What next after you have enough sort of.

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
User avatar
Topic Author
TheTimeLord
Posts: 8948
Joined: Fri Jul 26, 2013 2:05 pm

What next after you have enough sort of.

Post by TheTimeLord »

I am very comfortable that between SS, small pensions and savings come 65-67 we will be in excellent shape. In other words I sort of feel like I have enough but I am not sure what to do for the next dozen or so years. I know the answer is save so I can retire early. I just have trouble figuring out what that portfolio would look like given it fairly short time horizon. Anyone else struggling with this?

I should add we have zero debt and discretionary income to play with monthly.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]
Random Walker
Posts: 4743
Joined: Fri Feb 23, 2007 8:21 pm

Re: What next after you have enough sort of.

Post by Random Walker »

I'm struggling with this issue as well. I'm sure StarbuxInvestor appreciates this, but thought I'd point it out anyways because of the way his question is written. Short time to retirement doesn't mean short time horizon for the portfolio. The portfolio needs to exist and be maintained potentially for another roughly 30 years.
I think the big issue is protecting oneself from big portfolio declines in the years immediately preceding retirement and in early retirement. My thought is to cool off the asset allocation some, but not too much because of the long period of retirement. Also may be worthwhile to think in some absolute terms rather than just AA %s. Might want to have a fixed amount invested in near riskless assets and then hold the remainder in a defined AA that will always be at risk.

Dave
User avatar
Topic Author
TheTimeLord
Posts: 8948
Joined: Fri Jul 26, 2013 2:05 pm

Re: What next after you have enough sort of.

Post by TheTimeLord »

Random Walker wrote:I'm struggling with this issue as well. I'm sure StarbuxInvestor appreciates this, but thought I'd point it out anyways because of the way his question is written. Short time to retirement doesn't mean short time horizon for the portfolio. The portfolio needs to exist and be maintained potentially for another roughly 30 years.
I think the big issue is protecting oneself from big portfolio declines in the years immediately preceding retirement and in early retirement. My thought is to cool off the asset allocation some, but not too much because of the long period of retirement. Also may be worthwhile to think in some absolute terms rather than just AA %s. Might want to have a fixed amount invested in near riskless assets and then hold the remainder in a defined AA that will always be at risk.

Dave
Interesting because I was thinking in the opposite direction of having a fixed dollar amount of equities. I know to some it sounds like a dumb question and to be honest I sort of feel like a guy complaining about finding a $100 bill but I am having a difficult time finding balance because of this.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]
sscritic
Posts: 21858
Joined: Thu Sep 06, 2007 8:36 am

Re: What next after you have enough sort of.

Post by sscritic »

I am retired. I have a pension and social security that cover my expenses. I will also have RMDs that I will be required to take in a few years. I also have children and grandchildren, the youngest being 16 months. If she lives to 91 1/4, and if I intend to support her in her retirement, I need my money to last 90 years.

I like the fixed dollar amount in stocks idea, although I might have to adjust that amount upward after I get my inheritance. Hmm, maybe I will have to adjust it upward after I start collecting my RMDs as well. Having money you don't need is a real pain. :)
Random Walker
Posts: 4743
Joined: Fri Feb 23, 2007 8:21 pm

Re: What next after you have enough sort of.

Post by Random Walker »

Check out William Bernstein's e-book The Ages of the Investor: A Critical Look at Lifecycle Investing. It's a really short and cheap read, and if I remember talks a lot about liability matching portfolios. I'm going to reread it myself.

Dave
BigJohn
Posts: 1953
Joined: Wed Apr 02, 2014 11:27 pm

Re: What next after you have enough sort of.

Post by BigJohn »

I am currently planing to retire in the next 6 - 12 months so have been giving this a lot of thought over the last several years. Tweaked my IPS a bit to adjust my asset allocation a little more heavily toward bonds. Nothing extreme, just gliding from 70/30 to 60/40 over the last several years. With run up in stocks it's been pretty easy to "sell high" as I rebalanced. I was able to do so in my 401K so no LTCG to worry about.

