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don't need no stinking plan!
Old 01-25-2015, 06:35 PM   #1
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don't need no stinking plan!

or may be that should be "don't have one" ... little tongue in cheek

Plan is to have a few % in cash (MM or banks) and all investments in taxable accounts will not reinvest distributions. All investments in IRA, RIRA will reinvest distributions. The taxable distributions can be used for living or reinvestment. The cash can be used if distributions are short of needs.

ER is 5 weeks away... at 53 with no pension.... so what do others do for generating spending money.
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Old 01-25-2015, 07:03 PM   #2
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If you don't have a plan, you have a plan. Unfortunately, you're probably screwed.

You need to read Millionaire Teacher by Andrew Hallam and decide on an asset allocation. The classic withdrawal is 4% of your assets annually adjusted for inflation. That was based on 30 years of retirement so you may wish is take a little less.

Read various posts on safe withdrawal rate (SWR) and get a path forward.
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Old 01-25-2015, 08:08 PM   #3
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It sounds like you do have a plan - you plan to live off the dividends and cash in your taxable accounts.

That will work just fine if they cover your expenses.

Did you have a question? Did you have a point to make?

Quote:
...with no pension.... so what do others do for generating spending money.
I look at everything as one big bucket. I currently spend from taxable accounts (to avoid penalties or committing to a 72-T), if divs/cash don't meet my needs, I sell something. Will have a modest pension plus SS in the future, and will draw from tax deferred when I can do it w/o restrictions.

-ERD50
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Old 01-25-2015, 08:11 PM   #4
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If you don't have a plan, you have a plan. Unfortunately, you're probably screwed.
From my OP
"or may be that should be "don't have one" ... little tongue in cheek"
I think I have a SWR. My so called hand wave plan is as stated in the OP... very haphazard.
I guessed at my 1st year withdraw by taking our 2013 spending (sans income tax) and adding 10k for health insurance and adding 10k to cover most max out of pocket health expenses (insurance max). in 2013 with had 2.5 weeks in Europe, a week long Caribbean curse and a large (for us, out of character) furniture purchase. This would be a withdraw of slightly less than 1.5%.

I am curious as to how others arranges their withdraws for spending. Do they try to use dividends and cap gains from taxable accounts as I'm hand waving, systematic withdraws, or other approaches.
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Old 01-25-2015, 08:51 PM   #5
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Originally Posted by bingybear View Post
...
I think I have a SWR. My so called hand wave plan is as stated in the OP... very haphazard. ...
I wouldn't say it is haphazard at all. If your spending is about the same as the divs on your taxable account, and you have significant tax-deferred that you haven't touched, it seems you are in good shape.


Quote:
I am curious as to how others arranges their withdraws for spending. Do they try to use dividends and cap gains from taxable accounts as I'm hand waving, systematic withdraws, or other approaches.
Money is fungible (tax considerations aside). Sell, use only distributions, etc - it's all money.

-ERD50
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Old 01-25-2015, 09:10 PM   #6
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I retired last June at age 52.
I would not have been comfortable without a plan - but that's me.

You ask where our spending money comes from. Over half comes from rent and DH's SS. The other half is taken from our nest egg.

As far as the dividends/cap gains... that's one way to acquire the cash. Or you can reinvest, and sell when you need the cash. That's a personal decision. I do have some cash on hand - for some planned home improvements and for a planned "big" vacation... and a few months spending.
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Old 01-25-2015, 11:06 PM   #7
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Oh my. Had you annoyed the voodoo gods?

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Originally Posted by bingybear View Post
a week long Caribbean curse .
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Old 01-26-2015, 04:23 AM   #8
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With a w/d rate less than 1.5% you don't need much of a plan.
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Old 01-26-2015, 05:05 AM   #9
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I am curious as to how others arranges their withdraws for spending. Do they try to use dividends and cap gains from taxable accounts as I'm hand waving, systematic withdraws, or other approaches.
I moved my 2015 living expenses into my saving account that's linked to my checking account. I move money as needed during the year.

Next year I'll decide what accounts I want to pull cash from and move money during my annual rebalancing. I will take most of my money in 2016 from my taxable accounts and will be selling mutual funds. I'll then move money from my tIRA to my Roth.
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Old 01-26-2015, 04:03 PM   #10
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With a w/d rate less than 1.5% you don't need much of a plan.
+1 Just diversify a bit and 1.5% should never burn through the stash.
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Old 01-26-2015, 04:18 PM   #11
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With a w/d rate less than 1.5% you don't need much of a plan.
+2. Actually, it seems like you are in very good shape.
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Old 01-26-2015, 04:53 PM   #12
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"don't have one"
"Everyone has a plan 'till they get punched in the mouth." - Mike Tyson

Quote:
... little tongue in cheek
That's a plan.
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Old 01-26-2015, 06:25 PM   #13
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+1 Just diversify a bit and 1.5% should never burn through the stash.
I try to diversify, but at present I'm a bit cautious with bonds. No I have not bailed on them, but looking for alternatives. I have used a market neutral fund to replace a small part of bonds. I'm also looking into alternatives/diversifiers. At the end of last year I removed all MF from my taxable accounts. It is really hard to tax plan when MF can distribute very large percentages. I do still hold MF in tax deferred/free (IRA/RIRA).
While I have some ETF/Stocks that have good dividend flow, I have not really set up my portfolio to deliberately to maximize dividend generation. I still have growth ETFs that distribute little or nothing.
We have about a 45%/55% tax deferred/taxable distribution of funds. The higher taxable account value I expect will be useful to prevent us from needing to tap the IRA/RIRA until well beyond 59.5

I'm not sure if it is better for focus the taxable account on dividends or not. I think it really may depend on trade offs with taxes and possibly having lower diversification by focusing on dividend stocks.
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Old 01-26-2015, 07:23 PM   #14
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+2. Actually, it seems like you are in very good shape.
+3
Bernstein has said any w/r below 2% is "bulletproof". He recently stated even in Japan after their market crash an investor w/ a mix of equities and bonds and less than a 2% w/r came out okay. That's saying a lot, IMO.
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Old 01-26-2015, 09:23 PM   #15
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or may be that should be "don't have one" ... little tongue in cheek

Plan is to have a few % in cash (MM or banks) and all investments in taxable accounts will not reinvest distributions. All investments in IRA, RIRA will reinvest distributions. The taxable distributions can be used for living or reinvestment. The cash can be used if distributions are short of needs.

ER is 5 weeks away... at 53 with no pension.... so what do others do for generating spending money.
Parts of your plan are very similar to mine. I take as cash most of the dividend distributions in my taxable accounts and reinvest the rest along with cap gain distributions. All distributions in my tIRA are reinvested. My SWR was about 2.5% for the first 3 years of ER (2009-2011) but has dropped to 1.8% since then (2012-2014).
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