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  1. SJ

    If this is the advice for Gen X I can’t imagine what the advice will be for my children (youngest Millennials and oldest Gen Z). Despite whatever benefits Boomers say we’ve had (and they haven’t???), many younger Gen X ers and Millennials are having a hard time clearing student loan debt and accessing or maintaining career-level employment. Boomers didn’t have the expensive college tuition, nor did they, in the immediate years upon graduation, have to circumvent the biggest recession since the Great Depression. I am on the cusp between Gen X and Millennial and I can attest that many in my generation have had to delay the big lifetime milestones like first home purchases and starting a family in part because it wasn’t financially feasible. I know several that are still balancing student loan debt, mortgages, retirement investing and their own children’s 529 plans. And as I’m sure you know that delay matters. A late start in investing greatly affects the power of compounding interest. My husband and I are doing the best we can as are many readers of this and other personal finance blogs, but the cards we were dealt with are not the same as yours and a few of our “cards” are concerns previous generations have never had to deal with… specifically the extremely dangerous global threats created by climate change (natural disasters, resource scarcity and unhinging geopolitical structures). What you are saying is that many Boomers look at the future of Gen X and say to themselves “It all looks hunky dory.. I will go ahead and use up all those resources just on myself”. That, unfortunately, is not the perspective I have about my generation’s future and I have still much graver doubts about humanity’s youngest generations. In their lifetime, probably mine (and perhaps for a few Boomers ) the chickens will come to roost. The bill will be due. There will be no more kicking the can down the road. And honestly from talking to my own Boomer mother… she knows it’s true. She doesn’t deny it… And yet, like you and others of a particular age, she is steadfast in maintaining her intensive carbon-polluting, resource-consuming lifestyle. “The future be damned!” ” I won’t be around anyways!” And you know what I tell her.. fine.. go ahead.. but just remember this: the river runs downstream. I am now and forever committed to the survival and wellbeing of my children and the protection of the planet that they will inherit.

    • SJ, I’d be the first to admit that as a Baby Boomer, I had the enjoyment of a pretty affluent childhood especially when compared to what my parents grew up with during the Depression. As the parent of two Gen Xers, I really believe that my generation has gone way overboard in trying to make their lives better than ours and perhaps that has set them up for some kind of failure.

      I also have to state that I grew up with college debt and took 10 years to pay mine off. In addition, in my thirties our country went through the oil crisis and by the time the 80’s rolled around saw a recession and mortgage interest rates in the teens which definitely complicated my life and others.

      I greatly admire you feeling that you need to help your children with their challenges and they have many, because that is what parents do. The purpose of my writing this post was to simply say that when you’re young and in the prime of life, you should not look for easy roads to success and assume that it will be there for you. It might be, but you have to plan for the “what if’s” in life. I’m sure that your children will based on what you’ve said.

      Thank you so much for sharing your thoughts.

  2. These are great tips as always Gary! Might even say they’re rather groovy tips! 🙂

    #2 is good, but one I struggle with a bit. I don’t think Vanguard or Morningstar have any better of a crystal ball than the rest of us. That said, we certainly could have another lost decade – chances are that we will at some point.

    The S&P 500 lost about 21% over that ten-year stretch. A 60/40 portfolio lost just under 5%. Another reason to consider having bonds in your portfolio as someone gets closer to needing the money.

    • I think taking a conservative approach with your investments comes along as you progress toward retirement. The time to be somewhat aggressive is when you’re younger and you can look at the long time frame as an asset to grow your money. I definitely think that the market is a important part of building your financial wealth, but too many people speculate wildly and that can be dangerous. Thanks for your comments, Brad.

  3. Dangerous assumptions indeed. I think your idea of being conservative and scaling back makes complete sense. Plan on needing less, earning less, and inflation going up is not a bad way of making sure you are ready to retire. Then if you end up with more cash then expected you can spend more. Bonus!

    I personally would retire as soon as possible, but may be working until 60 for a pension. I don’t want to wait to have a heart attack and for my son to be out of the house before I can enjoy my time with him.