I gave some thought to the question of "Is this conservative enough to cover the scenario of a major stock market decline in the first 5 - 10 years of retirement?". To address this my plan is to keep at least 5 years of minimalist living expenses in short term bonds as part of my bond allocation. This should allow me the weather the downturn without having to sell stocks while they are low. Choose short term bonds as a compromise between inflation risk of cash and price drop risk of intermediate term bonds (especially with current low interest rates).
"The greatest enemy of a good plan is the dream of a perfect plan" - Carl Von Clausewitz
IlliniDave
Posts: 2358
Joined: Fri May 17, 2013 7:09 am

Re: What next after you have enough sort of.

Post by IlliniDave »

StarbuxInvestor wrote:I am very comfortable that between SS, small pensions and savings come 65-67 we will be in excellent shape. In other words I sort of feel like I have enough but I am not sure what to do for the next dozen or so years. I know the answer is save so I can retire early. I just have trouble figuring out what that portfolio would look like given it fairly short time horizon. Anyone else struggling with this?

I should add we have zero debt and discretionary income to play with monthly.
I'm 15 years from full retirement age but planning to bow out in 5. The two things I'm doing are fattening up my taxable accounts and "auditioning" my early retirement lifestyle as best I can. I should note maybe that my intent is to live rather frugally on a day-to-day basis to preserve the ability to do some nice but non-luxury travel.

As far as the portfolio my intent right now is to go along for the next 2-3 years preserving an ~70/30 allocation, then for the last 3-2 years start using all my taxable contributions to buy bonds. My goal is to have enough in bonds to cover my anticipated liability above my employer annuity for 15 years (out to age 70) without spending down more than half of them. That should also wind up being close to half my taxable account balance, +/- whatever vagaries the stock market throws at me. I'm not necessarily planning to only spend out of the bond half of my taxable, that's just what I'm looking at as far sizing it and how I'm putting together my "early retirement portfolio". Another check I'll be performing is to ensure that my projected withdrawal rate relative to my overall invested assets is < 3%.
Don't do something. Just stand there!
User avatar
Topic Author
TheTimeLord
Posts: 8948
Joined: Fri Jul 26, 2013 2:05 pm

Re: What next after you have enough sort of.

Post by TheTimeLord »

People may think if it as a mental accounting trick but after thinking long and hard on this topic it seemed to me I am looking at 2 distinct phases pre and post SS and pension. To plan for post SS and pension which is about 14 years away I can take X dollars and a say 65/35 AA and let things run their course in a tax deferred account. The pre SS and pension is a bit trickier because it starts at some point in the next 14 years, mostly like in the next 2-5 years and will last no more than 12 years and be a very risk adverse period. So to me it seems I am looking at 2 portfolios with meaningful difference in their focus, time horizon and the duration that need to last.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]
Longtimelurker
Posts: 471
Joined: Fri Dec 13, 2013 8:23 am

Re: What next after you have enough sort of.

Post by Longtimelurker »

I think there are several phases to retirement preparation. You have built the core "4% withdrawal rate" retirement portfolio. Congrats. Next some options:

- Reduce required retirement spending - things like paying off debt etc that reduce the amount of cash you need each month once retired
- Add a liability matching floor to your portfolio - TIPS ladder or a SPIA to target certain expenses, thereby reducing risk that you end up with portfolio failure. Targets like "I want my property taxes for the next 30 years to be covered" can be both motivating and an improvement to your plan from a risk perspective.
- Target a 3% withdrawal rate and start to reduce retirement age using this figure. Early retirement, yay!
- Build a TIPS ladder to take you from early retirement to SS to smooth out the guaranteed income variability

Make sense?
Stay the course. If you can't resist greed, and fear is proven to be 2x as strong, you are doomed as an investor.
User avatar
Topic Author
TheTimeLord
Posts: 8948
Joined: Fri Jul 26, 2013 2:05 pm

Re: What next after you have enough sort of.

Post by TheTimeLord »

I may be missing something here but seems to me that once I start taking SS and pension @ 67 a SWR of 5% might even be appropriate considering I am looking at a 25 year retirement and have a paid off residence I could liquidate.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]
User avatar
Topic Author
TheTimeLord
Posts: 8948
Joined: Fri Jul 26, 2013 2:05 pm

Re: What next after you have enough sort of.

Post by TheTimeLord »

Longtimelurker wrote:- Build a TIPS ladder to take you from early retirement to SS to smooth out the guaranteed income variability

Make sense?
I need more coaching on TIPS ladders for sure.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]
matonplayer
Posts: 257
Joined: Wed May 22, 2013 10:02 pm

Re: What next after you have enough sort of.

