Can't see retiring without 15x-30x fixed income

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TheTimeLord
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Can't see retiring without 15x-30x fixed income

Post by TheTimeLord » Mon Mar 11, 2019 2:51 pm

Maybe it is because I want to retire in my 50s and not my 30s or 40s or that I feel the value of my human capital falls off a cliff the day I retire but I have trouble understanding why anyone would want to retire without having somewhere between 15x-30x in safe fixed income. From my perspective if I couldn't do that it would mean I would have too high a need to take risk. I guess I just don't want to feel like every year I need my equity holdings to have a good year. So I would like to understand the other perspective on this.
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ohai
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Re: Can't see retiring without 15x-30x fixed income

Post by ohai » Mon Mar 11, 2019 2:57 pm

Most people at retirement age don't have a choice to work any more. Most people below retirement age don't retire even with that much savings - as you said, if you can be safer by working a bit longer, then why wouldn't you? In fact, most people on this forum seem to define "early retirement" as just not caring if their job disappears, rather than actively leaving their careers.

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Re: Can't see retiring without 15x-30x fixed income

Post by fposte » Mon Mar 11, 2019 3:06 pm

For a lot of people that’s what Social Security is. (There’s also a big difference between 15x and 30x.)

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Re: Can't see retiring without 15x-30x fixed income

Post by sailaway » Mon Mar 11, 2019 3:07 pm

If you mean that much in investments, the standard advice falls to the higher end of your range, with x as expense, so I don't see what it is you are complaining about? The advice to put it in stocks is to try to keep up with inflation.

Or perhaps you are suggesting a 70/30 split with the 30% = 15x? Or something similar?
Last edited by sailaway on Mon Mar 11, 2019 3:16 pm, edited 1 time in total.

aristotelian
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Re: Can't see retiring without 15x-30x fixed income

Post by aristotelian » Mon Mar 11, 2019 3:09 pm

The problem is inflation. 30X expenses in fixed income has a higher chance of failure than 20X expenses in stocks over 40, 50, and 60 years. You mention retiring at 50, so you would only have a better chance on the fixed income (even with a head start of 10 years of expenses) if you plan to die at 80, and you are also much less likely to leave a legacy at that point. 25X expenses in stocks even beats 30X in fixed income over 30 years.

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Re: Can't see retiring without 15x-30x fixed income

Post by livesoft » Mon Mar 11, 2019 3:12 pm

The OP needs to keep working ...

... forever.
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Re: Can't see retiring without 15x-30x fixed income

Post by Darth Xanadu » Mon Mar 11, 2019 3:14 pm

Doesn't seem unreasonable. Consider the low end of your range, 15x. If you retire with a total portfolio of 30x in a 50/50 AA, that puts you at 15x in safe fixed income.
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Re: Can't see retiring without 15x-30x fixed income

Post by Johnsson » Mon Mar 11, 2019 3:28 pm

TheTimeLord wrote:
Mon Mar 11, 2019 2:51 pm
Maybe it is because I want to retire in my 50s and not my 30s or 40s or that I feel the value of my human capital falls off a cliff the day I retire but I have trouble understanding why anyone would want to retire without having somewhere between 15x-30x in safe fixed income. From my perspective if I couldn't do that it would mean I would have too high a need to take risk. I guess I just don't want to feel like every year I need my equity holdings to have a good year. So I would like to understand the other perspective on this.
Safe fixed income is not ALWAYS safe all on its own. Diversification across the spectrum is where your security will come from. Yes, have 40 or 50% in diversified FI... hopefully that's your 15-30x. You also need equities to provide gains when FI may be lagging. Looking at history, 5x in FI is likely enough. Then again, who knows what the future will bring.

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Re: Can't see retiring without 15x-30x fixed income

Post by beyou » Mon Mar 11, 2019 3:41 pm

May help to think of your retirement savings in buckets.
Fixed income bucket allows you to live your first 10-20 years in retirement.
But for expenses that are 20+ years away, why keep the money in fixed income ?
Hard to imagine that in 20 years, you would do any worse than bonds, and if the economy is strong for even part of that period,
you need some inflation hedge. You could maybe put part of that money in TIPS, if you want to be more conservative, but only owning property has any chance of beating inflation (property meaning a business, real estate, equity in a business, index fund etc).

