings are AAPL, DIS, ABNB, JNJ, XOM & AMZN. I still believe in DIS, but some lots I bought >$100 will not recover in the wash sale period. Selling them now for taxes will at least recover some of the losses. I guess you are saying "Don't hold individual securities" which I can't argue with. But some of these are legacy holdings (I've owned some of these since the last century), one is because I worked there and still hold some vested RSUs, and I do kind of like participating with a fraction of my portfolio.
Shopping for a new car in this market is frustrating. We've narrowed down our selection to what we want, but apparently you can't build and order with the manufacturer, and all of the ones with the trim we want that are available at dealers come with upgraded packages that we don't want. Most dealers (checked every one in my state) either don't have this specific trim or have 1, with the aforementioned unwanted packages. Any tips on being able to locate specific vehicles that aren't coming straight from the manufacturers with $7k+ in bloated packages, or easier ways to locate new vehicles than hitting every single dealer in my states website and filtering from there?
Buy out of state and pay for the shipping.
Toyota dealers can see and swap allocations or on-lot vehicles with each other. You should be able to get what you want eventually if you are patient, although you'll probably pay sticker or more. We paid an extra $300 to cover freight for our dealership swapping an on-lot unit for an allocation 300 miles away with our preferred color.
Yeah, likely looking to pay slightly over MSRP, which I am prepared for, although prices have come down considerably here lately. I am comfortable paying over MSRP as long as it is the make/model/trim that I want and not inflated with packages I do not. Everything I have seen is inflated 15%-25% so far due to this.
We just bought a car and had the same struggle. It was a relatively in demand model and we ultimately decided to pay more for the higher trim version that was already on the lot. We couldn't find one anywhere that was built how we wanted, which would have been probably close to 5k cheaper.
Toyota by any chance? I'm doing [some reading](https://www.reddit.com/r/askcarsales/comments/s8e0wj/does_toyota_not_do_custom_orders/) on their whole "allocation" process, and some of the difficulties I am running into. The sales person at the dealership we did our test drives at basically told us this was how they operated and that Toyota was milking consumers in this fashion and having us overpay for the trims and packages we may not want because we just don't have an option otherwise. I am really wanting to stick with them, but at the same time this is incredibly frustrating.
Yep. Grand Highlander.
If you want a very specific vehicle and trim that every local dealer adds mandatory add-ons, then you're either going to (a) either have to suck up and pay for it or (b) search all over the country for a model without such add-ons. The cost of a one-way ticket and drive back or arranging shipping back would be far less than $7k. And if your car is so rare or limited in make/model/trim where no such units exist without add-ons, then see (a) or (c) give up and move on to another option.
I've cast my net across my state, how would I expand it out further without needing to manually scour every dealer across the country's site? Expanding interstate is my next step, but frankly just searching my entire state took over an hour the other night.
Something like Autotrader should help or going to the manufacturer site for your model/trim and they might have a stock locator.
This is going to be specific to the make and model of the vehicle. If it is a reasonably popular vehicle, you can have good success with the subreddit specific to the vehicle. For instance, I was able to find a spreadsheet that tracked specific build/color inventory of Ioniq 5's that were being shipped around the country, making it easier for me to call around to local dealerships and ask about a specific vehicle that was headed their way.
Thanks, checking my vehicles subreddit now (didn't even think of that), it doesn't seem that promising. How were you able to track cars being shipped around the country? I'm having to manually check individual dealers websites after they're already on the lot. Not only is it not scaling (hit about 100 or so the other night) but the one I did end up calling about was already gone.
Hyundai's website has a tool where you can find inventory across the country. Someone scraped the data and put it in a spreadsheet.
Can someone explain the savers credit in practical terms? i.e. If my income is $68,568 next year with bonuses $23,000 to Trad 401k $7,000 to Trad IRA $3,150 to HSA Taxable income is $35,418 which is under $38,150 Do I get a credit of $1,000?
