Recently retired, should I protect equity and sell?

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FXDXontherun
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Recently retired, should I protect equity and sell?

Post by FXDXontherun »

My wife and I both retired, (her because of health reasons), three years ago. We currently have a little over $1.5M at VG invested at 40% stock, 60% bond. We also have a bit over $400K in CD's that we have used as living expenses over the last three years. I ladder these CD's according to expected need. My wife has a small USPS pension, (about $7,800.00 yr). We are both 63 y/o and plan to take Social Security at FRA which is 66.6 y/o for us. At FRA, SS is estimated to pay us both about $2200 monthly x 12 = $52K/yr before taxes. Our expenses right now are about $50K yearly and we have no debt.
Our VG account has grown 22% from 4-2017 to 12-2019. With the recent downturn, from 4-2017 to 3-20-2020, our VG account is now up 7 percent. I will take a loss of $296K if I sell out now but will still realize a $98K gain over the 4-2017 starting point if I sell now.
I believe I'm in a position to ride this out but if the market takes a BIG drop it could take years to get it back and I'm considering taking the $98K gain if I sold now. I'm curious as to what you folks that know much more than me would do based on my age and the other data.

I have an phone appt with my VG personal advisor next Friday, (soonest I could get one) to discuss.

Thanks for any replies and good luck to you all.
Silk McCue
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Re: Recently retired, should I protect equity and sell?

Post by Silk McCue »

Sounds to me like you won’t have need to touch your equities for a decade, give or take. No, I wouldn’t sell because you may live into your 90s. When considering your $400k CD. You currently hold a very conservative amount of equities. Let them grow for the coming decades.

Cheers
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WoodSpinner
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Re: Recently retired, should I protect equity and sell?

Post by WoodSpinner »

OP,

Agree, you are in a good position to ride it out.

That’s my plan as well.

WoodSpinner
TonyDAntonio
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Re: Recently retired, should I protect equity and sell?

Post by TonyDAntonio »

I'm in a similar position. I'm not selling. In fact, if things get really bad I'll tap my emergency fund and invest in equities. I believe you are in good shape.
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BolderBoy
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Re: Recently retired, should I protect equity and sell?

Post by BolderBoy »

FXDXontherun wrote: Sun Mar 22, 2020 4:59 pmI'm curious as to what you folks that know much more than me would do based on my age and the other data.
I won't claim to know anything. (Mr Bogle repeatedly said, "Nobody knows nothin'!".

Two things:

1) You should stand fast.
2) When this market rout is over, consider changing your AA to 30/70. You just need to stay ahead of inflation with your portfolio.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect
retire57
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Re: Recently retired, should I protect equity and sell?

Post by retire57 »

DH and I are in a similar position and we aren't selling. The only thing we are doing differently is not looking at our portfolio :shock:
retire57
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Re: Recently retired, should I protect equity and sell?

Post by retire57 »

retire57 wrote: Sun Mar 22, 2020 10:13 pm DH and I are in a similar position and we aren't selling. The only thing we are doing differently is not looking at our portfolio :shock:.
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dwickenh
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Re: Recently retired, should I protect equity and sell?

Post by dwickenh »

retire57 wrote: Sun Mar 22, 2020 10:13 pm DH and I are in a similar position and we aren't selling. The only thing we are doing differently is not looking at our portfolio :shock:
I love this one!!!

:sharebeer
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett
smectym
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Re: Recently retired, should I protect equity and sell?

Post by smectym »

FXDXontherun wrote: Sun Mar 22, 2020 4:59 pm My wife and I both retired, (her because of health reasons), three years ago. We currently have a little over $1.5M at VG invested at 40% stock, 60% bond. We also have a bit over $400K in CD's that we have used as living expenses over the last three years. I ladder these CD's according to expected need. My wife has a small USPS pension, (about $7,800.00 yr). We are both 63 y/o and plan to take Social Security at FRA which is 66.6 y/o for us. At FRA, SS is estimated to pay us both about $2200 monthly x 12 = $52K/yr before taxes. Our expenses right now are about $50K yearly and we have no debt.
Our VG account has grown 22% from 4-2017 to 12-2019. With the recent downturn, from 4-2017 to 3-20-2020, our VG account is now up 7 percent. I will take a loss of $296K if I sell out now but will still realize a $98K gain over the 4-2017 starting point if I sell now.
I believe I'm in a position to ride this out but if the market takes a BIG drop it could take years to get it back and I'm considering taking the $98K gain if I sold now. I'm curious as to what you folks that know much more than me would do based on my age and the other data.

