Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Re: A Financial Thought from an Early ER
Old 03-04-2007, 01:07 PM   #41
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2003
Location: Kansas City
Posts: 7,408
Re: A Financial Thought from an Early ER

Ha

Maybe some of us are afraid we're getting the whiff of some possible Bear poop and thus there might a you know what lurking in the woods.

The little 2000 - 2003 dipsy dootle might have heightened our senses.

heh heh heh - what? me worry! - I have balanced index. And a good supply of clean underwear like my Mama told me.
__________________

__________________
unclemick is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: A Financial Thought from an Early ER
Old 03-04-2007, 01:26 PM   #42
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
donheff's Avatar
 
Join Date: Feb 2006
Location: Washington, DC
Posts: 8,637
Re: A Financial Thought from an Early ER

Quote:
Originally Posted by SteveR
. . . If I really have an issue with money then the only course will be consulting...which would be about as attactive to me as cleaning toillets in a public restroom.
Quote:
Originally Posted by sgeeeee
I hear that. Friends and colleagues keep trying to convince me to consult. I tried it. It s#cks as far as I'm concerned. Yeah, you can make a lot of money, but the reason I saved and invested all these years is to be free of that need. Actually, I think I would prefer cleaning public restrooms.
ROTFLOL. Ding, Ding, Ding! That is why I stuck it out until all the lights were green. I always gave the appearance of a type A even though my real nature is laid back. Everyone assumed I would consult for the big bucks and a number of my former suppliers made inquiries. But I wanted to be free and rebuffed anything that even apporached a real job. I took on one short IT consulting project and all of the BS I left behind came back with a rush. I switched over to HR where I could do very short analytical projects I like. That was better but every project was still like a boat anchor around my neck. Retired is retired. I no longer need the affirmation of employment. And I do not regret the extra few years to make sure I won't have to go back there.
__________________

__________________
Every man is, or hopes to be, an Idler. -- Samuel Johnson
donheff is online now   Reply With Quote
Re: A Financial Thought from an Early ER
Old 03-04-2007, 01:39 PM   #43
Thinks s/he gets paid by the post
wabmester's Avatar
 
Join Date: Dec 2003
Posts: 4,459
Re: A Financial Thought from an Early ER

Quote:
Originally Posted by 3 Yrs to Go
IMO, the ability to cut your spending to 2%, or lower, is the critical factor. But a 2% initial WR may not be the optimal solution.
The risk is due to stocks seeing something like another 1929, 1966, or Japan-1990, right? So, if you really want to ensure a 4% SWR, have you considered TIPS + high yield investments like real estate or dividend plays?

There are ways to insure against long periods of poor stock market returns, but most people want to shoot for the brass ring that a high stock allocation *might* provide.
__________________
wabmester is offline   Reply With Quote
Re: A Financial Thought from an Early ER
Old 03-04-2007, 02:11 PM   #44
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Gone4Good's Avatar
 
Join Date: Sep 2005
Posts: 5,381
Re: A Financial Thought from an Early ER

Quote:
Originally Posted by wab
The risk is due to stocks seeing something like another 1929, 1966, or Japan-1990, right? So, if you really want to ensure a 4% SWR, have you considered TIPS + high yield investments like real estate or dividend plays?

There are ways to insure against long periods of poor stock market returns, but most people want to shoot for the brass ring that a high stock allocation *might* provide.
I tried to model TIPS, but without a historic record its kind of a garbage-in-garbage-out kind of analysis. What I found was a TIPS allocation of 20% helped some, but it wasn't enough to make a meaningful difference.

To your point of increasing the portfolio yield, I think that has merit, within reason. Like I said earlier, keying your withdrawals off of the portfolio yield does seem to allow greater stability in real withdrawals - but I have to play around more with that.
__________________
Retired early, traveling perpetually.
Gone4Good is offline   Reply With Quote
Re: A Financial Thought from an Early ER
Old 03-04-2007, 02:26 PM   #45
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Gone4Good's Avatar
 
Join Date: Sep 2005
Posts: 5,381
Re: A Financial Thought from an Early ER

Quote:
Originally Posted by firewhen
3 Yrs to Go,

I understand what you are saying, but for me it is the opposite direction. I would not be cutting our spending, but having calculated what our reasonable spend rate is, continuing to work and hopefully grow our portfolio to the point where our uncut expenses equal the 2% SWR.
I think you and I are looking at different sides of the same coin. If you can build a portfolio to the point where you can meet your day to day needs on a 2% WR, anything withdrawn above that is completely discretionary. I'm of the view that it's worth it to spend that extra money traveling the world, knowing full well that if the markets and economy turn sour, I'll have to hand over my passport.
__________________
Retired early, traveling perpetually.
Gone4Good is offline   Reply With Quote
Re: A Financial Thought from an Early ER
Old 03-04-2007, 02:36 PM   #46
Confused about dryer sheets
 