    • Mr. DDD, you have a great point when you say by scaling back and being conservative, you might wind up with some “extra” money. While shooting for early retirement is a great goal, there’s a lot of uncertainty in the additional years that you’ll be covering with your nest egg. I have to laugh, I often could be quoted as saying that I wasn’t going to keep working until I was found slumped over my desk and that retirement was always on my horizon.

    • Mrs. Groovy

      Mr. G was planning on working until he was 67 until we figured out this early retirement thingy. Luckily he was able to do it at 55, although he could have counted on keeping his government job until then. But even if he stayed until 57 rather than 67 that would have been two more years of being miserable.

  4. All good thoughts. I think people are way too rosy about staying in the job market as they age. Unless you have your own business, it can be awfully hard to guarantee that you’ll still have a good paying job as you age. Employers everywhere seem to prefer hiring younger employees who cost less or outsourcing jobs entirely.

    As for inheritance, it’s hard to know your parents’ full financial picture (as well as anticipate medical costs.) Most people just don’t share their money situation, even with family members. Plus, assisted living costs are incredibly high. The average cost in the US is $3550 a month, not including any extras.

    • I’m always surprised when I hear people make these kind of assumptions, Emily. And I have to restrain myself from making a sharp comment to them. While my own parents made every effort to leave me an inheritance, that attitude came from the struggles they faced as children during the Depression. The Baby Boomers seem to be spending their money (like me) and not exactly making it a priority to leave it to their kids.

  5. Great points Gary! The idea that you will be able to work up until (or after) your full retirement age is definitely something people have to think about. We know many people who had that plan, but health issues or caring for elderly parents ended those plans. As far as inheritances go, I believe I will get an inheritance – but I NEVER think about it. I wish my parents would use their money to enjoy the rest of their lives. Unfortunately my dad has Alzheimer’s – so their plans have drastically changed. Our longer life spans will definitely impact the amount of money we will have to pass on too. We will try to leave plenty for the kids – but we’ve always shared that you should never count on it.

    • Maintaining your standard of living when you retire is something that everyone has to give sincere thought to. There are basically two ways to have more money, one is to earn it (benefits, investments, pensions, part time work etc.), two is to cut expenses. Most people choose to downsize so that they can handle rising costs of retirement and healthcare. I appreciate you sharing your family’s story and wish you the best.

  6. Not something that I’ve done but know people who do or say this: 1. I love my job so I don’t plan on retiring. Yes, but what if that job you love goes away? Or you get sick? Or something else? 2. I don’t want to sacrifice having fun now when I probably won’t even live a long life. That last one really does’t make much sense to me!

    • Generally speaking, when you’re young, you think you are immortal in the sense that you don’t really have to worry about what you’re going to do long ahead in your future. You live for the moment. While most of us do that for a little while, being grown up requires you to have a plan. And that plan should include dealing with the “what if’s” in life. It’s not as much fun, but it’s a necessity. Thanks for your comments, Tonya.

    • Mrs. Groovy

      That last comment disturbs me too, Tonya. Some people would rather be in denial about the future than deal with it. Also, it’s almost like asking the universe to make sure your life is short. Who wants to live like that?

    • The “you only live once” excuse really burns me. You don’t need a lot of money to have fun. Last night Mrs G and I went to a local supermarket where 25 cent soft ice cream cones are served. So for 50 cents we had a blast. Those who need a lot of money “to live” have a serious lack of imagination.

  7. Excellent list, Gary!! Luckily, I’m pretty risk averse so I always try to assume conservatively when it comes to our post retirement income, etc. It’s always better to have more money to live off of than to have to figure out a way to live on much less than you were expecting.

  8. I was pretty bummed when Bogle himself forecasted slower growth overall for the coming decades domestically. Just about 3% less than the historical average we’ve enjoyed. 3% less compounding power is a heck of a difference, you would have to half your original projections! Bummer!

    • Bummer indeed! One way to deal with that is to use your asset allocation so that you can cover the various segments of the market, since there always seems to be some areas that grow even when the market isn’t growing. But if I really had the answers, I’d be typing this reply from Tahiti. 🙂 Thanks for your comments, Lily.

    • Agreed. Future returns 3% below normal is going to hurt. This will probably be a good environment for real estate or AirBnB. Real estate done right is a great way to boost a portfolio’s overall return.