Can retirement be this simple?

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DeltaWye
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Can retirement be this simple?

Post by DeltaWye » Fri May 22, 2020 9:48 am

I have been struggling with entering the distribution phase of life. I have read a gazillion posts, and I think I know the Boglehead answer to my question. I may be just looking for assurance I guess. Here is the situation:
I need to rollover a lump sum pension and a 401k to an IRA. I plan on rolling both into a Vanguard account, specifically the Vanguard Balanced Fund (VBIAX). I have 2.5 years of expenses in cash, health insurance covered, and will be able to take the distributions without penalty. I have a paid-for home, newer vehicles, and no other debt.
Can retirement really be as simple as rolling both of these accounts into the VBIAX fund and set up an annual withdrawal of 4.25% of the balance to replenish the cash account? The 4.25% of balance actually leaves me with a fair amount of wiggle room and I could also work a bit. My withdrawal rate could be lower then. I would delay SS until my FRA of 67 under this scenario, and then reduce withdrawals further...unless there is a large increase in my accounts. I would adjust my distributions with future RMDs in mind.
I realize I would have all of my eggs in the "Vanguard" bucket...Is this relatively safe? Also I would essentially be in one fund. (okay two funds-in -one)
60/40 works for me as far as sleeping at night. That is my current allocation and the current pandemic hasn't bothered me a bit as far as emotional factors with investing.
I realize that this is not an all-inclusive summary, but again I ask: "Could it be this simple?"

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dwickenh
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Re: Can retirement be this simple?

Post by dwickenh » Fri May 22, 2020 10:12 am

It can be as simple as you want to make it!! Was there a decision made on taking the pension as a monthly payment for life, or as a lump sum?
There is more to plan for in the way of controlling expenses, legacy decisions, financial and health proxies for later in life, and long term care decisions.

All of these questions need answers, maybe not today, but eventually you will need to make plans for all of these things in retirement.

Good Luck to you, best wishes,

Dan
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

bloom2708
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Re: Can retirement be this simple?

Post by bloom2708 » Fri May 22, 2020 10:12 am

Are you 50 or 65?

How did you settle on 4.25%?

4% held up (past) for a 30 year retirement. We are in a low interest rate environment.

3.5% is typically considered as a safer withdrawal rate for early retirement.

Not really enough information. Consider posting in this format:

viewtopic.php?t=6212
"We are here to provoke thoughtfulness, not agree with you." Unknown Boglehead

Broken Man 1999
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Re: Can retirement be this simple?

Post by Broken Man 1999 » Fri May 22, 2020 10:18 am

DeltaWye wrote:
Fri May 22, 2020 9:48 am
I have been struggling with entering the distribution phase of life. I have read a gazillion posts, and I think I know the Boglehead answer to my question. I may be just looking for assurance I guess. Here is the situation:
I need to rollover a lump sum pension and a 401k to an IRA. I plan on rolling both into a Vanguard account, specifically the Vanguard Balanced Fund (VBIAX). I have 2.5 years of expenses in cash, health insurance covered, and will be able to take the distributions without penalty. I have a paid-for home, newer vehicles, and no other debt.
Can retirement really be as simple as rolling both of these accounts into the VBIAX fund and set up an annual withdrawal of 4.25% of the balance to replenish the cash account? The 4.25% of balance actually leaves me with a fair amount of wiggle room and I could also work a bit. My withdrawal rate could be lower then. I would delay SS until my FRA of 67 under this scenario, and then reduce withdrawals further...unless there is a large increase in my accounts. I would adjust my distributions with future RMDs in mind.
I realize I would have all of my eggs in the "Vanguard" bucket...Is this relatively safe? Also I would essentially be in one fund. (okay two funds-in -one)
60/40 works for me as far as sleeping at night. That is my current allocation and the current pandemic hasn't bothered me a bit as far as emotional factors with investing.
I realize that this is not an all-inclusive summary, but again I ask: "Could it be this simple?"
Could be. Parts of your plan are similar to what I did. In 2003 I rolled my 401k plan, and DW's 401k plan and pension into TIRAs at Vanguard. In 2008 I rolled another 401k belonging to DW into her Vanguard TIRA. In 2015 I put my lump-sum pension in my Vanguard TIRA. Over a few years we added Roth IRAs at Vanguard, and purchased a VA at Vanguard.