Join Date: Mar 2007
Posts: 8
Re: A Financial Thought from an Early ER

Wanted to share a personal experience which caused a major pause in my life and a thorough assesmet of my future retirement plan. Worked for a company in management for 16 years and the business that I worked in was sold. New owners and in 5 weeks I am gone. I decided to get back into the same field but at a level without the burden of managing a staff.
Salary cut by 60% but have benefits and enjoy the work. At 51 planning for retirement and loading up on 50% equities and 40% fixed, 10% bonds.
I am getting a 6.25 CD rate from Penfed for a 3 year period. I have found that penfed has this excellent program every January. My plan is to build a $100k ladder each year for three and always have $100k ready on tap on annual basis if needed. Unless I am missing something Bonds do not offer the safety nor the guarantee of a 6.25% rate. Anyone else passing on bonds and going the CD route.........
__________________
shanjwa5 is offline   Reply With Quote
Re: A Financial Thought from an Early ER
Old 03-04-2007, 02:41 PM   #47
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Gone4Good's Avatar
 
Join Date: Sep 2005
Posts: 5,381
Re: A Financial Thought from an Early ER

Quote:
Originally Posted by youbet
3 Yr to Go...... What about the variable of working longer to increase the size of the portfolio so that spending is equal in absolute terms? That is, 4% of 2 mil = $80K and 2.67% of 3 mil = $80K.

In our planning, we didn't find it possible to half our desired budget (as in your example) and still anticipate a happy RE.
That example was directed at someone who is targeting a 2% initial WR, and may not apply to everyone. But the earlier point was that a 4% initial withdrawal rate coupled with some kind of spending reduction rule (whether CPR or ESRBob's 95% rule) resulted in substantial decreases in real spending during the 70's . . . on the order of 40%-50%. However you prepare for that (COLA'd annuities, pension, lower WR, part-time work, shorter retirement horizon, etc) its worth thinking about ahead of time.
__________________
Retired early, traveling perpetually.
Gone4Good is offline   Reply With Quote
Re: A Financial Thought from an Early ER
Old 03-04-2007, 04:02 PM   #48
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Re: A Financial Thought from an Early ER

Quote:
Originally Posted by 3 Yrs to Go
However you prepare for that (COLA'd annuities, pension, lower WR, part-time work, shorter retirement horizon, etc) its worth thinking about ahead of time.
Yes indeedy!

And looping back to an earlier point in this thread, the pain of substantially cutting back on spending in real terms or of having to go back to work after several years off should not be underestimated.

Of course, your personal circumstances as you approach RE are key. You're making a huge salary and don't mind the job vs. you're making peanuts and every minute is hell, etc.

Ha's post was very insightful and summed up most of my feelings on the subject very well.
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Re: A Financial Thought from an Early ER
Old 03-04-2007, 04:20 PM   #49
Full time employment: Posting here.
 
Join Date: Jan 2007
Posts: 585
Re: A Financial Thought from an Early ER

Quote:
Originally Posted by HaHa
The board seems to be moving toward conservatism lately. Previously there was a lot of “Just do it!” talk. I don’t pretend to know what is best; I suspect it depends on who you are and how you rank things.

Ha
A stock market drop of 50% would not even come close to the tradgedies that life can deal out to you. It pales in comparison to a divorce or death of a loved one. I think most people on this forum are very fortunate if their greatest fear is a stock market drop. I don't sweat a market drop, I plan on it! - That is why I am diversified into only 50% in the market. A 50% drop in the market would reduce my pile by 25% and give the stocks more room for growth. If I never thought the market would drop, I'd be 100% in stocks!

Of all the folks on this forum, I think Uncklemick has had the worst run of luck the last couple of years, and in the grand scheme of things, he may have loosened his purse strings a bit.
__________________
Cut-Throat is offline   Reply With Quote
Re: A Financial Thought from an Early ER
Old 03-04-2007, 04:37 PM   #50
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,380
Re: A Financial Thought from an Early ER

Quote:
Originally Posted by Cut-Throat
A stock market drop of 50% would not even come close to the tradgedies that life can deal out to you. Itpale in comparison to a divorce or death of a loved one.
CT, I sure agree with you on this!

