One of the keys to an effective retirement plan is to keep it as simple and straightforward as possible. To help assess whether Morningstar.com readers and Morningstar followers on Twitter are adhering to that philosophy, I asked them to summarize their own retirement strategies in 140 characters or fewer. (That's the character limit that Twitter imposes on tweets.) I asked respondents to post their "retirement haiku" on Twitter, using the hashtag #MstarDiscuss, as well as in the Investing During Retirement Forum of Morningstar.com.
Responses poured forth, especially on Morningstar.com. Many posts centered around the importance of living within one's means in the years leading up to and during retirement, while other responses focused on investing those savings well. Other respondents interpreted my query holistically, weaving together both financial and lifestyle wisdom for a successful retirement.
To read the complete thread or share your own retirement strategy (remember: brevity! 140 characters or fewer), click here (http://news.morningstar.com/articlenet/article.aspx?id=614323) or tweet using the hashtag #MstarDiscuss. (You can also follow me on Twitter @Christine_Benz.)
'You Never Had It; You Don't Miss It'
Many respondents advised sticking to the basics in the years leading up to and during retirement. And the most fundamental aspect of any successful financial plan? Making sure your outgo doesn't exceed your inflow.
Chief K believes that it's easier to scrimp when you're young than have to do so later on. To wit, his strategy is to "live below my means now, to afford life at my means later. Easier to have fun if young/poor. Harder if old/poor. The second option stinks on ice."
For Offthegrid, building wealth for retirement means staying out of debt and making the maximum retirement-plan contributions. "No debt = low expenses. Max 401(k) deductions teaches how to live on less. Will get raise in take-home at retirement."
Rumljo is also a believer in automatic payroll deductions, and automatically increasing those deductions when you're lucky enough to get a raise. "Have half of every raise deducted from your paycheck and put somewhere you can't get at on a whim. You never had it; you don't miss it."
For Galeno, having a healthy savings target is a good starting point; so is making sure your planned withdrawal rate is in a sustainable range. "Save and invest 20% of gross salary until you have enough to retire on an annual 3%-4% of portfolio value," this poster suggested.
'Pray for Steak, Not Spam'
Other posters stayed focused on investing when crafting their responses. Yogibearbull's strategy is "Balanced: core and explore with tactical allocation."
The balanced approach also appeals to Mysticaltyger, whose minimalist strategy is to "invest in a top-performing balanced mutual fund with below-average costs such as: Vanguard Wellington (VWELX), T. Rowe Price Capital Appreciation (PRWCX), Mairs & Power Balanced (MAPOX), Dodge & Cox Balanced (DODBX). Hold for life."
Myshkin agrees that keeping investment costs down and making sane fund selections is essential to a good outcome. "Low turnover funds, low cost," this poster wrote. "Allocate assets. Pray for steak, not spam."
Dave Schmarder (@DaveSchmarder) is also looking to stay away from low-quality meat products, quipping via Twitter that "I want an Alpo-free retirement."
Taylor Larimore believes that simplifying things makes life easier on everyone. "At my age (89) and having lost my wife of 62 years," this veteran Boglehead wrote, "one thing is very clear to me--the importance of simplifying our lives--for ourselves, our caregivers and our heirs."
Dr. Bobb laid out the following straightforward strategy. "Buy blue-chip stocks with a P/E below 15 and a yield over 3%. Don't sell a stock unless there is a good reason. Also, buy long-term investment grade municipal bonds when yields are over 5%."
Jomil is similarly focused on income production. "My plan was to diversify income and simplify investing, two seemingly contradictory goals," this poster wrote. "It took doing research and choosing options that I felt were best for me."
Meanwhile, Chas63128 is employing the total-return strategy known as bucketing, which I've frequently discussed on Morningstar.com. This poster wrote, "I follow Christine's bucket approach keeping in mind the bond to stock percentages I am comfortable with." (Although I'd love to lay claim to originating the concept, financial-planning guru Harold Evensky pioneered the bucket approach.)
Other posters said their retirement strategies revolve around both saving enough and investing well.
The following sensible retirement recipe came to us courtesy of JMcCart, who advised, "Auto-invest 15% of income: 401(k), IRA; live below your means; have 'cheap' fun; no debt; low cost funds; diversify; rebalance."
Rohit33410's approach is similar--with a dash of modesty. "No Debt. Low-risk, low cost funds. Humility. Sometimes good returns are good luck/timing rather than great skills."
ColonelDan outlined his retirement plan as follows: "Simple, steady bucket system of solidly managed dividend-paying funds; a balanced asset allocation; less outgo than income; stay debt-free."
Meanwhile, Badgerstate's tack is to "enjoy life now and once retired by living below means, saving beyond 401(k)/IRA, holding diversified stock portfolio, buying on dips."
'Retire When All Systems Go!'
For other posters, quality of life in the years leading up to and during retirement is the name of the game. HerbDeno's main goal is to "stay healthy; I'm more concerned with running out of life than running out of money."
Young Lion is also a believer in the idea that properly investing in one's physical and mental health is at least as important as selecting the right financial investments. "Save aggressively, invest conservatively, be properly insured," this poster wrote. "View physical health as an investment and 'dollar cost average.' At least 30 minutes of exercise a day, every day. Use the principles of 'asset allocation' to protect your mental health. Faith, family, friends, volunteering, and so on. 'Markets' move in cycles . . . there will always be a bright spot in your 'portfolio' to allow you to keep perspective."
Orygunduck--along with many other posters--believes that the best retirement plans are holistic, weaving a healthy, happy, and productive lifestyle together with a sensible portfolio plan. This poster's six-step strategy revolves around "1) Preventive medicine, weight control, exercise daily; 2) Reliable income from income stocks; 3) Quality family time; 4) Travel; 5) Hobbies; 6) Volunteer."
Ohioknight was kind enough to mention me in his holistic retirement plan. "Healthy lifestyle. Live within your means. Invest 15+%. Read Christine. Love life . . . it's too short."
Pavlov's formula for retirement is similar. "Live well below my means and save the rest. Invest wisely. Live a healthy and fulfilling life. Give back. Retire when all systems go!"
Ditto for Zorkl55, whose strategy is to "stay within reasonable means, accept financial limitations, and live with a rich emotional engagement in life."
Retiredgary was also succinct: "Have diversified investments. Plan for a long life. Manage expenses and taxes. Have fun, ignore trends and status, and do what you like and want."
Darwinian's retirement strategy packs a punch with just four words (and a nod to actor Leonard Nimoy): "Live long and prosper."
For GuppaZ155, a successful retirement revolves around marriage and family as much as it does a healthy financial picture. "Spend and enjoy a lifetime finding the right partner, raising a family, and accumulate assets sufficient to allow for us to maintain the same lifestyle in retirement that we enjoyed in our working years. Plan with spouse for the next phase in life, having fun, being a good person, and living within our means, so we can leave a legacy to our family, friends, and those in need."
Finally, Andy Brooks' tweet is an encouragement to other retirement planners to dream big. "I hope to have several noncorrelated groups of assets producing earnings while living life to its fullest . . . and world peace."
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