The Inverted Yield Curve

[Bud]

I understand,

Personally I am not ready for a 50 50 split between gov slug bonds and stocks, I may get there some day but not yet.

I have to much enthusiasm for the tech sector and biotech. Big advances coming in those sectors. Tech tail winds: wireless system going 5G (all the new devices that will be able to work on 5G -drones, cars, ect...), self driving technology coming on line. new satelite technology, Streaming, artificial intellegence, cloud technology, electric cars and battery technology.
Biotech is just scratching the surface on the use of stem cells and such. My daughter had her dauughters umbilical cord preseved by a biochem company that does that, in case anybody in our family needs stem cells.
Corp bond market is a way for me to stay connected to comapanies I like. Doing my due diligents on those companies helps me update my overall thesis. Stock prices can go down to half if it wants but won't effect the bonds. Only if company files chapter 11 or 7 does it effects their bonds. Just my thoughts not meant to contradict anybody.

 

[dhays]

I also have a part of our portfolio that we started truly as a hobby, not caring if all was at risk and that's our businesses. I still don't consider them when looking at our portfolio any more than I do our home or boats or cars.

So you consider your home as part of your net worth, but not as part of your long term investment portfolio? Do you consider home equity to be part of your "retirement" portfolio?


Just curious. I don't really look at my home equity as part of my investment portfolio but I do consider it when I am looking at my retirement planning.

 

[BandB]

I understand,

Personally I am not ready for a 50 50 split between gov slug bonds and stocks, I may get there some day but not yet.
.

Was just using that as an example. Not as a split necessarily for anyone in particular.

 

[BandB]

So you consider your home as part of your net worth, but not as part of your long term investment portfolio? Do you consider home equity to be part of your "retirement" portfolio?


Just curious. I don't really look at my home equity as part of my investment portfolio but I do consider it when I am looking at my retirement planning.

Well, we are retired, supposedly, although our hobby businesses got sort of out of hand and other interests we have too, but otherwise....We do go into the office perhaps 40 days a year and read emails every day.

Still we do look at retirement planning and consider our home. We look at all expenses to be incurred per year of retirement and we look at different periods. No home mortgage, but maintenance. The cost of maintaining current home vs. alternatives. Boat expense. Replacements of boats. Our businesses we exclude 100% although the reality is they provide income but if that is more than expected simply means we can do more for charity. We look at the need for autos.

The one retirement planning piece that is most complex I think is long term care. We know one woman with 24/7 nursing plus housekeeper plus chef plus driver. We're aware of assisted living facilities from the cheapest to resort qualify. We're also aware of the point they boot the person out due to them becoming too costly or difficult to care for and then nursing homes as their destination. There we're aware of the finest, but horrified by the fact that so many end up sharing a room in a medicaid facility and often miserable conditions. Only lives lost in our county during Irma were lost in a nursing home that lost electricity and could have relocated the patients across the street to a hospital, but didn't.

As to net worth, not something I really look at. Value of home isn't $X but is "home." It's dollar value only matters if I'd sell it.

Biggest challenge in retirement planning is how long and what health. We did struggle with that one before we retired. Do we need enough to live to 100? At what point do we consider major health issues for one or both of us. Disability was always a concern while working as even though we both had policies, mine would pay very much less than my normal earnings plus disability would mean no more adding to 401-K or to social security.

I see those come here and debating retire now or later and we often give simple answers but it's not something ever with a simple answer. Do you project a healthy economy or do you take precautions against another great depression? What about your health? Who first? Women outnumber men by huge amounts in assisted living and in nursing homes, partly because of life longevity but partly because women more often are caregivers than men.

Although this is decidedly a non-boating thread, how one feels about the economy is definitely part of boat purchasing.

 

[menzies]

Another way of balancing once you are near or at retirement is not to look at the percentage split - but looking at what income you need for two or three years and putting that into bonds. Then if and when the equities market takes a hit you can draw on those for that period and leave the equities to recover.

 

[Bigsfish]

I don’t consider real estate, boats, cars, jewelry, art, gold, ect at part on my net wealth. Yes, I know it is both for my purposes I tend to disregard those assets. I’m lucky in that I retired at 50 and was fortunate enough to have enough money (stocks, investments) to support my life style and never run out of money. Kids are taken care of so if we spend everything they will do fine. I was lucky in business and just decided I didn’t want to work any longer as I had enough money to live out my life. Friends kept working because they wanted the power money brings, I couldn’t case less. So I probably have 75% in stocks and 25% in tax free bonds and I probably won’t adjust that until death. Yes I was lucky in business and investing, I know that and I appreciate it.

