I can sleep at night but it is on my mind a lot

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mule
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I can sleep at night but it is on my mind a lot

Post by mule » Sun Jan 17, 2016 9:40 pm

I will be retiring in a few month's and now with the markets dropping I'm getting a little nervous.

My portfolio has $400,000. in cash and then I have 70/30 stocks and bonds worth 2.5M. I will need about $48,000. a year to live. I will stay the course for now and won't do any adjusting till I feel comfortable to do so. I'm 59 years old and been looking so forward to retiring and living life and then this. I have been investing for 35 years and when these evens took place it didn't bother me but now it is a big deal.

My question is would you feel comfortable retiring now in the numbers I have given you. I would be able to live about 8 years without having to touch any money that is in the stock market. Thanks

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tainted-meat
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Re: I can sleep at night but it is on my mind a lot

Post by tainted-meat » Sun Jan 17, 2016 9:47 pm

You're good in my opinion. Plus, when you add in social security you will not have to withdraw much in relation to the size of your portfolio.

dbr
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Re: I can sleep at night but it is on my mind a lot

Post by dbr » Sun Jan 17, 2016 9:49 pm

You have plenty of money to live on at that expenditure or even quite a bit more. It would be fine for you to hold less in stocks, perhaps even as little as 30/70 or 40/60, including the cash as bonds. I think a portfolio at 70/30 stocks to bonds is enough in stocks to make you nervous.

You don't mention Social Security or pensions. If all your income is going to be from those investments it isn't necessary but may add to your comfort to use some money for a single premium immediate annuity or two to have a steady guaranteed income stream.

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Re: I can sleep at night but it is on my mind a lot

Post by livesoft » Sun Jan 17, 2016 9:50 pm

Of course I would. And I did retire.
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Re: I can sleep at night but it is on my mind a lot

Post by bloom2708 » Sun Jan 17, 2016 10:04 pm

I would retire on Tuesday. Only because Monday is a holiday.

40/60 would be my target.
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2comma
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Re: I can sleep at night but it is on my mind a lot

Post by 2comma » Sun Jan 17, 2016 10:05 pm

I'd retire now with those assets and those expenses. I think the retire now/wait until... state you're in makes it harder emotionally. If you'd have retired 6 months ago you'd be beyond that by now and I'm guessing not too worried. I retired almost 3 years ago, with about 2/3 your assets but we do have some mitigators (I cooled the AA to 35/65 before I retired, we'll have two pensions, wife's younger so will work a few more years and we'll have SS coming online). So, come on in, the water's fine!
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Re: I can sleep at night but it is on my mind a lot

Post by GoldenFinch » Sun Jan 17, 2016 10:06 pm

Your situation looks good to me. Congratulations on retiring early! :beer

randomguy
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Re: I can sleep at night but it is on my mind a lot

Post by randomguy » Sun Jan 17, 2016 10:13 pm

mule wrote:I will be retiring in a few month's and now with the markets dropping I'm getting a little nervous.

My portfolio has $400,000. in cash and then I have 70/30 stocks and bonds worth 2.5M. I will need about $48,000. a year to live. I will stay the course for now and won't do any adjusting till I feel comfortable to do so. I'm 59 years old and been looking so forward to retiring and living life and then this. I have been investing for 35 years and when these evens took place it didn't bother me but now it is a big deal.

My question is would you feel comfortable retiring now in the numbers I have given you. I would be able to live about 8 years without having to touch any money that is in the stock market. Thanks
So you need about <2% from your portfolio and you are worried? Your portfolio could drop 50% and you would still be fine. You could always go more conservative than your ~60/40 portfolio if you wanted to. 40/60 is plenty when you only need 2% SWR. Heck you could even go 20/80 if you wanted. Your situation has changed. Think about if your AA still makes sense for you.