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Re: Can't see retiring without 15x-30x fixed income

Post by randomguy » Mon Mar 11, 2019 3:43 pm

aristotelian wrote:
Mon Mar 11, 2019 3:09 pm
The problem is inflation. 30X expenses in fixed income has a higher chance of failure than 20X expenses in stocks over 40, 50, and 60 years. You mention retiring at 50, so you would only have a better chance on the fixed income (even with a head start of 10 years of expenses) if you plan to die at 80, and you are also much less likely to leave a legacy at that point. 25X expenses in stocks even beats 30X in fixed income over 30 years.
I think the assumption is that you will have an reasonable amount of stocks. 30% would be the minimum for anyone with a 40 year time frame. Given that 30x is off in crazy land of conservativeness. 15x for the 50/50 guy is very conservative but some what reasonable.

In the end this is type of personal choice. If you have 30x expenses, some people go great I can go 30/70 and be fine. Other people go great, I can go 70/30 and be fine. And historically they have both been right. If you start worrying about market hickups like last dec, go conservative. If you don't care, keep doing what you have been doing.

And yes working longer is always safer from a financial point of view. But there is a lot more to life than money.

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Re: Can't see retiring without 15x-30x fixed income

Post by surfstar » Mon Mar 11, 2019 3:47 pm

livesoft wrote:
Mon Mar 11, 2019 3:12 pm
The OP needs to keep working ...

... forever.
I'll start the chant:

One More Year

One More Year

One More Year!!!

Change title to "Can't see retiring" and it fits just fine.

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Re: Can't see retiring without 15x-30x fixed income

Post by TheTimeLord » Mon Mar 11, 2019 3:51 pm

aristotelian wrote:
Mon Mar 11, 2019 3:09 pm
The problem is inflation. 30X expenses in fixed income has a higher chance of failure than 20X expenses in stocks over 40, 50, and 60 years. You mention retiring at 50, so you would only have a better chance on the fixed income (even with a head start of 10 years of expenses) if you plan to die at 80, and you are also much less likely to leave a legacy at that point. 25X expenses in stocks even beats 30X in fixed income over 30 years.
I said I plan to retire I my 50s, not at 50, so you are correct I am not considering a 50 or 60 year retirement. Why are you comparing fixed income returns to equity returns, I didn't specify the amount of equities to be held nor did I imply you I would have all my money in fixed income? I was just saying that I couldn't see retiring without being able to fund my anchor windward to 15x-30x.This is pretty standard Bernstein isn't it?
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Re: Can't see retiring without 15x-30x fixed income

Post by mak1277 » Mon Mar 11, 2019 3:54 pm

TheTimeLord wrote:
Mon Mar 11, 2019 2:51 pm
Maybe it is because I want to retire in my 50s and not my 30s or 40s or that I feel the value of my human capital falls off a cliff the day I retire but I have trouble understanding why anyone would want to retire without having somewhere between 15x-30x in safe fixed income. From my perspective if I couldn't do that it would mean I would have too high a need to take risk. I guess I just don't want to feel like every year I need my equity holdings to have a good year. So I would like to understand the other perspective on this.
My perspective is that I believe the chart that shows a 3% WR at a 60/40 equity/bond split is safe for a 50-60 year retirement.

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Re: Can't see retiring without 15x-30x fixed income

Post by mak1277 » Mon Mar 11, 2019 3:55 pm

mak1277 wrote:
Mon Mar 11, 2019 3:54 pm
TheTimeLord wrote:
Mon Mar 11, 2019 2:51 pm
Maybe it is because I want to retire in my 50s and not my 30s or 40s or that I feel the value of my human capital falls off a cliff the day I retire but I have trouble understanding why anyone would want to retire without having somewhere between 15x-30x in safe fixed income. From my perspective if I couldn't do that it would mean I would have too high a need to take risk. I guess I just don't want to feel like every year I need my equity holdings to have a good year. So I would like to understand the other perspective on this.
My perspective is that I believe the chart that shows a 3% WR at a 60/40 equity/bond split is safe for a 50-60 year retirement.
I guess that would leave me around 13x in fixed income, so I'm not really all that far off what you're saying.

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Re: Can't see retiring without 15x-30x fixed income

Post by Mlm » Mon Mar 11, 2019 4:00 pm

30X in fixed income? How long are you planning to live?

