Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 08-10-2017, 05:09 AM   #61
Thinks s/he gets paid by the post
 
Join Date: Nov 2009
Posts: 3,693
Quote:
Originally Posted by flyingaway View Post
If I read your post correctly, you only spend the dividends in taxable account, not touch the principal before 60. In theory, you could do this forever, no need for any reinforcements.
Nearly true, but not quite. First, the dividends do not grow with inflation, while my expenses do. Second, the built-in surplus I have has been shrinking because some of the dividends themselves have been shrinking. Third, due to some health issues, my overall expenses beyond inflation have risen slightly in the last few years. And fourth, if I have any one-time large expenses which exceed my built-in surplus, they will come out of principal.

Taken together, in a few years these 4 things will probably erode my remaining built-in surplus and force me to use some principal before the reinforcement begin to arrive. I have lots of principal including some "slush funds" set aside just for this purpose.

Any one of my reinforcements will probably be enough to offset these gradual, negative pressures on my financial picture. And those reinforcements do not include a possible inheritance down the line, nor do they include a likely reduction in my medical expenses from switching from an ACA health plan to Medicare.
__________________

__________________
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.

"I want my money working for me instead of me working for my money!"
scrabbler1 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!

Old 08-10-2017, 06:52 AM   #62
Recycles dryer sheets
 
Join Date: Aug 2013
Posts: 402
Back up plan when savings run out to $0.00 and you only have $1200-$1300 in Social Security .... move to a cheap Asian country like the Philippines or Thailand and still live fine.
__________________

__________________
No to consumerism, Living a simple life, enjoying the experience - not the material stuff
cyber888 is offline   Reply With Quote
Old 08-10-2017, 12:09 PM   #63
Full time employment: Posting here.
GravitySucks's Avatar
 
Join Date: Feb 2014
Location: Syracuse
Posts: 879
Quote:
Originally Posted by ejman View Post
Not knowing what #1 "Cruise Ship Giglio" meant I Googled it. The answer from Google is all related to the Costa Concordia Ship disaster. I must admit to extreme befuddlement. #'s 2-4 I can relate to.


Typo.
Gigolo
https://youtu.be/F4q8_2q44CQ

Life Goes on Without Me.
__________________
“No, not rich. I am a poor man with money, which is not the same thing"
GravitySucks is offline   Reply With Quote
Old 08-10-2017, 06:41 PM   #64
Thinks s/he gets paid by the post
nun's Avatar
 
Join Date: Feb 2006
Posts: 4,826
Quote:
Originally Posted by Alan View Post

4. Moved to a place with minimal healthcare costs.
Luckily I only pay $100/month for health insurance and other out of pocket costs are low. When I hit Medicare age my costs will rise as I'll have to pay PartB and a comprehensive Medicare extension plan......that combo is currently $200/month. I might then consider moving to the UK for the NHS, but who knows what it will be like post BREXIT.
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”

Current AA: 65% Equity Funds / 20% Bonds / 7% Stable Value /3% Cash / 5% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
nun is offline   Reply With Quote
Old 08-10-2017, 07:27 PM   #65
Recycles dryer sheets
 
Join Date: May 2014
Posts: 298
Quote:
Originally Posted by cyber888 View Post
Back up plan when savings run out to $0.00 and you only have $1200-$1300 in Social Security .... move to a cheap Asian country like the Philippines or Thailand and still live fine.
How could you do that in your 70s or 80s?
__________________
flyingaway is offline   Reply With Quote
Old 08-10-2017, 08:03 PM   #66
Recycles dryer sheets
 
Join Date: Feb 2013
Location: San Jose
Posts: 160
I guess my approach is to keep distinct silos for 3% annual withdrawal. For a prolonged risk-off scenario I keep 33x current annual expenses (excluding income taxes) in FDIC-insured deposits. Exposure here is inflation in case CD rates never catch up to inflation. For this issue I keep 33x current expenses in common stocks which hopefully hold up better but could get wiped out by a lawsuit. So for that exposure I have 33x current expenses in my 401K and IRA which hopefully offers some protection. Mostly in international stock funds which may help if the US dollar crashes.

If none of these work then Plan B is expense reduction, which would be difficult for me because I think I'm at the minimum right now. But if the need arose, leaving California would be an option. Plan C would be returning to work as a part time contractor if they'll have me and tutoring math or science if not. My current expenses are less than what my projected Social Security benefit will be so the gap I expect to be relatively small. So hopefully covered by just a few hours a week.