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GerryL
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Re: I can sleep at night but it is on my mind a lot

Post by GerryL » Sun Jan 17, 2016 10:20 pm

mule wrote:
My portfolio has $400,000. in cash and then I have 70/30 stocks and bonds worth 2.5M. I will need about $48,000. a year to live.
If THAT's not enough, then I'm hosed. (And I'm doing fine :wink: )

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Re: I can sleep at night but it is on my mind a lot

Post by tibbitts » Sun Jan 17, 2016 10:23 pm

2comma wrote:I'd retire now with those assets and those expenses. I think the retire now/wait until... state you're in makes it harder emotionally. If you'd have retired 6 months ago you'd be beyond that by now and I'm guessing not too worried. I retired almost 3 years ago, with about 2/3 your assets but we do have some mitigators (I cooled the AA to 35/65 before I retired, we'll have two pensions, wife's younger so will work a few more years and we'll have SS coming online). So, come on in, the water's fine!
It might be fine for you, but you can't compare yourself with two pensions to the OP without any pension(s). You might receive, total, $100k/yr from pensions. The value of pensions has risen dramatically in recent years due to the plunge in interest rates. A pension that might have taken $1MM to fund (in terms of an equivalent annuity) some years ago might take more like $1.5MM - $2MM to fund today. So if you had no pension but had $2MM and were planning on annuitizing half to provide a comfortable income base, all of a sudden now you're annuitizing all or most of your savings to get the same income. On the other hand if you're receiving a pension, somebody else is coming up with that extra $500k - $1MM - or at least you hope they are.

Having said that I agree the OP should be fine, particularly since if someone has accumulated $3MM, it's very likely that a good chunk of $48k (if that's the total requirement) would come just from SS within a few years.

mule
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Re: I can sleep at night but it is on my mind a lot

Post by mule » Sun Jan 17, 2016 10:39 pm

I have no pensions. I will be getting $140,000. lump sum in 4 month's and have no clue what I should do with it. I could roll it to my 401K and put it in the money market fund same as cash. Then down the road I could re-allocate it in different funds if I want. What is your thoughts.

I also will be getting 4 more pay checks and I wanted to put all I can in the 401K also and was thinking putting it in my 401K in the money market fund also at least there would be no risk.

If I roll my retirement $140,000. into the 401K could I also have money taken out of my pay checks to fund my 401K? I ask because it would take me way over my yearly amount.

I can use all the help you give me. I really appreciate your thoughts. Thanks

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Re: I can sleep at night but it is on my mind a lot

Post by David Jay » Sun Jan 17, 2016 10:51 pm

48,000 * 8 = 384,000

You already have $400,000 in cash, so you are covered for the next 8 years without any portfolio withdrawals. What was your question again? :wink:
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mule
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Re: I can sleep at night but it is on my mind a lot

Post by mule » Sun Jan 17, 2016 10:54 pm

I have no pensions. I will be getting $140,000. lump sum in 4 month's and have no clue what I should do with it. I could roll it to my 401K and put it in the money market fund same as cash. Then down the road I could re-allocate it in different funds if I want. What is your thoughts.

I also will be getting 4 more pay checks and I wanted to put all I can in the 401K also and was thinking putting it in my 401K in the money market fund also at least there would be no risk.

If I roll my retirement $140,000. into the 401K could I also have money taken out of my pay checks to fund my 401K? I ask because it would take me way over my yearly amount.

I can use all the help you give me. I really appreciate your thoughts. Thanks

mule
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I can sleep at night but it is on my mind a lot

Post by mule » Sun Jan 17, 2016 11:33 pm

[Thread merged into here, see below. --admin LadyGeek]

Here is a question from my previous post.

I have no pensions. I will be getting $140,000. lump sum in 4 month's and have no clue what I should do with it. I could roll it to my 401K and put it in the money market fund same as cash. Then down the road I could re-allocate it in different funds if I want. What is your thoughts.

I also will be getting 4 more pay checks and I wanted to put all I can in the 401K also and was thinking putting it in my 401K in the money market fund also at least there would be no risk. I also would have the option to put it into one bond fund.