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Re: Can't see retiring without 15x-30x fixed income

Post by TheTimeLord » Mon Mar 11, 2019 4:00 pm

surfstar wrote:
Mon Mar 11, 2019 3:47 pm
livesoft wrote:
Mon Mar 11, 2019 3:12 pm
The OP needs to keep working ...

... forever.
I'll start the chant:

One More Year

One More Year

One More Year!!!

Change title to "Can't see retiring" and it fits just fine.
If that is true it won't be because fo this topic. We already have enough fixed income to fall with comfortably within the range I specified. And the amount I need to maintain that number of years goes down every month since post-FRA months have a lower required contribution from my portfolio than Pre-FRA months. Yep, I have a rising glide path heading into retirement.
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Re: Can't see retiring without 15x-30x fixed income

Post by TheTimeLord » Mon Mar 11, 2019 4:01 pm

Mlm wrote:
Mon Mar 11, 2019 4:00 pm
30X in fixed income? How long are you planning to live?
I assume at least one of us will make it at least 30ish years.
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Re: Can't see retiring without 15x-30x fixed income

Post by MikeG62 » Mon Mar 11, 2019 4:26 pm

TheTimeLord wrote:
Mon Mar 11, 2019 2:51 pm
Maybe it is because I want to retire in my 50s and not my 30s or 40s or that I feel the value of my human capital falls off a cliff the day I retire but I have trouble understanding why anyone would want to retire without having somewhere between 15x-30x in safe fixed income. From my perspective if I couldn't do that it would mean I would have too high a need to take risk. I guess I just don't want to feel like every year I need my equity holdings to have a good year. So I would like to understand the other perspective on this.
I buy the low end of your range as fair. If one retired with a portfolio at 30X annual spending with a 50/50 asset allocation I can’t argue with that.

However, the high(er) end of your range I think is unreasonable and would result in one working many more years that was necessary for the apparent safety of bonds. Bonds seem safe in that they have not historically fluctuated like equities (and in all likelihood won’t). They are more risky in that they don’t protect you against inflation.

Remember that the problem for the 1966 retiree in Bengen’s research (the cohort which set the 4% SWR floor) was not poor equity returns as much as it was inflation.

This is why one needs some balance In their portfolio, balance that would likely be sorely missing for someone with 30X annual expenses in Fixed Income.
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Re: Can't see retiring without 15x-30x fixed income

Post by Leesbro63 » Mon Mar 11, 2019 4:34 pm

This is basically Dr. Bernstein’s “Liability Matching Portfolio”.

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Re: Can't see retiring without 15x-30x fixed income

Post by KlingKlang » Mon Mar 11, 2019 4:36 pm

I went back and checked my records, I had 21x (Total expenses - (Entertainment + Vacation expenses)) in fixed income when I was laid off in 2014 at age 58. Another 26x in stocks, so 55/45 asset allocation.

Curious about what constitutes "safe fixed income"? Are you only including government insured and Treasury assets where the principal can never decline (i.e. no bond funds or corporate debt)?
Last edited by KlingKlang on Mon Mar 11, 2019 4:42 pm, edited 1 time in total.

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Re: Can't see retiring without 15x-30x fixed income

Post by KlangFool » Mon Mar 11, 2019 4:38 pm

OP,

There is a risk of working longer than necessary. Then, you may not have enough healthy years to live your life. In that situation, you do not get a chance to do it over.

Your life your choice.

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Re: Can't see retiring without 15x-30x fixed income

Post by 2015 » Mon Mar 11, 2019 4:42 pm

beyou wrote:
Mon Mar 11, 2019 3:41 pm
May help to think of your retirement savings in buckets.
Fixed income bucket allows you to live your first 10-20 years in retirement.
But for expenses that are 20+ years away, why keep the money in fixed income ?
Hard to imagine that in 20 years, you would do any worse than bonds, and if the economy is strong for even part of that period,
you need some inflation hedge. You could maybe put part of that money in TIPS, if you want to be more conservative, but only owning property has any chance of beating inflation (property meaning a business, real estate, equity in a business, index fund etc).
Now you've done it. You're going to get the anti-buckets crowd yapping like a bunch of nervous poodles locked in a kennel.

OP, my perception of personal risk greatly transformed when I liability matched last year. I sleep much better at night as a result. The greatest risk I see is getting deeper into retirement and coming to the inevitable realization your life is much more valuable than you thought, so you wish you had retired earlier. In my case, it was just right, but I'm glad I never engaged in the OMY syndrome.

