Zero Stocks In Retirement

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antiqueman
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Zero Stocks In Retirement

Post by antiqueman » Thu Feb 13, 2020 2:39 pm

Does anyone on the forum, who is at least 62 and retired, hold zero of their assets in stock. If you do not hold any stocks what are you invested in? All TIPS? Or you have sufficient pension income and social security ?


Are you concerned about running out of money before death or inflation ?

Thanks

MotoTrojan
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Re: Zero Stocks In Retirement

Post by MotoTrojan » Thu Feb 13, 2020 2:49 pm

I use a modified Larry portfolio; 1% Bitcoin, 99% treasuries.

Just kidding.

I’m interested to know if anyone does exclude them. I could see someone with income producing real estate justifying it. Someone with >50x expenses could use TIPs I suppose but is such a sad waste of future wealth (even wealth for legacy); sleeping well at night isn’t free though.

DB2
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Re: Zero Stocks In Retirement

Post by DB2 » Thu Feb 13, 2020 2:53 pm

antiqueman wrote:
Thu Feb 13, 2020 2:39 pm
Does anyone on the forum, who is at least 62 and retired, hold zero of their assets in stock. If you do not hold any stocks what are you invested in? All TIPS? Or you have sufficient pension income and social security ?


Are you concerned about running out of money before death or inflation ?

Thanks
My question would be, why not hold stocks in retirement? Stocks are more likely to help replenish some capital and helps keep your portfolio balanced...even 20-30% stocks. I would never put everything into one single asset class even if TIPS, but that's just me.

UpperNwGuy
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Re: Zero Stocks In Retirement

Post by UpperNwGuy » Thu Feb 13, 2020 2:56 pm

Definitely stocks as well as bonds. An all fixed income portfolio is so over-cautious that it carries its own risks.

Unladen_Swallow
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Re: Zero Stocks In Retirement

Post by Unladen_Swallow » Thu Feb 13, 2020 3:09 pm

I would be more likely to be 100% stocks in retirement than 0% stocks.
"I think it's much more interesting to live not knowing than to have answers which might be wrong." - Richard Feynman

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Brianmcg321
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Re: Zero Stocks In Retirement

Post by Brianmcg321 » Thu Feb 13, 2020 3:12 pm

You could do 100% SPIA
Rules to investing: | 1. Don't lose money. | 2. Don't forget rule number 1.

bikechuck
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Re: Zero Stocks In Retirement

Post by bikechuck » Thu Feb 13, 2020 3:24 pm

I am retired, in my mid 60s, I have between 45% to 50% equities, and will likely keep my current allocation for the rest of my life.

However a good friend recently sold his rental real estate holdings and has 100% of his portfolio in CDs. He says that he worked too hard for what he has to expose it to market risk. I suspect that his portfolio of CDs is large and he and his wife are frugal and carefully track every single dollar that they spend. They do travel and enjoy life but they are financially responsible and I doubt if they will outlive their portfolio. So zero stocks work for them.
Last edited by bikechuck on Thu Feb 13, 2020 6:50 pm, edited 1 time in total.

bikechuck
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Re: Zero Stocks In Retirement

Post by bikechuck » Thu Feb 13, 2020 3:26 pm

Brianmcg321 wrote:
Thu Feb 13, 2020 3:12 pm
You could do 100% SPIA
That can be problematic if you have a large unplanned expenditure. I will consider an annuity when I am in my mid to late 70s but if I do buy one I will limit it to no more than 25% of my portfolio.

sailaway
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Re: Zero Stocks In Retirement

Post by sailaway » Thu Feb 13, 2020 3:29 pm

My parents have their assets divided between a SPIA (bought early 2008, so they feel like lottery winners) and CDs. Between that, SS and a very tiny pension, they are coming out ahead every year and they are as insured as anyone against the next recession.

lessismore22
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Re: Zero Stocks In Retirement

Post by lessismore22 » Thu Feb 13, 2020 3:33 pm

0/100 seems much riskier than 30/70 or even 50/50. Would hate to see someone give up all that potential growth.

Schlabba
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Re: Zero Stocks In Retirement

Post by Schlabba » Thu Feb 13, 2020 3:37 pm

antiqueman wrote:
Thu Feb 13, 2020 2:39 pm
Does anyone on the forum, who is at least 62 and retired, hold zero of their assets in stock. If you do not hold any stocks what are you invested in? All TIPS? Or you have sufficient pension income and social security ?