Pensions, children, and inheritance ain't gonna happen for me.
__________________
dunkelblau is offline   Reply With Quote
Old 08-10-2017, 08:17 PM   #67
Moderator
rodi's Avatar
 
Join Date: Apr 2012
Location: San Diego
Posts: 8,429
Quote:
Originally Posted by dunkelblau View Post
I guess my approach is to keep distinct silos for 3% annual withdrawal. For a prolonged risk-off scenario I keep 33x current annual expenses (excluding income taxes) in FDIC-insured deposits. Exposure here is inflation in case CD rates never catch up to inflation. For this issue I keep 33x current expenses in common stocks which hopefully hold up better but could get wiped out by a lawsuit. So for that exposure I have 33x current expenses in my 401K and IRA which hopefully offers some protection. Mostly in international stock funds which may help if the US dollar crashes.

If none of these work then Plan B is expense reduction, which would be difficult for me because I think I'm at the minimum right now. But if the need arose, leaving California would be an option. Plan C would be returning to work as a part time contractor if they'll have me and tutoring math or science if not. My current expenses are less than what my projected Social Security benefit will be so the gap I expect to be relatively small. So hopefully covered by just a few hours a week.

Pensions, children, and inheritance ain't gonna happen for me.
Did I read that right? You have 99x your expenses? Wow. Belt, suspenders, and super glue. Lol.
__________________
Retired June 2014. No longer an enginerd - now I'm just a nerd.
micro pensions 7%, rental income 18%
rodi is offline   Reply With Quote
Old 08-10-2017, 09:45 PM   #68
Recycles dryer sheets
 
Join Date: Nov 2014
Posts: 111
We came from nothing so know what it's like. Blessed by the Lord and never want to go back, we could cut way back if need be. Honestly we don't spend much now. Our activities aren't expensive but we would definitely have to move to another state.
__________________
Hyper is offline   Reply With Quote
Old 08-11-2017, 06:40 AM   #69
Full time employment: Posting here.
Markola's Avatar
 
Join Date: Nov 2013
Posts: 544
The most broke period I ever lived through was in grad school. I didn't own a car, shared a house, read books and talked about lofty matters with other smart, broke people, like my future wife, whom I met then. I could see the checking account dwindling to nearly nothing each week and there was no savings account. It was awesome. Today in our early 50s we have seven figures saved, no debt and good jobs and SS is there someday, so Plan B is knowing DW and I can muddle through whatever, should we have to again, and it will be alright.
__________________
Markola is offline   Reply With Quote
Old 08-11-2017, 06:45 AM   #70
Thinks s/he gets paid by the post
 
Join Date: Dec 2009
Location: Alberta/Ontario/ Arizona
Posts: 2,896
Quote:
Originally Posted by scrabbler1 View Post
Nearly true, but not quite. First, the dividends do not grow with inflation, while my expenses do. Second, the built-in surplus I have has been shrinking because some of the dividends themselves have been shrinking.
Surprised your divs are not increasing or even shrinking. My divs are now growing by about 7% per year and have doubled since retirement n 2006. This has kept my cash flow (divs plus pension) growing ahead of inflation.
__________________
Danmar is offline   Reply With Quote
Old 08-11-2017, 07:04 AM   #71
Recycles dryer sheets
 
Join Date: May 2014
Posts: 298
Quote:
Originally Posted by Markola View Post
The most broke period I ever lived through was in grad school. I didn't own a car, shared a house, read books and talked about lofty matters with other smart, broke people, like my future wife, whom I met then. I could see the checking account dwindling to nearly nothing each week and there was no savings account. It was awesome. Today in our early 50s we have seven figures saved, no debt and good jobs and SS is there someday, so Plan B is knowing DW and I can muddle through whatever, should we have to again, and it will be alright.
Similar comments may have different meaning dependent upon your status, i.e., retired or not.
__________________
flyingaway is offline   Reply With Quote
Old 08-11-2017, 07:18 AM   #72
Recycles dryer sheets
 
Join Date: Jul 2013
Posts: 352
Quote:
Originally Posted by RunningBum View Post
My first safety net is realizing that 4% is not a rule at all, but a finding in a study that historically has worked over a 30 year period. It may or may not work in the future, over longer periods. So I had no plans to ER at 4%.
+1 Even if you put all your faith in 4%, it does not apply to early retirees.

To answer the OP's question - we keep 3 years of expenses in short-term investments to help protect against sequence of returns risk.
__________________
mrfeh is offline   Reply With Quote
Old 08-11-2017, 07:43 AM   #73
Thinks s/he gets paid by the post
jollystomper's Avatar
 
Join Date: Apr 2012
Posts: 1,243
Though not quite retired, my safety net is similar to what others have mentioned. We have a "luxury" budget that I have used for forecasting planned expenses, and an "austerity budget" for the absolute basics. My pension will cover the austerity budget, and when SS kicks in that would give us some additional breathing room.