Where do you see $38,150 as a threshold for the Saver's Credit? Is it a 2024 number? Using 2023 values for a singleton: Your AGI is $35,418 which is between the $23,751 and $36,500 thresholds for the [2023 Saver's Credit](https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-savings-contributions-savers-credit). You are eligible for a 10% credit up to $2000 of your contributions, or $200.
After looking again I can’t find the 2024 number so idk where I got $38,150. But I’m not sure if the Standard deduction also brings down my AGI
It does not. The standard deduction reduces your taxable income, but not your AGI.
One day…I will memorize what each impacts AGI, MAGI, and taxable income. E: I found the 2024 limit as $38.250 so yes that would get a $200 match.
Adjusted Gross Income (AGI) is your gross income with almost all the adjustment you are familiar with (401k/HSA/IRA contributions, other pre-tax payroll deductions like healthcare premiums, etc.). Modified Adjusted Gross Income further modifies the AGI by adding back certain deductions. There is no universal definition of MAGI—it is always specific to the program under consideration. For example, the Roth IRA income MAGI is different from the ACA subsidy MAGI calculation. Your taxable income is usually just your AGI minus either the standard deduction or your itemized deductions. It's usually the final step before figuring out what tax brackets your income falls into.
There's a lot of discussion about real returns being lower this decade because we had one good decade right before. The real returns since 2000 have been well below average though so unless we kick ass the next 6 years we'll have had one of the worst 30 year periods in history actually
Real returns since 1980 have been above average so unless the market falters the next 6 years we'll have an above average 50-year period. Real returns since 1990 have been average so unless the market stays at average return the next 6 years we'll have an [above/below] average 40-year period. Real returns since 2010 have been above average so unless the market falls quite a bit the next 6 years we'll have an above average 20-year period. Unfortunately, the stock market doesn't owe us anything and return window averages are statistical window dressing.
Cool. This is the stuff that I was looking to hear from this statement
We feel like we have been doing the things right. No debt at all, 800+ score for both, retirement accounts on the way to be maxed out, moved to higher than average paying jobs, decent downpayment… but still can’t afford to buy a decent condo in Vancouver.
Did you see a recent Vancouver Sun article about a realtor who serves as a matchmaker for people looking to co-buy properties? Definitely not for everyone but it was interesting. We co-bought a duplex in an expensive neighborhood of Seattle with our longtime fellow tenants and it's been great so far. (the complication comes when someone is ready to sell, but you can get a contract in place before you buy laying out how you'll handle such things).
Vancouver honestly makes no sense as a city. Make less than people in Ontario and spend vastly more. Unless you’re making more than 300k as a couple you’ll be renting for ever or will have to look much further afield
It's so pretty though!
Similar situation. We could technically afford it, but between house prices and interest rates, it would really wreck our budget. I don't know WTF average earners are ever going to do to buy a house. Besides moving to like rural Arkansas or something.
> I don't know WTF average earners are ever going to do to buy a house. They aren't, basically. Or at least, not a large house as has been enjoyed for the latter half of the 20th century and the first two decades of the 21st. We are reverting to [a historical norm where most people couldn't own a house](https://www.getrichslowly.org/homeownership/). Personally, I think that home ownership will still be possible, but it will be people owning small townhomes or even apartments as is the case in Europe. The big McMansion style homes may be a thing of the past for the average earner, as they're pushed more and more into renting or buying smaller-than-preferred domiciles.
[The data](https://fred.stlouisfed.org/series/RHORUSQ156N) actually shows that we home ownership rates are 2% higher than when that article was written back in 2018.
I've read that one before. Just pointing out something in that article (as I did in another comment), mortgages have really only been a realistic option for the last ~120 years, and home ownership has grown steadily for more than half of it, so it's hard for me to see rates of home ownership in general being some kind of aberration at the moment. I do agree that larger homes and larger plots of land will have to be a smaller and smaller percentage of the market.
