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birb_cromble  15hr ago (text post)   122 thread views

Weekly Finance Thread - 2027-06-27

A weekly thread to discuss financial matters - from personal all the way up to global.

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When planning for retirement, is there a useful heuristic for when it makes sense to pull back on contributing to your 401(k) and stashing money in a taxable brokerage account instead?

Right now I'm operating on a premise that looks something like this.

  • Assume my retirement spending base is the equivalent of the highest inflation-adjusted year I have on record.
  • Assume $15,000/year (inflation adjusted) for private insurance until I can get Medicare at 65.
  • Assume Medicare will exist when I'm 65.
  • Assume social security will not be available on retirement.
  • Assume the market between now and my death at 95 will have 5th percentile performance (ie: dogshit)
  • Assume my tax advantaged accounts will be accessible without penalty at 59.5.
  • Add a small yearly buffer as a safety factor.

My thought right now is that I should keep contributing to the 401(k) until I have enough saved so that I can survive entirely on my tax advantaged accounts from 59.5 to 95, based on those assumptions.

Is this reasonable? I've had "you must contribute to your 401(k) or you will die starving in a ditch" pounded into my head for so long that it seems almost blasphemous to even consider alternatives.

As an American, you should at the very least seriously consider a geographical arbitrage exit strategy.

Of course, it's not always feasible due to family and friends, cultural barries, etc. But the retirement math in the US is much different than that in Italy/France, let alone somewhere like Brazil/Paraguay, so I would consider it.

The thing is, you're going to die somewhere and if you are one of the only 5% of people still with enough money to support themselves when they get old, guess what the tax on your pension is going to be? It's like being a prepper after Hurricane Katrina.

Spending money now at least guarantees you'll get something for it, and that something won't be an extra year being cranky and yelling for somebody to change your urine bag.

It's like being a prepper after Hurricane Katrina.

Well Hurricane Rita hit only three weeks later, though I don't know what the fiscal analogy there is.

The analogy is that if you are known as prepper, when SHTF your hoarded supplies become number one target in your neighborhood. You have guns? Well, your desperate neighbors have guns too and nothing to lose.

This is why OPSEC is the most crucial element of survival success in such situations.

Absolutely bonkers take in a finance thread. Obviously there are scenarios you can't hedge against with conventional financial instruments, but there are also a lot of scenarios you can. Edit, to lump everything into one comment/thread: you think furniture and jewelry will somehow hold value when VT won't? Fine china and furniture haven't even held their value now, boomer estate sales being unable to give the stuff away when it represented a sizable outlay at time of purchase is a minor twitter cliche.

(In any case, I for one would a hell of a lot rather have more time and autonomy than more stuff. I suppose the short time horizon strategy is to retire earlier and with less saved, so fair enough.).

OP includes the premise that social security is going to be gone when he reaches retirement. I am not optimising for 'what financial instrument will hold up best if the US goes into recession'. I am optimising for, 'what can I do/buy to make my life as happy and comfortable as possible without standing out from the crowd in times of severe financial hardship'.

Ultimately, in my opinion, if the US ends up being divided into the 20% of people who have full savings for retirement, the 20% who have partial savings, and the 60% who have nothing, then the US is going to go full socialist at lightning speed. It will not be a good time to have lots of money in an accessible pot that the government knows about, no matter how sophisticated the contents of that pot. Britain has already gone through multiple rounds of reneging on benefits and discounts and tax deductability on pensions, because pensions are big lumps of money and there are lots of voters in the UK who don't think they have enough money.

In short, however sophisticated your financial instruments are, it won't matter if the US institutes a wealth tax. I still remember all the breathless enthusiasm about how crypto was going to break Americans free of the government's stranglehold on the money supply, and make taxation impossible because the government won't know how much BitCoin is in your anonymous wallet or what income is going into it or what you're spending it on. Needless to say, none of that has happened, because the government got one whiff of that kind of thing and now mandates full exchange reporting of all transactions, plus using analytics to match activity to users. Anybody who handles crypto anywhere that touches the US is dead meat; there is nowhere you can put value that won't go the same way.

(There is also simply the issue that as you get older and wealthier, more and more people and industries have an incentive to sponge on you. From family to carers to hearing aid providers, everyone knows that the elderly are the easiest segment of society to milk.)

Fine china and furniture are things I recommend not because they keep their financial value but because they keep their actual value. Having bought them, they will stay basically as nice and useful and pleasant to use for the next 50 years. Likewise, the government cannot tax your memories, nor your social circle. If you are interested in time and autonomy then I would suggest attempting to arrange for sabbaticals now rather than saving up for retirement under circumstances that you do not yet know.

As a small point of order, I don't think social security will be gone - I just think it won't be 100% of what should be available, and I'd rather ignore it entirely than try to predict what the real percentage will be.

Fair. This is overlapping partially with my thoughts to the effect that, given the future is more radically uncertain than usual, and I don't have enough money to meaningfully aim for FIRE or something like that, it would be wise to obtain things now that have long-term utility in the event my salary drops sharply. So I've been thinking about what those might be.

Spending money now at least guarantees you'll get something for it

That's part of the problem; I'm not really sure what something I would get. I'm pretty happy living a simple life. I'd rather do what I can to secure my current life as much as possible, rather than do anything fancier.

Antique / good furniture is a gimme - long-lived, beautiful, utilitarian. Similarly good china, good cutlery. A nice bathroom. Appliances, tools, robovacs. Jewellery can be a pleasant way to store value in a way that's more visual than a stock certificate. A good fountain pen.

Social clubs/events likewise. (Note that this is a do as I say, not as I do, kind of situation :P). The kind of hobbies that require some equipment. I have friends who fly Cessnas and that seems awesome. Balloonists often co-buy balloons.

Travel isn't a bad way of spending money. You can get too into it, but IMO occasionally going to a nice hotel and getting a couple of tours is still a pretty good way of seeing 'oh, that's what is like...'. I can't be arsed with all the budget backpacking stuff, I'm far too soft for that.

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