Works for us, though our AA is 50/50. I have never had any concern having all our retirement assets at Vanguard, except our Series I Savings Bonds.

Lots of folks here use a balanced fund. It is a possible I will use a balanced fund as I age simply to shed some management tasks, and also looking forward to the time a DD might be managing things for us.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven then I shall not go. " -Mark Twain

NotWhoYouThink
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Re: Can retirement be this simple?

Post by NotWhoYouThink » Fri May 22, 2020 10:24 am

Sounds like a solid plan to me, and better than many complicated plans.

I don't worry about having all my retirement money at Vanguard, but do keep an account at a local bank for convenience.

Congratulations, now you just need to plan your time to enjoy your retirement.

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willthrill81
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Re: Can retirement be this simple?

Post by willthrill81 » Fri May 22, 2020 10:28 am

bloom2708 wrote:
Fri May 22, 2020 10:12 am
4% held up (past) for a 30 year retirement. We are in a low interest rate environment.

3.5% is typically considered as a safer withdrawal rate for early retirement.
The OP seems to be planning on withdrawing 4.25% of the portfolio balance each year (i.e. totally flexible). That's on the opposite end of the spectrum from the '4% rule of thumb' (i.e. totally fixed).
Last edited by willthrill81 on Fri May 22, 2020 10:29 am, edited 1 time in total.
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calmaniac
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Re: Can retirement be this simple?

Post by calmaniac » Fri May 22, 2020 10:29 am

I know it's not part of your question, but why did you role over your pension into a lump sum?
62 yo, 1-3y til retire. AA 70/30: 30% S&P, 16% value, 14% intl, 10% EM, 30% short/int govt bonds. DW & my Fed pensions now ≈60% of expenses. Taking SS @age 70--> pension+SS ≈100% of expenses.

JimmyD
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Re: Can retirement be this simple?

Post by JimmyD » Fri May 22, 2020 10:31 am

DeltaWye wrote:
Fri May 22, 2020 9:48 am
I have been struggling with entering the distribution phase of life. I have read a gazillion posts, and I think I know the Boglehead answer to my question. I may be just looking for assurance I guess. Here is the situation:
I need to rollover a lump sum pension and a 401k to an IRA. I plan on rolling both into a Vanguard account, specifically the Vanguard Balanced Fund (VBIAX). I have 2.5 years of expenses in cash, health insurance covered, and will be able to take the distributions without penalty. I have a paid-for home, newer vehicles, and no other debt.
Can retirement really be as simple as rolling both of these accounts into the VBIAX fund and set up an annual withdrawal of 4.25% of the balance to replenish the cash account? The 4.25% of balance actually leaves me with a fair amount of wiggle room and I could also work a bit. My withdrawal rate could be lower then. I would delay SS until my FRA of 67 under this scenario, and then reduce withdrawals further...unless there is a large increase in my accounts. I would adjust my distributions with future RMDs in mind.
I realize I would have all of my eggs in the "Vanguard" bucket...Is this relatively safe? Also I would essentially be in one fund. (okay two funds-in -one)
60/40 works for me as far as sleeping at night. That is my current allocation and the current pandemic hasn't bothered me a bit as far as emotional factors with investing.
I realize that this is not an all-inclusive summary, but again I ask: "Could it be this simple?"
Question for you: as someone who's still 20+ years from retirement, can you help me understand how you accumulated the 2.5 years of expenses in cash? It's just hard for me to envision saving that much cash. Is it something you did over time or did you convert some of your existing retirement assets into cash? If the later, where do you keep the cash (fund and account type)?