 

[BandB]

I was lucky in business and just decided I didn’t want to work any longer as I had enough money to live out my life. Friends kept working because they wanted the power money brings, I couldn’t case less.

Amazing how many people were shocked when we said we were retiring. I remember one saying, "You worked so hard to get the position you have" and I said "I worked so hard to retire." I didn't need my job to validate me. A lot of people seem to and they need a title and power that goes with it. I like the title "Retired" far better than "CEO" or any other business title. Then it was some with both myself and my wife saying "But you're so good at what you do." She told one lady, "I'm even better at doing nothing but playing." I've known a lot of people who never developed any outside interests or passions. I look at a couple like Bill and Melinda Gates. Retired but they sure work hard. We've been accused of that by some but retirement doesn't mean you now do nothing, it means you can now do anything you want to do. We're in SC today and tomorrow and to Charlotte on Friday, then back home on Monday. Busy, but a fun busy.

 

[Bigsfish]

I don’t like the term retired, I much prefer unemployed.

We feel similar to the reason to retire.

 

[drb1025]

I don’t like the term retired, I much prefer unemployed.

We feel similar to the reason to retire.

I use the term funemployed.

 

[dhays]

Thanks BandB. I do keep track of the equity in my home as that is something that I will likely need to use to fund expenses later in life. Maybe just for rent when we don’t want to own anymore. I have other income producing real estate assets where I don’t factor in the equity but simply the projected income they produce. There are other assets whose future value is just too hard to calculate so I figure them at zero.

Of course, that is one of the reasons I will be working for a while longer as I tend to be conservative and a bit pessimistic about future earnings and expenses.

 

[BandB]

Thanks BandB. I do keep track of the equity in my home as that is something that I will likely need to use to fund expenses later in life. Maybe just for rent when we don’t want to own anymore. I have other income producing real estate assets where I don’t factor in the equity but simply the projected income they produce. There are other assets whose future value is just too hard to calculate so I figure them at zero.

Of course, that is one of the reasons I will be working for a while longer as I tend to be conservative and a bit pessimistic about future earnings and expenses.

We look at our home as our permanent home. Now, that can change.

I'm also financially conservative and predicate much of what I calculate on worst case or at least something on that side of the equation. We considered businesses a hobby and didn't invest a dime in them that we couldn't afford to lose, didn't even project any return. We still project no future for them, act as if they could all shut down tomorrow. So, like you, we treat their asset value as zero.

 

[Boat]

I read threads here about people who changed their lifestyle to a cruising lifestyle. They liquidated their physical assets, (stuff). Nobody wanted the stuff that they had cherished and maintained. (hoarded) They end up throwing it away or giving it away.

The more stuff you have, the more problems.

If I had one of everything, I wouldn't be able to find it when I wanted it. This is just to say that you need space to have and organize stuff. It is probably not worth it.

Life is much better if you can embrace, grok, the difference between want and need.

Also extends to nutrition, consumption, indulgence in the most significant ways.


Extends to business, personnel, inventory, liability, bluck.

 

[menzies]

Couple of thoughts.

Regarding our mindset around the house, we see it as two things. After we were empty nesters we actually increased the size, location, and value of our house. Counter intuitive I know. But it was to diversify our wealth away from equities/bonds altogether, and the equity would be there to pass onto the children should we blow through all of our other investments (which we are trying damned hard to do!!).
So we don't necessarily see it as retirement income so much as inheritance money.

To Boat's comment on stuff. We have met up with numerous cruisers who have sold their home and gone long term cruising. One a couple of Australians, and just this summer a couple on a Nordhavn 47.

We have the conversation about what they do with stuff. Not furniture etc., but things of sentimental value, such as family heirlooms, important gifts that they gave each other, and things they had from their children, especially when young. The answer was some went into storage but the more important stuff went to other family members to hold for them.

 

[Bud]

The late life care is concerning. My parents (mid 80's) are getting 24 hour care in there home. The cost for that alone is $260,000 a year. They are in the north east and won't move to florida. I believe they would have done much better in one of these continued care facilities that we have here in Florida. These places seem to take a single payment for life which sounds easier to budget.

 

[BandB]

The late life care is concerning. My parents (mid 80's) are getting 24 hour care in there home. The cost for that alone is $260,000 a year. They are in the north east and won't move to florida. I believe they would have done much better in one of these continued care facilities that we have here in Florida. These places seem to take a single payment for life which sounds easier to budget.

Wifey B: Don't bet on them doing better in a FL continued care facility.

You don't get 24 hour care in them. You're just in a facility 24 hours. In fact, when you reach the stage of needing 24 hour care, they send you on your way.

Single payment is entry fee, but sizable monthly payments on top of that.

