Retirement investing...

[k1xv]

You need to talk to Schwab. They can help you find a balance; that balance is based on a big number of things. Do you have a home free and clear that needs nothing? Your health and life expectancy? Your goals?

And everything changes. I thought I knew where I was, my wishes, the future. I thought I was pretty set. I was wrong. Lot's of needs arise...

I live in a mortgage free house with a market value of around a million dollars. With Medicare and Medigap insurance, I have not had a single medical bill not paid by insurance. I owe nothing to anyone. I put my excess income in 529 plans so those kids can avoid student loans. If I become totally infirm, I will hire a caretaker to allow me to live at home as long as possible. I even have my cemetery plot and memorial marker in place.

My estate plan is to fund trusts for four children, the oldest is now 14. The trusts provide that the funds can be used for education and living expenses while in full time education. Then, half of what remains can be withdrawn at age 25. And the remainder left can be fully withdrawn at age 35.

My personal goal is to continue to live in my present home until I croak. My income is more than enough to pay all my expenses.

 

[TnT_M]

Do others agree with this? Especially in my case I stated I am on the cusp of retirement and the opportunity to recover from a deep loss is not there? I know people who lost 1/3 of their savings during the 2008 downturn. I was taught to manage your investments for stability at, and into retirement, not risky gains. I experienced at least three recessions - some got beat down severely.

IMO, by living with the fear of a recession, you are costing yourself gains. All the financial talking heads tell you no one times the market, even the algorithms are behind. They are the best but still aren't 100%. Couple that with the fact that you have not actually lost or gained any money until you sell is a key piece. On paper I have had a great return the last 3 years (>100%), but I have not sold anything.

Now let me give you something to ponder. Take it as you will.

Let's assume you have $1M in your available retirement account. Why would you invest 100% of that in a conservative investment (bonds?) at 3 to 5% right now? why not consider something like a 50/50 split in conservative and higher risk?

Here is what 100% conservative looks like

Gross Amount	$ 1,000,000.00
Bonds (4%)	$ 40,000.00
Total	$ 1,040,000.00

Here is what a 50/50 split looks like in a great year

$ 1,000,000.00
Safe	$ 500,000.00	Risk	$ 500,000.00
Bonds (4%)	$ 20,000.00	Nasdaq (24% YTD)	$ 120,000.00
Total	$ 520,000.00	Total	$ 620,000.00
Total	$ 1,140,000.00

Here is what a 50/50 split looks like if we see a 24% correction

Gross Amount	$ 1,000,000.00
Safe	$ 500,000.00	Risk	$ 500,000.00
Bonds (4%)	$ 20,000.00	Nasdaq (-24%)	$ (120,000.00)
Total	$ 520,000.00	Total	$ 380,000.00
Total	$ 900,000.00

So on paper you are down $80k for the year. If you see a 24% return the next year you are back up $91k the very next year. Again, a lot of assumptions here, but long-term investing even in retirement pays dividends. I understand no one should be 100% aggressive when retired, but I can't get behind 100% bonds either.

 

[TnT_M]

What gets lost in many of these threads is time horizon and how much someone has in savings/how much they need in retirement/what their plan is.

100%!!!

I tell people about the 4% rule all the time, trying to get them to a goal. The theory is to live off of 4% of your retirement and invest such that over the years you earn on average more than 4% so you never deplete your savings.

Said differently, if you want $5k per month to live on, you need $1.5M in retirement investments unless you have a pension or other income streams to supplement the $5K.

$1.5M x 4% = $60k per year

If you do this and your investments return greater than 4% you gain on your $1.5M. Couple this with my post above about the 50/50 split and you should have a nice nest egg to pass along to your children when you die, along with any assets you may have. Finances, like diets are easy to plan, the disciplined execution is the hard part.

 

[Vil_Riker]

100%!!!

I tell people about the 4% rule all the time, trying to get them to a goal. The theory is to live off of 4% of your retirement and invest such that over the years you earn on average more than 4% so you never deplete your savings.

Said differently, if you want $5k per month to live on, you need $1.5M in retirement investments unless you have a pension or other income streams to supplement the $5K.