Are you concerned about running out of money before death or inflation ?

Thanks
You run the risk of living till 120.

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Sandtrap
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Re: Zero Stocks In Retirement

Post by Sandtrap » Thu Feb 13, 2020 3:46 pm

antiqueman wrote:
Thu Feb 13, 2020 2:39 pm
Does anyone on the forum, who is at least 62 and retired, hold zero of their assets in stock. If you do not hold any stocks what are you invested in? All TIPS? Or you have sufficient pension income and social security ?


Are you concerned about running out of money before death or inflation ?

Thanks
I was 100% invested in R/E income property developments, sole owner/business, over 10 years ago.
No pension. No SS. No 401k. No IRA. No ROTH. No Government pension.
Worked out well.
I know at least several others who are retired and do very well with substantial accumulated R/E income properties and no investment in the market.
(Certainly not for everyone, and should not be.)
j :happy
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willthrill81
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Re: Zero Stocks In Retirement

Post by willthrill81 » Thu Feb 13, 2020 3:55 pm

lessismore22 wrote:
Thu Feb 13, 2020 3:33 pm
0/100 seems much riskier than 30/70 or even 50/50. Would hate to see someone give up all that potential growth.
0/100 certainly hasn't had any advantages that I can see over the last ~50 years. Over that time frame, 25/75 and 0/100 allocations (TSM and ITT) have had very similar volatility and drawdowns, but 25/75 had over 1% higher annualized return. And the last ~50 years included the ~30 year bull market for bonds, one of, if not the, biggest in history, which 'stacked the deck' in favor of the 0/100 allocation.

Assuming that this is a reasonable proxy for the future, the only reasonable way to reduce the volatility in inflation-adjusted dollars of a 25/75 even further is with something like a TIPS and/or I-bond ladder.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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White Coat Investor
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Re: Zero Stocks In Retirement

Post by White Coat Investor » Thu Feb 13, 2020 3:59 pm

antiqueman wrote:
Thu Feb 13, 2020 2:39 pm
Does anyone on the forum, who is at least 62 and retired, hold zero of their assets in stock. If you do not hold any stocks what are you invested in? All TIPS? Or you have sufficient pension income and social security ?


Are you concerned about running out of money before death or inflation ?

Thanks
I know lots of people who invest it all in real estate. No stocks or bonds.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

1130Super
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Re: Zero Stocks In Retirement

Post by 1130Super » Thu Feb 13, 2020 4:01 pm

0% stock is probably more risky than 100% stock over a long period of time if you factor in inflation
Last edited by 1130Super on Thu Feb 13, 2020 4:08 pm, edited 1 time in total.

lessismore22
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Re: Zero Stocks In Retirement

Post by lessismore22 » Thu Feb 13, 2020 4:01 pm

Sandtrap wrote:
Thu Feb 13, 2020 3:46 pm
antiqueman wrote:
Thu Feb 13, 2020 2:39 pm
I was 100% invested in R/E income property developments, sole owner/business, over 10 years ago.
No pension. No SS. No 401k. No IRA. No ROTH. No Government pension.
Worked out well.
I know at least several others who are retired and do very well with substantial accumulated R/E income properties and no investment in the market.
(Certainly not for everyone, and should not be.)
j :happy
A good point here.

We have a dear friend who owns a property management company. Has never had any type of investment account and will likely never put a penny in the market. I couldn't do what he does, and he couldn't stomach what I do(3 fund portfolio). But we'll both be comfortably retired someday.

hoops777
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Re: Zero Stocks In Retirement

Post by hoops777 » Thu Feb 13, 2020 4:11 pm

I am retired at 68. We have zero stocks. No mortgage. A good LTC policy. 66,000 in HSA. About 50,000 in free travel rewards points.
We have CD’s,Ibonds,individual Muni’s,bond mutual funds and some high quality individual bonds,like Microsoft.
When I take my full SS at 70,our combined SS will pay all of our day to day expenses, including a little travel.
Our interest from investments will provide an additional 50K per year as currently invested.
We have 2 1/2 to 6 years left on our current CD’s and individual Corp bonds and 26 years on the Muni’s.
In hindsight, we could have made a lot of money in stocks, but I wanted to be guaranteed to have x amount of dollars when I turned 70 and my spouse is 72. No real regrets and very happy that we will achieve that goal.

