No. Nobody is saying this anywhere but the newsletter circuit but "retirement" will likely be revealed to be an aberration for about five generations - those that were able to retire between 1933 and 2040. Do not expect to retire, do not shape your future on your ability to retire, absolutely keep retirement as a goal but recognize that it's not an entitlement the way it has been portrayed lo these many years. The 'boomers will likely be the last generation to retire with any regularity. The secret to retirement is "magical" compounding interest and we're entering a period of potentially a decade or more where interest doesn't compound. For the past 15 years it's been compounding at half the rate everyone was expecting it to and that's punched a giant hole in the economy that nobody really wants to talk about. Get good with cold frames. Those who succeed at intensive agriculture will enjoy a better standard of living than those who don't. Sorry to be a downer. The tea leaves are particularly bitter and cloudy this morning.Am I going to be able to retire? Will the bit I've saved now actually add up to enough, or are the markets going to become more unpredictable too?
Eh, my political and financial tea leaves have been bitter for a few years now. Think I'm going to graduate, start a little chicken farm, and learn sustainable agriculture with my wife. Trying to learn how to make and fix stuff since I'm skeptical that we will continue to enjoy the plenty and ease of access to all sorts of things that we do today.
The two books I recommend are Radical Homemakers and 5 acres and independence. I fought tooth and claw for what you want to do. Unfortunately my wife's success depended on an urban density that made this approach largely impractical. Still, dreams die hard. I remain on the Whatcom Farmers email list.
A broadly diversified US equity fund like VTSAX had a CAGR of 10.25% from 2003 to today. That's a hair over the 10% that underlies many projections about retirement investment.For the past 15 years it's been compounding at half the rate everyone was expecting it to
Yeah but pension funds don't get to go "pile it all into SPDR" because diversification is a hedge against disaster. Take it further: VTSAX is at 17% for the year! Yet CALPERS made 6.7% which is under their 7% goal. And thing is, once you miss a goal you don't get a do-over. So why don't they pile into index funds like everyone else? Index funds that buy what works? How 'bout some of those marvelous tech stocks? I mean, what could go wrong? After all, things with the Nifty Fifty worked out so well: So yeah. If you're golden in 2013, and you don't touch it, and you don't have greater expectations, and you needed to make 10.25% that you could get out sixteen years later, VTSAX works out fine. But if you live in the real world, your goal has been 6-7%. And you've been making 3-4%. And the PBGC has $1.7T in insurance, an annual budget of $423m and there are 19 trillion dollars worth of pension obligations in the United States. Which, by the way, now generates 95% of all the positive-cash-flow bonds in the world.
So my idea of moving to the Methow isn’t a bad idea, then, assuming that it doesn’t all burn down.