If I roll my retirement $140,000. into the 401K could I also have money taken out of my pay checks to fund my 401K? I ask because it would take me way over my yearly amount.

I can use all the help you give me. I really appreciate your thoughts. Thanks

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Watty
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Re: I can sleep at night but it is on my mind a lot

Post by Watty » Mon Jan 18, 2016 12:18 am

A lot depends on what the lump sum is for. If it is some sort of severance package or bonus then your options would be limited and it likely could not be rolled into a retirment account.

If it something like some sort of tax deferred profit sharing then people would typically roll those out to an IRA when they retired and not into the 401k, but there might be some sort of special situation where it could be rolled into a 401k,

jjface
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Re: I can sleep at night but it is on my mind a lot

Post by jjface » Mon Jan 18, 2016 12:24 am

Treat yourself, relax and pat yourself on the back for a job well done! You can live off the cash for so long that whether the stock market tanks this year or not is of no real concern other than scoring some cheaper stocks with that $140k. Normally the advice would be to buy your usual allocation as soon as you can but I would hold off a bit and keep it in cash and when you feel the stock market is having a bad time invest some. If it drops again put some more in etc.

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Re: I can sleep at night but it is on my mind a lot

Post by 2comma » Mon Jan 18, 2016 1:04 am

tibbitts wrote:
2comma wrote:I'd retire now with those assets and those expenses. I think the retire now/wait until... state you're in makes it harder emotionally. If you'd have retired 6 months ago you'd be beyond that by now and I'm guessing not too worried. I retired almost 3 years ago, with about 2/3 your assets but we do have some mitigators (I cooled the AA to 35/65 before I retired, we'll have two pensions, wife's younger so will work a few more years and we'll have SS coming online). So, come on in, the water's fine!
It might be fine for you, but you can't compare yourself with two pensions to the OP without any pension(s). You might receive, total, $100k/yr from pensions. The value of pensions has risen dramatically in recent years due to the plunge in interest rates. A pension that might have taken $1MM to fund (in terms of an equivalent annuity) some years ago might take more like $1.5MM - $2MM to fund today. So if you had no pension but had $2MM and were planning on annuitizing half to provide a comfortable income base, all of a sudden now you're annuitizing all or most of your savings to get the same income. On the other hand if you're receiving a pension, somebody else is coming up with that extra $500k - $1MM - or at least you hope they are.

Having said that I agree the OP should be fine, particularly since if someone has accumulated $3MM, it's very likely that a good chunk of $48k (if that's the total requirement) would come just from SS within a few years.
Yes tibbitts I agree with everything you said. Our pensions will be worth about half, $55k but there is no COLA. Our pension got frozen a few years back but they did come up with a "portable" plan which the company makes all contributions to. Not nearly as good as the original but it is something. I'm guessing that since mule has an extra million we are roughly equivalent. My main thought was that he has almost 3M, is taking out less than 2%. He's done a good job for retirement and we both think he has made it.
If I am stupid I will pay.

mouses
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Re: I can sleep at night but it is on my mind a lot

Post by mouses » Mon Jan 18, 2016 1:25 am

You have almost $3 million. In federally insured CDs earning 2%, that's $60,000 a year before taxes. Your annual expenses are $48,000. You may also be getting Social Security in a few years. Even if you don't, it looks to me like you could happily live on this for longer than anyone can expect to live without having anything in the stock market. I think the oldest person in the US is something like 115.

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Re: I can sleep at night but it is on my mind a lot

Post by Dandy » Mon Jan 18, 2016 2:10 am

Retirement investing and risk can be a whole different ballgame. You seem to have ample assets and a nice cash cushion. Staying the course with a bit of rebalancing should do ok. But, if you are edgy now with a 10% or so pullback how will you cope with 20 or 30%? You become fully aware that your earning power is rapidly going to minimum wage and the Pot is all you've got. Reality bites.