In addition, we have enough in cash to cover the gap between pension and our "luxury" budget, or to supplement our "austerity" budget, to not be forced to sell equities before we are eligible for SS.
__________________
Current target FIRE date: Under negotiation but will happen in 2017
jollystomper is offline   Reply With Quote
Old 08-11-2017, 08:02 AM   #74
Thinks s/he gets paid by the post
 
Join Date: Nov 2009
Posts: 3,693
Quote:
Originally Posted by Danmar View Post
Surprised your divs are not increasing or even shrinking. My divs are now growing by about 7% per year and have doubled since retirement n 2006. This has kept my cash flow (divs p,us pension) growing ahead of inflation.
Most of my dividends are from bond funds, not stock funds. As a percentage of my big bond fund's NAV, the monthly dividends per share has fallen by more than 1/3 since 2009. I have increased that bond fund's share count by about 50% (through rebalancing, reinvested cap gin distributions, and some external purchases), so my monthly dividends have been pretty stable.

My quarterly stock fund dividends have increased somewhat, but they represent maybe 15% of my portfolio.
__________________
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.

"I want my money working for me instead of me working for my money!"
scrabbler1 is offline   Reply With Quote
Old 08-11-2017, 11:00 AM   #75
Thinks s/he gets paid by the post
 
Join Date: Dec 2009
Location: Alberta/Ontario/ Arizona
Posts: 2,896
Quote:
Originally Posted by scrabbler1 View Post
Most of my dividends are from bond funds, not stock funds. As a percentage of my big bond fund's NAV, the monthly dividends per share has fallen by more than 1/3 since 2009. I have increased that bond fund's share count by about 50% (through rebalancing, reinvested cap gin distributions, and some external purchases), so my monthly dividends have been pretty stable.

My quarterly stock fund dividends have increased somewhat, but they represent maybe 15% of my portfolio.
I understand. So the distributions from your bond funds are characterized as divs. These would be interest or cap gains in Canada.
__________________
Danmar is offline   Reply With Quote
Old 08-11-2017, 11:11 AM   #76
Recycles dryer sheets
 
Join Date: Nov 2011
Posts: 102
For early retirees, the best safety net is a conservative withdrawal rate. Since ER, ours has been right about 3%.
__________________
FIREd 2012 at Age 49
523HRR is offline   Reply With Quote
Old 08-11-2017, 11:20 AM   #77
Thinks s/he gets paid by the post
RobbieB's Avatar
 
Join Date: Mar 2016
Location: Central CA
Posts: 2,203
I have no safety net. My fixed expenses are so low I don't need one.
__________________
Retired at 59 in 2014. Should have done it sooner but I worried too much.
RobbieB is online now   Reply With Quote
Old 08-11-2017, 11:20 AM   #78
Thinks s/he gets paid by the post
 
Join Date: Dec 2009
Location: Alberta/Ontario/ Arizona
Posts: 2,896
Quote:
Originally Posted by 523HRR View Post
For early retirees, the best safety net is a conservative withdrawal rate. Since ER, ours has been right about 3%.
Best? Not sure. Why wouldn't a flexible spending plan be equally good and have the advantage of more spending in good times?
__________________
Danmar is offline   Reply With Quote
Old 08-11-2017, 11:21 AM   #79
Recycles dryer sheets
hesperus's Avatar
 
Join Date: Aug 2013
Location: colorado
Posts: 494
3 years expenses in cash should cover us, as we carry no debt and have not taken SS or small pensions yet. Further, we could reduce expenses, sell a vacation home, tap a life insurance policy. If a market downturn went into five years or longer, and our dividends took a big hit, I'd be sweating on the equity portion of the portfolio.
__________________
hesperus is offline   Reply With Quote
Old 08-11-2017, 01:47 PM   #80
Recycles dryer sheets
 
Join Date: May 2014
Posts: 298
Quote:
Originally Posted by 523HRR View Post
For early retirees, the best safety net is a conservative withdrawal rate. Since ER, ours has been right about 3%.
That means something very serious, i.e., changing an early retiree to a regular retiree by working a few more years.

By the time we have satisfied the 3% rule, we would find that we just need the 4% rule (being older), LOL.
__________________

__________________
flyingaway 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
Any other VERY early retirees? (in your 30's) 23Red Hi, I am... 28 06-25-2012 01:43 PM
Safety Nets or Backup Plans During ER flipstress FIRE and Money 24 11-11-2007 09:08 AM
FSBO nets more money than a realtor cute fuzzy bunny Other topics 3 06-18-2007 12:31 PM
Poll #1 Early retirees and your Marriage ESRBob Life after FIRE 2 05-25-2005 06:50 PM
Poll #2 Early Retirees and Your Health ESRBob Life after FIRE 11 05-25-2005 05:49 PM

 

 
All times are GMT -6. The time now is 09:47 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.