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Re: A Financial Thought from an Early ER
Old 03-04-2007, 05:07 PM   #51
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2003
Location: Kansas City
Posts: 7,408
Re: A Financial Thought from an Early ER

Quote:
Originally Posted by Cut-Throat
Of all the folks on this forum, I think Uncklemick has had the worst run of luck the last couple of years, and in the grand scheme of things, he may have loosened his purse strings a bit.
Wiped out by Katrina - not allowed to rebuild, three deaths in the same household within a year - others may have had it worse.

Other than the normal grieving process - on the 'stiff upper lip side off things' - did manage to quit smoking finally maybe cross your fingers, trying to use more humor in my posts and now less charitibly - like the wide receiver who got creamed too many times going out for passes - trying to loosen up before I get too old to enjoy it - with now essentially no heirs - don't want to leave too much on the table.

Although cheap is fun and it's a thrill to bargin shop Salvation Army - will try to spend more on travel/entertainment.

heh heh heh
__________________
unclemick is offline   Reply With Quote
Re: A Financial Thought from an Early ER
Old 03-04-2007, 06:07 PM   #52
Recycles dryer sheets
 
Join Date: Nov 2006
Posts: 105
Send a message via Yahoo to OkieTexan
Re: A Financial Thought from an Early ER

Quote:
Originally Posted by unclemick2
Wiped out by Katrina - not allowed to rebuild, three deaths in the same household within a year - others may have had it worse.

use more humor in my posts

heh heh heh
WoW! It is fantastic that you still have a sense of humor! No amount of $$ can buy that!
__________________
OkieTexan
OkieTexan is offline   Reply With Quote
Re: A Financial Thought from an Early ER
Old 03-05-2007, 02:29 AM   #53
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 1,012
Re: A Financial Thought from an Early ER

Quote:
Originally Posted by firewhen
I still think that depending on your situation, a SWR of less than 4% might be preferable to avoid living on the edge or worrying about depleting one's portfolio, etc. While it will delay ER, it could be warranted in these situations, especially if many of them apply:

especially early ER, with upwards of 50+ nonworking years
no pension or retiree health care benefits
family issues (young children, older parents who need help)
unwillingness to relocate to less expensive areas

We have all of the above, which is why I am aiming for 2% SWR. I do not want to cut to the bone or look for work again once I stop.
Given your concerns about your future income, have you considered insuring some or all of it with a CPI adjusted immediate annuity? A 44 yo couple can get one with 100% survivor benefits that initially pays out >3% of the purchase price (with CPI adjustments every year after the first). Depending on how big an annuity you were to purchase you could lower the amount you need for retirement by up to one third. For example if you need $60K/yr to start retirement using a 2% WR you would need a portfolio of $3M, however you could buy a CPI adjusted immediate annuity that starts out paying $60K for <$2M.

If you read this board you'll find some posters will hate the idea of buying an immediate annuity (they'll say you can get a better return on your money investing it in the market), but then you'll also find that most posters think that waiting to retire until you can have a 2%WR to means you have built up too large a portfolio to cover your income needs (i.e. you have worked too long). Consider the risks and decide for yourself, I'm just trying to present an alternative.
__________________
jdw_fire is offline   Reply With Quote
Re: A Financial Thought from an Early ER
Old 03-05-2007, 08:25 AM   #54
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Moemg's Avatar
 
Join Date: Jan 2007
Location: Sarasota,fl.
Posts: 10,031
Re: A Financial Thought from an Early ER

[stock market drop of 50% would not even come close to the tragedy's that life can deal out to you. It pales in comparison to a divorce or death of a loved one. I think most people on this forum are very fortunate if their greatest fear is a stock market drop]


Cut throat ,
You are so right about that .I lost my husband and my son . Nothing the stock market could do would affect me like that did .
__________________

__________________
Moemg is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Positive Financial Planner stories Empty Pockets FIRE and Money 30 01-12-2007 12:57 PM
Financial Engines feedback Nords FIRE and Money 34 11-18-2006 12:14 PM
How people find us... asian carp?? dory36 Forum Admin 4 05-27-2005 01:07 PM
Financial modeling RedOscar FIRE and Money 3 09-27-2003 12:50 PM

 

 
All times are GMT -6. The time now is 08:08 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.