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Post by retiredat48 on Jul 24, 2022 16:24:19 GMT
Retiring at age 48, I had to project out a long way. Calculations showed I had a 20% chance of running out of money assets at age 88.
Game plan was: we call the kids and tell them to "come and get us."
With all the writings about retiring today, maybe I would chicken out as a do-over. However, worked out great, as portfolio has GROWN, not declined.
I like the discussions going on about the minimal value of a buckets-approach. See my post above.
Now what about those half of Americans who hardly have any money saved? How do they retire...but they do.
Most on this forum can relax.
R48
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Post by retiredat48 on Jul 24, 2022 16:48:48 GMT
Mustang , "Harold Evensky, who pioneered the bucket approach, said in a 2010 interview that the sensible number of buckets for a do-it-yourself investor was two. He is said to have simply bolted on a cash account to his total return portfolios. Distributions are only from growth. Cash is spent first and replenished from growth. A failure is when cash runs out. He advocated a much simplified approach for individual investors. Modern advocates, like Benz, have complicated it." I didn't realize it, but I guess I pretty much have an Evensky bucket system. Each January I take my RMD and put it in VG muni MM fund. I use this to pay for my expenses for the year. The rest of my portfolio is invested as if the muni account didn't exist, a TR portfolio. I never thought of it as a bucket system, but I guess it is. By the way, I realize taking all my yearly expenses in January can be sub-optimal, but since I can never really know in advance what will be optimal, at least I get the peace of mind knowing my expenses are covered for the year. ,...ah moz, this is the crux of the matter. It is not rocket science. You have to make annual withdrawals to live on...to some degree. The key is to realize you do some market timing, or simply use a 2 Jan date to reposition one's needs. (I also do not like 2Jan selling as this is when new IRA money is coming to market, driving up prices--use April...as in front-running "sell in May and go away"). I have always used the flexible approach, determining what would be a good time to sell risky assets such as growth stock funds, into MM or bond funds, to enable the year's withdrawals. I also had a HELOC that permitted me deferring withdrawals to later in year, if desired. I lived short-term off of the HELOC...then paid it back. I find the annual selling process to be simply a part of investing, and it also forced me to continually upgrade my portfolio. I think this selling paid off as I would naturally sell some things reaching hew highs. Here's a technique I use...immunize my withdrawals for up to two years...if I desire. I have to take IRA RMDs as part of the process. So let's say the market is zooming to new highs, like Jan/FEB 2020 (just before Covid). I posted of selling Energy funds and some other stock funds, actually getting to more than a years spending needs/RMDs, into bond funds. Then when Covid hit, just before the big decline started, I posted I was selling more stock funds, getting to two years immunity. Meaning, I had enough cash assets to fund two years w/o selling stock funds. The key realization is that, doing this in Jan, means I can take 2020 RMDs in Jan, and do not have to take next RMDs until Dec 2021...hence the two years immunization. IOW I greatly prefer a "strategic selling/replenishing" approach, versus a fixed date or autopilot, monthly approach. BTW it so happens that currently I am now immunized for several years, because of my selling/exiting several standard issue/vanilla bond funds over last two years. That is a first, ever. My largest cash position in my lifetime. Comforting...yes, somewhat. Good day. R48 |
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Post by mozart522 on Jul 24, 2022 18:21:44 GMT
retiredat48, We all have different approaches. I have 4 accounts (two TIRA and two Roths) but only have to take RMDs from one IRA. I keep some less risky stuff in this IRA for that purpose so no growth equities need to be sold. Also, I want to get the RMD out of the way so I can time the yearly Roth conversions if I think the market is going lower.
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Post by FD1000 on Jul 25, 2022 19:39:03 GMT
Mustang That second paragraph above made me go the income route. I saw that close up. A dedicated section perhaps in income only investments takes the place of an annuity when combined with SS. If one choses to spend down which we may be forced to do one day our order is equities first, munis second then income investments. Most unreliable income to most lucrative and steady in our particular case. Your describing quite a mess to drop on a spouse or heirs in my opinion. The above doesn't solve the problem of...when bonds+stocks go down for years. These CEFs could lose as much as stocks and they did worse in 03/2020 and similar YTD. Munis also lost a lot this year. You can use ST treasuries. But the easiest way that can work for most 1) Limited number of funds(3-5) based on someone goals. Most should have bonds and some of them ST (treasuries/TIPS) 2) In order to keep the AA, when someone needs to withdraw money, use stocks when they are up and use bonds when stocks are down. Below, you can see VTWNX Vanguard Target Retirement 2020 Fund close to 50/50...or...Schwab Target 2020 Index Fund SWYLX which is more conservative. Both can be used as a good start for many retirees, even if we are different. Different doesn't mean complication. No buckets, annuities, CEFs, trading, more moving parts = KISS. Large portfolios survived regardless, it doesn't mean, it's the best risk-adjusted performance. Attachments:
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Post by fritzo489 on Jul 25, 2022 20:53:56 GMT
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