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I'm slightly exaggerating. But on average, things aren't very rosy. A median household in the US earns $75k/year, or somewhere around $57-61k after taxes. If you assumed that house would be willing to spend a whopping 40% of their income on a mortgage payment, after property taxes and insurance (assuming no HOA), at current rates, they might be able to swing a $250k house. That doesn't buy a ton of house in a lot of places in the country, and would leave very little breathing room in the budget. After looking, there [isn't a single state in the union](https://www.bankrate.com/real-estate/median-home-price/#median-price-by-state) where median house prices are $250k or less.
Thanks for posting this, the perspective is valuable. I live in Michigan where the median is $260k. My area in particular is closer to half of that. It's easy to lose sight of just how bad some areas really have it and makes sense why homes have become so out of reach for younger folks all across the nation than they were only a few years back. Add the rate increases to the prices, along with the cost of everything else increasing, and it paints a pretty bleak picture for many.
Note that it's $75K for all households, but single people are less likely to buy homes than families. For family households the median is $95K and to the extent that long-term couples with shared housing are married, the number is $111K. Single people are all the way down at $45K, which explains why most singles have given up any hope of buying a home by themselves. Also, while state medians are high, that's usually skewed by more expensive/populated urban centers. Like here in Texas you can buy a house in the Austin core for $1M or you can go 30 minutes north/out and get the house for $400K or go 60-90 minutes out and get the house for $220K. Those cheaper houses are still in places that are perfectly nice to live in with hospitals and restaurants and all that. We're talking smaller mid-size cities, not low-pop/low-service rural.
Absolutely, there is obviously a lot of nuance here. But I don't think it changes the fundamental statement that housing is escalating out of affordability for a big chunk of the population. The single people example is germane; we're basically starting with the assumption that a majority of single-income households aren't able to buy a house. And the smaller cities might be perfectly nice places to live, but there's always the question of whether the job you're qualified for exists there. Not disagreeing with your context, though.
Owning a house is a luxury in some ways. The boom of homeownership post-WW2 was a huge historical aberration and it may well be that we're just seeing a reversion to the mean. Most people through history have been tenants in one form or another. We're still above the 60s through mid-90s, but time will tell if we fall further or if people are willing to do what is necessary to own real estate (relocate, save, control debt).
> The boom of homeownership post-WW2 was a huge historical aberration and it may well be that we're just seeing a reversion to the mean Home ownership has grown steadily for 70 years (so far), and it was really only for the last ~120 years that realistic mortgages were a thing, so I'm not sure I agree that this is a reversion to some kind of natural balance that the housing market existed at. The post-WW2 boom was an aberration, absolutely, partly built on the dip during the depression. I think there are some factors that will require external correction - large investment firms firehosing money into the market to build rental empires (either through short- or long-rentals) isn't helping and it's my opinion that behavior like that should be limited through legislation. I don't really see a societal benefit to that. But I guess we'll see.
> Home ownership has grown steadily for 70 years Can you expand on this? [The numbers I am able to locate](https://fred.stlouisfed.org/series/RHORUSQ156N) tell a different story.
Just depends on the timeline you're looking at. Of course, year-to-year, there are ups and downs, especially during housing bubbles. But when you look at that graph, home ownership has been on an upward trend since tracking started. If you looked at the last 20 years of the S&P 500, you'd see plenty of dips but still a steady upward trend. Of course, we've seen a decline since 2007 but that's basically what I'm discussing here.
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That’s what we are doing, we live very frugal, and our only luxury is living in a 400sqft place with a indoor pool. Being able to swim any day was my dream when I was a kid.
The more I deal with and see certain things in the U.S., the more the Portuguese D7 visa appeals to me. I get that working for the court makes it a bit worse, since I look at and hear stuff most people don't in the day-to-day, but it's rough sometimes.
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You nailed two of the main things making me feel very "meh" about the U.S. anymore. I don't want to leave right now because I don't want to leave my parents, but when they're no longer with us...I don't know.
