Retirement Closing In

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Topic Author
LuigiLikesPizza
Posts: 512
Joined: Tue Jan 05, 2016 6:54 am

Retirement Closing In

Post by LuigiLikesPizza »

Retirement is planned for 2019 at age 58. Starting to get cold feet, would appreciate any outside/objective views or comments on my situation - any tweaks I can make or blind spots that should be pointed out.

Single, no debt, a renter.

Have accrued 25 X expenses BEFORE Social Security and Pension income. One of the pensions is a federal pension. The other pension appears secure & well funded. I will be eligible to keep healthcare insurance in retirement.

At risk of sounding obvious, I want to strike a balance between enough growth to keep pace with inflation, without any undue risk as it's very unlikely that I would ever return to full-time work.

Current accounts & allocation

Stock Funds - 38% (includes a mix of Vanguard total market, Vanguard total international, smaller amounts of small and mid-cap funds) - all of this is held in a taxable account

REIT Fund - 4% (Vanguard broad index REIT ETF) held in Roth Account

Bonds - 58% in the G Fund, held in the TSP

total - 100%

Also have about $200K in the form of I-Bonds, CDs and cash, for short term & emergency use.

Other assets - not much, I travel light, have a car worth about $15K.

Thanks.
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Pajamas
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Re: Retirement Closing In

Post by Pajamas »

LuigiLikesPizza wrote: Thu Apr 26, 2018 4:09 pm
At risk of sounding obvious, I want to strike a balance between enough growth to keep pace with inflation, without any undue risk as it's very unlikely that I would ever return to full-time work.
Are you thinking that you should shift into fewer equities? Or what?

It seems to me that you are already carrying very little risk for someone in your situation and that you could carry more safely but simply choose not to because you are so risk adverse.

You have no debts or even financial obligations of any sort beyond ordinary living expenses. You will have significant Social Security and pension income, and good health care coverage. Then you have almost enough to live on without any of that at 25x expenses, with mostly bonds (58%) in your investment accounts plus $200k cash or near-cash equivalents.

So it seems to me that you have no need to change anything and it's not clear what you think you should change and for what purpose, more or less risk.
Grt2bOutdoors
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Re: Retirement Closing In

Post by Grt2bOutdoors »

How much does pension income cover of you annual expenses? Assuming you will collect social security at either ages 67 or 70? You have 14x annual expenses in bonds already plus another 200k in near cash. Think of portfolio as two pieces - safe and risk. Only 32% is at risk, when market declines, leave the risk portfolio alone to recover and take from bonds.

Enjoy your retirement!
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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ResearchMed
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Re: Retirement Closing In

Post by ResearchMed »

Pizza...

Very sorry for your loss!

Please try to take some time off... at least for a few days, and preferably a bit more... before you make any significant changes like this.

You are really doing well financially, it seems, as already pointed out.
A few more weeks or even months won't matter, and given the volatility these days, you might end up happy with your 'safe' approach right now.

You might want to consider what percent of your expected budget those pensions will provide. That will also make a difference in how much risk you'd feel comfortable with in your portfolio.

RM
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Topic Author
LuigiLikesPizza
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Re: Retirement Closing In

Post by LuigiLikesPizza »

How much does pension income cover of you annual expenses?

I can meet expenses just based on income from investments, but it would be a middle class lifestyle (not that there's anything wrong with that).

The pensions and Soc Sec. income will push me into the ranks of upper middle class lifestyle.
Topic Author
LuigiLikesPizza
Posts: 512
Joined: Tue Jan 05, 2016 6:54 am

Re: Retirement Closing In

Post by LuigiLikesPizza »

Are you thinking that you should shift into fewer equities? Or what?

I don't know what I am thinking, to be honest. Its approximately 40 % stocks to 60% bonds, which is not that atypical for a person retiring into their 6th decade.
PhilosophyAndrew
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Re: Retirement Closing In

Post by PhilosophyAndrew »

Your finances seems fine for retirement. You say you are getting cold feet — exactly what about your retiremt makes you anxious or unsure?