Thanks for your help and best of luck in retirement!

Iorek
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Re: Can retirement be this simple?

Post by Iorek » Fri May 22, 2020 10:50 am

I am not the OP but after I contribute to my 401k I buy i-bonds (and sometimes ee bonds) with extra savings. Been doing that about 20 years and it adds up— I probably have a couple years worth of expenses more or less in savings bonds now.

sixtyforty
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Re: Can retirement be this simple?

Post by sixtyforty » Fri May 22, 2020 11:00 am

Yes, it can be that simple. We are following a similar plan.. and also have VBIAX.
"Simplicity is the ultimate sophistication" - Leonardo Da Vinci

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Watty
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Re: Can retirement be this simple?

Post by Watty » Fri May 22, 2020 11:08 am

DeltaWye wrote:
Fri May 22, 2020 9:48 am
"Could it be this simple?"
I did not double check your numbers but it not only can it be simple but it should be simple so that you will be able to manage it easier when you are 80+ years old and may be less mentally capable. I plan on having mine be pretty much on automatic pilot by the time I start Social Security.

Having it simple will also make it easier if a spouse who knows less about investing needs to manage it some day, or if someone like a kid has to manage your finances for you.

If you end up with a lot in taxable accounts that will complicate it some since you would need to worry about the tax efficiency but for most people that is not very complex either.

You will also need to figure out if doing Roth conversions makes sense at least until you start Social Security. They typically do not make sense after that because of the way Social Security is taxed.
DeltaWye wrote:
Fri May 22, 2020 9:48 am
I would delay SS until my FRA of 67 under this scenario,
See this web site to get a suggested SS claiming stragety especially if you have ever been married.

https://opensocialsecurity.com/

Topic Author
DeltaWye
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Re: Can retirement be this simple?

Post by DeltaWye » Fri May 22, 2020 11:20 am

dwickenh wrote:
Fri May 22, 2020 10:12 am
It can be as simple as you want to make it!! Was there a decision made on taking the pension as a monthly payment for life, or as a lump sum?
There is more to plan for in the way of controlling expenses, legacy decisions, financial and health proxies for later in life, and long term care decisions.

All of these questions need answers, maybe not today, but eventually you will need to make plans for all of these things in retirement.

Good Luck to you, best wishes,

Dan
I decided to go Lump sum. With interest rates falling, the lump sum grew. It isn't a done deal tho. Also, the annuity works out to about the same 4.25%. That is also why I picked 4.25% btw.
Last edited by DeltaWye on Fri May 22, 2020 6:48 pm, edited 1 time in total.

Topic Author
DeltaWye
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Re: Can retirement be this simple?

Post by DeltaWye » Fri May 22, 2020 11:21 am

calmaniac wrote:
Fri May 22, 2020 10:29 am
I know it's not part of your question, but why did you role over your pension into a lump sum?
The annuity option worked out to about the same rate of 4.25%. That was really my only reason.

Topic Author
DeltaWye
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Re: Can retirement be this simple?