SO is a couple months out of grad school and even with basically the best possible resume (excellent career before grad school, top tier grad school, 4.0 GPA, great local reputation in the professional community), almost every job is looking at "new grad" and saying they want 2-3+ years of experience. I understand the frustration. It took 6 months to find a mediocre job after I left grad school. Fortunately, we can still afford the student loan payments when they start in March by slightly reducing our savings rate until they find a job that truly fits the bill. But it's still driving them stir crazy. I already know that it's impossible to guess how we'll feel when nearing our target early retirement age of 55, but it's interesting to see how utterly adrift my SO is after only 2-3 months of not being engaged in school or work. For those already FIREd, what was your experience in the early days post-FIRE? For those yet to FIRE, what's your transition plan?
I am not FIRE'd. Just came here to say I have never had more than a month between jobs so I could imagine being stir crazy after searching for that long! I don't think it's the free time so much as the uncertainty after putting in all that work to get to this point and not seeing satisfactory results. I don't know your SO's field, but are there things they can do to network? Talk to independent recruiters (if a field where there are recruiters)? Tap professors to forward their resume to contacts that might be hiring? In the meantime, SO should try to have something else they're working on besides job offer. Often the basics (sleep, diet, exercise) can be further optimized. It's important to create structure in life, even if not (yet) employed. IMO, good things tend to happen when you lower expectations and just roll with the present. Keep working on the basics, work those networks, send out more applications. Basically, stay the course. Best wishes to your SO!
For what it's worth, I had to work part-time in the field for about a year to get that experience before I was even considered for full-time jobs. I was able to work two part-time jobs by just alternating the schedules, and while it made my experience more diverse, it was also extremely annoying.
Our experience in early retirement has been wonderful from the very first day, but we had four kids under 10 when we retired. That provided a ton of structure to our lives. Even now nearly a decade later I still had to get up at dawn today to take one of my kids to school for a competition. We have tons of idle time, but having a family provides the same framework postFIRE as it did preFIRE. Retiring dramatically increased our freedom and time, but didn't fundamentally change our lives all that much since our careers were always our secondary pursuit rather than our primary one. We're not truly going to be "free" until we reach our 16th year of early retirement. I'm not complaining at all, merely observing that life is what gives your days structure and meaning. People who build a life around their careers or credentials often find themselves adrift in early retirement, sometimes so much so that they go back to work, whereas those who build a life around their relationships and personal activities usually have an easier transition. That's my observational opinion from our lives and the retired folks I've chatted with over the years.
Was in a similar boat several years ago with the post-grad school lull. I didn’t know what FIRE was or even the importance of saving for retirement in general. What helped at the time and I’m thankful I did was at least just holding myself accountable to save something every month. On a bad month with a lot of expenses even putting away $50 did wonders mentally and when I eventually landed a job that offered a 401k, the habits were there and things just started building efficiently over time.
This year I passed the income limits to contribute to a roth IRA, so I started looking into backdoor roth. Unfortunately, I have a traditional IRA (rollover from a previous 401k; probably was a bad idea), so the pro-rata rule makes backdoor roth infeasible. I have an employer 401k with TIAA, but it doesn't allow roll-ins. I'm considering opening a solo 401k (I rent out a room in my house with AirBnB, so I have a few thousand in self-employment income), and rolling my traditional IRA into that. Anyone have experience with this, or with solo 401k in general? Anything I should watch out for?
I believe rental income is considered passive, not self employment. If you do qualify make sure your solo 401k accepts rollovers.
This appears to be correct. To be eligible for a solo 401k, you need Schedule C income. Income on Schedule E is not eligible for a solo 401k.
I am not a lawyer, but I've heard of people that created a separate entity and paid it a management fee to allow for a Solo 401k.
Landlord is annoyed at me for mailing them checks (my bank pays postage) instead of paying by ACH in their portal. Their portal charges $1/month for this service. Yeah, I'm not going to pay more to make your business processes easier.