I have an phone appt with my VG personal advisor next Friday, (soonest I could get one) to discuss.

Thanks for any replies and good luck to you all.
FXDX, good call setting up those CD’s, that provides a security buffer. We have quite a bit along those lines and it does help us to stand fast in times of extreme stress. This is one of those times. Agree with others, and with what I’d imagine your Vanguard guy will also say: based on your particular situation, tactically, your best move right now is “Don’t just do something, stand there!”

I will point out that the bond market is going through a very odd period right now: corporate bonds are significantly stressed because even investment-grade companies find their revenues threatened by the virus, but perhaps even more by the lockdown aimed at containing the virus. So perhaps review the composition of the bond allocation. Should it be more heavily tilted to Treasuries, and if so, what tenor of Treasuries? That might be a good topic to discuss with your advisor and it’s an area where he might conceivably suggest a change (are you enrolled in Vanguard’s Personal Advisor Service [VPAS]?).

Good luck!
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jabberwockOG
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Re: Recently retired, should I protect equity and sell?

Post by jabberwockOG »

We are in a similar situation as you with apprx 5 years living expenses in cash. Absolutely do not sell now. Ride it out. We have been down this road before with black swans. Each time it looks unique and hopeless but in the long run we get past it and the market bounces back. Hang in there and quit looking at your portfolio for a while.
curmudgeon
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Re: Recently retired, should I protect equity and sell?

Post by curmudgeon »

Sounds like you are in good shape no matter what you do. I don't see any reason to do any selling with the market chaotic and no near-term need for cash. Give it a couple of years.
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Cyclesafe
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Re: Recently retired, should I protect equity and sell?

Post by Cyclesafe »

OP, your position is awesome. You've made all the right calls. Congratulations.

Don't sell equities for the duration. Your expenses will drop since you now have fewer ways to spend money.
"Plans are useless; planning is indispensable.” (Dwight Eisenhower) | "Man plans, God laughs" (Yiddish proverb)
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galawdawg
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Re: Recently retired, should I protect equity and sell?

Post by galawdawg »

It looks like you have a well considered and balanced asset allocation and are probably better positioned to ride out this market without the need to sell equity holdings than other retirees who may be more equity heavy.

I retired at the end of 2018. Personally, I am staying the course with the optimistic expectation that the markets will recover in the long-term. But seeing this market from the perspective of a retiree who is deaccumulating is a lot different than seeing previous market downturns when I was still working and accumulating. While the emotions and concerns may be different now that I am retired, my response is the same. Stick to my IPS and stay the course.
michaeljc70
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Re: Recently retired, should I protect equity and sell?

Post by michaeljc70 »

I agree with most of the others and say ride it out. You don't need that money any time soon. I think you will regret selling in the long run and are trying to play a mental game on yourself by saying you are selling at a gain (which is true, but is almost always true on long held stocks).
Rudedog
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Re: Recently retired, should I protect equity and sell?

Post by Rudedog »

You still own shares in the best companies on earth, with hard-working and smart employees. I do too and I'm going to ride it out.
cleosdad
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Re: Recently retired, should I protect equity and sell?

Post by cleosdad »

FXDXontherun wrote: Sun Mar 22, 2020 4:59 pm My wife and I both retired, (her because of health reasons), three years ago. We currently have a little over $1.5M at VG invested at 40% stock, 60% bond. We also have a bit over $400K in CD's that we have used as living expenses over the last three years. I ladder these CD's according to expected need. My wife has a small USPS pension, (about $7,800.00 yr). We are both 63 y/o and plan to take Social Security at FRA which is 66.6 y/o for us. At FRA, SS is estimated to pay us both about $2200 monthly x 12 = $52K/yr before taxes. Our expenses right now are about $50K yearly and we have no debt.
Our VG account has grown 22% from 4-2017 to 12-2019. With the recent downturn, from 4-2017 to 3-20-2020, our VG account is now up 7 percent. I will take a loss of $296K if I sell out now but will still realize a $98K gain over the 4-2017 starting point if I sell now.
I believe I'm in a position to ride this out but if the market takes a BIG drop it could take years to get it back and I'm considering taking the $98K gain if I sold now. I'm curious as to what you folks that know much more than me would do based on my age and the other data.

I have an phone appt with my VG personal advisor next Friday, (soonest I could get one) to discuss.

Thanks for any replies and good luck to you all.
Hello. Any chance her postal pension will affect S.S? I was under CSRS and it took half of mine.
Carmen1409
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Re: Recently retired, should I protect equity and sell?