We will re-evaluate when everything matures, but plan is to be 30/70 down the road,with the 70 being more than adequate for all of our expenses. In a weird way it is very satisfying that I did it without the stock market. I had my own little business and did it the hard way.
K.I.S.S........so easy to say so difficult to do.

MichCPA
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Re: Zero Stocks In Retirement

Post by MichCPA » Thu Feb 13, 2020 4:18 pm

hoops777 wrote:
Thu Feb 13, 2020 4:11 pm
I am retired at 68. We have zero stocks. No mortgage. A good LTC policy. 66,000 in HSA. About 50,000 in free travel rewards points.
[...]
If you thought the stock market was too volatile, I am not sure retiring on rewards points is really the answer. :D

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Stinky
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Re: Zero Stocks In Retirement

Post by Stinky » Thu Feb 13, 2020 4:21 pm

bikechuck wrote:
Thu Feb 13, 2020 3:24 pm

However a good friend recently sold his rental real estate holdings and has 100% of his portfolio in CDs. He says that he worked too hard for what he has to expose it to market risk. I suspect that his portfolio of CDs is large and he and his wife are frugal and carefully tract every single dollar that they spend. They do travel and enjoy life but they are financially responsible and I doubt if they will outlive their portfolio. So zero stocks work for them.
If your good friend is a relatively young retiree (say age 55 or 60), he’s taking considerable longevity and inflation risk by having no stocks.

But maybe his pile of money is so large that he can survive on CD yields for decades to come.
It's a GREAT day to be alive - Travis Tritt

hoops777
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Re: Zero Stocks In Retirement

Post by hoops777 » Thu Feb 13, 2020 4:38 pm

MichCPA wrote:
Thu Feb 13, 2020 4:18 pm
hoops777 wrote:
Thu Feb 13, 2020 4:11 pm
I am retired at 68. We have zero stocks. No mortgage. A good LTC policy. 66,000 in HSA. About 50,000 in free travel rewards points.
[...]
If you thought the stock market was too volatile, I am not sure retiring on rewards points is really the answer. :D
:D They are actually pretty stable. A mix of Southwest,Marriott and Capital One Venture. We are going to spend these the next few years. I was able to buy most of my inventory by CC. Have not paid for a hotel/flight in many years.
K.I.S.S........so easy to say so difficult to do.

Pierre Delecto
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Re: Zero Stocks In Retirement

Post by Pierre Delecto » Thu Feb 13, 2020 4:51 pm

antiqueman wrote:
Thu Feb 13, 2020 2:39 pm
Does anyone on the forum, who is at least 62 and retired, hold zero of their assets in stock. If you do not hold any stocks what are you invested in? All TIPS? Or you have sufficient pension income and social security ?


Are you concerned about running out of money before death or inflation ?

Thanks
You need to have way over-saved relative to your anticipated expenses to go 0 percent stock. Unless perhaps you are somehow in real estate or have an ownership stake in a non-public company. Treasuries, bonds, CDs, tips. etc aren’t going to do it in a low interest rate environment unless you have vastly more capital than you actually need.

MathWizard
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Re: Zero Stocks In Retirement

Post by MathWizard » Thu Feb 13, 2020 4:52 pm

On this board, it would be a very small minority, just like if you asked "how many people will be working until age 70"
on a FIRE board.

In the real world, lots of people have zero stocks in retirement. In fact, most of my family does not hold stocks.
My parents were children of the depression, and never held anything more risky than a CD. This behavior gets
passed on to children.

In fact, were it not for tax advantaged retirement accounts and company stock incentives, I'm not sure anybody in my
family would hold stocks.

Pierre Delecto
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Re: Zero Stocks In Retirement

Post by Pierre Delecto » Thu Feb 13, 2020 4:54 pm

MathWizard wrote:
Thu Feb 13, 2020 4:52 pm
On this board, it would be a very small minority, just like if you asked "how many people will be working until age 70"
on a FIRE board.

In the real world, lots of people have zero stocks in retirement. In fact, most of my family does not hold stocks.
My parents were children of the depression, and never held anything more risky than a CD. This behavior gets
passed on to children.