Post by DeltaWye » Fri May 22, 2020 11:29 am

JimmyD wrote:
Fri May 22, 2020 10:31 am
DeltaWye wrote:
Fri May 22, 2020 9:48 am
I have been struggling with entering the distribution phase of life. I have read a gazillion posts, and I think I know the Boglehead answer to my question. I may be just looking for assurance I guess. Here is the situation:
I need to rollover a lump sum pension and a 401k to an IRA. I plan on rolling both into a Vanguard account, specifically the Vanguard Balanced Fund (VBIAX). I have 2.5 years of expenses in cash, health insurance covered, and will be able to take the distributions without penalty. I have a paid-for home, newer vehicles, and no other debt.
Can retirement really be as simple as rolling both of these accounts into the VBIAX fund and set up an annual withdrawal of 4.25% of the balance to replenish the cash account? The 4.25% of balance actually leaves me with a fair amount of wiggle room and I could also work a bit. My withdrawal rate could be lower then. I would delay SS until my FRA of 67 under this scenario, and then reduce withdrawals further...unless there is a large increase in my accounts. I would adjust my distributions with future RMDs in mind.
I realize I would have all of my eggs in the "Vanguard" bucket...Is this relatively safe? Also I would essentially be in one fund. (okay two funds-in -one)
60/40 works for me as far as sleeping at night. That is my current allocation and the current pandemic hasn't bothered me a bit as far as emotional factors with investing.
I realize that this is not an all-inclusive summary, but again I ask: "Could it be this simple?"
Question for you: as someone who's still 20+ years from retirement, can you help me understand how you accumulated the 2.5 years of expenses in cash? It's just hard for me to envision saving that much cash. Is it something you did over time or did you convert some of your existing retirement assets into cash? If the later, where do you keep the cash (fund and account type)?

Thanks for your help and best of luck in retirement!
Jimmy,
Actually I have a bit more than 2.5 years. I remember how hard it was to get started living beneath my means, but when I did adjust my spending I got to a point where I was living on less than half of my income. Things start to snowball at that point. Next thing you know, there are no payments of any kind. I still lived good, just cut down on waste in my life. I was a slow-saver for my first decade of saving, but the last 20 years is where I really got serious about having no debt, buying high-quality goods when I did buy stuff, and actively saving. I ended up getting hurt and leaving the workforce involuntarily, but I had my ducks-in-a-row prior to that.

kabob
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Re: Can retirement be this simple?

Post by kabob » Fri May 22, 2020 11:31 am

Can retirement be this simple? - Yes!
I was a bit anxious about retirement (primarily due to leaving a very comfortable,stable job and income) in last half of 2014 - but being in a similar position as your indicating (no debt, residence & essentials all paid off), Ive found the planning has created a perpetual growth machine/foundation far greater than 4-5%++... Retirement's Great! (shoulda done this earlier!!)
Simply following a non extravagant and financially farsighted BogleLifeStyle has probably done ya a pretty good job.

One simple modification to the BooglePlan that's worked for me is: Loss Avoidance and modifying that StubbornStayTheCourse mentality. It can take ya Down Bad!
One simple stratagy will keep ya in Perpetual Growth and income - and all ya have to do is PayAttention! (at least weekly or so). Just watch the funds and allocations that have got ya where you are. When the slope of 50day Ave is positive let er run (take the windfall profits, let original principal allocation work), when the 50day ave slope goes negative - step aside... just click Sell (your with Vanguard, a couple mil allocation move is no problem and literally just a click away!)
And just watch the market madness from safety...
When the 50day Ave slope returns goes positive - Reap the rewards of recovery goin up & repeat....
It's Perpetual...

Notice, I'm not sayin duck on just a small dip below the 50day Ave, but once one has achieved Significant working capital, one definitely should Pay Attention to a Decreasing slope of the 50Day Ave of they're achieved investments Net Value!
And actually, it aint a bad idea to Never even hold anything with a decreasing 50day moving average!
Simply, at your point, Just Pay Attention - Don't let the Market take ya Down!
Last edited by kabob on Fri May 22, 2020 2:52 pm, edited 1 time in total.

printer86
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Re: Can retirement be this simple?

Post by printer86 » Fri May 22, 2020 1:16 pm

If things are so rosy, why not defer social security until you turn 70? That get's you an additional 24% monthly payment for the rest of your life. That's about the best deal out there. Plus, it's pretty good longevity insurance.

suewolf
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Re: Can retirement be this simple?

Post by suewolf » Fri May 22, 2020 2:58 pm

Congratulations - a great plan. But here's some reasons why you might want to be less simple:
- how do you know 4.25% withdrawal rate is the right number? you might run out of money. For what it's worth with 40 years of withdrawals, I'm using about 3%.
- mitigating taxes is the hard part, not investing. Once RMD's start (and SS) you might be throwing yourself into a higher tax bracket than you really need to be (or want to be in). Consider at least partial roll over to ROTH IRA to avoid RMDs
- estate issues: do you want to leave money to heirs? do you want to minimize their tax burdens? if these are important, there are ways to help, including insurance products.
- sequence of returns risk: if we get 10 years of bad market returns, will your plan still work? do you have contingency plans that will allow you to avoid selling at low points in the Balance Fund?