Post by matonplayer »

StarbuxInvestor wrote:People may think if it as a mental accounting trick but after thinking long and hard on this topic it seemed to me I am looking at 2 distinct phases pre and post SS and pension. To plan for post SS and pension which is about 14 years away I can take X dollars and a say 65/35 AA and let things run their course in a tax deferred account. The pre SS and pension is a bit trickier because it starts at some point in the next 14 years, mostly like in the next 2-5 years and will last no more than 12 years and be a very risk adverse period. So to me it seems I am looking at 2 portfolios with meaningful difference in their focus, time horizon and the duration that need to last.
I agree. As a 53 year old retiree, cash flow will be significantly different from age 53-70 than it will be from 70 on, assuming my wife and I defer. I'm considering purchasing a secondary market annuity that would get us to age 70.
The Wizard
Posts: 13356
Joined: Tue Mar 23, 2010 1:45 pm
Location: Reading, MA

Re: What next after you have enough sort of.

Post by The Wizard »

I don't *quite* understand what the question/problem is.
OP is targetting retirement in 12 years at age 65-67, so is around 53-55 now.
I'm assuming you have your basic expenses under control and are putting at least 25% of gross pay into long-term investments, so I'd continue with that, possibly bringing your AA down to 50/50 as you close in on retirement.
You want a decent pad above your minimum number, to deal with possible market declines.

And to the extent needed, I'd also advise invigorating your recreational activities a bit, so you don't arrive at retirement's doorstep asking: Ok, now what?

So I'm guessing you may not have to stay fully employed for the next dozen years, but yes, it can be a bit of a challenge deciding just when is a good time to pull the plug on employment...
Attempted new signature...
User avatar
Taylor Larimore
Advisory Board
Posts: 30317
Joined: Tue Feb 27, 2007 8:09 pm
Location: Miami FL

Secondary Market Annuities

Post by Taylor Larimore »

I'm considering purchasing a secondary market annuity that would get us to age 70.
Matonplayer:

This could be a very big mistake. Jason Zweig, respected columnist for the Wall Street Journal, explains:

Another Can't-Miss Deal That Can Miss Spectacularly

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
matonplayer
Posts: 257
Joined: Wed May 22, 2013 10:02 pm

Re: Secondary Market Annuities

Post by matonplayer »

Taylor Larimore wrote:
I'm considering purchasing a secondary market annuity that would get us to age 70.
Matonplayer:

This could be a very big mistake. Jason Zweig, respected columnist for the Wall Street Journal, explains:

Another Can't-Miss Deal That Can Miss Spectacularly

Best wishes.
Taylor
Taylor, thanks. This article was one big reason why I haven't pulled the trigger on one yet. :)
User avatar
Random Musings
Posts: 5908
Joined: Thu Feb 22, 2007 4:24 pm
Location: Pennsylvania

Re: What next after you have enough sort of.

Post by Random Musings »

Of course, you can save more to retire earlier. OTOH, you can spend a little more now in your youth doing things you may or may not be able to do 10 years plus from now.

RM
I figure the odds be fifty-fifty I just might have something to say. FZ
User avatar
Garco
Posts: 785
Joined: Wed Jan 23, 2013 2:04 am
Location: U.S.A.

Re: What next after you have enough sort of.

Post by Garco »

So far, nobody who's laying out their retirement plan on this thread has mentioned insurance, specifically disability insurance. You can deplete your wealth pretty fast if you find yourself in need of long-term care. Your relatives, who in some cases you are planning to support through an inheritance, could end up with nothing.

I'm also curious whether you all carry life insurance, to deal with the risk that your "two life" plan for retirement might end up without one of you surviving until retirement.
Last edited by Garco on Tue Apr 08, 2014 11:53 am, edited 1 time in total.
sport
Posts: 9989
Joined: Tue Feb 27, 2007 3:26 pm
Location: Cleveland, OH

Re: What next after you have enough sort of.

Post by sport »

I find it interesting and surprising that some of the comments in this thread talk about AA's in the range of 60/40 and 70/30 in the years just before and after retirement. My thoughts, as I neared retirement, were along the lines of I finally have enough to retire and I don't want to mess that up. In other words, my investment focus had shifted from asset growth to asset preservation, to a large extent. My suggestion would be a shift to a 50/50 AA at about 10 years from retirement and to 40/60 about 5 years from retirement.