Explaining this may help you garner responses that address your exact concerns.


Andy.
DorothyB
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Re: Retirement Closing In

Post by DorothyB »

How much are your annual expenses?

My case was slightly similar to yours (in some ways). Only one pension and I own my home, but single, retiring before age 60 w/ health insurance benefits.

You have more saved than I did :) Inflation is probably one of our biggest concerns since we will be retired for so long.

I'm planning to wait until age 70 to start soc sec so it will be as large as possible since it is "sort of" inflation adjusted so will help with that.

I would make sure that you have enough in "liquid" assets (cash, money market accounts, i-bonds, etc) to last 2 or 3 years for when the market crashes, so you don't have to sell as much at a loss.
Topic Author
LuigiLikesPizza
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Re: Retirement Closing In

Post by LuigiLikesPizza »



How much are your annual expenses?


For the past several years, I've been able to live on 50K yr in a HCOL. - not counting income taxes or retirement fund contributions.

I am planning to move to a LCOL, so I estimate I will continue to live on $50K yr with the ability to spend more on travel.

Seems I'll be able to do that.

It's just a huge psychological leap to go from accumulation to spending down.
ExitStageLeft
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Re: Retirement Closing In

Post by ExitStageLeft »

It looks like you're ready to retire today. Have you run your numbers through FIRECalc or CFIRESim? A 40% equities position is more susceptible to being eaten by inflation than something like 60/40. But that's only really an issue when you start spending more than ~4% of the portfolio.

Will you be dealing with big RMDs from the TSP at age 70 and beyond? Might want to consider some Roth conversion over the next few years while tax rates are lower.
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Watty
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Re: Retirement Closing In

Post by Watty »

LuigiLikesPizza wrote: Thu Apr 26, 2018 5:42 pm How much does pension income cover of you annual expenses?

I can meet expenses just based on income from investments, but it would be a middle class lifestyle (not that there's anything wrong with that).

The pensions and Soc Sec. income will push me into the ranks of upper middle class lifestyle.
I would look at it the other way around since the pension and Social Security are the more secure sources of income,

Can the pension and Social Security cover your core expenses?

Once you settle in for a few years in the lower cost of living area one thing you might look at is buying a house or a condo. Without a rent payment it could be that the pension and Social Security will cover a lot more of your expenses. In some situation you can rent or buy virtually identical properties in a subdivision or condo so deciding if you should rent or buy can be mainly a financial decision.
ExitStageLeft
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Re: Retirement Closing In

Post by ExitStageLeft »

LuigiLikesPizza wrote: Thu Apr 26, 2018 6:14 pm It's just a huge psychological leap to go from accumulation to spending down.
I'm not there yet myself, just a couple years behind you. But I've heard that quite a few times from folks who have sizeable portfolios. It's not an easy transition for many to go from being a prodigious saver to spending even the least bit of that portfolio.
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tennisplyr
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Re: Retirement Closing In

Post by tennisplyr »

Retired 7 years and in my late 60s. Been taking from my portfolio since day 1 of retirement. In the beginning it was kinda weird living off of assets but over time I saw that it actually works and it doesn't bother me at all. To some extent it takes a leap of faith but so do many things in life. Good luck
“Those who move forward with a happy spirit will find that things always work out.” -Retired 13 years 😀
Topic Author
LuigiLikesPizza
Posts: 512
Joined: Tue Jan 05, 2016 6:54 am

Re: Retirement Closing In

Post by LuigiLikesPizza »

You say you are getting cold feet — exactly what about your retiremt makes you anxious or unsure?