Was in a similar position retiring in 2008 at age 60 and needing a drawdown of a slightly smaller amount. It was scary. I had a conservative allocation and it included a decent cash position. I remember going for a walk each morning and making sure I stopped at the store that sold a coffee for 1.25 instead of the one for 1.50. You can get a bit irrational. :oops:

I still hate when the market is down a lot. What helped me was roughly following Dr. Bernstein's advice of having X years worth of drawdown in "safe" products and the rest allocate like an investment portfolio. For me that meant allocation more money to short term bond funds as well as other products e.g. CD ladder, Online Savings etc. Now when the market goes down it doesn't bother me as much.

You have a bit more than 8 years in cash. That is usually a conservative approach. If you continue to worry more than you want I'd consider extending that further. When the market is down withdraw from the safe portfolio and when it is up you have a choice - take it from your risk portfolio and extend your "protection" another year or take it from the "safe" assets.

mule
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Re: I can sleep at night but it is on my mind a lot

Post by mule » Mon Jan 18, 2016 8:39 am

This 140K will be a retirement or pension that I have options on how I want to take it. One option is lump sum and that is how I would take it but not sure where I want it to go because of falling stock markets. I can put it into 401K in a money market fund earns hardly nothing but it isn't in the stock. What would you do? Thank you.

mule
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Re: I can sleep at night but it is on my mind a lot

Post by mule » Mon Jan 18, 2016 8:48 am

I thank you again for the encouraging words. I guess my goal was to live from my interest and at death still have what I had the day I retired. Lol I knw that may sound strange but that was what I work to accomplish. I hope with in the 8 years or so stocks will rebound and things start to look better.

dbr
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Re: I can sleep at night but it is on my mind a lot

Post by dbr » Mon Jan 18, 2016 9:02 am

mule wrote:I thank you again for the encouraging words. I guess my goal was to live from my interest and at death still have what I had the day I retired. Lol I knw that may sound strange but that was what I work to accomplish. I hope with in the 8 years or so stocks will rebound and things start to look better.
To meet that objective you would need to increase your portfolio to pace inflation and your withdrawals likewise. You want about 1.6% withdrawal on your current assets. Thirty year TIPS are running at an interest rate of about 1.3% now, so there really is no investment that meets your objectives guaranteed. Investing in some allocation to stocks will give you an excellent chance of meeting your goal at your level of spending but also a chance of watching a significant decline in assets. To see how the possible scenarios might develop you could enter your scenario at www.firecalc.com and observe the chart presented in the output.

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Re: I can sleep at night but it is on my mind a lot

Post by retiredjg » Mon Jan 18, 2016 9:03 am

I think you have plenty of money, but I don't know if it is enough to "live on the interest". Might be if your expenses are low enough. But why live on the interest? Why not spend some of what you have saved?

Even with plenty of money, it seems your stock to bond ratio may be a little aggressive if you are now finding the gyrations of the market to be stressful. If it didn't bother you in the past and it does bother you now, your emotional tolerance for risk has changed. You should change your portfolio to be consistent with your new tolerance.

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Re: I can sleep at night but it is on my mind a lot

Post by navyitaly » Mon Jan 18, 2016 9:08 am

[OT comment removed by admin LadyGeek]

letsgobobby
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Re: I can sleep at night but it is on my mind a lot

Post by letsgobobby » Mon Jan 18, 2016 9:14 am

You have enough to retire but you are taking far too much risk for someone with your disposition.

I would do 50/50 or even 40/60 or even 30/70, plus whatever cash cushion lets you sleep well at night. Assuming there is some social security or pension money coming your way in the next decade, you do not really need to take any risk at all. 70/30 is far too much in retirement for someone who has to ask.

Some folks are just plain nervous nellies. There is nothing wrong with that. My dad has predicted a stock market crash since the Nifty Fifty stocks of the sixties. He has never been more than 20% stocks. He still managed to retire on a 2% SWR because he is a good saver. His money will outlive him. There are many roads to Dublin.

