Wednesday, October 29, 2014

The Sarcasm Report v.191

October 28, 2014
7 surprise retirement expenses

As a retiree and a writer of sarcasm reports, how could I resist clicking on that link?

1. Unexpected expenses.

The first surprise retirement expense is a group of surprise retirement expenses? Welcome to the world of recursion! Fantastic! I immediately searched the Internet for more information. As seen in the following link, it turns out that there are 7 unexpected expenses.

October 28, 2014
7 surprise retirement expenses

1. Unexpected expenses.

Help me! I'm caught in a recursion loop. Oh, I see what they've done here. I'm supposed to move on to the second surprise retirement expense in the list. Got it.

2. Don't delay investment decisions.

I'm already retired. No time like the present to stop procrastinating! How is this a surprise retirement expense though? Perhaps I'm missing something.

3. Timing your retirement.

If you time your retirement poorly, surprise! 2000? Bad timing! 2007? Bad timing! 2014? Who knows?

4. Playing it too safe. We need income in retirement, and the temptation is to protect our principle and live off the interest. But that's almost impossible in these days of ultra-low interest rates. Instead, design your portfolio to produce total returns of 6 to 7 percent, even though the interest you get might be closer to 3 percent.

There is definitely a temptation to protect my principle (a basic truth)! Agreed. That's why I write sarcasm reports! Oh, wait. Do you think he meant principal (my nest egg) instead? Well, yeah. I'm trying very hard to protect it too.

I'm reminded of a rhetorical story. I owed the loan shark $10,000 and he wanted the money within a week. I told him that I could scrounge up $5,000 safely, but it was almost impossible to come up with $10,000 in these days of ultra-low interest rates. He said that if I didn't cough up $10,000 then he'd shoot me in the knee cap. That got me to thinking about designing a riskier portfolio that could produce 100 percent returns in just 7 days. Two days and a trip to Vegas later I offered the loan shark the following deal. $0 or bust! Not unexpectedly, he shot me in the knee cap.

It's what he said next that really made me laugh though, "I still need that $10,000 from you!" I replied, "Good luck on that, chump! I lost your $5,000 at the roulette table in Vegas! Just one bet! All or nothing! It was your money and therefore a risk I was willing to take!" Oh how we laughed over that one. He definitely appreciated my sense of humor. That didn't stop him from shooting me in the other knee cap though. What a surprise retirement medical expense that was! Never saw it coming!

That's when I decided to ask how many more bullets he had left in his gun? I can't say that I particularly cared for his answer. It ended well though. Fortunately, I met another loan shark. I needed income in retirement! $10,000 to be precise! I am still working through the details of how I'm going to pay him back. I probably just need to build an even riskier retirement portfolio and head back to Vegas.

5. Figure in inflation.

Surprise! Although inflation has been around for more than a century, this expense still manages to surprise retirees. Why is that? I wish you could have seen my face when reading it. I gasped in horror at the unexpected!

6. Falling victim to fraud.

You mean like designing a retirement portfolio to safely produce total returns of 6 to 7 percent when the 3 month treasury bill yields just 0.02%? That kind of fraud? Because if the retirement portfolio can't safely produce total returns of 6 to 7 percent and I am relying on it to do just that, then hello surprise retirement expense!

7. Selling your life span too short.

I could live long and my nest egg could run dry? This is a really surprising retirement expense. It has never even entered my thoughts! Has anyone else ever considered it?


Mr Slippery said...

I am glad you broke out of the recursion loop, because as a reader, I would also have become stuck. Close one.

The "list" format is very popular in financial media these days. The template: N reasons "statement". I always feel less informed after reading one. Almost enough to buy stocks, which is what nearly all of them conclude.

Stagflationary Mark said...

Mr Slippery,

It was definitely a dangerous moment for all involved. I didn't realize the seriousness of the matter until it was too late. Fortunately, I had seen Groundhog Day. While trapped in the loop, I worked on my ice carving and piano skills.

I recall you mentioning the "list" format in the past. Still not a fan? Shocking!

I swear that I clicked on that link with just one thought on my mind. Sarcasm Report! It exceeded my expectations. I almost stopped at the recursion loop but the "we need income in retirement" caught my eye. My first thought upon seeing that was...

Yeah, well, people in hell "need" ice water. Good luck getting it! Sigh.