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Re: Can't see retiring without 15x-30x fixed income

Post by Grt2bOutdoors » Mon Mar 11, 2019 4:45 pm

TheTimeLord wrote:
Mon Mar 11, 2019 4:01 pm
Mlm wrote:
Mon Mar 11, 2019 4:00 pm
30X in fixed income? How long are you planning to live?
I assume at least one of us will make it at least 30ish years.
Maybe I missed it somewhere in the thread, but are you including Social Security benefits in the 15-30x fixed income category? If Social Security provides 50% of the fixed income, then retiring with 15x expenses in fixed income should be plenty sufficient with equities to provide the rest needed.
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Re: Can't see retiring without 15x-30x fixed income

Post by willthrill81 » Mon Mar 11, 2019 5:00 pm

TheTimeLord wrote:
Mon Mar 11, 2019 4:01 pm
Mlm wrote:
Mon Mar 11, 2019 4:00 pm
30X in fixed income? How long are you planning to live?
I assume at least one of us will make it at least 30ish years.
If you were following a SWR approach, the highest historic success rates resulted from no more than a 50% allocation to fixed income. So even if your portfolio was 30X your annual spending, you wouldn't have more than 15X in fixed income. Even if you were very conservative and had a 30/70 portfolio, you wouldn't have more than about 21X in fixed income. So at 30X in fixed income, you're almost certainly far too risk averse, both in terms of your AA and your withdrawal rate. That would be what I would call 'recklessly conservative'.
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Re: Can't see retiring without 15x-30x fixed income

Post by J295 » Mon Mar 11, 2019 5:09 pm

OP,

There is a risk of working longer than necessary. Then, you may not have enough healthy years to live your life. In that situation, you do not get a chance to do it over.

Your life your choice.

KlangFool
Agree with KF on this ... and if OP (or anyone else) wants to "work" because that's what they want to do irrespective of reasonable ability to "retire" then that's ok too .... I only suggest that these decisions be intentional and authentic.

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Re: Can't see retiring without 15x-30x fixed income

Post by dknightd » Mon Mar 11, 2019 5:09 pm

15x seems reasonable. 30x seems excessive.
I'll be retiring at 61. I have enough fixed to get me through 70. The rest is 50/50.
You might consider buying an SPIA. That is part of my plan.
Everybody has a different plan. As long as you are comfortable with yours that is good :)

I share your concern. Once I retire my human capitol essentially goes to zero. Yes I could probably find another job if I absolutely had to. But it would not pay very well. I'd be better off cutting my expenses. . .

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Re: Can't see retiring without 15x-30x fixed income

Post by aristotelian » Mon Mar 11, 2019 5:13 pm

TheTimeLord wrote:
Mon Mar 11, 2019 3:51 pm
aristotelian wrote:
Mon Mar 11, 2019 3:09 pm
The problem is inflation. 30X expenses in fixed income has a higher chance of failure than 20X expenses in stocks over 40, 50, and 60 years. You mention retiring at 50, so you would only have a better chance on the fixed income (even with a head start of 10 years of expenses) if you plan to die at 80, and you are also much less likely to leave a legacy at that point. 25X expenses in stocks even beats 30X in fixed income over 30 years.
I said I plan to retire I my 50s, not at 50, so you are correct I am not considering a 50 or 60 year retirement. Why are you comparing fixed income returns to equity returns, I didn't specify the amount of equities to be held nor did I imply you I would have all my money in fixed income? I was just saying that I couldn't see retiring without being able to fund my anchor windward to 15x-30x.This is pretty standard Bernstein isn't it?
I see, I thought you were proposing 100% fixed income. You didn't mention anything about equities except that you didn't want to be exposed to market risk.

15X does seem like a fine number as part of a diversified portfolio. 30X would be safer but I do not plan to work long enough to hit 40-50X expenses.
Last edited by aristotelian on Mon Mar 11, 2019 5:17 pm, edited 1 time in total.