During the time period 2008 to 2010, I would sometimes meet an acquaintance I had not seen for a while, and I would ask are you retired yet? A number of times I got the response "No, I have to keep working because my retirement account lost too much money". We have had a very strong stock market for the last 5 years, and it is easy to forget that there is significant risk in owning equities. In fact, because the market has gone up so far, this risk has increased as the market climbed. Accordingly, I would strongly caution those approaching retirement to have an appropriate concern for asset preservation in addition to the need for asset growth. Sometimes, "the risk shows up".
Jeff
Faith20879
Posts: 821
Joined: Fri Mar 02, 2007 10:16 am

Re: What next after you have enough sort of.

Post by Faith20879 »

Hi Star,

We are also about 4-6 years away and are actively contemplating the same issues. We use a non-scientific spreadsheet (all numbers are pseudo) to help visualize the different gaps and ways to fill them. It is especially helpful to the less-interested spouse to see where we are and thus more willing to paddle the last stretch in sync.

Image

Faith
Call_Me_Op
Posts: 8136
Joined: Mon Sep 07, 2009 2:57 pm
Location: Milky Way

Re: What next after you have enough sort of.

Post by Call_Me_Op »

What do you want out of this 12 year portfolio? I assume you want to stay ahead of inflation, but be pretty safe. So invest it 30/70.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein
YDNAL
Posts: 13774
Joined: Tue Apr 10, 2007 4:04 pm
Location: Biscayne Bay

Re: What next after you have enough sort of.

Post by YDNAL »

StarbuxInvestor wrote:I am very comfortable that between SS, small pensions and savings come 65-67 we will be in excellent shape. In other words I sort of feel like I have enough but I am not sure what to do for the next dozen or so years. I know the answer is save so I can retire early. I just have trouble figuring out what that portfolio would look like given it fairly short time horizon. Anyone else struggling with this?

I should add we have zero debt and discretionary income to play with monthly.
StarbuxInvestor wrote:People may think if it as a mental accounting trick but after thinking long and hard on this topic it seemed to me I am looking at 2 distinct phases pre and post SS and pension. To plan for post SS and pension which is about 14 years away I can take X dollars and a say 65/35 AA and let things run their course in a tax deferred account. The pre SS and pension is a bit trickier because it starts at some point in the next 14 years, mostly like in the next 2-5 years and will last no more than 12 years and be a very risk adverse period. So to me it seems I am looking at 2 portfolios with meaningful difference in their focus, time horizon and the duration that need to last.
Starbux, I don't know how this thread is any different than THIS other thread.

Perhaps I'm wrong, but it seems to me that you are struggling with what it is "to have enough."
  • 1. As I posted in the other thread, enough is having your basic consumption covered without taking unnecessary risk. That, pretty much, should dictate your AA decisions.... don't take unnecessary risk with what you have!!!!

    2. UNLESS you don't think that way, then your next few years of accumulation should be devoted to other goals/objectives (not basic consumption). Do you have those (goals/objectives)?
Landy | Be yourself, everyone else is already taken -- Oscar Wilde
User avatar
Topic Author
TheTimeLord
Posts: 8948
Joined: Fri Jul 26, 2013 2:05 pm

Re: What next after you have enough sort of.

Post by TheTimeLord »

YDNAL wrote:
StarbuxInvestor wrote:I am very comfortable that between SS, small pensions and savings come 65-67 we will be in excellent shape. In other words I sort of feel like I have enough but I am not sure what to do for the next dozen or so years. I know the answer is save so I can retire early. I just have trouble figuring out what that portfolio would look like given it fairly short time horizon. Anyone else struggling with this?

I should add we have zero debt and discretionary income to play with monthly.
StarbuxInvestor wrote:People may think if it as a mental accounting trick but after thinking long and hard on this topic it seemed to me I am looking at 2 distinct phases pre and post SS and pension. To plan for post SS and pension which is about 14 years away I can take X dollars and a say 65/35 AA and let things run their course in a tax deferred account. The pre SS and pension is a bit trickier because it starts at some point in the next 14 years, mostly like in the next 2-5 years and will last no more than 12 years and be a very risk adverse period. So to me it seems I am looking at 2 portfolios with meaningful difference in their focus, time horizon and the duration that need to last.
Starbux, I don't know how this thread is any different than THIS other thread.

