Thanks Bill I was hoping you'd chime in. It is very interesting on how many different views there are on things but I like hearing a lot of different opinions before making a decision. I'm still reading up as well, Thanks for that pdf Steve, it's amazing how Buffet turned that company around.
It's possible for me to retire when Im 55 and my pension only goes up slightly year to year after that if I continue working. It's one of those things where I have to calculate when it's best to retire. If I want full salary for my pension then I'd have to work until I'm 75, there's no way I want to do that because I wouldn't want my coworkers to have to carry my weight, my job is pretty active and we have to dive in some bad conditions, lift heavy pumps, etc. I also am a firm believer in doing what you want to do while you can, who knows if I blow up with cancer or have an accident. I know a lot of guys who worked a few years until retirement and then had a heart attack and never got to do anything and man that's a damn shame.
When I ran the computer models at work, if my deferred comp made at least 3 percent gains every year then I'd be making the same amount of money withdrawing a bit from it and adding it to my pension and could live that way until I was 95 before the deferred compensation ran out. It's very tempting. However, if I plan poorly or if my mutual funds tank within the next five years then there's no way I could retire at all without making severe sacrifices, and like I told my wife: there's no way I'm selling that boat
I heard similar things about the bond ratio that Bill mentioned, although the way I heard it was you subtract 10 after halving your age which means I should have 40 percent in bond funds. Right now I'm only carrying 10 percent, mainly because I had been watching the funds and tracking their growth over time and had broken it up into different percentages of foreign, small, mid and large cap. But I need to plan my exit strategy for when I retire. I'm hoping if I keep pretty much what I have now at almost the same ratios and just convert say 20 percent into bond funds then I should be able to ride out any shortfalls for at least ten years. I wish I knew more about this when I started out at work, but at the least I started throwing a bit at a time in my deferred comp. I'm trying to learn as much as I can right now because a lot of it is really confusing. My game plan will include working part time somewhere, at a spear shop, doing scientific collecting of specimens, or working as a contractor for environmental surveys.
Again, for most younger spearos this is probably the most boring thing around you could read and I could have just hit up my friends on a sidebar but I wanted the younger guys to at least think about what we are talking about. I bring this up to every young staff I know and I usually recommend they check out vanguard as it's an easy way to start a Roth IRA if their work doesn't have one. Had I listened to my old professor when I was a freshman in college I'd be way ahead of the game now, he recommended that you set aside one dollar a day and put it into funds (at the time he said cd's because they weren't dead like they are now), with modest growth in 40 plus years you'd have a lot of money. I tried it for a few months and then blew the money on car stuff. It's hard to think about your future when you are 18. My friends at work are all mid twenties to about 40, a lot of them blow unbelievable amounts of cash on starbucks every day and other things without ever planning for the future. I think it's like better than 50 percent of the country doesn't have any real investments and that's going to be scary when they grow older and are scrambling too late.
If you are young and working part time and can set aside 100 a month into a decent mutual fund and keep it up, you will be blown away at what you will end up with when you hit 65. Of course that means cutting back on your speargear and man that's a hard bullet to bite