tag:blogger.com,1999:blog-5621914599310831423.post2021873041191711279..comments2024-03-01T03:44:39.796-08:00Comments on The Retirement Café: Minimizing RegretDirk Cottonhttp://www.blogger.com/profile/05616143752082768155noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-5621914599310831423.post-84421170695679745292018-01-24T12:45:08.742-08:002018-01-24T12:45:08.742-08:00Reposted for Steve Vernon. I included the link to ...Reposted for Steve Vernon. I included the link to his book, which wasn't in his original post:<br /><br />Hi Dirk<br /><br />Great post! I agree with all your insights and have applied regret in my retirement planning. <br /><br />If I delay Social Security and then die early, I experience "regret from heaven." I really can't imagine regret from heaven. <br /><br />On the other hand, if I claim Social Security early and live a long time, it's easy to imagine being alive, old, and poor, and then regretting that I claimed Social Security early. In fact, I have many older friends in their 70s and 80s who have this very regret, so it's very easy for me to imagine that regret.<br /><br />I'm a 64 year-old actuary who has given a lot of thought to retirement planning. I'm delaying my SS until age 70. Until then, I'm making just enough money to cover my living expenses, doing work I really enjoy. I don't regret continuing to work. Life is good!<br /><br />Thanks, Steve Vernon<br /><br />My 2012 book <a rel="nofollow">Money for Life </a>contained an entire chapter on Win/Regret analysis as applied to retirement income planning. My thinking has evolved since then, but I still like the Win/Regret analysis.Dirk Cottonhttps://www.blogger.com/profile/05616143752082768155noreply@blogger.comtag:blogger.com,1999:blog-5621914599310831423.post-49905858690802551802018-01-13T06:20:19.637-08:002018-01-13T06:20:19.637-08:00Thanks for sharing! There are positive lessons, as...Thanks for sharing! There are positive lessons, as well. Regret minimization kept me from losing my Tech Boom profits. Here's an embedded link to <a href="https://vanguardblog.com/2017/04/18/the-coulda-shoulda-woulda-behind-every-retirement-story/" rel="nofollow">that Vanguard site</a> so you don't have to copy and paste<br /><br />Thanks, Rob.Dirk Cottonhttps://www.blogger.com/profile/05616143752082768155noreply@blogger.comtag:blogger.com,1999:blog-5621914599310831423.post-15265954544721254982018-01-13T05:39:56.232-08:002018-01-13T05:39:56.232-08:00A somewhat related blog on regret for retires on V...A somewhat related blog on regret for retires on Vanguard was the most popular post of 2017. Here is the link: <br />https://vanguardblog.com/2017/04/18/the-coulda-shoulda-woulda-behind-every-retirement-story/<br />There are lots of great practical examples and lessons learnt that folks can learn from. Personally, my biggest regret is not living more within my means and starting to save a younger age losing the power of compounding. We have done OK with catch-up but it has been an uphill slog. <br />Robnoreply@blogger.comtag:blogger.com,1999:blog-5621914599310831423.post-62418222085291021452018-01-09T11:16:00.191-08:002018-01-09T11:16:00.191-08:00In my experience, Abby, the market cares very litt...In my experience, Abby, the market cares very little about "what everyone is crowing" except that when "everyone" agrees on market direction, it usually means it's about to head in the opposite direction (see Irrational Exuberance.) <br /><br />In early 2000, "everyone" said the Tech Boom would last forever. Since I had already accumulated "enough", I decided that the regret of losing a secure financial future would be far greater than the lost opportunity to earn even more than I needed. I sold all my options.<br /><br />Scores of my colleagues subsequently experienced the regret of having had financial security "on paper" and then losing it all. They thought I was being stupid by selling.<br /><br />Hope your decision works out for you!<br /><br />Thanks for writing.Dirk Cottonhttps://www.blogger.com/profile/05616143752082768155noreply@blogger.comtag:blogger.com,1999:blog-5621914599310831423.post-1567545836263290162018-01-09T11:01:18.188-08:002018-01-09T11:01:18.188-08:00This excellent post was very timely for me!
I go...This excellent post was very timely for me! <br /><br />I got really nervous a few months ago and cut back on equities, taking a bit of a tax hit but being rewarded by less worry. The markets then commenced to rise even faster, and now everyone is crowing about how the tax reforms will boost them through 2018, as if there was no possible direction but up. So maybe I should rethink that shift? <br /><br />This morning I decided I prefer the risk of earning less than I might over the risk taking a huge hit from a market drop when I am almost ready to retire early. Now, after reading your post, I’m even more comfortable with my decision to stay where I am - at 50-50. :-)Abikinhttps://www.blogger.com/profile/05007062483133237391noreply@blogger.comtag:blogger.com,1999:blog-5621914599310831423.post-75235700662213329912018-01-08T14:24:49.440-08:002018-01-08T14:24:49.440-08:00Good point. Thanks, Joe!
I regret not mentioning ...Good point. Thanks, Joe!<br /><br />I regret not mentioning Kahneman in the post.Dirk Cottonhttps://www.blogger.com/profile/05616143752082768155noreply@blogger.comtag:blogger.com,1999:blog-5621914599310831423.post-64646577089986913032018-01-08T14:17:42.459-08:002018-01-08T14:17:42.459-08:00Nice job on this Dirk. One additional twist on thi...Nice job on this Dirk. One additional twist on this per Daniel Kahneman is that we feel more regret for actions taken that don't work out than when we don't take action and things don't work out. For example, one feels more regret if one increases a stock allocation and the market tanks than if one leaves a stock allocation as is and the market takes off. So one way to minimize regret is not to do anything. But that's probably not a great idea. Perhaps a better idea is to do things gradually, e.g., gradually increase a stock allocation. It might be financially optimal to do it all at once, but better to spread changes over time to reduce potential regret. Joe Tomoinsonhttps://www.blogger.com/profile/11129369543619991986noreply@blogger.com