$1.5M x 4% = $60k per year

If you do this and your investments return greater than 4% you gain on your $1.5M. Couple this with my post above about the 50/50 split and you should have a nice nest egg to pass along to your children when you die, along with any assets you may have. Finances, like diets are easy to plan, the disciplined execution is the hard part.

Gotta account for the taxes, too. Gross can be misleading.

 

[Vil_Riker]

100%!!!

I tell people about the 4% rule all the time, trying to get them to a goal. The theory is to live off of 4% of your retirement and invest such that over the years you earn on average more than 4% so you never deplete your savings.

Said differently, if you want $5k per month to live on, you need $1.5M in retirement investments unless you have a pension or other income streams to supplement the $5K.

$1.5M x 4% = $60k per year

If you do this and your investments return greater than 4% you gain on your $1.5M. Couple this with my post above about the 50/50 split and you should have a nice nest egg to pass along to your children when you die, along with any assets you may have. Finances, like diets are easy to plan, the disciplined execution is the hard part.

Gotta account for the taxes, too. Gross can be misleading.

 

[Nessism1]

I live in a mortgage free house with a market value of around a million dollars. With Medicare and Medigap insurance, I have not had a single medical bill not paid by insurance. I owe nothing to anyone. I put my excess income in 529 plans so those kids can avoid student loans. If I become totally infirm, I will hire a caretaker to allow me to live at home as long as possible. I even have my cemetery plot and memorial marker in place.

My estate plan is to fund trusts for four children, the oldest is now 14. The trusts provide that the funds can be used for education and living expenses while in full time education. Then, half of what remains can be withdrawn at age 25. And the remainder left can be fully withdrawn at age 35.

My personal goal is to continue to live in my present home until I croak. My income is more than enough to pay all my expenses.

Outstanding plan! Thanks for sharing. It gives me ideas for my own future planing!

 

[gfh77665]

So, I have been plotting a retirement. If everything is paid off, and you have say, $500k in mutual funds etc, is there any reason not to put it in a fund like PRT or EFC or something and just live off the dividends?

It would be OK if you had no interest in seeing it grow much.

I am retired and I am sure glad I have been heavy in TECH this past year.

 

[Dave Hess]

It would be OK if you had no interest in seeing it grow much.

I am retired and I am sure glad I have been heavy in TECH this past year.

Same here.

 

[JeffKeryk]

It would be OK if you had no interest in seeing it grow much.

I am retired and I am sure glad I have been heavy in TECH this past year.

I did starting in the 1980's. Still do.

 

[JRHAWK9]

heavy in TECH this past year.

same here, but I've been all in in tech for the last 10-12 years.

 

[Ws6]

It would be OK if you had no interest in seeing it grow much.

I am retired and I am sure glad I have been heavy in TECH this past year.

It can zero out by the time I get to die for all I care.

 

[gfh77665]

That's fine, but if its approaching "zero out" late in the game, your dividends will be doing the same.

 

[Ws6]

That's fine, but if its approaching "zero out" late in the game, your dividends will be doing the same.

Ideally, Id like to die bankrupt, but living how I want until that second.

 

[Pablo]

Most people don’t have a clear mind at 85-90-95+ years old as they count down to the last dollar

Some loved one doing your accounting at best

 

[ArrestMeRedZ]

Most people don’t have a clear mind at 85-90-95+ years old as they count down to the last dollar

Some loved one doing your accounting at best

That's why you marry a much younger woman.

 

[Pablo]

That's why you marry a much younger woman.

Yep

Money gone. No problem. Good solution!

 

[ArrestMeRedZ]

Yep

Money gone. No problem. Good solution!

Ah, but there is nothing more fun to spend it on!

 

[Dave Hess]

Ideally, Id like to die bankrupt, but living how I want until that second.

What about your kids and grandkids ?

 

[Pablo]

What about your kids and grandkids ?

I’m doing the generational wealth plan. Started by my father and uncle. My brother and I really. Out of the four kids between us only one has the inclination so to speak.

I feel it would be dishonorable not to actually. But on the other end no free money. You know kids just waiting for us to croak.

 

[Dave Hess]

I opened Roth IRAs when our kids turned 18 and funded the first year to get snowball churning.
These have done well over the past 10+ years.


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