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Originally Posted by 53anddone
.....My primary question is what I should assume I can get for a return on my cash assets which will start to work for me in 2016. .....
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Quote:
Originally Posted by 53anddone
.....maybe a more direct question. If you had a lump sum where you wanted a low risk approach to getting an annual income stream around 3.5% with modest growth in the 4% range what would be your approach be to that. I am looking at something like slowly buying into an ETF like DVY but wondering others thoughts.
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If you are just talking about 53 to 65, you are all set. Even assuming 0% income on your assets, you would only need $1.6m to carry you for the 8 years from 53 to 65 at $15k a month plus $18k a year for health care and you have way more than that.
In order to get a response to your first question, you need to tell us more about your intended asset allocation or your risk appetite. You are in the "won the game" zone where you have much more than what you need. One school of thought is that because you have much more than what you need that you can take some risk because even if it goes sideways you will not be ruined and if it goes well your kids and favorite charities will do very well. The other extreme is that you don't need to take any risk at all to cover the rest of your life but your legacy will be smaller as a result.
I have a 60/34/6 equities/bond/cash AA. Most early retirees here are in the 30/70 to 70/30 range and while Firecalc and other tools suggest that success rates don't vary greatly along this range, ending balances do vary.
From 1926 to 2014 a 60/40 portfolio has returned 8.8%. I believe that future returns will not be as robust and have haircut the return to 5.5% (nominal, 2.5% real) for my retirement planning.
If you are in the low risk end of the spectrum, then Vanguard Wellesley or other low cost funds with a significant bond component may be attractive to you.