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Re: Can't see retiring without 15x-30x fixed income

Post by marcopolo » Mon Mar 11, 2019 5:13 pm

TheTimeLord wrote:
Mon Mar 11, 2019 2:51 pm
Maybe it is because I want to retire in my 50s and not my 30s or 40s or that I feel the value of my human capital falls off a cliff the day I retire but I have trouble understanding why anyone would want to retire without having somewhere between 15x-30x in safe fixed income. From my perspective if I couldn't do that it would mean I would have too high a need to take risk. I guess I just don't want to feel like every year I need my equity holdings to have a good year. So I would like to understand the other perspective on this.
A couple of thoughts

1) 15x - 30x is such a wide range, I am not sure what anyone is supposed to do with that

2) You seem to be on an eternal search for reasons to NOT retire. What is the point? If you don't want to retire, don't. Lots of people choose that route, there is no shame in it.
Once in a while you get shown the light, in the strangest of places if you look at it right.

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Re: Can't see retiring without 15x-30x fixed income

Post by willthrill81 » Mon Mar 11, 2019 5:24 pm

marcopolo wrote:
Mon Mar 11, 2019 5:13 pm
2) You seem to be on an eternal search for reasons to NOT retire. What is the point? If you don't want to retire, don't.
I have very much gotten that vibe as well.

If you're pessimistic, you'll always find reasons why you shouldn't retire. But you might end up like my FiL, who was diagnosed with kidney cancer five years after he retired and died two years later. From seeing what happened to him and others, I have no plans on waiting until I reach 30X or more before retiring. I enjoy what I do for money but not enough to do it if I don't have to.

Once you reach 25X expenses, flexibility in your withdrawals will probably be of far greater marginal value than saving up even more.
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Re: Can't see retiring without 15x-30x fixed income

Post by Jack FFR1846 » Mon Mar 11, 2019 5:27 pm

So to give you a poster child for "conservative", here I am. I'm already at 50/50 and should easily hit 50X spending at the point I retire (next few years). So I'll have the "traditional" 25X spending in bonds. Add social security and a very small pension to that and there's my future. I'm already 62, so could take early SS right now, if I wanted to. With money over 50X, I plan to buy a stupid car (as in a 6 figure car) and stay in the house we're in now (no downsizing).
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Re: Can't see retiring without 15x-30x fixed income

Post by delamer » Mon Mar 11, 2019 5:46 pm

dknightd wrote:
Mon Mar 11, 2019 5:09 pm
15x seems reasonable. 30x seems excessive.
I'll be retiring at 61. I have enough fixed to get me through 70. The rest is 50/50.
You might consider buying an SPIA. That is part of my plan.
Everybody has a different plan. As long as you are comfortable with yours that is good :)

I share your concern. Once I retire my human capitol essentially goes to zero. Yes I could probably find another job if I absolutely had to. But it would not pay very well. I'd be better off cutting my expenses. . .
Agreed. Having enough in fixed income to get you to a pension and/or Social Security (whenever you choose to take it) makes sense. But setting that arbitrarily at 15 to 30 times expenses is unnecessary.

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Re: Can't see retiring without 15x-30x fixed income

Post by TheTimeLord » Mon Mar 11, 2019 5:47 pm

KlangFool wrote:
Mon Mar 11, 2019 4:38 pm
OP,

There is a risk of working longer than necessary. Then, you may not have enough healthy years to live your life. In that situation, you do not get a chance to do it over.

Your life your choice.

KlangFool
I guess you might be correct for some of the early FIRE types but I haven't found it to be the case I can't live my life while working. I have had many rewarding trips, adventures and experiences while working, beginning in my 20s and continuing up until today.
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Re: Can't see retiring without 15x-30x fixed income

Post by TheTimeLord » Mon Mar 11, 2019 5:55 pm

Grt2bOutdoors wrote:
Mon Mar 11, 2019 4:45 pm
TheTimeLord wrote:
Mon Mar 11, 2019 4:01 pm
Mlm wrote:
Mon Mar 11, 2019 4:00 pm
30X in fixed income? How long are you planning to live?
I assume at least one of us will make it at least 30ish years.
Maybe I missed it somewhere in the thread, but are you including Social Security benefits in the 15-30x fixed income category? If Social Security provides 50% of the fixed income, then retiring with 15x expenses in fixed income should be plenty sufficient with equities to provide the rest needed.
No, but I am defining expenses as those expenses not covered by SS and/or pensions. So my expenses will be higher before SS, than after I start receiving my benefit so for each month I work the amount needed to cover X years of Fixed Income decreases by the amount of our estimated SS benefits in today's dollars.
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Re: Can't see retiring without 15x-30x fixed income

Post by Ron » Mon Mar 11, 2019 5:55 pm

livesoft wrote:
Mon Mar 11, 2019 3:12 pm
The OP needs to keep working ...