In fact, were it not for tax advantaged retirement accounts and company stock incentives, I'm not sure anybody in my
family would hold stocks.
I’m assuming then that later in retirement they’re just living on SS and any pension they may have? Doable with pensions. Super lean on just SS. Still doable I suppose if house paid off.

MathWizard
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Re: Zero Stocks In Retirement

Post by MathWizard » Thu Feb 13, 2020 5:02 pm

One has a pension, two have 401ks, but for most part, they have been living off CDs and SS.

Only the one with the pension retired before FRA.

MichCPA
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Re: Zero Stocks In Retirement

Post by MichCPA » Thu Feb 13, 2020 5:15 pm

hoops777 wrote:
Thu Feb 13, 2020 4:38 pm
MichCPA wrote:
Thu Feb 13, 2020 4:18 pm
hoops777 wrote:
Thu Feb 13, 2020 4:11 pm
I am retired at 68. We have zero stocks. No mortgage. A good LTC policy. 66,000 in HSA. About 50,000 in free travel rewards points.
[...]
If you thought the stock market was too volatile, I am not sure retiring on rewards points is really the answer. :D
:D They are actually pretty stable. A mix of Southwest,Marriott and Capital One Venture. We are going to spend these the next few years. I was able to buy most of my inventory by CC. Have not paid for a hotel/flight in many years.
Marriott literally just announced a devaluation. They have 3x the property class increases vs decreases. Also the transfer ratio on C1 is terrible, Chase, Citi and Amex are better values, but I digress.

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willthrill81
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Re: Zero Stocks In Retirement

Post by willthrill81 » Thu Feb 13, 2020 5:37 pm

To the extent that retirees are reliant on their portfolio for their spending needs, having only investment-grade fixed income seems imprudent. That does not mean that stocks are necessary; as others have noted, direct real estate investment or REITs are an option. Also, an allocation to corporate bonds is equivalent to having some stock exposure.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

hoops777
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Re: Zero Stocks In Retirement

Post by hoops777 » Thu Feb 13, 2020 5:39 pm

MichCPA wrote:
Thu Feb 13, 2020 5:15 pm
hoops777 wrote:
Thu Feb 13, 2020 4:38 pm
MichCPA wrote:
Thu Feb 13, 2020 4:18 pm
hoops777 wrote:
Thu Feb 13, 2020 4:11 pm
I am retired at 68. We have zero stocks. No mortgage. A good LTC policy. 66,000 in HSA. About 50,000 in free travel rewards points.
[...]
If you thought the stock market was too volatile, I am not sure retiring on rewards points is really the answer. :D
:D They are actually pretty stable. A mix of Southwest,Marriott and Capital One Venture. We are going to spend these the next few years. I was able to buy most of my inventory by CC. Have not paid for a hotel/flight in many years.
Marriott literally just announced a devaluation. They have 3x the property class increases vs decreases. Also the transfer ratio on C1 is terrible, Chase, Citi and Amex are better values, but I digress.
Not to change the thread, but the Marriott changes are insignificant to us. We find the lowest level properties quite nice. I inherited Marriott from Starwood so it is what it is.
K.I.S.S........so easy to say so difficult to do.

bck63
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Re: Zero Stocks In Retirement

Post by bck63 » Thu Feb 13, 2020 5:57 pm

MathWizard wrote:
Thu Feb 13, 2020 4:52 pm
On this board, it would be a very small minority, just like if you asked "how many people will be working until age 70"
on a FIRE board.

In the real world, lots of people have zero stocks in retirement. In fact, most of my family does not hold stocks.
My parents were children of the depression, and never held anything more risky than a CD. This behavior gets
passed on to children.

In fact, were it not for tax advantaged retirement accounts and company stock incentives, I'm not sure anybody in my
family would hold stocks.
This is so true. My parents and many people in their generation never owned a single stock. My father was a child of the depression and wanted, as he called it, "no risk." I never bothered to talk to him about various types of risk, because he had a great pension and plenty of cash in the bank.

Nowadays, with the pension being almost a thing of the past, it ain't so easy.

Me...I consider myself primarily a saver and an investor a distant second. I don't like volatility. It makes me nervous. So I'm conservatively invested but have approximately 35% in stock with 6-9 years to go in retirement. I'll reach my goals. It works for me.

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MN-Investor
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Re: Zero Stocks In Retirement

Post by MN-Investor » Thu Feb 13, 2020 6:08 pm

The convention is that when you're in your 20s, you're investing for the long term so you invest heavily in stocks.