I think you will sleep much better, with stocks up 150% from their lows and trading at high PE10 ratios, with far less stock exposure.

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Re: I can sleep at night but it is on my mind a lot

Post by pkcrafter » Mon Jan 18, 2016 9:17 am

I will be retiring in a few month's and now with the markets dropping I'm getting a little nervous.

It's natural to be nervous when you realize for the first time you don't have income back up. It feels a bit like walking a tight rope without a net. But here's the facts.

Your actual withdrawal is $48,000 from 2.9MM, which is a very low 1.65% withdraw rate. Your portfolio is 60/40 because you have to count the 400k cash. This means you have lots of capacity to take risk, but have little need. The AA is within reason, but you could go with 50/50 or 40/60 with no problems.

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When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

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Re: I can sleep at night but it is on my mind a lot

Post by Toons » Mon Jan 18, 2016 9:22 am

"My question is would you feel comfortable retiring now in the numbers I have given you"

Unequivocally,
Yes :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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Re: I can sleep at night but it is on my mind a lot

Post by jebmke » Mon Jan 18, 2016 9:23 am

mule wrote: I guess my goal was to live from my interest and at death still have what I had the day I retired.
Is there a specific reason why you desire to have the same amount at death? The reason I ask is that, at some point down the road it might make sense for you to explore a single premium immediate annuity (SPIA). That would give you some guaranteed cash flow for the rest of your life.
When you discover that you are riding a dead horse, the best strategy is to dismount.

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Re: I can sleep at night but it is on my mind a lot

Post by Dandy » Mon Jan 18, 2016 9:25 am

Most people find it comical on here that you can't figure out if you are ok on almost $3,000,0000....I do too...

Unnecessary comment and not true at least not verifiable. Laughing at people's fears doesn't help them. Calm reassurance with some facts and/or sound suggestions often does. The OP is not sitting in the dark sucking his thumb he just has some relatively normal concerns when his retirement pot is in a short, steep decline.

One of the strengths of this forum is that people can ask questions without being treated poorly.

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Youngblood
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Re: I can sleep at night but it is on my mind a lot

Post by Youngblood » Mon Jan 18, 2016 9:46 am

When I was young and working I was close to 100% equities.

As a retiree, I would not be comfortable with a 70% allocation to stocks and both my wife and I
have ample pensions.

Though we can't predict the future, the market really doesn't look that good right now.

If you lose 50% of your portfolio you will need to gain 100% just to break even. In our remaining years that may not happen.

In dollars, how much would you be comfortable to lose? With approximately 2.5 million in a 70/40 allocation and depending on what percentage you had in small caps, emerging markets etc. I would estimate you have lost about 150K.

That's a lot of money.

YB
"I made my money by selling too soon." | Bernard M. Baruch

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Re: I can sleep at night but it is on my mind a lot

Post by 2Birds1Stone » Mon Jan 18, 2016 9:49 am

mule wrote:I thank you again for the encouraging words. I guess my goal was to live from my interest and at death still have what I had the day I retired. Lol I knw that may sound strange but that was what I work to accomplish. I hope with in the 8 years or so stocks will rebound and things start to look better.

Your goal is to die with a $3 million portfolio?

Oy vey.

dbr
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Re: I can sleep at night but it is on my mind a lot

Post by dbr » Mon Jan 18, 2016 9:58 am

2Birds1Stone wrote:
mule wrote:I thank you again for the encouraging words. I guess my goal was to live from my interest and at death still have what I had the day I retired. Lol I knw that may sound strange but that was what I work to accomplish. I hope with in the 8 years or so stocks will rebound and things start to look better.

Your goal is to die with a $3 million portfolio?

