So what happened with the DOW today −457.21

[progree]

38. Actually, I had in mind the people who need their retirement money, not well-off people

who don't need to live off their retirement savings. What I wrote:

If one doesn't need any of their retirement savings in retirement, yeah, it doesn't matter what the heck one invests their money in. But for most who aren't so lucky, then the risk of keeping up with inflation and not running out during retirement is the risk that matters.

I was thinking of the vast majority of Americans when I wrote about people needing to withdraw say an average of 4% (or more) annually of their initial retirement account in retirement, increasing with inflation, and the thousands of monte carlo simulations that show that a high equity to fixed income allocation in the beginning years of retirement have the lowest probabiility of running out retirement, when all scenarios are weighted by their probabilities. As opposed to obsessively fixate on just one extremely low probability event like a Great Depression near the beginning of retirement. Where probably everyone is screwed anyway.

All of the post WWII bear markets recovery times have been 7.5 years or less (the 74-75 and dot-com were 7.5 years and 7.2 years respectively) and the other 3 were 5.5 years (housing bubble), 1.9 (1980) and 1.9 years (1987). And these ignore reinvested dividends, which would shorten the recovery times somewhat.

One of the big risk factors of retirement is longevity risk. The other is unexpectedly high expenses, such as medical and long term care. Another is higher-than-expected inflation. I rank these scenarios as higher in probability than a Great Depression 16 year recovery time stock market, and that's why I feel I need the growth that only a high equity allocation can provide.

I don't think I'll need 4%/year withdrawals, if things go well and I don't live past about 85. But I am concerned about healthcare costs -- e.g. studies by both Fidelity and the Employee Benefits Research Institute of a 65 year old Medicare-covered couple will pay on average (or is it a median, I forget) about $280,000 in out-of-pocket medical costs including premiums over their lifetimes. And this doesn't cover long term care costs, e.g. nursing homes (which BTW aren't at all covered by Medicare). I don't think it includes vision, dental, or hearing either (none of these BTW are generally covered by Medicare).

in response to:

Your situation sounds like you are toward the better off end, that is not the reality for the vast majority of Americans.