It was a bit of an eyeopener when I read a financial advisor make the point that, when you're 65, you may very well live for another 30 years. How is that not a long term? Therefore, you need to continue to have investments in stocks at that point of your life too.

My husband and I shifted from about 90% stocks a couple years before he retired to about 60% bonds in the year he retired. That seemed like an asset allocation we could live with in our mid-60s.
The key to success - Save early, save often, invest well.

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willthrill81
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Re: Zero Stocks In Retirement

Post by willthrill81 » Thu Feb 13, 2020 6:19 pm

MN-Investor wrote:
Thu Feb 13, 2020 6:08 pm
The convention is that when you're in your 20s, you're investing for the long term so you invest heavily in stocks.

It was a bit of an eyeopener when I read a financial advisor make the point that, when you're 65, you may very well live for another 30 years. How is that not a long term? Therefore, you need to continue to have investments in stocks at that point of your life too.

My husband and I shifted from about 90% stocks a couple years before he retired to about 60% bonds in the year he retired. That seemed like an asset allocation we could live with in our mid-60s.
The problem with the 'I'll live another 30 years if I'm 65' idea is that it can lead retirees to take on more risk than what is needed or prudent. For instance, that's one of my perennial problems with the Stacking Benjamins podcast (which I like overall, though they also beat the 'you need an advisor in your corner' drum way too hard and often) hosts: they often refer to that idea but rarely discuss the very real problem of sequence of returns risk, especially its potential severity and longevity. Also, many, probably most, retirees would get very jittery at the least if they had an 80% stock allocation or higher and stocks fell by 50% (happened twice in the last 20 years). Seeing close to half of that precious nest egg that they're now relying on for income go poof could be more than enough to send many retirees fleeing for the exits.

In your case, a 60/40 AA sounds perfectly reasonable. 90/10 and even 100/0 can be reasonable for retirees who can tolerate the volatility swings in retirement and adjust their withdrawals accordingly, though they are likely few and far between.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

TravelforFun
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Re: Zero Stocks In Retirement

Post by TravelforFun » Thu Feb 13, 2020 6:25 pm

Brianmcg321 wrote:
Thu Feb 13, 2020 3:12 pm
You could do 100% SPIA
Not possible! Reputable insurance companies would not allow you to use your entire net worth to buy annuities.

TravelforFun

Dottie57
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Re: Zero Stocks In Retirement

Post by Dottie57 » Thu Feb 13, 2020 6:39 pm

Unless you are an 8 digit plus millionaire, I think 0% stocks is a mistake. 30% stocks should help your portfolio grow after a 3.5 to 4% yearly withdrawl.

columbia
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Re: Zero Stocks In Retirement

Post by columbia » Thu Feb 13, 2020 6:48 pm

Schlabba wrote:
Thu Feb 13, 2020 3:37 pm
antiqueman wrote:
Thu Feb 13, 2020 2:39 pm
Does anyone on the forum, who is at least 62 and retired, hold zero of their assets in stock. If you do not hold any stocks what are you invested in? All TIPS? Or you have sufficient pension income and social security ?


Are you concerned about running out of money before death or inflation ?

Thanks
You run the risk of living till 120.
Maybe even 127:
https://www.google.com/amp/s/www.thesun ... istan/amp/

xxd091
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Re: Zero Stocks In Retirement

Post by xxd091 » Thu Feb 13, 2020 6:54 pm

Heard 30 years ago of people retiring with large portfolios with only bonds -good interest rates in those days-don’t hear it now
I was like most investors starting out -mostly equities-learning all the time and discovered JohnBogle
Now 73-17 years retired-made my pile-30/65/5-equities/bonds/ cash-2 fund portfolio-low volatility-sleep at night
SWR 3.5% -enough for me-could take more if required
Mr Bogle brought me home -we will not see his like again
xxd091
PS I think he advised to never to go below 30% equities in your portfolio

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Taylor Larimore
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Re: Zero Stocks In Retirement

Post by Taylor Larimore » Thu Feb 13, 2020 6:55 pm

TravelforFun wrote:
Thu Feb 13, 2020 6:25 pm
Brianmcg321 wrote:
Thu Feb 13, 2020 3:12 pm
You could do 100% SPIA
Not possible! Reputable insurance companies would not allow you to use your entire net worth to buy annuities.

