Posted on 06/26/2017 7:45:52 AM PDT by SeekAndFind
Edited on 06/26/2017 8:44:25 AM PDT by Admin Moderator. [history]
I get that..................
“There is an imbalance in that equation. “Ethically” belongs on both sides.”
True.
“For both cases, it is a matter of law, and laws can change.”
And I can walk.
Municipal bonds? Do you know how many cities are going to go belly up in the next decade due to pension obligations? If You want 1 cent on the dollar return, then buy municipal bonds.
Is it enough?
It depends on a lot of factors:
- how old are you (65? 62? 55?), which links to
- how many years of retirement do you expect to have
and
- would you be happy if you had just enough money, or do you want to have some left in your estate for family (or safety, in case you live longer than expected.
- what is your expected burn rate?
- what is your guess at inflation?
- how much “risk” are you willing to take on the principal in order to mitigate inflation eating away at the initial million bucks?
- and do you have any other significant income, like Social Security or pensions.
Basically, there are guidelines for spending which aren’t a sure thing. Suppose you invested in a conservative mix of stocks and some bonds. And, also suppose you spent roughly 3% to 4% of whatever you had on hand each year. The hope is that the amount the investment grows will allow you withdraw this much while compensating for inflation, and having it last 25 or 30 years.
So, figure the million bucks is worth an inflation adjusted 40,000 per year. You’ll eat into most of it by the end of your life, but YMMV, because of some of the factors I mentioned above. That amount is real helpful in most parts of the country, but in metro areas or the coasts, it will likley become tight over time.
But, things can go wrong—like a bear market combined with a burst in inflation. Having a million bucks is a lot better than not having it, but it isn’t an absolute guarantee of security through a long retirement.
Is that helpful?
Rent control is a factor, though. If expenses go higher but you are not permitted to raise rents enough to cover them, you margin goes down. If it passes after the fact it devalues your holdings as it increases risk to any potential buyer.
Of course. I don’t know why I wrote rent control, but I would never want to buy in a location that either is, or is likely to go rent control. I guess around here you’d want a somewhat upper middle class area that is gentrifying up. Because a lot of middle class areas are headed down in socioeconomic levels. And that is where, in the future, politicians will come whoring for votes by stagnating rents.
Some years ago when mrs abb & I began planning all the things you are contemplating, I tried to read anything and everything I could on personal finance. I figured I had to learn it for myself, because it was our money. Subscribed to Money magazine & Changing Times, bought several books from Business Book Club and read them all.
This was in the days before the internet came along - late 80s and early 90s.
Out of all of it, I would recommend regular reading of Kiplinger’s Personal Finance Magazine (formerly Changing Times). Down to earth, written in a plain fashion, and time-tested advice.
Most of their stuff is online, if you want to save the subscription cost.
One other thing that has been invaluable to us is a detailed budget. ALL income and ALL expenses documented and put in a spreadsheet. That way, we could predict with some degree of comfort what future expenses we would face, based on past lifestyle.
Thank, Abb. My dad used to get Changing Times and I know he also read Kiplinger. Good advice.
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