Tags: Ning | retire | market | expense

Personal Finance Expert Ning: Early Retirees Must Have Tolerance for Market Shifts

By    |   Monday, 23 March 2015 06:20 AM

There's nothing wrong with retiring early if you have the financial means to do so. But David Ning, founder of MoneyNing.com, cites several issues to be aware of if you decide to take the plunge. 
  • You should be "willing to tune out market gyrations," he writes in an article for U.S. News & World Report. "Most early retirees need the help of growing equities to sustain their lifestyle for decades. But markets are volatile, and it's hard to hang on during a bear market."
  • You should also know your expenses, Ning says. Start by estimating what your expenses will be in retirement. "From there, you can determine how much you will need to draw from your assets each year and can calculate a savings goal you need your nest egg to hit."
  • Be prepared to return to work if you need the money. "You may never need to go back to work, but it's comforting to know that the option is always there," Ning writes.
Meanwhile, though Warren Buffett's Berkshire Hathaway has generated an annualized total return of 10.2 percent during the last 15 years, dwarfing the S&P 500 index' 4.4 percent return, that doesn't mean you should put all your retirement eggs in Buffett's Berkshire basket, says Walter Updegrave, editor of RealDealRetirement.com,
 
"I have no problem with you owning Berkshire shares," he writes in an article for CNNMoney. But, "I don't think it's a good idea to invest too much of your retirement savings into Berkshire. As a rule, it's not wise to concentrate more than 10 percent or so of your stock holdings in the shares of any single company."
 
And why not bet the farm on Buffett?
 
"If you're going to make any single investment the cornerstone of your stock holdings, that investment ought to be very broadly diversified," Updegrave says. While Berkshire does have a wide range of holdings, he adds, "it doesn't have the breadth of a total stock market index fund."
 
Then there's the question of how much longer Buffett, 84, will be around. "I'm not suggesting the whole shebang will fall apart post-Buffett. But it's an open question as to whether its extraordinary success will continue," Updegrave writes.

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There's nothing wrong with retiring early if you have the financial means to do so. But David Ning, founder of MoneyNing.com, cites several issues to be aware of if you decide to take the plunge.
Ning, retire, market, expense
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2015-20-23
Monday, 23 March 2015 06:20 AM
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