TravelforFun
TravelforFun:

I once had a license to sell annuities but I never heard this about "Reputable insurance companies." Can you give a source?

Thank you and best wishes.
Taylor
Jack Bogle's Words of Wisdom: "Depending on the particular circumstances, annuities are a good idea, but only annuities available at very low cost and commensurately high return."
"Simplicity is the master key to financial success." -- Jack Bogle

rkhusky
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Re: Zero Stocks In Retirement

Post by rkhusky » Thu Feb 13, 2020 7:00 pm

If you have $2M and need only $50K/yr, you would probably be fine with all fixed income.

If you had $30K/yr in SS, you could get by on less than $1M.
Last edited by rkhusky on Thu Feb 13, 2020 7:03 pm, edited 1 time in total.

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whodidntante
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Re: Zero Stocks In Retirement

Post by whodidntante » Thu Feb 13, 2020 7:02 pm

My mother and father own no stocks. They sold in 2005 and will reportedly never own stock again. Their money is in CDs, US treasuries, a pension plan, income-producing real estate, owner financing (where they are the owner and charge 8%), and junk that they sell to poor people. I guess that last one is more of a business than an asset.

columbia
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Re: Zero Stocks In Retirement

Post by columbia » Thu Feb 13, 2020 7:03 pm

Wellesley Income would be a great lower risk, single holding.

hoops777
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Re: Zero Stocks In Retirement

Post by hoops777 » Thu Feb 13, 2020 7:13 pm

Dottie57 wrote:
Thu Feb 13, 2020 6:39 pm
Unless you are an 8 digit plus millionaire, I think 0% stocks is a mistake. 30% stocks should help your portfolio grow after a 3.5 to 4% yearly withdrawl.
So you are saying one needs 10,000,000 plus to live in retirement without stocks? Was this a serious statement or am I not seeing the humor/sarcasm?
K.I.S.S........so easy to say so difficult to do.

dbr
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Re: Zero Stocks In Retirement

Post by dbr » Thu Feb 13, 2020 7:13 pm

I know a number of people who are retired whose asset allocation is 0/0 as in they don't have any assets. Their income is SS, pensions, and public assistance in various combinations. They can have the same issues as the hypothetical person with nothing but SPIA's, meaning not being able to come up with lump sums can be a real problem. Actually to the extent such people may have car loans and the like I guess you could say their assets are negative. That would be 0/-100 if we let mortgages be negative bonds. Yes, a disabled family member actually did own a house with no other assets and a mortgage.

I understand this is probably not what the OP is really asking. In that vein I can certainly understand and have known people who might do such a thing, but there is no one I know for a fact is 0/100 in retirement.

7eight9
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Re: Zero Stocks In Retirement

Post by 7eight9 » Thu Feb 13, 2020 7:14 pm

It all comes down to expenses and savings. We currently at at 20/80 and I could certainly see us moving to 0/100. Expenses are ~$18K annually. $25K with vacations added in. Social Security at 62 would do most of the lifting. Current savings just under $1.4M. No legacy motive. I don't really see any need for us to own stocks.
I guess it all could be much worse. | They could be warming up my hearse.

TravelforFun
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Re: Zero Stocks In Retirement

Post by TravelforFun » Thu Feb 13, 2020 7:22 pm

Taylor Larimore wrote:
Thu Feb 13, 2020 6:55 pm
TravelforFun wrote:
Thu Feb 13, 2020 6:25 pm
Brianmcg321 wrote:
Thu Feb 13, 2020 3:12 pm
You could do 100% SPIA
Not possible! Reputable insurance companies would not allow you to use your entire net worth to buy annuities.

TravelforFun
TravelforFun:

I once had a license to sell annuities but I never heard this about "Reputable insurance companies." Can you give a source?

Thank you and best wishes.
Taylor
Jack Bogle's Words of Wisdom: "Depending on the particular circumstances, annuities are a good idea, but only annuities available at very low cost and commensurately high return."
Mr. L, my source is New York Life. They insisted to see all my investment statements before they sold me an annuity in March 2019. The agent told me the company would not allow me to tie up all my money in annuities. The SPIA I eventually got is about 15% of my investable asset.

Perhaps others can chime in.