Oy vey.
It isn't uncommon that people come to the forum with a thought in mind that safety can be expressed in the concept of "live on the interest and don't invade the principal." That is an old and honorable point of view. It is especially valid in family dynasties where preservation of family wealth is even more important than the comfort and welfare of the current elders of the family. In Victorian England one often heard of one's wealth quoted in terms of the annual income from the entailed estates. The problem is that it doesn't apply today to people who don't have the wealth to make such a thing practical. It is especially difficult if one keeps track of real wealth after inflation rather than nominal dollars. But in this case the ambition is very nearly possible. One can use a tool such as FireCalc to explore the possibilities. There is even an option on the spending tab to impose the "95% rule" which includes a report where the criterion for success is a portfolio not falling in real value from the initial value.

I should add that most of the outcomes of spending from portfolios of stocks and bonds at "safe" rates like 4% will end up with vast unspent wealth. Stock and bond investments are a very poor match to the problem of funding retirement from wealth. The most efficient or best aligned method would be an inflation indexed SPIA. One gets a level real income stream, a life guaranteed income stream benefiting from pooled longevity risk, and the value of the assets involved has zero volatility (it is exactly zero from beginning to end). There are practical reasons why that would not be what one would do with all of one's wealth, and there is agency risk in insurance companies, but, still, it seems reasonable that everyone should diversify their retirement income streams to have sources independent of investment results. Social Security, especially delayed to age 70, is one fundamental tool many people have already.
Last edited by dbr on Mon Jan 18, 2016 10:04 am, edited 1 time in total.

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Re: I can sleep at night but it is on my mind a lot

Post by supersharpie » Mon Jan 18, 2016 10:00 am

mule wrote:I thank you again for the encouraging words. I guess my goal was to live from my interest and at death still have what I had the day I retired. Lol I knw that may sound strange but that was what I work to accomplish. I hope with in the 8 years or so stocks will rebound and things start to look better.
You worked for ~40 years to be a rich man in the graveyard?

JW-Retired
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Re: I can sleep at night but it is on my mind a lot

Post by JW-Retired » Mon Jan 18, 2016 10:02 am

mule wrote:This 140K will be a retirement or pension that I have options on how I want to take it. One option is lump sum and that is how I would take it but not sure where I want it to go because of falling stock markets. I can put it into 401K in a money market fund earns hardly nothing but it isn't in the stock. What would you do? Thank you.
There is no good answer to this without us knowing more about your finances. What sort of monthly pension option could you take with this? What is your whole retirement income picture going to be? What is your 401k invested in now?

Would be Ideal to put your info in something like our preferred format here:
viewtopic.php?f=1&t=6212
JW
added ps: I see you have asked this previously. viewtopic.php?f=1&t=182342&newpost=2764200
Not sure what I could add to that.
Retired at Last

dbr
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Re: I can sleep at night but it is on my mind a lot

Post by dbr » Mon Jan 18, 2016 10:04 am

supersharpie wrote:
mule wrote:I thank you again for the encouraging words. I guess my goal was to live from my interest and at death still have what I had the day I retired. Lol I knw that may sound strange but that was what I work to accomplish. I hope with in the 8 years or so stocks will rebound and things start to look better.
You worked for ~40 years to be a rich man in the graveyard?
see above

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Re: I can sleep at night but it is on my mind a lot

Post by jebmke » Mon Jan 18, 2016 10:05 am

supersharpie wrote:You worked for ~40 years to be a rich man in the graveyard?
Mule didn't say. Perhaps there are heirs or philanthropic reasons.
When you discover that you are riding a dead horse, the best strategy is to dismount.

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Watty
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Re: I can sleep at night but it is on my mind a lot

Post by Watty » Mon Jan 18, 2016 10:29 am

mule wrote:I would be able to live about 8 years without having to touch any money that is in the stock market.
If you set your stock dividends and bond interest to not be automatically reinvested then you could likely not only not touch the stocks, but also not touch your cash since if you get 2% in dividends and bond interest on that $2.5m that would give you $50,000 a year before taxes.