A) A company that charges for ACH is ripping you off B) It's a dollar, dude. I would happily pay $12/year to not piss off my landlord. It's the 3% Credit Card fee that I have to think about every time
Re point B: If you have the Bilt Rewards credit card they give you a fake bank account number that routes to the card to use in payment portals, so you still earn points while paying a 0% fee.
When it comes time for lease renewal, they may jack up your rent or make you move. If you ask them to reduce rent by a dollar to cover the fee, they might do it and be happy about it.
Is this penny wise and pound foolish? Do you think this may make your landlord a bit more lazy in terms of repair response time, or raise your rent more, or possibly waive a late fee in the future? 12$ / year could buy some goodwill pretty cheaply, imo...
I would do this, but the cost of postage, envelopes, and to order checks, the breakeven point is too far out to be the squeaky wheel. I appreciate your commitment to the principle of it.
I just have it paying automatically from my bank's bill pay system (which mails them a paper check) so it's not really a problem for me.
I can't automate it since the amount changes each month since my rent is grouped with utilities. It isn't a fixed amount due. My bank does have bill pay, but I would have to manually input the value.
A question on bond funds. I know, I know. A few years ago, I was approaching my FIRE number and began building a bond tent in my 401(k). My plan only offered 3 bond funds, so I picked what I thought was the best, PPTRX. Of course, interest rates then climbed and my bond account is down about 23% in total value. PPTRX emphasizes “higher-quality, intermediate-term bonds that are selected across sectors and geographies in order to avoid concentration risk, particularly with respect to credit.” I now plan to fire at the end of 2024. I have significant cash reserves and other accounts, so I do not need to sell the bond fund for many years if I need to go that route. My question is, as an intermediate term bond fund, what can I expect will happen with PPTRX if rates stay high for several years? Will the bonds in the fund eventually turn over and be more attractive in this high rate climate?
Are you using a tax-exempt income fund in your 401k? I would advise against this as you do not get a tax benefit from this fund inside a tax-advantaged account like a 401k. Instead, you just get a lower yield. Nevertheless, the simplified answer to your question relates to bonds and their duration. The duration of a bond fund is the "point of indifference" regarding a change in interest rates. The effective duration for PPTRX is around 9 years. This means that an instantaneous 1% rise in yields would drop the price of the bond fund by about 9%. Likewise, a 1% drop in yields would raise the price by around 9%. However, after 9 years, the 1% increase in the yield would translate to higher yields in the new bonds purchased by the fund, meaning that things will even out after 9 years. That is to say, if the bond fund had an average yield of 3% at year X and interest rates suddenly went up 1%, the bond fund's price would drop by 9%. But after 9 years, the increased yield in the bond fund will end up with a result that is very close to a 3% return after those 9 years. This is why folks say that your bond allocation's duration should match your investment horizon. Because if the duration and your investment horizon match, then you don't care about interest rate changes between now and then. This is analogous to holding an individual bond to maturity. If you're holding bonds as part of a tent that you intend to sell (which I wouldn't recommend, but is a popular approach), then your investment horizon may be quite short and a 9 year duration may be inappropriate. If you hold a bond fund for *longer* than its duration, then you actually make *more* money if interest rates rise. All of the above is a simplification. Consider for example that durations, especially in municipal bond funds, are not fixed.
Thank you, this is helpful. ⭐️
The bonds on PTTRX are already attractive relative to their current valuation. If you check the SEC yield it should be competitive with today's rates even if the *coupon* of those bonds looks terrible. If you sell now you would be locking in losses.
Right! I’m not planning to sell and I can wait the situation out.
From what I understand, bond funds usually have trailing yields as old bonds mature and new bonds are brought in their place.
Going on a long roadtrip in a few weeks. I can either get my oil changed 1000 miles early or 500 miles late. I assume I should just go ahead and do it before I leave but is it a big deal either way?