Perhaps I'm wrong, but it seems to me that you are struggling with what it is "to have enough."
  • 1. As I posted in the other thread, enough is having your basic consumption covered without taking unnecessary risk. That, pretty much, should dictate your AA decisions.... don't take unnecessary risk with what you have!!!!

    2. UNLESS you don't think that way, then your next few years of accumulation should be devoted to other goals/objectives (not basic consumption). Do you have those (goals/objectives)?
You are right on both counts. This thread is intended as sort of an evolution of the other thread. And I am definitely struggling with the concept of enough. Because of small pensions with COLAs plus 100% survivor benefits and SS, life after 67 looks pretty set even if I was to take only about 60% of my portfolio and let it grow naturally. So my rub is what will be enough from basically here until getting to 67. I have already been debt free for a few years now.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]
YDNAL
Posts: 13774
Joined: Tue Apr 10, 2007 4:04 pm
Location: Biscayne Bay

Re: What next after you have enough sort of.

Post by YDNAL »

StarbuxInvestor wrote:
YDNAL wrote:Starbux, I don't know how this thread is any different than THIS other thread.

Perhaps I'm wrong, but it seems to me that you are struggling with what it is "to have enough."
  • 1. As I posted in the other thread, enough is having your basic consumption covered without taking unnecessary risk. That, pretty much, should dictate your AA decisions.... don't take unnecessary risk with what you have!!!!

    2. UNLESS you don't think that way, then your next few years of accumulation should be devoted to other goals/objectives (not basic consumption). Do you have those (goals/objectives)?
You are right on both counts. This thread is intended as sort of an evolution of the other thread. And I am definitely struggling with the concept of enough. Because of small pensions with COLAs plus 100% survivor benefits and SS, life after 67 looks pretty set even if I was to take only about 60% of my portfolio and let it grow naturally. So my rub is what will be enough from basically here until getting to 67. I have already been debt free for a few years now.
Starbux,

You haven't clearly stated when you plan to retire - but, from what you said, I read it as in 2-5 years.
StarbuxInvestor wrote:The pre SS and pension is a bit trickier because it starts at some point in the next 14 years, mostly like in the next 2-5 years and will last no more than 12 years and be a very risk adverse period.
So, I don't see why are you so concerned with the subsequent period that lasts perhaps only 9 years and "will last no more than 12 years."

Maybe I should summarize what I would do.
  • 1. Figure basic needs (adjusted by inflation guess) for 9-12 years and call it X.
    2. Invest maybe 1.25X, or 1.5X, or whatever makes you feel comfortable.
    3. Avoid unnecessary risk. I would use/consider 100% fixed income.
That's it.. no over-thinking (there are no guarantees if you are looking for some)!!
Landy | Be yourself, everyone else is already taken -- Oscar Wilde
User avatar
500Kaiser
Posts: 173
Joined: Sat Mar 14, 2009 3:00 am
Location: Ireland

Re: What next after you have enough sort of.

Post by 500Kaiser »

Starbux, I am in a similar boat. Here is what we are doing. I am struggling as well. Much, much harder than early accumulation phase.

Reading up on liability matching and lifecycle finance. Some very good posts here lately, and an updated wiki on the latter.

Current 50/50 allocation. Currently at 20x desired expenses. Could live on pensions and SS after 70 if we had to. Pension not inflation indexed, so will have to compensate for this.

Using Intermediate treasury bond fund, stable value fund, and short term bond index to be conservative with the 50 in the bond portion of portfolio (plus some Wellesley described below)

Intending to build TIPS ladder. Made first purchase ever in Vanguard brokerage account this march on 10 year reissue to get used to it and try out the process. Am hoping for higher rates. Have built table, based on Mr. swedroes books to detemine what rate to wait for, and what maturity. For example, if rates on 30 years TIPS go above 3%, I am ready to put up to 50 % of my bonds into TIPS ladder immediately. At current rates, my table would have me make some purchases of 10 year TIP, but holding back the annual amount.

