Working Toward Retirement – September

It’s been another great month in our retirement investments. My work 401k rate of return is currently at 34%, my Vanguard is currently at 43%, and Christy’s Betterment account is at 44%. But how long will the good times last?

Christy recently read a Market Watch opinion piece on the roaring ’20s and it’s similarities to today. There is no way around the fact that we will experience more market crashes, recessions, and inflation for as long as our system is in place, but good times like these well help raise our average returns over the next 16+ years.

I’ve heard before retirees that saw their retirement savings cut in half during the 2008 market crash recouped nearly all of it a few years later as the market shot back up, as long as they remained steadfast and didn’t pull out of the market. I also heard a quote from Warren Buffet regarding a recent drop.

A reporter asked him about his portfolio losing a b-b-b-b-b-billion dollars during the drop. He replied, I haven’t lost anything because I haven’t sold anything.

I understand that our retirement balance is based off the current shares and their price per share. What I don’t get is, how you could lose nothing during a crash, even if you didn’t sell. I am still learning and growing, but I would think if the downturn were so severe that some holdings went into a negative rate of return you would lose some of your growth.

I have been researching it lately and all the articles I’ve read only speak about losing money if you sell when the market is down. If that is the case, is it due to your retirement account dividends being reinvested so your growth is tied up in more shares? I think that’s the case, but like I said, I’m still researching to make sure. If either of our readers has any clarity on that, please comment.

If that is accurate, I feel even more confident about our retirement future. Christy and I aren’t high maintenance. If there is a market downturn in retirement, we will just tighten our belts for a year or few, withdraw the money we need to live, and leave the rest to recuperate once the market recovers. Unless our balance is enough that we don’t have to completely shut things down for too long. I do want us to enjoy our retirement after all.