How should I take the marshmallow test?

[wiggin]

I'm not sure how you're using the word 'optionality' here, but I get the gist. I think that all retirement plans - DB, DC, and variants thereof - try shifting risks around to improve outcomes. But fundamentally they don't really get rid of risks, they are just shifted from one sort of risk to another. In the case of a DB pension like I'm talking about, the individual has no market or longevity risk, but they have some institutional/policy risk and reduced control. DC funds try to eliminate the chance of your pension being underfunded or the funding organization going under (and gives people more control), but it adds a lot of other risks onto the individual. IIRC there was a nice piece about this a while back but I can't find it right now; I'll see if I can get it later.

My argument isn't that one side or another isn't without risks - there are always risks - but that by diversifying the type of risk one is exposed to, it decreases the chance of wholesale catastrophe to one's retirement savings.

[GGT]

I've been very clear about my goals for the entire thread, GGT. It's way more interesting of a discussion than what to do with $8k.

Uh, the members of this forum? Obviously you're all going to have a challenge giving useful advice on something like this without way more detail, detail which I'm never going to share on the internet. There are reasons to go to the internet for information, of course - say I need to know which sites to see in Istanbul (Hazir), or how library funding and operations work in the US (OG), or an obscure definition in the political science literature (Loki). That's because I'm relying on expertise that each of you have. But when the decision is essentially tied up in a full understanding of my own financial situation and life priorities, obviously the main person to talk to is my wife. I don't really understand how this is controversial.

What I post isn't 'controversial', and my 'expertise' comes from life experience. If you only consider your wife's opinion, in the end, then why bother with forums like this?

I'm not sure how you're using the word 'optionality' here, but I get the gist. I think that all retirement plans - DB, DC, and variants thereof - try shifting risks around to improve outcomes. But fundamentally they don't really get rid of risks, they are just shifted from one sort of risk to another. In the case of a DB pension like I'm talking about, the individual has no market or longevity risk, but they have some institutional/policy risk and reduced control. DC funds try to eliminate the chance of your pension being underfunded or the funding organization going under (and gives people more control), but it adds a lot of other risks onto the individual. IIRC there was a nice piece about this a while back but I can't find it right now; I'll see if I can get it later.

My argument isn't that one side or another isn't without risks - there are always risks - but that by diversifying the type of risk one is exposed to, it decreases the chance of wholesale catastrophe to one's retirement savings.

Yes, life is full of risk....but getting old is even riskier! You've obviously made the decision that bringing a child into the world is a "good thing" because you're already a parent. That decision, framed as a choice, puts you in a special category that millions don't share. It also comes with a greater degree of responsibility; I get that. First world problems, among the top tiers of a population, don't make your decisions any easier. It's a true quandary.

Hindsight is 20/20....and I'm trying to tell you (based on my experience) that living in a certain zip code, even if it means better public schools for your children, may not be worth it 10 or 20 years from now. In fact, the job you have now (with its defined benefits) may not be "worth" the prices you pay in other areas, and can't be compensated in any way. Try getting to your kid's soccer games or musical performances, for example.

I grew up in the 60's, considered the "sandwich generation". We had plenty of wealthy and absent parents (especially fathers)....but that was a totally different era, culturally and otherwise. Have we evolved much in my lifetime? Yes. With qualifiers.