Also bought Wellesley. Intent is to move from current 10% of portfolio in Welllesly to 33%. Prefer Wellesley to other balanced fund offerings for variety of reasons. I figure eventually I will end up about a third Wellesly, a third TIPs and a third remaining portfolio. Remaining portfolio AA will depend on how things play out over time and Mr. Market. This remaining third is up in the air a bit. Struggling with desire to simplify and desire to do Swedroe barbell approach. Waiting for his pending book to ponder more.

Plan to defer SS to 70. House will be paid off in few years. Will consider indexed annuity after i reach 70 and see where we are.

Not trying to highjack your thread, so not looking for feedback. Just trying to answer your question of what others are doing.
Higher risk = higher HOPEFUL returns, not expected returns.
Rodc
Posts: 13601
Joined: Tue Jun 26, 2007 9:46 am

Re: What next after you have enough sort of.

Post by Rodc »

I'm in a similar boat. I read the other thread as well.

To avoid recovering ground others have covered, I would only add that I would start making plans to fully retire in 0 years, 3 years, 6 years, 12 years, or to down shift to half time (or really half pay) in 0, 3, 6, 12 years. So run eight planning scenarios.

Many people find themselves going into retirement earlier than originally thought (or end up with greatly reduced income early) for a wide variety of reasons.

You will be better off prepared ahead of time, and possibly sleep better at night, if you know you have your bases covered, or at least have a good idea of any significant short fall, if early retirement (forced or by choice) comes to pass.

I'm nominally 8 years out, and did a quick spreadsheet analysis to get rough estimates of yearly retirement income under a similar set of scenarios and was pleasantly surprised at the results. It also helps with thinking about when to retire and the trade off of working longer and having more money vs retiring earlier and having less money (ie the time vs money trade off).

Best of luck.

Rod
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.
heyyou
Posts: 3873
Joined: Tue Feb 20, 2007 4:58 pm

Re: What next after you have enough sort of.

Post by heyyou »

as IlliniDave said
"auditioning" my early retirement lifestyle as best I can.
We were so focused on the size of the income number that only later did we realize that we had been practicing our retirement spending. That does smooth the transition, knowing that your spending budget is the same or slightly larger than before, with only the savings contributions ending when you retire. There is significant cost shifting, such as, cars last longer but you go out to lunch more often.

Early retirement has been the best years of my life, so do consider that if it also suits your spouse. Mine was pleased with how I mellowed as I got further away from work.

During the next market slump, track how you feel about your portfolio value. In retirement, there will be more of those slumps. Year 2000 was training for 2008, with my 2005 retirement.
User avatar
Topic Author
TheTimeLord
Posts: 8948
Joined: Fri Jul 26, 2013 2:05 pm

Re: What next after you have enough sort of.

Post by TheTimeLord »

heyyou wrote:as IlliniDave said
"auditioning" my early retirement lifestyle as best I can.
We were so focused on the size of the income number that only later did we realize that we had been practicing our retirement spending. That does smooth the transition, knowing that your spending budget is the same or slightly larger than before, with only the savings contributions ending when you retire. There is significant cost shifting, such as, cars last longer but you go out to lunch more often.

Early retirement has been the best years of my life, so do consider that if it also suits your spouse. Mine was pleased with how I mellowed as I got further away from work.

During the next market slump, track how you feel about your portfolio value. In retirement, there will be more of those slumps. Year 2000 was training for 2008, with my 2005 retirement.
If you don't mind me asking at what age did you retire?
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]
User avatar
pteam
Posts: 419
Joined: Wed Mar 17, 2010 2:27 am

Re: What next after you have enough sort of.

Post by pteam »

What to do next? Set your portfolio and then live your life and have fun :)
staythecourse
Posts: 6993
Joined: Mon Jan 03, 2011 9:40 am

Re: What next after you have enough sort of.

Post by staythecourse »

I am much younger then the other folks commenting on this so take it with a grain of salt. I would accept that no plan you decide will work in a vacuum. No plan is perfect as no one knows what type of extreme events in the future will change your needs. I would guard against the worst which in investing is withdrawing money from an account that is in a horrible bear market at the same time.

I would suggest having 5-10 yrs. of principle stable investments that will weather bear markets. The rest put in an asset allocation that you are comfortable with. I would then just adapt as you go along. When you have excess money save more that year. You have increase need for money try to get some part time work to pay for some of it. Adaptation seems to be one of the most important qualities in nature and in life.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle
User avatar
Topic Author
TheTimeLord
Posts: 8948
Joined: Fri Jul 26, 2013 2:05 pm

Re: What next after you have enough sort of.