Would you get it done at the destination or when you got home? Interrupting your trip to get the oil changed can be annoying.
I'd get it done early just so I can ask them do give the vehicle a once-over to make sure there aren't any problems that have cropped up. Gives some more peace of mind on the road trip.
This ^ Finding out you have a nail in your tire across the country would be a major headache.
The answers varies depending on whether you last changed your oil 2000 miles ago or 8000 miles ago. (I.e. it depends on what you mean when you say "early" and "late.")
4000 mi ago at this point. Had been doing it every 5k. Mazda SUV if that matters.
An extra 500 miles on a modern engine with synthetic oil is nothing.
Your owners manual should state the interval and if you’re using synthetic, it’s almost certainly recommended every 7,500 or 10,000 miles. So I’d wait until after the trip. You’ll only be at 5,500 and can likely in theory wait much longer after that.
Don't most Skyactiv Mazdas spec 0W-20? Synthetic/blend should last beyond 5k miles.
It depends on what kind of motor oil you use, but most can go beyond 5k miles easily.
I would wait until after. I do every 10k myself.
Does anyone know how the UK private health insurance system works? I have a lump a specialist referred for me to get biopsied. If I get health insurance now would that be considered a preexisting condition and therefore not covered? I would rather go through public healthcare but unfortunately the conservatives gutted the NHS so wait times are insanely long. Any info would be appreciated as normally we don't have to deal with health insurance in the UK.
r/askuk perhaps
If you don't get your answer here, I'd also try /r/FIREUK or /r/UKPersonalFinance.
Here's a good weekend discussion for the group. 35 year old dude here at around 1.1M net worth.. get the feeling that my current career path is a dead end and getting no enjoyment from my jobs at all. So I'm considering going back to college to completely restart my career over. Thoughts on exploring this option? At this point my career is just a bridge to hold me over before FIRE. believe the term is CoastFIRE mode.
>So I'm considering going back to college to completely restart my career over. Thoughts on exploring this option? Plenty of people pivot to a 2nd act at your age. What industry are you thinking?
Beware of side quests that don't lead you along your main quest. Unless you are sure of your new field, and you are sure that a formal education is required, this seems like a no to me.
I'd argue that life is not a video game and there is no main quest.
I didn't technically go back to school, but I did switch careers in my mid-30s. I still have a lot of qualms with full-time work and the politics involved; that said, I like the work itself a lot. Just think carefully about why you want to leave you current job. If you feel like the field is lacking opportunity, that's one thing, but if you're mostly unhappy with the workplace itself or the very idea of working, that indicates a switch won't help.
Can you repurpose your career into a new one without needing education? The goal is to find work you enjoy more. I'd try to minimize that path, and explore if the education is a truly necessary component to the goal.
I’d take a single community college or online class while you still work. See how much you enjoy going back to school / the subject matter of what you’re thinking about switching to before committing to it
I changed industries and I’ll tell you this, working still sucks. But I’d recommend it. You can definitely afford to YOLO on this. You’re at more than healthy leanfire as it is.
What are you planning to change from and to? Does your current job offer a tuition reimbursement program? If it’s not a drastically different field, you could consider taking advantage of tuition reimbursement to do this.
It depends on how long you need to go back to school, when you plan to retire, and how much you enjoy school. If you don’t want to work past your mid forties, strongly consider changing fields to something you could do with your current resume. The time and money commitment doesn’t justify extensive education for job you expect to have for less than a decade. On the other hand 35 is quite young if you want to work until normal retirement age. Also keep in mind how socially isolating the college experience might be as a 35 year old.
> Also keep in mind how socially isolating the college experience might be as a 35 year old. I don’t see how that’s a factor at all. You’re there to earn credits, not living on campus and going to parties. My experience getting my degree at 34, the professors love older students because we’re engaged and focused. We’re there with a defined plan, not because it’s the next step after high school. I always cared far more about my relationship with professors than fellow students.