... forever.
That's what I get from his many past comments/postings :? ...

- Ron

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Re: Can't see retiring without 15x-30x fixed income

Post by TheTimeLord » Mon Mar 11, 2019 5:57 pm

willthrill81 wrote:
Mon Mar 11, 2019 5:00 pm
TheTimeLord wrote:
Mon Mar 11, 2019 4:01 pm
Mlm wrote:
Mon Mar 11, 2019 4:00 pm
30X in fixed income? How long are you planning to live?
I assume at least one of us will make it at least 30ish years.
If you were following a SWR approach, the highest historic success rates resulted from no more than a 50% allocation to fixed income. So even if your portfolio was 30X your annual spending, you wouldn't have more than 15X in fixed income. Even if you were very conservative and had a 30/70 portfolio, you wouldn't have more than about 21X in fixed income. So at 30X in fixed income, you're almost certainly far too risk averse, both in terms of your AA and your withdrawal rate. That would be what I would call 'recklessly conservative'.
Best I can tell historically 75/25 seems to have had the greatest statistical success over most standard time periods. That said it wouldn't be fun to catch a big down draft early in retirement with an AA of 75/25, or experience a lost decade.
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Re: Can't see retiring without 15x-30x fixed income

Post by bhsince87 » Mon Mar 11, 2019 5:58 pm

I agree completely. I pulled the ER trigger when we hit about 20X annual expenses in fixed income, with a 55/45 allocation.

Got about 16 years until SS at age 70, so 16X was my minimum number, but the timing was better if i waited a bit longer.

That was about 2 and a half months ago. Now we're at 60/40 because of the recent stock run up. I'm not sure if I'm going to rebalance. I think we have "enough" FI, and 60/40 is where I want to be longer term.
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Re: Can't see retiring without 15x-30x fixed income

Post by TheTimeLord » Mon Mar 11, 2019 6:02 pm

dknightd wrote:
Mon Mar 11, 2019 5:09 pm
15x seems reasonable. 30x seems excessive.
I'll be retiring at 61. I have enough fixed to get me through 70. The rest is 50/50.
You might consider buying an SPIA. That is part of my plan.
Everybody has a different plan. As long as you are comfortable with yours that is good :)

I share your concern. Once I retire my human capitol essentially goes to zero. Yes I could probably find another job if I absolutely had to. But it would not pay very well. I'd be better off cutting my expenses. . .
From my perspective, 30x is like the top for someone retiring in their 50s, it would be silly to pick a number larger than your reasonable remaining lifespan. I would assume someone selecting 30x would likely have 50x-100x in their total portfolio.
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Re: Can't see retiring without 15x-30x fixed income

Post by radiowave » Mon Mar 11, 2019 6:02 pm

OP, sounds like you are proposing something like Kitces "bond tent" https://www.bogleheads.org/forum/viewt ... ?t=209728

Are you saying only to withdraw from bonds when transitioning to retirement?
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Re: Can't see retiring without 15x-30x fixed income

Post by TheTimeLord » Mon Mar 11, 2019 6:08 pm

marcopolo wrote:
Mon Mar 11, 2019 5:13 pm
TheTimeLord wrote:
Mon Mar 11, 2019 2:51 pm
Maybe it is because I want to retire in my 50s and not my 30s or 40s or that I feel the value of my human capital falls off a cliff the day I retire but I have trouble understanding why anyone would want to retire without having somewhere between 15x-30x in safe fixed income. From my perspective if I couldn't do that it would mean I would have too high a need to take risk. I guess I just don't want to feel like every year I need my equity holdings to have a good year. So I would like to understand the other perspective on this.
A couple of thoughts

1) 15x - 30x is such a wide range, I am not sure what anyone is supposed to do with that

2) You seem to be on an eternal search for reasons to NOT retire. What is the point? If you don't want to retire, don't. Lots of people choose that route, there is no shame in it.
I don't think so, while things could change, I am reasonably sure I am on track to hit retirement in the timeframe I posted on this forum. Or at least not miss it by more than 2-3 months. But I have lots to figure out about retirement between now and then.
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Re: Can't see retiring without 15x-30x fixed income