Post by TheTimeLord »

staythecourse wrote:I am much younger then the other folks commenting on this so take it with a grain of salt. I would accept that no plan you decide will work in a vacuum. No plan is perfect as no one knows what type of extreme events in the future will change your needs. I would guard against the worst which in investing is withdrawing money from an account that is in a horrible bear market at the same time.

I would suggest having 5-10 yrs. of principle stable investments that will weather bear markets. The rest put in an asset allocation that you are comfortable with. I would then just adapt as you go along. When you have excess money save more that year. You have increase need for money try to get some part time work to pay for some of it. Adaptation seems to be one of the most important qualities in nature and in life.

Good luck.
I am sorry but I am not the relation between your answer and my original post.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]
scone
Posts: 1457
Joined: Wed Jul 11, 2012 4:46 pm

Re: What next after you have enough sort of.

Post by scone »

IMO, once you have "enough," the rest is about the taxman, inflation, and random chance. All unknown unknowns, really. So you are right back at the most fundamental level: how much risk to take under conditions of uncertainty. IMO, in that situation, you have to make a commitment to one of 2 possible approaches: either a bet on the averages, which allows you to spend more now but increases risk of failure, or an "overwhelming force" response that sacrifices current consumption to build up a massive reserve of money that can withstand almost any attack, short of the end of all things. Of course, if the worst happens, no amount of mere money will save you.

There's no perfect answer. Ultimately, and again IMO, if you bet on the averages you are also making an implicit bet that your family or the government is your last backstop-- to help you out if all else fails. And if you have kids who will take you in, that may be a pretty good bet. But if you can't count on any other resources, and your relatives may end up in dire straits themselves, perhaps the "overwhelming force" solution gives you your best chance with the smallest possibility of ending your days as a financial burden on other people. And maybe, if you save more, you can help others, which is really a privilege.

There's an assumption here that you aren't a pig who is happy to exploit others. In other words, you would basically agree that our choices are not just personal and "selfish," they also have a moral dimension-- we always have a duty to others, even to the unknown taxpayers who are kind enough to help undertake the burden of our financial support in this world. Contrariwise, IMO, if we hit the jackpot we have some duty to those less lucky. That's how I interpret the social contract, anyway. To me, it's a humane way to mitigate the horrors of random chance, sheer bed luck. I don't know about you, but as the song says, if it wasn't for bad luck, I wouldn't have any luck at all.

Aeschylus said: call no man happy until he is dead. Nor woman either, I would say, as a woman. A reversal of fortune can happen at any time, for almost any reason. That's why fortune was represented as a wheel in ancient times-- sometimes you're up, sometimes you're down, sometimes you're eating cat food and pushing a grocery cart under an overpass. Just remember that some time you are asked for a handout. There, but for the grace of... Well, you know the rest.

Just a bunch of rambling thoughts for you to consider. Good luck to all of us. :sharebeer
"My bond allocation is the amount of money that I cannot afford to lose." -- Taylor Larimore
bhsince87
Posts: 2700
Joined: Thu Oct 03, 2013 1:08 pm

Re: What next after you have enough sort of.

Post by bhsince87 »

Starbux, I’m in a similar situation, but maybe a bit younger. I’ll be 49 in a month. But I’ve already announced my plan to retire at 55, and switch to half time at 53. But between you me and the lamppost, I just might taper to half time at 50, and go out completely at 52. That’s assuming I can control my own destiny….

I will have a tiny pension ($900 a month) at age 67, and our social security will be max payout. We know we can live a very good life on that income alone.

Meanwhile, we’ve got about 40X our “good life” annual spending saved up already. And no kids to pass anything on to.

Soooo, what I’ve decided to do is to taper to a 40/60 mix in 3-4 years, from the 80/20 I’ve been at for the past 30 years. And then I’ll taper down to 70/30.

I figure we’ll need money to live off of for the next 15 years or so, and that can come from the bonds (principle and interest). I don’t need my money to “work” for me in excess of inflation anymore, and I don’t need to worry about what happens past age 70 or so, since SS will be indexed (hopefully!)
"If ye love wealth better than liberty, the tranquility of servitude better than the animating contest of freedom, go home from us in peace." Samuel Adams
Post Reply