Not as easy to budget as you think as they have base fee and personal care fees they add on top and they keep increasing as patient's condition worsens.

Price for two people likely to be in the realm of $120k per year and could be much higher.

24 hour care in the home is superior, if the home care is good, just very few people can afford it. We don't do a good job of taking care of our elderly.

 

[Bud]

Wifey B: Don't bet on them doing better in a FL continued care facility.

You don't get 24 hour care in them. You're just in a facility 24 hours. In fact, when you reach the stage of needing 24 hour care, they send you on your way.

Single payment is entry fee, but sizable monthly payments on top of that.

Not as easy to budget as you think as they have base fee and personal care fees they add on top and they keep increasing as patient's condition worsens.

Price for two people likely to be in the realm of $120k per year and could be much higher.

24 hour care in the home is superior, if the home care is good, just very few people can afford it. We don't do a good job of taking care of our elderly.

One of our neighbors bought into one, a fancy one, he wouldn’t,t tell me how much he just said more than a million. He said they take care of him for life, until death. He was pretty excited about the community and activities. I looked a little bit online but they don,t give the details like your talking about online.

 

[Bigsfish]

After my dad died I was able to let my mother live in their house which was in my name for the years until her death. I had staff of three or four people to take care of her 24/7, one a nurse. It didn’t matter what it costs (real estate taxes were $15K) but it made her happy to be in her own home. They stole her jewelry, Art, silver place setting and jewelry (anything of value) but she was happy. Well worth it and I was happy to afford it. I sleep well at night.

 

[BandB]

One of our neighbors bought into one, a fancy one, he wouldn’t,t tell me how much he just said more than a million. He said they take care of him for life, until death. He was pretty excited about the community and activities. I looked a little bit online but they don,t give the details like your talking about online.

Wifey B: Those that are more than a million may be different. Don't get me wrong, they are all great as long as you don't require true nursing care. However, at the point you become difficult for them to care for, then either you hire a nurse on your own or they will make you move on. One of the techniques used there is the next time you need to go to ER, they call 911 and off you go. Then they say they can't take care of you anymore and don't allow you to return. Difficult to kick you out, but not difficult to refuse you returning from hospital.

Assisted living has changed in many areas as one large company bought more and more and consistently has lowered quality while raising prices.

 

[Boat]

Assisted living has changed in many areas as one large company bought more and more and consistently has lowered quality while raising prices.

WallSt in patient care is bad news, real bad.

 

[dhays]

I read threads here about people who changed their lifestyle to a cruising lifestyle. They liquidated their physical assets, (stuff). Nobody wanted the stuff that they had cherished and maintained. (hoarded) They end up throwing it away or giving it away.

The more stuff you have, the more problems.

If I had one of everything, I wouldn't be able to find it when I wanted it. This is just to say that you need space to have and organize stuff. It is probably not worth it.

Life is much better if you can embrace, grok, the difference between want and need.

Also extends to nutrition, consumption, indulgence in the most significant ways.


Extends to business, personnel, inventory, liability, bluck.

I agree with you completely. Primarily because I feel a bit buried under 4 decades of acquired crap. Fortunately, it seems my kids have decided to try and avoid those same pitfalls. My 29 year old single son is convinced that he never wants to have more stuff than he can fit into the back of his pickup. For the most part he has done it. Last time he moved, anything that didn’t fit in the truck was given away, sold, or left out to be stolen.

We are at the point in our life where the primary project to is to get rid of the decades of detritus that has accumulated.

I have always felt that debt limits freedom. Now I’m also of the mind that stuff limits freedom as well.

 

[dhays]

Wifey B: Those that are more than a million may be different. Don't get me wrong, they are all great as long as you don't require true nursing care. However, at the point you become difficult for them to care for, then either you hire a nurse on your own or they will make you move on. One of the techniques used there is the next time you need to go to ER, they call 911 and off you go. Then they say they can't take care of you anymore and don't allow you to return. Difficult to kick you out, but not difficult to refuse you returning from hospital.



Assisted living has changed in many areas as one large company bought more and more and consistently has lowered quality while raising prices.

A few years ago as we were reviewing our future financial plans I found that in the US (at least a few years ago) the median time patients spent in nursing care was 5 months. The average was 14 months. So, while long term care certainly is an issue that should be considered, I don’t worry about it very much.

More important to me is the area of “assisted living”. Not nursing care, but support such as meals, transportation, housekeeping, etc... There are a lot of financially reasonable alternatives in that space.

 

[BandB]

More important to me is the area of “assisted living”. Not nursing care, but support such as meals, transportation, housekeeping, etc... There are a lot of financially reasonable alternatives in that space.