TravelforFun

Unladen_Swallow
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Re: Zero Stocks In Retirement

Post by Unladen_Swallow » Thu Feb 13, 2020 7:31 pm

Dottie57 wrote:
Thu Feb 13, 2020 6:39 pm
Unless you are an 8 digit plus millionaire, I think 0% stocks is a mistake. 30% stocks should help your portfolio grow after a 3.5 to 4% yearly withdrawl.
I wouldn't be 0% stock in any situation, but that is just my nature.

However, one does not need to have over $10M in assets to have 0% stock. Surely. For that amount, you could stuff your money under the proverbial mattress and be just fine. Unless of course, your expenses are $500k a year. But I assume we are talking more typical expenses commonly talked about on this forum.
"I think it's much more interesting to live not knowing than to have answers which might be wrong." - Richard Feynman

Dottie57
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Re: Zero Stocks In Retirement

Post by Dottie57 » Thu Feb 13, 2020 7:38 pm

hoops777 wrote:
Thu Feb 13, 2020 7:13 pm
Dottie57 wrote:
Thu Feb 13, 2020 6:39 pm
Unless you are an 8 digit plus millionaire, I think 0% stocks is a mistake. 30% stocks should help your portfolio grow after a 3.5 to 4% yearly withdrawl.
So you are saying one needs 10,000,000 plus to live in retirement without stocks? Was this a serious statement or am I not seeing the humor/sarcasm?
Not humor or sarcasm. I think counting on just bonds may not keep up with inflation. My parents had only bonds. Mom is now in hospice, but she would run out in about 8-10 years. Lots of longevity in her family. I was planning a future living with mom so she could be comfortable. No big worries now.

My main point is that inflation can really eat into bonds. Stocks help a portfolio keep up with inflation

And of course expenses are a main component of any decision on AA.

Yes the 8 digits is hyperbole. However I do remember inflation in the 70’s......
Last edited by Dottie57 on Thu Feb 13, 2020 8:06 pm, edited 1 time in total.

bikechuck
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Re: Zero Stocks In Retirement

Post by bikechuck » Thu Feb 13, 2020 8:03 pm

Stinky wrote:
Thu Feb 13, 2020 4:21 pm
bikechuck wrote:
Thu Feb 13, 2020 3:24 pm

However a good friend recently sold his rental real estate holdings and has 100% of his portfolio in CDs. He says that he worked too hard for what he has to expose it to market risk. I suspect that his portfolio of CDs is large and he and his wife are frugal and carefully tract every single dollar that they spend. They do travel and enjoy life but they are financially responsible and I doubt if they will outlive their portfolio. So zero stocks work for them.
If your good friend is a relatively young retiree (say age 55 or 60), he’s taking considerable longevity and inflation risk by having no stocks.

But maybe his pile of money is so large that he can survive on CD yields for decades to come.
Yes, a large pile of money, they never had children and I suspect they are spending less than their interest income. Also since their assets came from selling their rental properties all or almost all of their income is in after tax accounts.

They are living a stress free life from a financial standpoint.

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Re: Zero Stocks In Retirement

Post by Grt2bOutdoors » Thu Feb 13, 2020 8:55 pm

lessismore22 wrote:
Thu Feb 13, 2020 3:33 pm
0/100 seems much riskier than 30/70 or even 50/50. Would hate to see someone give up all that potential growth.
It's all relative. Here is an example, a couple is age 65, accumulated a portfolio of $10 million, their annual expenses are $150,000. Their income in retirement will be Social Security of $60K, requiring $90K to be taken from the portfolio.

Do you still consider a 0/100 portfolio to be riskier? It's all about how you think about things. A 100% portfolio in fixed income could earn anywhere from 2-3% over the next 10 years. Still think it's risky? Dividends can be cut, contractually owed monies are a different animal altogether. The chances are nearly 99% that there will be plenty of money available for someone else to spend after the couple moves on to the next world.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Bluce
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Re: Zero Stocks In Retirement

Post by Bluce » Thu Feb 13, 2020 9:16 pm

willthrill81 wrote:
Thu Feb 13, 2020 5:37 pm
To the extent that retirees are reliant on their portfolio for their spending needs, having only investment-grade fixed income seems imprudent. That does not mean that stocks are necessary; as others have noted, direct real estate investment or REITs are an option. Also, an allocation to corporate bonds is equivalent to having some stock exposure.
Investment grade is anything (S&P) BBB or better, which includes a lot of corporates and MBS.