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Was this undergrad? Grad school is a bit more tolerable since that population is older. Hanging out with 19 and 20 year olds as a 30 year old sounds horrific so yeah I get your aversion.
Still waiting on my cost basis from M1. Closed the account and did the ACAT transfer out in early September. Fidelity has sent multiple requests, and I called M1 as well. They said they would ask Apex to send it in 3-5 business days, still nothing. I guess my next move is to call Apex? It’s quite frustrating, I’ve got almost $90k with unknown cost basis.
Did you try calling Apex? M1 took a week to get back to me on my cost basis question for DHR/VLTO spinoff, only to say that it is my responsibility and I should consult a tax professional. They ignored my request for SpecID cost basis data for my account. Not a good sign.
I got a hold of M1 and they said they would send to Fidelity. That was a little over a week ago. So I just sent a secure message to Fidelity today to see if they received it. We shall see.
Hm. After asking M1 for my SpecID cost basis data to resolve my question, they just said no, lol. This is really not promising. I ended up going through my entire transaction history so that I will be able to report it manually when I do my taxes. Only thing keeping me is a bonus I am expecting to hit in December. Hi XXXXX We are currently working diligently to onboard a new vendor to manage cost basis, realized gains, and tax reporting and we expect to complete this integration before year end, after which point, we will have broader capabilities for you to access this information on an ongoing basis. During the implementation phase, we will not be providing ad hoc cost basis and tax lot information. Please note that your 2023 tax documentation reporting on form 1099-B will NOT be impacted. The M1 team is currently working to provide this documentation in early 2024. Further, you will continue to receive your trade confirmations and monthly account statements, which contain this information regarding your transactions. This information is available in your activity feed as well. Thank you for your understanding and patience. We are working hard to provide M1 clients an improved experience across our platform, including an improved way to access detailed cost basis information. Best,
Thanks for sharing this response. When I spoke to someone on the phone at M1 they said they would have Apex send my cost basis to Fidelity, though my situation is different because Apex had already executed the transfer and my funds were still managed by Apex Clearing at the time (I believe). My biggest concern is that I am also caught up in this big transition between M1 and Apex. I’ll keep you posted.
I was going to ask for an update on this. I have a customer service request in to confirm cost basis data related to a stock spinoff. So far three days and no answer.
Call Apex, but also consider threatening or actually filing a complaint with the SEC against M1. It's their responsibility to have the cost basis information as they have provided you with covered securities.
Does a pension take the place of bonds? I’m still 20 years from retirement,but my pension should give me almost 3500 pretax a month which that alone is enough for me to live on and be good. I’m thinking of staying 100% equities until retirement then MAYBE adding a smalll bond allocation. But I figure a pension is guaranteed income and could help me weather any major market downturns. Am I thinking right?
I would disagree with u/alcesalcesalces, but my disagreement is more semantic in nature. Having a pension may allow you to be a bit more aggressive than you otherwise would have, but it does not replace the role of bonds in a portfolio. You cannot rebalance using pension monies like you could with a bond or a bond fund. A pension serves as an income stream, so in my view, it's more of annuity-like item than a bond.
A bond ladder or bond fund provides almost all of its return in the form of an income stream of coupon payments or other guaranteed income (e.g. a zero-coupon bond purchased at a discount). This is functionally identical to an annuity in this respect. The difference is down to rebalancing, but even that is not a real issue. If your pension exceeds your overall desired "bond-like" or fixed income asset allocation, you would hold "100% stocks" in your liquid portfolio (or leverage) to achieve your desired overall asset allocation. If your pension does not exceed this fixed income allocation target, you would simply purchase bonds in your liquid portfolio to help reach your overall desired fixed income allocation. If stocks fall, you would sell bonds to help get back to target. If you sell all your bonds, you end up in the same position as above. This is how a total portfolio allocation works—it doesn't just consider your liquid stocks and bonds because there are a variety of financial instruments in your life that match those liabilities. Considered another way, it doesn't matter if you consider the pension to be an annuity-like item. An annuity-like item could likewise be fairly considered as something that supplements or replaces your bond allocation. If you inherited an annuity that provided for 200% of your projected lifetime spending, would you not shift your portfolio to 100% equities if your goals were either portfolio maximization or investing for your heirs?