It's very likely (sorry if this sounds obvious) psychological. I was raised barely above poverty, so maybe, no matter how much one has, the fear of reverting doesn't go away. The idea of not having earned income is foreign....also it seems in retirement we can shoot ourselves in the foot in multiple ways - portfolio invested too conservatively, not conservatively enough, spending too much...lots of variables.
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Pajamas
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Re: Retirement Closing In

Post by Pajamas »

LuigiLikesPizza wrote: Thu Apr 26, 2018 7:04 pm You say you are getting cold feet — exactly what about your retiremt makes you anxious or unsure?

It's very likely (sorry if this sounds obvious) psychological. I was raised barely above poverty, so maybe, no matter how much one has, the fear of reverting doesn't go away. The idea of not having earned income is foreign....also it seems in retirement we can shoot ourselves in the foot in multiple ways - portfolio invested too conservatively, not conservatively enough, spending too much...lots of variables.
Maybe it would help to think of your pension and Social Security as earned income that continues after you stop working.
ColoradoRick
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Re: Retirement Closing In

Post by ColoradoRick »

You are fine. Millions would love to be in your position. The fact that you are worrying about it means you don't have to worry about it. We've got 25x and never looked back. It'll take practice and a little adjustment but you've worked hard....try to enjoy life.
Stang70
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Re: Retirement Closing In

Post by Stang70 »

You sound like an ideal candidate for implementing VPW (Variable Percentage Withdrawal). This portfolio draw-down method coupled with your stable pension(s) and delay to taking Social Security should help alleviate many of your concerns. Might want to check out the Boglehead VPW wiki https://www.bogleheads.org/wiki/Variabl ... withdrawal. Also the thread "Delay Social Security to age 70 and Spend more money at 62" viewtopic.php?f=10&t=102609
Last edited by Stang70 on Sun Apr 29, 2018 9:21 pm, edited 1 time in total.
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quantAndHold
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Re: Retirement Closing In

Post by quantAndHold »

I have to admit feeling the same way. I think it’s fairly common. For me, I was fine when I was considering retiring. I ran the numbers, everything looked good. I quit my job. Everything was fine for a few months. Then I started thinking about what I did (quitting in early 50’s, at peak earning power), and the consequences of being wrong. And then spent the next year living much more frugally than necessary.

When I started talking to recruiters about picking up contract work that I don’t actually want to do to earn money that we don’t actually need, I snapped out of it. I reran the numbers. Realized that over the past year, our annual expenses were only about 2.5% of our portfolio, and that we could probably spend more.

So I’m okay again. For now.
jminv
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Re: Retirement Closing In

Post by jminv »

If I were you, I would retire today and enjoy the next chapter of life. You have more than enough to retire, considering the 25x before pension or social security, so hesitation shouldn't be from that.

You say that some of the worry comes from your portfolio and what ifs but then you also have guaranteed retirement income to fall back on and no debt.
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cfs
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Re: Retirement Closing In

Post by cfs »

You are a perfect candidate for retirement. My recommendation is to have a good plan to stay mentally and physically active.

Go to our Roll Call for the Retirement Class of 2019 and let us know your retirement month/day.

And if you decide to retire THIS year, then go to our Roll Call for the Retirement Class of 2018 and let us know your retirement month/day.

Have FUN! Good luck with your retirement, y gracias por leer ~cfs~
~ Member of the Active Retired Force since 2014 ~
The Wizard
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Re: Retirement Closing In

Post by The Wizard »

ResearchMed wrote: Thu Apr 26, 2018 4:44 pm Pizza...

Very sorry for your loss!
What loss?
Am I missing something?
Attempted new signature...
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ResearchMed
Posts: 16795
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Re: Retirement Closing In

Post by ResearchMed »

The Wizard wrote: Fri Apr 27, 2018 2:38 pm
ResearchMed wrote: Thu Apr 26, 2018 4:44 pm Pizza...

Very sorry for your loss!
What loss?
Am I missing something?
Sorry, from another thread.
A family member had just passed away.
(My bad...)

RM
This signature is a placebo. You are in the control group.
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