(Corps are equivalent to stocks? Wow, I hope not. :shock: )

To the OP:

I think I posted this here before, but will again. A couple of years ago I read in a magazine about a woman who was maybe 60-ish and planned on retiring in a few years, and had $1M portfolio. She cashed it all in for CDs and ST Treasuries. What she had planned on doing once retired I don't remember, but it was an interesting story.

Myself: I'll be 70 this summer, still running my business (somewhat) but drawing SS, and have a 30/70 portfolio. I could retire on just the income it's throwing off now, so I'll probably not go lower than 30% stocks. But "The best-laid plans of mice and men oft go astray."

But I'll most likely croak within 15 years, so I'm not too worried about running out of money no matter what happens -- short of the USG defaulting on its bonds and destroying the dollar, or the stock market going to zero and staying there. :confused :oops:

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Re: Zero Stocks In Retirement

Post by willthrill81 » Thu Feb 13, 2020 9:21 pm

Bluce wrote:
Thu Feb 13, 2020 9:16 pm
willthrill81 wrote:
Thu Feb 13, 2020 5:37 pm
To the extent that retirees are reliant on their portfolio for their spending needs, having only investment-grade fixed income seems imprudent. That does not mean that stocks are necessary; as others have noted, direct real estate investment or REITs are an option. Also, an allocation to corporate bonds is equivalent to having some stock exposure.
Investment grade is anything (S&P) BBB or better, which includes a lot of corporates and MBS.

(Corps are equivalent to stocks? Wow, I hope not. :shock: )
To your first point, note that I didn't say that it's imprudent in the situation I described to have some investment-grade fixed income in your portfolio, just not 100% of your portfolio.

And yes, corporate bonds have performed similarly to something close to a 20% TSM / 80% intermediate-term Treasury allocation. Since 2003 (all available data in Portfolio Visualizer), the 20/80 had nearly identical returns but was actually significantly less volatile than corporate bonds.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

Wanderingwheelz
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Re: Zero Stocks In Retirement

Post by Wanderingwheelz » Thu Feb 13, 2020 9:37 pm

White Coat Investor wrote:
Thu Feb 13, 2020 3:59 pm
antiqueman wrote:
Thu Feb 13, 2020 2:39 pm
Does anyone on the forum, who is at least 62 and retired, hold zero of their assets in stock. If you do not hold any stocks what are you invested in? All TIPS? Or you have sufficient pension income and social security ?


Are you concerned about running out of money before death or inflation ?

Thanks
I know lots of people who invest it all in real estate. No stocks or bonds.
I live in a resort community that’s traditionally been a great real estate market for rental income production, so lots of people here have provided for a very comfortable retirement without stocks. My grandparents did it. Once they got up in years they sold it all and bought bonds.

Far more people shun stocks than the typical Boglehead might think. If stocks ever sell off and stay sold off for a very long time, there’ll be another generation of stock averse investors. Perhaps we’re due since the idea of owning no stock seems heretical.

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Bluce
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Re: Zero Stocks In Retirement

Post by Bluce » Thu Feb 13, 2020 9:39 pm

willthrill81 wrote:
Thu Feb 13, 2020 9:21 pm
Bluce wrote:
Thu Feb 13, 2020 9:16 pm
willthrill81 wrote:
Thu Feb 13, 2020 5:37 pm
To the extent that retirees are reliant on their portfolio for their spending needs, having only investment-grade fixed income seems imprudent. That does not mean that stocks are necessary; as others have noted, direct real estate investment or REITs are an option. Also, an allocation to corporate bonds is equivalent to having some stock exposure.
Investment grade is anything (S&P) BBB or better, which includes a lot of corporates and MBS.

(Corps are equivalent to stocks? Wow, I hope not. :shock: )
To your first point, note that I didn't say that it's imprudent in the situation I described to have some investment-grade fixed income in your portfolio, just not 100% of your portfolio.

And yes, corporate bonds have performed similarly to something close to a 20% TSM / 80% intermediate-term Treasury allocation. Since 2003 (all available data in Portfolio Visualizer), the 20/80 had nearly identical returns but was actually significantly less volatile than corporate bonds.
"Corporate bonds," depending on what point in history one chooses, may include a lot of junk -- which usually do parallel stock volatility.

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