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Wondering what's next
Old 02-13-2007, 08:11 PM   #1
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Wondering what's next

Hello all. I've read this forum for the last few years and have asked a few questions. Lot's of good information here and it's time that I start asking a lot more questions. I have a lot to learn about investing and I appreciate all input.

To give a little background, I'm 59, my wife is 57 so we aren't exactly talking "early" retirement. We have reached the end of our rope as far as working goes. Jan 1st, 2008 is the day we call it quits.

So here is our situation. We don't have a pension in the future. This is a concern to me as far as investing goes. We will end up with 1M in lump sum pension payout, 401K's, etc. We plan on drawing $48,000 a year ( about a third of our working income). At 62 I'm eligible for $18,000 a year SS (at 66, $24,000) and my wife is eligible for $12,000 a year SS at 62. We don't have any debt, we have two houses, one paid for, the other mortgaged. We will sell the mortaged one and make a downpayment on a house for my daughter and son-in-law.

So here is my concern. I notice a lot of people on this forum have pensions, therefore they can think of a pension as a bond and take more risks in the stock market. I can't afford that luxury. My plan is to put our funds in the Vanguard Wellesley fund or a Vanguard lifestyle fund and keep about four years in CD's . I'm thinking I need to be more conservative in investing since I don't have a pension. I'm wondering what my bond/stock mix should be without a pension.

We plan on relocating when we retire and more than likely I may pick up something to do until 62. I'd appreciate any comments and advise. Thanks folks.
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Re: Wondering what's next
Old 02-13-2007, 08:19 PM   #2
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Re: Wondering what's next

Sounds like a fine plan, one that's worked well for others in your sort of situation.

You haven't mentioned it, but frequently the more significant issue is health insurance.

You may want to read Scott Burns or Bud Hebeler (www.analyzenow.com) on taking Social Security later. The later you take it, the more the surviving spouse gets. By taking SS as late as age 70 you may also be able to free up more of the rest of your portfolio to spend during the first decade of retirement.
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Re: Wondering what's next
Old 02-13-2007, 09:55 PM   #3
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Re: Wondering what's next

Hey Garrynk,

Many here don't have pensions and have to live on/count on their stash to get them through - I am one of them. I personally have about 65% stocks - the rest in CDs and bonds, I sleep well at night w/ this split and have been pleased w/ the return - only you can decide what is right for you and your gut. You are closer to SS than me (i'm 50)so could be more"bold" but again you need to find your sweet spot.
Congrats! Your plan sounds solid - you can't go wrong w/ Wellesley or 2015/2025.
You are gonna love the freedom 8)
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Re: Wondering what's next
Old 02-14-2007, 05:51 AM   #4
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Re: Wondering what's next

Quote:
Originally Posted by garrynky
Hello all. I've read this forum for the last few years and have asked a few questions. Lot's of good information here and it's time that I start asking a lot more questions. I have a lot to learn about investing and I appreciate all input.

To give a little background, I'm 59, my wife is 57 so we aren't exactly talking "early" retirement. We have reached the end of our rope as far as working goes. Jan 1st, 2008 is the day we call it quits.

So here is our situation. We don't have a pension in the future. This is a concern to me as far as investing goes. We will end up with 1M in lump sum pension payout, 401K's, etc. We plan on drawing $48,000 a year ( about a third of our working income). At 62 I'm eligible for $18,000 a year SS (at 66, $24,000) and my wife is eligible for $12,000 a year SS at 62. We don't have any debt, we have two houses, one paid for, the other mortgaged. We will sell the mortaged one and make a downpayment on a house for my daughter and son-in-law.

So here is my concern. I notice a lot of people on this forum have pensions, therefore they can think of a pension as a bond and take more risks in the stock market. I can't afford that luxury. My plan is to put our funds in the Vanguard Wellesley fund or a Vanguard lifestyle fund and keep about four years in CD's . I'm thinking I need to be more conservative in investing since I don't have a pension. I'm wondering what my bond/stock mix should be without a pension.