For me, the complicating part of the withdrawal phase is taxes. If you don't care about that, then I think you're on a great path. But, while I'm proud to pay my fair share, I'm quite happy to do the necessary tax planning to minimize taxes through the years. Sometimes simplicity can be costly!

Best of luck.

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whodidntante
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Re: Can retirement be this simple?

Post by whodidntante » Fri May 22, 2020 3:01 pm

I would withdraw the funds as needed to meet current spending, making sure to honor RMDs once that's required. You can cut spending in bear markets and then live a little when the market hands you giant bags of money. I like to have separate funds for equities and fixed income, so I can pick which one to sell. So I would favor a little more complication, but you do you.

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David Jay
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Re: Can retirement be this simple?

Post by David Jay » Fri May 22, 2020 3:06 pm

Note to all: The OP is talking about a 4.25% withdrawal until age 67 when Social Security kicks in and his withdrawal rate will drop.

I am currently withdrawing over 6% of portfolio... but only until age 70, at which point withdrawal rate drops to something under 2%.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

Katietsu
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Re: Can retirement be this simple?

Post by Katietsu » Fri May 22, 2020 3:28 pm

I assume the 4.25% annuity option has no inflation adjustment/COLA. If you could receive 4.25% with COLA, I would reconsider taking the lump sum.

You need to plan for inflation. You need to plan for sequence of return risk. You need to plan for longevity. Have you considered these factors? Maybe you have with a plan to reduce your withdrawals once you get social security. But it seems like you might have overlooked these concerns.

kabob
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Re: Can retirement be this simple?

Post by kabob » Fri May 22, 2020 3:39 pm

printer86 wrote:
Fri May 22, 2020 1:16 pm
If things are so rosy, why not defer social security until you turn 70? That get's you an additional 24% monthly payment for the rest of your life. That's about the best deal out there. Plus, it's pretty good longevity insurance.
That's a very positive thought there... For those well positioned and repetitively healthy. Musta been complacent or distracted to not notice that!

JamesJonesJrJr
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Re: Can retirement be this simple?

Post by JamesJonesJrJr » Fri May 22, 2020 4:28 pm

How old are you? How much do you anticipate you'll receive from social security? What's your annual spend rate? And lastly how much do you have saved?

Topic Author
DeltaWye
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Re: Can retirement be this simple?

Post by DeltaWye » Fri May 22, 2020 6:00 pm

printer86 wrote:
Fri May 22, 2020 1:16 pm
If things are so rosy, why not defer social security until you turn 70? That get's you an additional 24% monthly payment for the rest of your life. That's about the best deal out there. Plus, it's pretty good longevity insurance.
I have considered that. I decided on 67 basically because i was in between 65 and 70! I could end up delaying as I have hopes of finding some niche that I really enjoy doing, that could also bring in a few dollars. It really came down to the fact that I think the age 65 amount will be enough. It will also depend on health issues. There is nothing "absolutely firm" in my plan. Nothing is "rosy" enough, in my mind, to rule out anything. Thanks for the reply and food for thought!

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GerryL
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Re: Can retirement be this simple?

Post by GerryL » Fri May 22, 2020 6:21 pm

It can be that simple, but one thing you want to add to the plan if you haven't already. Have a plan to track your spending.
Knowing how much you need for expenses and how much you spend each month/year will go a long way towards a financially secure retirement.

printer86
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Re: Can retirement be this simple?