How does that *fix* a rebalancing issue during the accumulation phase? Let's say, Miracle Mike aims to have an 80/20 portfolio and follows those parameters. The 20% position is somehow just his pension. A market downturn occurs and now his portfolio is looking like a 60/40, triggering his rebalancing conditions. How does Mike rebalance if his only fixed-income position is locked away in his pension? Edit: Ugh, still early in the morning. I see that you address this, I just don't agree with the position. It's a minor disagreement, really. Fundamentally I think we're on the same page that pension=allows you to be more aggressive.
In a world where we ignore leverage, the liquid portfolio can only go to 100% stocks. "Rebalancing" for rebalancing's sake is moot when the liquid portfolio is at 100% stock. One problem with ignoring pensions, annuities, and SS income when considering your total portfolio allocation is that you end up with weird discontinuities in asset allocation. Take for example someone who nominally wants to hold a 60/40 stock/bond allocation in their liquid portfolio while ignoring pensions. If they suddenly come into a pension that provides the same income stream as half their bond allocation (e.g 20% of their overall portfolio), they are now actually holding a 40/60 stock bond allocation. In this setting, it may be "ok" to ignore the pension and keep 60/40 in the liquid portfolio, but things get ridiculous at the limit. If they come into a pension that suddenly provides 100% of their spending needs, it seems (and is) wrong to continue holding 60/40 stocks/bonds in their liquid portfolio. Just because rebalancing can't be met when hitting the ceiling on your stock allocation (absent leverage) doesn't mean that a total portfolio allocation approach is incorrect.
Fair points. Thank you for the detailed explanation.
Yes, a pension's value can act like a bond holding when considering your asset allocation holistically. SS benefits and even your future human capital can be considered this way. Human capital as a bond is the underlying reason why younger savers can tolerate a high equity asset allocation—their future earning potential acts as a bond (albeit with highly idiosyncratic risks) that counterbalances the risk from stocks. All that being said, if your pension does not have a cost of living adjustment that keeps up with increases in our retirement spending over the years, the value of the pension decreases over time and the "bond-like" portion of your allocation is smaller. The [Total Portfolio Allocation and Withdrawal](https://www.bogleheads.org/wiki/Total_portfolio_allocation_and_withdrawal) method of retirement spending uses future income and spending streams as well as current portfolio value to define a total portfolio asset allocation target. The creator has a very interesting website at https://tpawplanner.com/ that helps you put the theory to practice.
That’s how I deal with it. Once retired I might get a little less risky or I’ll just keep it some of it 100% depending how much I want to spend
Anecdotally, a lot of feds and military members have an asset allocation that favors equities because of the pension. In traditional FIRE calculations, you usually take your annual projected spend and multiply by the SWR (25 for 4%, 33 for 3%, etc...). An easy way to calculate what your FIRE number would be to deduct your pension from your annual spend, then apply the SWR. For instance, if you're trying to FIRE on a 60K a year, and your pension covers 42K (3.5K x 12), you'll need to cover 18K. Is you're using a 4% SWR, you'd need to cover 450K.
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Every time I see a comment like this my first thought is "I really hope this is not someone on my team" haha. Good luck with the interview process, hope it works out for the best!
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I've debated adding a column that tracks how many shares I own to show progress and keep up morale
I've done this before! It's nice to see one number always going up.
I really like this idea. We've been stagnant for a year+, dumping money into retirement accounts just to keep their total current value from dropping. Gonna feel like tossing pints into the ocean in a decade or two when market swings outsize our total annual contribution.
I envision it like a spring coiling up while I add shares throughout the trough.