Post by TheTimeLord » Mon Mar 11, 2019 6:10 pm

Jack FFR1846 wrote:
Mon Mar 11, 2019 5:27 pm
So to give you a poster child for "conservative", here I am. I'm already at 50/50 and should easily hit 50X spending at the point I retire (next few years). So I'll have the "traditional" 25X spending in bonds. Add social security and a very small pension to that and there's my future. I'm already 62, so could take early SS right now, if I wanted to. With money over 50X, I plan to buy a stupid car (as in a 6 figure car) and stay in the house we're in now (no downsizing).
I plan to buy a stupid SUV (high/mid 5 figures) and downsize into a smaller but more expensive house. :oops:
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Re: Can't see retiring without 15x-30x fixed income

Post by Dottie57 » Mon Mar 11, 2019 6:13 pm

dknightd wrote:
Mon Mar 11, 2019 5:09 pm
15x seems reasonable. 30x seems excessive.
I'll be retiring at 61. I have enough fixed to get me through 70. The rest is 50/50.
You might consider buying an SPIA. That is part of my plan.
Everybody has a different plan. As long as you are comfortable with yours that is good :)

I share your concern. Once I retire my human capitol essentially goes to zero. Yes I could probably find another job if I absolutely had to. But it would not pay very well. I'd be better off cutting my expenses. . .
I have very similar plans to dnightd . Cds to 70, 60/40 or 50/50 at age 70.spia at 70 or 75.

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Re: Can't see retiring without 15x-30x fixed income

Post by TheTimeLord » Mon Mar 11, 2019 6:13 pm

radiowave wrote:
Mon Mar 11, 2019 6:02 pm
OP, sounds like you are proposing something like Kitces "bond tent" https://www.bogleheads.org/forum/viewt ... ?t=209728

Are you saying only to withdraw from bonds when transitioning to retirement?
Definitely has had an influence on my thinking once I realized my need to take risk had diminish meaningfully from the gains and contributions of the past decade.
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Re: Can't see retiring without 15x-30x fixed income

Post by matthewbarnhart » Mon Mar 11, 2019 6:14 pm

TheTimeLord wrote:
Mon Mar 11, 2019 5:47 pm
KlangFool wrote:
Mon Mar 11, 2019 4:38 pm
OP,

There is a risk of working longer than necessary. Then, you may not have enough healthy years to live your life. In that situation, you do not get a chance to do it over.

Your life your choice.

KlangFool
I guess you might be correct for some of the early FIRE types but I haven't found it to be the case I can't live my life while working. I have had many rewarding trips, adventures and experiences while working, beginning in my 20s and continuing up until today.
I found that this chart gave me a lot of perspective: Rich, Broke or Dead?

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Re: Can't see retiring without 15x-30x fixed income

Post by Wiggums » Mon Mar 11, 2019 6:17 pm

TheTimeLord wrote:
Mon Mar 11, 2019 5:55 pm

No, but I am defining expenses as those expenses not covered by SS and/or pensions. So my expenses will be higher before SS, than after I start receiving my benefit so for each month I work the amount needed to cover X years of Fixed Income decreases by the amount of our estimated SS benefits in today's dollars.
I’m not 100% clear on what your question is after reading all the responses.

It’s not uncommon to have an expense gap prior to SS and a lower amount after SS. So as long as your sources of income / portfolio covers your expenses multiplied by your life expectancy, that’s a good starting point.

There are a lot of tools that would visually model your cash flow (portfolio to expenses) over your specified longevity.

The following article may be helpful to you.

https://www.forbes.com/sites/robertberg ... ement/amp/

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Re: Can't see retiring without 15x-30x fixed income

Post by bltn » Mon Mar 11, 2019 6:22 pm

A 3% withdrawal rate with a conservative AA of 50/50 gives a fixed multiple of 16.6 x expenses. All of those parameters seem very secure.
25 x would actually require a wr of 2%. That is only necessary if one is determined to leave a large legacy. A 2% wr is not needed for most people to feel financially secure.
But neither is 20x expenses in fixed income.

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Re: Can't see retiring without 15x-30x fixed income

Post by KlangFool » Mon Mar 11, 2019 6:23 pm

TheTimeLord wrote:
Mon Mar 11, 2019 5:47 pm
KlangFool wrote:
Mon Mar 11, 2019 4:38 pm
OP,

There is a risk of working longer than necessary. Then, you may not have enough healthy years to live your life. In that situation, you do not get a chance to do it over.