In your situation I would be more concerned about your net worth growing to be above the estate tax threshold($5 million?) and having estate taxes be a problem.

dbr
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Re: I can sleep at night but it is on my mind a lot

Post by dbr » Mon Jan 18, 2016 10:31 am

You need to come to grips with what asset allocation you want. If it is a lump sum it is good to roll it into your 401K and then invest according to the asset allocation you choose. Putting retirement money into cash is probably the most risky alternative for funding future spending, but you need a plan first.

If one of the options is a monthly income pension payment you should not so quickly dismiss that. The comparison is to the cost of a current SPIA you might buy with the money.

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Re: I can sleep at night but it is on my mind a lot

Post by dbr » Mon Jan 18, 2016 10:34 am

Watty wrote:
mule wrote:I would be able to live about 8 years without having to touch any money that is in the stock market.
If you set your stock dividends and bond interest to not be automatically reinvested then you could likely not only not touch the stocks, but also not touch your cash since if you get 2% in dividends and bond interest on that $2.5m that would give you $50,000 a year before taxes.

In your situation I would be more concerned about your net worth growing to be above the estate tax threshold($5 million?) and having estate taxes be a problem.
What the objectives are for all this money is an important question. Mule, you have not said anything about that other than thinking you want to die with the money intact.

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Watty
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Re: I can sleep at night but it is on my mind a lot

Post by Watty » Mon Jan 18, 2016 10:43 am

dbr wrote:It isn't uncommon that people come to the forum with a thought in mind that safety can be expressed in the concept of "live on the interest and don't invade the principal." That is an old and honorable point of view. It is especially valid in family dynasties where preservation of family wealth is even more important than the comfort and welfare of the current elders of the family.
When the interest rate were higher than 4% that could have actually resulted in excessive withdrawals like like when there were double digit interest rates during the high inflation years.

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Re: I can sleep at night but it is on my mind a lot

Post by dbr » Mon Jan 18, 2016 10:45 am

Watty wrote:
dbr wrote:It isn't uncommon that people come to the forum with a thought in mind that safety can be expressed in the concept of "live on the interest and don't invade the principal." That is an old and honorable point of view. It is especially valid in family dynasties where preservation of family wealth is even more important than the comfort and welfare of the current elders of the family.
When the interest rate were higher than 4% that could have actually resulted in excessive withdrawals like like when there were double digit interest rates during the high inflation years.
A very good point.

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Re: I can sleep at night but it is on my mind a lot

Post by sambb » Mon Jan 18, 2016 4:18 pm

despite all of the logical advice here, I am sure it is tough to retire in the beginning of a potential big bear market. Changing allocation, and working 6 months to be more comfortable is not an unreasonable emotional solution while you become secure in the decision.

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Re: I can sleep at night but it is on my mind a lot

Post by stemikger » Mon Jan 18, 2016 4:21 pm

GerryL wrote:
mule wrote:
My portfolio has $400,000. in cash and then I have 70/30 stocks and bonds worth 2.5M. I will need about $48,000. a year to live.
If THAT's not enough, then I'm hosed. (And I'm doing fine :wink: )
+1

Me too! :beer
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!

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Re: I can sleep at night but it is on my mind a lot

Post by LadyGeek » Mon Jan 18, 2016 4:35 pm

The OP had two similar threads with the same title. I merged everything into here, as it's best to keep all the information in one spot.

mule - This is not a big deal, don't worry about it. Ask your questions here.
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Re: I can sleep at night but it is on my mind a lot

Post by bmelikia » Mon Jan 18, 2016 4:47 pm

If you disregard the 400k that you have and you only concentrate on the 2.5 million and assume you were going to live to age 92 (arbitrary age I picked). . .

This is nothing fancy on my part but just a simple way of figuring:

92 - 59 = 33 years that you need your money to last

2.5 million / 33 years = 75k per year that you could spend every year until age 92

That assumes that you earn 0% on your money between now and then.

If you don't have any kids - you could almost not even invest your money and just put it in savings accounts at 1% interest and more than cover your needs - definitely if you still think you only need to withdraw 48k a year.