Wifey B: Definition of financially reasonable is important there. They are not affordable for anyone living on social security alone which is 23% of couples and 43% of single retirees.

In the areas I'm familiar with a single room in assisted living starts around $3000 a month. A Shared room around $2400 or so. However, with any personal services they quickly arise so the starting price is just for the healthiest. Prices go up to $10,000 a month at some facilities, but most are $3000-5000. Not affordable for a large part of our population.

Assisted living facilities face a challenge. They've depended a lot on patients receiving VA Aid and Attendance, especially surviving spouses getting around $1100 or so per month. That eligible population is shrinking.

I've been in some extremely nice assisted living facilities with the residents extremely active and an entertainment schedule to be envied. I've also been in a couple where no one was outside their room doing anything.

You mention the short life span in nursing homes. From some I've been in, I'd consider that a blessing in disguise. Many of the long term care patients in nursing homes are there on Medicaid and the facilities with large numbers of them are the most depressing.

Many who go into assisted living facilities find themselves healthier and enjoying life more, doing better overall than they were. My observations of those going into nursing homes for long term care is they go downhill from the day they arrive.

Now, none of this is a reflection on nursing homes serving for rehabilitation or serving Medicare patients largely as some of those do incredible work.

 

[Boat]

We have talked about a duplex flat, easy wheelchair access. Housing for a helper as well as us. Disability friendly bath and such. When we sell all of our dirt holdings I will probably throw a handful of cash at such a last-stop abode. Maybe locate near medical and ancillary schools to provide a supply of hirable live-in care givers.

People have told me that one day you wake up and realize you outlived all your friends and older relatives. That's when you know your time is coming.

 

[menzies]

We have talked about a duplex flat, easy wheelchair access. Housing for a helper as well as us. Disability friendly bath and such. When we sell all of our dirt holdings I will probably throw a handful of cash at such a last-stop abode. Maybe locate near medical and ancillary schools to provide a supply of hirable live-in care givers.

People have told me that one day you wake up and realize you outlived all your friends and older relatives. That's when you know your time is coming.

Better than having someone else wake up and realizing that they outlived me!

 

[Bigsfish]

If I’m ever in a nursing home I don’t think I would want to live longer.

 

[BandB]

Maybe locate near medical and ancillary schools to provide a supply of hirable live-in care givers.

Not just for those reasons but for medical care. Preferably near a quality teaching hospital. There are areas with great hospitals and specialists for nearly every condition, but other areas where the local hospital and doctors may be very ill equipped to handle a major illness, even to make an accurate diagnosis. I know people who have to drive 200 miles and more to get quality medical treatment for their conditions.

Transplant may be the most extreme example. Most transplant centers want you to live within 2 hours of the facility to be listed for transplant. Then they want you to stay within 2 hours for a good period of time after the transplant.

 

[Boat]

I say I'm NOT doing the pin cushion thing but you never know. I think I'd prefer a quick transition from healthy to dead.


Had one friend who couldn't breath. Throat closed up from a growth and ended up in the hospital. What are you going to do when you can't breath? Same as everyone else, try your best to take another breath. When is enough, enough?


I say I don't want medical care but at some point the options get pretty narrow.


For the next decade or so I need to walk and swim. I chase the cows around. I have one that bugles like a bull elk. I call him my auroch. He looks like this:


https://en.wikipedia.org/wiki/Aurochs

 

[BruceK]

I say I'm NOT doing the pin cushion thing but you never know. I think I'd prefer a quick transition from healthy to dead.


Had one friend who couldn't breath. Throat closed up from a growth and ended up in the hospital. What are you going to do when you can't breath? Same as everyone else, try your best to take another breath. When is enough, enough?


I say I don't want medical care but at some point the options get pretty narrow.


For the next decade or so I need to walk and swim. I chase the cows around. I have one that bugles like a bull elk. I call him my auroch

Shows a great inverted yield curve for breed

 

[dhays]

Wifey B: Definition of financially reasonable is important there. They are not affordable for anyone living on social security alone which is 23% of couples and 43% of single retirees.

Good point. However, every time I read about something that is not affordable for someone living on Social Security alone, I can’t help but think SOCIAL SECURITY IS NOT MEANT TO BE YOUR SOLE RETIREMENT INCOME SOURCE!

Now, I understand that many end up in that situation through events they can’t control. However, I think many end up in that situation through a lifetime of poor decisions. I think there are also many who end up in that situation simply due to ignorance (not a pejorative but they simply didn’t have the information).

Regardless, of how it happened there are many in that situation who need to be cared for now. I just hope that those younger than I are being better educated as to the nature of Social Security.

 

[menzies]

Talking of which - I become Social Security eligible on Tuesday!