Do you have bond funds in your portfolio? Many people understand the way that bonds work, but they may not know how bond funds work. El has written in to ask this question which I will answer in the listener questions segment.

Before we get to that retirement question, we'll take a look at a MarketWatch article titled Are You in Retirement Hell? It was such a catchy title that I had to check it out.

The article expresses the author's struggle with finding challenge and meaning in retirement. You won't want to miss the ways that you can avoid your own retirement hell.

Outline of This Episode

• [2:32] Are you in retirement hell?
• [5:38] How to prevent retirement hell
• [6:56] How do bond funds work?
• [12:53] What are alternative options to bond funds?
• [16:52] Does John have enough money to retire?

Are you in retirement hell?

Retirement is a time of fun and relaxation. You no longer have exhausting work schedules, long commutes, or alarm clocks waking you up every morning. Every day is yours to do as you wish.

Passing the days pursuing leisurely activities like playing golf or visiting the grandkids may be just perfect for some laid-back retirees, but for those looking for more challenging pursuits, these carefree days could quickly turn into retirement hell.

You can recognize if you are in retirement hell if you are feeling lost and vulnerable. You may even sink into a depression as the activities that you once enjoyed feel empty and meaningless.

How to fix (or prevent) retirement hell

In the article, the author mentions that he didn't break out of retirement hell until he finally sat down and defined his concept of fine.

Contentment is an important part of retirement, it's so important that I even discussed it once in a previous episode with Fritz Gilbert. When you're done listening to this episode, pop back over to that one and have a listen.

I always like to say that you shouldn't be retiring away from something, instead retire to something. It's important to consider what you will do with those extra 40 hours a week that you now have at your disposal.

You don't want to wait until you are in the thick of retirement hell to figure this out. Try creating a practice retirement with some of your vacation time. Take a couple of weeks off and don't go anywhere or do anything exciting. Instead, try passing the days as you would like to when you retire.

How do bond funds work?

A bond fund is similar to a mortgage, but you have a group of investors and a company instead of the mortgage lender and home buyer.

Bonds can be purchased individually and held to maturity or they can be traded. Bonds are similar to stocks in that they can go up or down in value but they have different interest rates and different rates of maturity.

To spread out the risk of buying individual bonds, most investors choose to invest in a basket of bonds or a bond mutual fund. The risk is spread in the same way that you spread out the risk in your stock portfolio.

What are alternative options to bond funds?

If you aren't happy with the bond funds that you have now try Googling portfolio immunization. Portfolio immunization means that you match your retirement liabilities with your retirement assets.

The way to do this is to purchase a bond in advance so that it matures the year that you need the cash flow. The specific benefit of this strategy is holding the bond until maturity. By holding the bond until it matures you remove the interest rate risk.

Make sure to stay tuned until the very end where I answer John's question about whether he has enough money to retire. You may be surprised by my recommendation.

Resources & People Mentioned

• Boomer Benefits
• MarketWatch - Are You in Retirement Hell?
• Episode 146 with Fritz Gilbert
• Contentment episode with Fritz Gilbert
• Retirement Manifesto
• The infamous mullet episode
• Guyton's Guardrails episodes 153, 149, and 93

Connect with Benjamin Brandt

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