Like some previous comments mentioned - if you can't make this work then a lot of people out there are going to be in trouble (probably myself included)
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Re: I can sleep at night but it is on my mind a lot

Post by mouses » Mon Jan 18, 2016 5:01 pm

jebmke wrote:
mule wrote: I guess my goal was to live from my interest and at death still have what I had the day I retired.
Is there a specific reason why you desire to have the same amount at death?
I understand the OP's view. I used to think that way also. It is not totally rational when you consider the effect of inflation, but somehow part of my brain thought that as long as my assets did not decrease, I could basically live ad infinitum without running out of money. Then CD rates dropped :-) and I had to adjust.

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Re: I can sleep at night but it is on my mind a lot

Post by dbr » Mon Jan 18, 2016 5:13 pm

mouses wrote:
jebmke wrote:
mule wrote: I guess my goal was to live from my interest and at death still have what I had the day I retired.
Is there a specific reason why you desire to have the same amount at death?
I understand the OP's view. I used to think that way also. It is not totally rational when you consider the effect of inflation, but somehow part of my brain thought that as long as my assets did not decrease, I could basically live ad infinitum without running out of money. Then CD rates dropped :-) and I had to adjust.
A more serious risk is that on the opposite side one will not have enjoyed most of the wealth one saved. The general idea of saving is postponing consumption. It is not part of the plan that one nearly completely eschews consumption by dying with vast unspent wealth. That is an idea that works only for the very wealthy. The idea is to find a practical medium between the two.

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Re: I can sleep at night but it is on my mind a lot

Post by 209south » Mon Jan 18, 2016 5:26 pm

You are in terrific shape. Not sure you have answered the social security question yet, but even without it you should be fine. In the absence of social security and a pension, an immediate annuity could be suitable...based on a quick review on immediateannuities.com, a 59 year-old male could buy a $4,000 monthly annuity stream for a little over $800,000. In your situation I'd be inclined to buy three $300,000 annuities (different providers) to drive a cash flow stream of over $50,000 a year today, investing the remaining $2mm+ of the portfolio in something like LifeStrategy Moderate Growth (60/40) to deal with inflation and luxury spending.

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Re: I can sleep at night but it is on my mind a lot

Post by mule » Mon Jan 18, 2016 5:51 pm

I have started a few topics on this subject. It maybe that I have not asked the right question and I haven't really got the right answer yet. Yes I have enough cash to live on for about 8 years. Nobody knows for sure but I would hope the markets go up so I can recover what I will be losing in this market dip. It has made me uneasy being in a bear market and retiring in a few month's.
I live in a remote area and I don't have access to a finical guru to help me out and when I contacted a person that could help he didn't get back to me and I finally told him to forget it.

The big question is this second retirement of 140K and what to do with it. Also my pay checks I want to put in my 401K and try to max my early allowable amount if I can.

The question for you folks is how would you invest these funds (140K retirement and pay checks). I want to put the money in 401K and I have the option of money market same as cash but no risk or put it in one bond fund that they offer. The other options the 401K has in stock funds (international etc). What would you do with this money? For now I need answer and will re-allocate down the road. I have a week or so then I need to tell my employer if I want to contribute to the 401K. But where do I put it to be safe in these times of down markets. Any help please!!!!

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Re: I can sleep at night but it is on my mind a lot

Post by retiredjg » Mon Jan 18, 2016 6:03 pm

It seems you should have a choice of rolling the retirement money into your 401k or an IRA. Is that correct?

Do you plan to keep your 401k intact or roll it to IRA when you retire?

The only way to help you invest the money that is coming is to see your entire picture - all of your assets. The format for how to ask that kind of question is in the link at the bottom of this message. It is some work, but you will learn a lot by doing it.

If you are feeling uncomfortable with this volatile market, the place to put all new money would be a bond fund of some type. Hard to get more specific than that without knowing more.

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