Post by printer86 » Fri May 22, 2020 6:27 pm

DeltaWye wrote:
Fri May 22, 2020 6:00 pm
printer86 wrote:
Fri May 22, 2020 1:16 pm
If things are so rosy, why not defer social security until you turn 70? That get's you an additional 24% monthly payment for the rest of your life. That's about the best deal out there. Plus, it's pretty good longevity insurance.
I have considered that. I decided on 67 basically because i was in between 65 and 70! I could end up delaying as I have hopes of finding some niche that I really enjoy doing, that could also bring in a few dollars. It really came down to the fact that I think the age 65 amount will be enough. It will also depend on health issues. There is nothing "absolutely firm" in my plan. Nothing is "rosy" enough, in my mind, to rule out anything. Thanks for the reply and food for thought!
Yeah, "rosy" probably wasn't the right word for me to use, but I do think you have things well under control.

In regards to Social Security, I will further add the following. As the primarily wage earner in our house, I intend to defer SS until I turn 70 not only for the larger lifetime payment, but should my spouse survive me, she will inherit my larger SS payment for the remainder of her life.

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DeltaWye
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Re: Can retirement be this simple?

Post by DeltaWye » Fri May 22, 2020 6:38 pm

Katietsu wrote:
Fri May 22, 2020 3:28 pm
I assume the 4.25% annuity option has no inflation adjustment/COLA. If you could receive 4.25% with COLA, I would reconsider taking the lump sum.

You need to plan for inflation. You need to plan for sequence of return risk. You need to plan for longevity. Have you considered these factors? Maybe you have with a plan to reduce your withdrawals once you get social security. But it seems like you might have overlooked these concerns.
Correct on the no cola. Inflation is precisely my reason for taking the lump. I came of age in the 70's and early 80's. I remember double-digit inflation, paying 17% interest on my first car, graduating from high school while we were in a recession, farm crisis, oil boom in my area crashing...heck, my grandparents sold their farm and lived off 10% interest on CDs from the sale. My local small-town bank was the first bank in the U.S. to be closed down (1976) since the depression. Talk about a no-present Christmas! My point is that I have not forgotten the lessons I learned over my lifetime, and most learned the hard way I might add. There is no end to the different events that can and will happen. I have not overlooked bad-times, but I hope to follow a plan that is conservative and flexible enough to get through them.

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DeltaWye
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Re: Can retirement be this simple?

Post by DeltaWye » Fri May 22, 2020 6:42 pm

printer86 wrote:
Fri May 22, 2020 6:27 pm
DeltaWye wrote:
Fri May 22, 2020 6:00 pm
printer86 wrote:
Fri May 22, 2020 1:16 pm
If things are so rosy, why not defer social security until you turn 70? That get's you an additional 24% monthly payment for the rest of your life. That's about the best deal out there. Plus, it's pretty good longevity insurance.
I have considered that. I decided on 67 basically because i was in between 65 and 70! I could end up delaying as I have hopes of finding some niche that I really enjoy doing, that could also bring in a few dollars. It really came down to the fact that I think the age 65 amount will be enough. It will also depend on health issues. There is nothing "absolutely firm" in my plan. Nothing is "rosy" enough, in my mind, to rule out anything. Thanks for the reply and food for thought!
Yeah, "rosy" probably wasn't the right word for me to use, but I do think you have things well under control.

In regards to Social Security, I will further add the following. As the primarily wage earner in our house, I intend to defer SS until I turn 70 not only for the larger lifetime payment, but should my spouse survive me, she will inherit my larger SS payment for the remainder of her life.
Great point on the spousal payment. I am not married any more, but I suppose that could change. Also "rosy" does kind of fit...its been my nickname for 50+ years!

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LilyFleur
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Re: Can retirement be this simple?

Post by LilyFleur » Fri May 22, 2020 7:01 pm

whodidntante wrote:
Fri May 22, 2020 3:01 pm
I would withdraw the funds as needed to meet current spending, making sure to honor RMDs once that's required. You can cut spending in bear markets and then live a little when the market hands you giant bags of money. I like to have separate funds for equities and fixed income, so I can pick which one to sell. So I would favor a little more complication, but you do you.
I prefer this as well. If equities tank, I want the flexibility to not sell any equities at all until the market recovers. So, I have equities and fixed income in separate funds.

