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During my almost 40 year career, I had my 401k for most of that time in a total stock market index or S&P 500 index fund. I also had most of my post-tax personal investments in a total stock market index. At age 63 retirement, my nest egg investments were in the multi-millions. I got a generous corporate pension, plenty for me to live on without tapping my investments. I have not withdrawn or spent anything from my investments in the 5+ years I've been retired.
Not long after retirement, I got out of all stocks. Not interested in the drama or anxiety. My fixed income allocations did not yield much for many years up until the past 6 months. Now I have a bunch of CDs (purchased through Schwab) that are yielding above 4.5%. This year I'll bring in $145K in interest income on CDs or money market accounts. I can't even figure out how to spend a fraction of that.
I am 68 and still not drawing social security. If I start SS at age 69, I'll be earning another $4500 per month, roughly $52K annually. Don't ask me what I am going to do with that on top of my interest earnings and my pension. And the next thing after that comes at age 73, when my $70K annual RMDs begin. I guess I'll use a chunk of SS to pay taxes on RMDs.
I need to get started on spending - trying to build up my investments is what I did when I was working, not something I am interested in any more. I have no heirs to hand off my treasure to, so no need for me to accumulate more.
You may as well take the social security because as you said you can use it to pay taxes on your forced withdrawals as well as paying your IRMA fees. Make sure you have a good estate plan too or you will sacrificing a large chunk of you life’s work in more taxes eventually. Your post is a good example for showing the right answer to the question depends on too many variables to answer without knowing more details. You have no need to grow your portfolio and feel more comfortable not worrying about managing investments.
All of a sudden the tabs worked for me on the iPad
So firecalc shows 25% equities is good up to a 3.85% draw rate.. unfortunately 4% drags It down to an unacceptable 81% level .
Of course that 3.85 is going to vary based on the types of bonds used as well as the mix of equities. But it will be close enough .
The difference between 3.85 and 4% seems slight but it is enough to send the success rate plunging to just 81%
FIRECalc Results 25% equities
Your spending in every year after the first year will be adjusted for inflation, so the spending power is preserved.
FIRECalc looked at the 122 possible 30 year periods in the available data, starting with a portfolio of $1,000,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 122 cycles. The lowest and highest portfolio balance at the end of your retirement was $-175,926 to $3,299,731, with an average at the end of $667,409. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)
For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 10 cycles failed, for a success rate of 91.8%..
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Here is a 4% draw with 25% equities
FIRECalc Results
Your spending in every year after the first year will be adjusted for inflation, so the spending power is preserved.
FIRECalc looked at the 122 possible 30 year periods in the available data, starting with a portfolio of $1,000,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 122 cycles. The lowest and highest portfolio balance at the end of your retirement was $-251,267 to $3,183,055, with an average at the end of $588,187. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)
For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 23 cycles failed, for a success rate of 81.1%.
Last edited by mathjak107; 02-18-2023 at 07:17 AM..
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
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I know there are people invested 50/50 in retirement but that just seems too rich for me. Curious of views from current and future retirees.
It depends
30% of my investments are in tangible real estate, which has it's own risks and benefits. Thus some of my bond and growth is mitigated in personal equities.
I feel comfortable with 50-60% in well diversified stocks (total market)
I keep 10% of investable assets as play money, which pretty much covers my needs and wants through gains. But some days my wants get beat down. Needs?.... I'm eating a little too well, and traveling a lot.
I tried 30% equities , but again to low of a success rate at 4% . 35% is still the lowest allocation for 4% draws
FIRECalc Results 30% equities
Your spending in every year after the first year will be adjusted for inflation, so the spending power is preserved.
FIRECalc looked at the 122 possible 30 year periods in the available data, starting with a portfolio of $1,000,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 122 cycles. The lowest and highest portfolio balance at the end of your retirement was $-206,630 to $3,368,918, with an average at the end of $689,177. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)
For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 15 cycles failed, for a success rate of 87.7%.
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35% equities
FIRECalc Results
Your spending in every year after the first year will be adjusted for inflation, so the spending power is preserved.
FIRECalc looked at the 122 possible 30 year periods in the available data, starting with a portfolio of $1,000,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 122 cycles. The lowest and highest portfolio balance at the end of your retirement was $-173,739 to $3,558,380, with an average at the end of $796,753. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)
For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 12 cycles failed, for a success rate of 90.2%.
Last edited by mathjak107; 02-18-2023 at 07:18 AM..
I went my entire working life without any interest in investing in the stock market. I am now seven years into my retirement, and nothing has changed, with the exception of investing through phone apps for a brief time just to watch the numbers go up and down. That novelty lasted about six months before it ceased to amuse me.
Most of us need to take advantage of one of the most powerful forces on the planet COMPOUNDING .
that is what takes the little bits we are able to save and turns it in to meaningful amounts ..
Some earn very high pay and they are able to save sizable amounts without the compounding of investments .
Inflation is the retirement bogie man … it can result in the reduction of purchasing power that can wipe away what was believed to be a decent amount to live on .
So for most of us markets are still an important part of sustaining the purchasing power of our nest eggs
After reading all the very informative responses, I am thinking Vanguard Wellesley is the right mix for my comfort level in retirement. Although as I advance in years, is a 40/60 mix applicable for say someone in their eighties?
Wellesley is perfect ,and yes for most of us investing is still needed all the way through or at least until a decade or two in when you have a good idea of what inflation and returns and interest left you with..
No one knows in advance if they will be The poster child for a poor time frame or high inflationary time frame nor how long you will live
Most of us need to take advantage of one of the most powerful forces on the planet COMPOUNDING .
that is what takes the little bits we are able to save and turns it in to meaningful amounts ..
Some earn very high pay and they are able to save sizable amounts without the compounding of investments .
Inflation is the retirement bogie man … it can result in the reduction of purchasing power that can wipe away what was believed to be a decent amount to live on .
So for most of us markets are still an important part of sustaining the purchasing power of our nest eggs
Far to many think they can hide under a rock and not use powerful compounding to grow their money ..then when spending exceeds what they planned$ they realize this to late to do anything about it
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