We plan on relocating when we retire and more than likely I may pick up something to do until 62. I'd appreciate any comments and advise. Thanks folks.
Hi, Garry! And welcome. Like you and your wife, I am a little older (58 in my case), but hey, I think anything younger than 65-66 is "early retirement". Besides, this is the best retirement board I've found. I do have a pension, but it amounts to very little (not enough to even pay for my grocery bill). I plan to wait until 66 to draw my social security, since my pension is so tiny, but my social security is pretty small, too. Both together add up to about 60% of my anticipated retirement budget.

I am tentatively planning on a 60/40 (60% stocks, 40% bonds) allocation, plus I am planning to keep some cash in money market funds or CD's to lean on during bear markets.

I am only going to withdraw 3.5% from my nestegg, since I assume (for financial planning, anyway) that I will live for 40 years after retirement based on my family history and good health. You might want to think about your withdrawal rate and lifespan, and then run Firecalc to check on your withdrawal rate if you haven't done so already. Nobody wants to end up old, feeble and penniless.

Like you and your wife, I feel a bit uneasy about not having much in the way of a steady, predictable pension income. An option I keep toying with is an immediate inflation protected lifetime annuity that would give me a steady, predictable "pension-like" income for life. However, there are a lot of disadvantages to an annuity, mainly that you lose control of your money forever (it's gone!) and you are dependant on the insurance company's survival for your own. If I do that, I'll use only 1/4 of my nestegg or less for the annuity.

Good luck, and I hope you get a lot of helpful answers to your questions from various people on the message board. A lot of them know a whole lot more than I do about this so this is a good place to learn.
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Re: Wondering what's next
Old 02-14-2007, 08:01 AM   #5
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Re: Wondering what's next

Quote:
Originally Posted by Nords
Sounds like a fine plan, one that's worked well for others in your sort of situation.

You haven't mentioned it, but frequently the more significant issue is health insurance.

You may want to read Scott Burns or Bud Hebeler (www.analyzenow.com) on taking Social Security later. The later you take it, the more the surviving spouse gets. By taking SS as late as age 70 you may also be able to free up more of the rest of your portfolio to spend during the first decade of retirement.
I forgot to mention health insurance. I am fortune in that respect. Cost for health insurance for my wife and I will run $185 a month.

I've read quite a bit about the pros and cons of when to social security and you have a very good point. I will take a hard look into this. Thanks.
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Re: Wondering what's next
Old 02-14-2007, 08:07 AM   #6
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Re: Wondering what's next

Quote:
Originally Posted by Donzo
Hey Garrynk,

Many here don't have pensions and have to live on/count on their stash to get them through - I am one of them. I personally have about 65% stocks - the rest in CDs and bonds, I sleep well at night w/ this split and have been pleased w/ the return - only you can decide what is right for you and your gut. You are closer to SS than me (i'm 50)so could be more"bold" but again you need to find your sweet spot.
Congrats! Your plan sounds solid - you can't go wrong w/ Wellesley or 2015/2025.
You are gonna love the freedom 8)
Donzo
Donzo, really what I want to do is put the money somewhere and forget it, I don't want to have to worry about what the market is doing on a daily basis. I know I have to worry about inflation but the other side of me likes bonds. Oh yeah, I'm really ready for a change!
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Re: Wondering what's next
Old 02-14-2007, 08:13 AM   #7
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Re: Wondering what's next

Quote:
Originally Posted by Want2retire
Hi, Garry! And welcome. Like you and your wife, I am a little older (58 in my case), but hey, I think anything younger than 65-66 is "early retirement". Besides, this is the best retirement board I've found. I do have a pension, but it amounts to very little (not enough to even pay for my grocery bill). I plan to wait until 66 to draw my social security, since my pension is so tiny, but my social security is pretty small, too. Both together add up to about 60% of my anticipated retirement budget.

I am tentatively planning on a 60/40 (60% stocks, 40% bonds) allocation, plus I am planning to keep some cash in money market funds or CD's to lean on during bear markets.