Post by Carmen1409 »

It sounds like you’re going to be OK for the time being. Way to go! Don’t sell and don’t look at your portfolio!

One thing I did wonder, is it at all possible to lower your spending. $50k seems like a lot in retirement at this moment. But I don’t know your situation.
Topic Author
FXDXontherun
Posts: 35
Joined: Tue Nov 01, 2016 12:51 pm

Re: Recently retired, should I protect equity and sell?

Post by FXDXontherun »

Thanks very much for all the replies, it makes me feel a bit better about our position. Our expenses were actually $42,394.XX last year so I doubt they will be $50K this year as I listed. I often rough calculate things on a "worst case" scenario. All my life I have been a buy and hold guy. I remember in '08 when I was working, I knew the market was dropping significantly but even though I kept an eye on it, I was so busy I just didn't focus on it. Now in retirement, I have time to watch and fret over it! Thanks to the reply that suggested a review of my 60% bond portion and consider tilting towards treasuries. I'll discuss that with the advisor. And yes, I am in the VPAS program and I'm certain that she will suggest I stay the course.
Thanks all and good luck.
Topic Author
FXDXontherun
Posts: 35
Joined: Tue Nov 01, 2016 12:51 pm

Re: Recently retired, should I protect equity and sell?

Post by FXDXontherun »

cleosdad wrote: Mon Mar 23, 2020 9:19 am
FXDXontherun wrote: Sun Mar 22, 2020 4:59 pm My wife and I both retired, (her because of health reasons), three years ago. We currently have a little over $1.5M at VG invested at 40% stock, 60% bond. We also have a bit over $400K in CD's that we have used as living expenses over the last three years. I ladder these CD's according to expected need. My wife has a small USPS pension, (about $7,800.00 yr). We are both 63 y/o and plan to take Social Security at FRA which is 66.6 y/o for us. At FRA, SS is estimated to pay us both about $2200 monthly x 12 = $52K/yr before taxes. Our expenses right now are about $50K yearly and we have no debt.
Our VG account has grown 22% from 4-2017 to 12-2019. With the recent downturn, from 4-2017 to 3-20-2020, our VG account is now up 7 percent. I will take a loss of $296K if I sell out now but will still realize a $98K gain over the 4-2017 starting point if I sell now.
I believe I'm in a position to ride this out but if the market takes a BIG drop it could take years to get it back and I'm considering taking the $98K gain if I sold now. I'm curious as to what you folks that know much more than me would do based on my age and the other data.

I have an phone appt with my VG personal advisor next Friday, (soonest I could get one) to discuss.

Thanks for any replies and good luck to you all.
Hello. Any chance her postal pension will affect S.S? I was under CSRS and it took half of mine.
Hello cleosdad. , My wife retired in 2016 under the FERS retirement system. I believe your CSRS was previous to the FERS, (and paid much better). My dad retired under the system before the FERS system and he had a nice pension. I do not believe my wife's FERS pension affects her SS in a negative way. At least that's what my research with the SS dept tells me. Thanks for the reply.
Nightowl99
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Re: Recently retired, should I protect equity and sell?

Post by Nightowl99 »

The stock market has always come back after a crash in the past. I used to work with someone who sold equities during the last financial crisis. He said he really regretted it because he locked in his losses.

Here's a quote from Jane Bryant Quinn ("How to Make Your Money Last"):
"Selling the stock market when it falls is like feeding your money to the squirrels. It's gone for good. If you simply do nothing, and wait, the money will eventually return."
"Please delete my account" -- jazzmaster | "Yeah, delete my account, too! Also, I'd like an order of flapjacks, thanks. And extra napkins."--Robot Monster
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KEotSK66
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Re: Recently retired, should I protect equity and sell?

Post by KEotSK66 »

if your 40/60 portfolio generates 3% income that's $45k, add to that the pension and you''ve met your expenses. you don't need to sell stock, cds, anything (vwiax?)

if the funds only generate 2% that's $30k, with the pension you're at about $37k so I guess you'd spend down the cds, still don't need to sell anything since the cds could support this for a long time

and when ss kicks in you'll be ahead of the game and won't have to sell or spend down anything, just live off the income

note I didn't need to consider any stock growth, which would be icing on the cake
"i just got fluctuated out of $1,500", jerry
yukon50
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Re: Recently retired, should I protect equity and sell?

Post by yukon50 »

OP, how did the meeting with PAS go?
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