Your life your choice.

KlangFool
I guess you might be correct for some of the early FIRE types but I haven't found it to be the case I can't live my life while working. I have had many rewarding trips, adventures and experiences while working, beginning in my 20s and continuing up until today.
TheTimeLord,

Your problem has nothing to do with money. You do not have something to retire to.

To each its own.

KlangFool

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Re: Can't see retiring without 15x-30x fixed income

Post by radiowave » Mon Mar 11, 2019 6:28 pm

TheTimeLord wrote:
Mon Mar 11, 2019 6:13 pm
radiowave wrote:
Mon Mar 11, 2019 6:02 pm
OP, sounds like you are proposing something like Kitces "bond tent" https://www.bogleheads.org/forum/viewt ... ?t=209728

Are you saying only to withdraw from bonds when transitioning to retirement?
Definitely has had an influence on my thinking once I realized my need to take risk had diminish meaningfully from the gains and contributions of the past decade.
I'm mostly using the 3 fund portfolio and that helps me see the effects of bonds (mostly total bond funds in tax-deferred) on both bond and total portfolio longevity. Having the ability to withdraw from either bonds or stock funds gives a lot of flexibility in managing a portfolio in retirement. I think the 15 yrs for bonds is a helpful metric, but agree with above that 30 may be too conservative. Is there a point where a portfolio is too safe at the expense of future growth from equity?
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Re: Can't see retiring without 15x-30x fixed income

Post by TheDDC » Mon Mar 11, 2019 6:33 pm

TheTimeLord wrote:
Mon Mar 11, 2019 2:51 pm
Maybe it is because I want to retire in my 50s and not my 30s or 40s or that I feel the value of my human capital falls off a cliff the day I retire but I have trouble understanding why anyone would want to retire without having somewhere between 15x-30x in safe fixed income. From my perspective if I couldn't do that it would mean I would have too high a need to take risk. I guess I just don't want to feel like every year I need my equity holdings to have a good year. So I would like to understand the other perspective on this.
Personally, I favor a "preservation of capital" approach when retiring such that you don't have a premature drawdown and your balance stays the same. That is mostly the point of saving.

Now, if you listen to the folks here and wait until 50+ you will get the idea that it's all about saving until retirement, and then suicide (or expensive LTC insurance plans) for later. So save for death, nursing care, or insurance and be a true blue BH.

If you actually enjoy life and enjoy being useful in the workforce then I can agree with you with your plan. So how much is it? 15x or 30x? There's quite a bit of daylight between them.

My plan is not to save for retirement as most BH would consider retirement but being able to spend and preserve wealth simultaneously. If you can figure out that goal then you, sir, have won the game!

Always,

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Re: Can't see retiring without 15x-30x fixed income

Post by bltn » Mon Mar 11, 2019 6:41 pm

Jack FFR1846 wrote:
Mon Mar 11, 2019 5:27 pm
So to give you a poster child for "conservative", here I am. I'm already at 50/50 and should easily hit 50X spending at the point I retire (next few years). So I'll have the "traditional" 25X spending in bonds. Add social security and a very small pension to that and there's my future. I'm already 62, so could take early SS right now, if I wanted to. With money over 50X, I plan to buy a stupid car (as in a 6 figure car) and stay in the house we're in now (no downsizing).
Your spending restraint is just as impressive as your accumulation. You might decide at some point that you can safely increase your spending and your lifestyle and enjoy some of the increased benefits you deserve.
Congratulations.

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Re: Can't see retiring without 15x-30x fixed income

Post by dknightd » Mon Mar 11, 2019 6:43 pm

TheTimeLord wrote:
Mon Mar 11, 2019 6:02 pm
From my perspective, 30x is like the top for someone retiring in their 50s, it would be silly to pick a number larger than your reasonable remaining lifespan. I would assume someone selecting 30x would likely have 50x-100x in their total portfolio.
If you have 50x-100x in your total portfolio. retire today!
TheTimeLord wrote:
Mon Mar 11, 2019 6:02 pm
I plan to buy a stupid SUV (high/mid 5 figures) and downsize into a smaller but more expensive house. :oops:
Then either buy them now, or, put them in as a line item in your spending plan.

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