I am only going to withdraw 3.5% from my nestegg, since I assume (for financial planning, anyway) that I will live for 40 years after retirement based on my family history and good health. You might want to think about your withdrawal rate and lifespan, and then run Firecalc to check on your withdrawal rate if you haven't done so already. Nobody wants to end up old, feeble and penniless.

Like you and your wife, I feel a bit uneasy about not having much in the way of a steady, predictable pension income. An option I keep toying with is an immediate inflation protected lifetime annuity that would give me a steady, predictable "pension-like" income for life. However, there are a lot of disadvantages to an annuity, mainly that you lose control of your money forever (it's gone!) and you are dependant on the insurance company's survival for your own. If I do that, I'll use only 1/4 of my nestegg or less for the annuity.

Good luck, and I hope you get a lot of helpful answers to your questions from various people on the message board. A lot of them know a whole lot more than I do about this so this is a good place to learn.
Thanks for the welcome. I think I'm going to roll the dice without an annuity but I may wait until later to take SS. I may be more conservative on the stock side than most people but I came here to learn. Thanks for the ideas.
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Re: Wondering what's next
Old 02-14-2007, 09:55 AM   #8
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Re: Wondering what's next

Quote:
Originally Posted by garrynky
Thanks for the welcome. I think I'm going to roll the dice without an annuity but I may wait until later to take SS. I may be more conservative on the stock side than most people but I came here to learn. Thanks for the ideas.
Your Wellesley/etc plan sounds pretty good, especially coupled with the 4 years CD reserve.

Like you, I was relatively conservative when I wandered onto the forum (late 20s, with over 60% in fixed income/bonds/CDs). As I became aware of the whole ER concept, I also became aware of the realization that I needed more equity exposure, and have subsequently upped my equity % significantly.

However, if you have a good chunk in Wellesley/etc., you already have a good exposure (for your age) in equities.
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Re: Wondering what's next
Old 02-14-2007, 11:27 AM   #9
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Re: Wondering what's next

Right now we have our money scattered. Some is at Fidelity, T. Rowe and some in a bond ladder. We will take a lump sum payout at the end of the year from our current pension plan. My next big problem will be how to get all this mess from where it is now to where it should be. I have to figure out whether to dump it all at once or gradually move things around. More than likely we will go with one of the Vanguard funds. Since we are at Fidelity now we might check out what they offer also. Also I have to figure out an income stream. I've read a lot of posts on this forum but this still seams like a major task.
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Re: Wondering what's next
Old 02-16-2007, 11:12 PM   #10
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Re: Wondering what's next

Any advise from people who have been there done that?
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Re: Wondering what's next
Old 02-27-2007, 10:37 AM   #11
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Re: Wondering what's next

i have i live in panama i just got and apartment in fron of the sea for 150k and you can live here for less tha 1k a month like a king after you buy your place
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Re: Wondering what's next
Old 02-28-2007, 10:28 AM   #12
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Re: Wondering what's next

I just joined the forum, and have been ERed for over a year. I also have most of my investments with Vanguard. I reviewed my portfolio with vanguard in December of 06 and they recommended a wide variety of investments - too many to list - but with a 60/40 split - 60% stocks, 40% bonds.

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Re: Wondering what's next
Old 02-28-2007, 02:34 PM   #13
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Re: Wondering what's next

Have you considered moving to another location [country] where your money will go a lot farther and medical is more reasonable. There are lots of people moving into warmer climates with more reasonable standard of living.
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Re: Wondering what's next
Old 03-01-2007, 04:07 PM   #14
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Re: Wondering what's next

I haven't considered moving. It's a long story but I live in Kentucky now and will be moving to Oklahoma when I retire. My house there is paid for and housing in general is very cheap there. I am fortunate to have inexpensive medical insurance as part of my retirement package.

I am about finished reading "Work Less, Live More" and some of the portfolio recommendations make sense to me. (That's scary.) My wife and I have multiple sources of money that we will have to gather up and tranfer, more than likely to Vanguard. I know I just take it a step at a time, I hope I move the right funds at the right time.
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