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LilyFleur
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Re: Can retirement be this simple?

Post by LilyFleur » Fri May 22, 2020 7:07 pm

DeltaWye wrote:
Fri May 22, 2020 6:42 pm
printer86 wrote:
Fri May 22, 2020 6:27 pm
DeltaWye wrote:
Fri May 22, 2020 6:00 pm
printer86 wrote:
Fri May 22, 2020 1:16 pm
If things are so rosy, why not defer social security until you turn 70? That get's you an additional 24% monthly payment for the rest of your life. That's about the best deal out there. Plus, it's pretty good longevity insurance.
I have considered that. I decided on 67 basically because i was in between 65 and 70! I could end up delaying as I have hopes of finding some niche that I really enjoy doing, that could also bring in a few dollars. It really came down to the fact that I think the age 65 amount will be enough. It will also depend on health issues. There is nothing "absolutely firm" in my plan. Nothing is "rosy" enough, in my mind, to rule out anything. Thanks for the reply and food for thought!
Yeah, "rosy" probably wasn't the right word for me to use, but I do think you have things well under control.

In regards to Social Security, I will further add the following. As the primarily wage earner in our house, I intend to defer SS until I turn 70 not only for the larger lifetime payment, but should my spouse survive me, she will inherit my larger SS payment for the remainder of her life.
Great point on the spousal payment. I am not married any more, but I suppose that could change. Also "rosy" does kind of fit...its been my nickname for 50+ years!
Depending on how long you were married and if it ended in death or divorce, it's worth making an appointment, taking your divorce decree and marriage certificate down to the SS office and getting an estimate of collecting from your ex or collecting on your own. I'm glad I did.

This forum has lots of advice should you ever consider remarrying! :mrgreen:

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WoodSpinner
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Re: Can retirement be this simple?

Post by WoodSpinner » Fri May 22, 2020 7:28 pm

DeltaWye wrote:
Fri May 22, 2020 11:21 am
calmaniac wrote:
Fri May 22, 2020 10:29 am
I know it's not part of your question, but why did you role over your pension into a lump sum?
The annuity option worked out to about the same rate of 4.25%. That was really my only reason.
This is a decision that I suggest you do some more research in. It was one of the most difficult ones for us as we prepared for Retirement. The BogleHead Search Bar can be very helpful.

Here is a thread that helped me....
viewtopic.php?t=236087

There are a number of aspects to consider:
- Value of the Lump Sum
- Value of the Pension when compared to buying a SPIA with Lump Sum
- Sequence of Return Risks
- Stability of the company providing the pension
- Inflation Protection
- Personal Goals
- Health Status
- etc.

Congrats and best of luck

WoodSpinner

heyyou
Posts: 3672
Joined: Tue Feb 20, 2007 4:58 pm

Re: Can retirement be this simple?

Post by heyyou » Fri May 22, 2020 8:27 pm

Simple, yes, because you have made good choices. You are adapting your spending by withdrawing a fixed percentage of each annual portfolio balance. Ignoring those two (adapting spending & remaining portfolio balance) is what contributed to the failures of the 4% plus inflation, plan. So many are looking for absolute certainty for three decades, but accepting the prospect of future, slightly variable income is what matches the expected returns of the stock market.

synergy
Posts: 187
Joined: Mon Oct 13, 2008 8:00 pm

Re: Can retirement be this simple?

Post by synergy » Sat May 23, 2020 3:01 pm

As you approach the time you need to make RMDs you may consider having several years of distributions in cash or cash like accounts. In that way if the market tanks for several years you do not not need to access funds when the market is low. I set this up a few years before I reached 71 and I take my distributions from whatever fund is most advantageous. Congratulations on achieving your financial goals.

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