Income Investment Strategies During Retirement

[easysurfer]

Read the Income In Retirement: Common Investment Strategies PDF from Vanguard today.

https://personal.vanguard.com/pdf/icrria.pdf

They different strategies discussed:

1) All Income (live off dividends, interest only)

2) Total return approach (sell investments to replenish spending income)

3) All In One Funds (such as Managed Payout, Balanced Funds)

4) Customized Portfolio Spending (most DIY control, most effort involved)

5) Guaranteed Income (SS, Annuity)

They aren't exclusive as one can use the strategies from several.

I fall mostly in the total return approach, but have some from #5.

Which strategy to you tend to follow mostly?

Edit: On the poll, of course #4 should be

Customized Portfolio Spending (most DIY control, most effort involved)

Sorry for the mistake. I blame that on a kitten crawling and rubbing all over me as I was trying to type

 

[Animorph]

Total return, though I expect portfolio value to increase at least equal to inflation with time. Nominally 100% equities.

 

[Meadbh]

In ER I expect it will be mostly #4, supplemented by rental income. At some later time when (a) I am older (at least 65) and (b) interest rates are higher, it may make sense for me to buy a SPIA to reduce the risk associated with portfolio volatility. I would not spend more than 20% of my portfolio on an annuity.

 

[MichaelB]

If I could have a dividend portfolio that satisfied my cash needs I would, but as that is not likely to happen our portfolio is focused on total return.

 

[grumpy]

As I have posted here before, our COLAd pensions and DW's social security payment essentially cover all regular living expenses. I manage our 7-figure portfolio with alot higher equity exposure than most here. Goal is to finance all college expenses for our grandchildren (only one so far) and to leave a substantial inheritance to our two children.

 

[GregLee]

As I have posted here before, our COLAd pensions and DW's social security payment essentially cover all regular living expenses. I manage our 7-figure portfolio with alot higher equity exposure than most here.

Likewise, except our portfolio is 6 figures. It's a sinking fund for LTC expenses.

 

[obgyn65]

I am the opposite with 0% equities. I expect to annuitize a significant part of my savings when I turn 62.

Total return, though I expect portfolio value to increase at least equal to inflation with time. Nominally 100% equities.

 

[fritz]

Retired early - no pensions or annuities - live off investments. Focus is on maximizing dividends while maintaining 45~50% equity exposure. Also utilize balanced funds for core holdings, but total return approach is our blueprint for dividend shortfalls in retirement income. Social Security will allow us to pretty much avoid selling investments (for the most part) in a couple of years.

 

[scrabbler1]

Dividends and interest in my ER and it will be that way until at least age 59.5. After that, my "reinforcements" kick in, such as unfettered access to my IRA, my frozen pension, and SS.

 

[FIREd]

Living on DW's income for now, but the portfolio is being set up as an income producer. We plan on living on dividends and interests only when DW retires and reassess when we are in our 60's. At that point we might look into annuitizing part of the nest egg or perhaps spending down some of the principal.

 

[Gone4Good]

My "income" strategy is to maintain a low enough withdrawal rate so I don't have to reach for income. I'm nominally a total return investor, but investment income covers my needs . . . so take your pick.

 

[REWahoo]

I voted "other".

What I needed was a "some of all the above" option.

 

[freebird5825]

I voted "other".

What I needed was a "some of all the above" option.

Same here.

 

[unclemick]

I voted "other".

What I needed was a "some of all the above" option.

Yep. And a seriously bad attitude toward expenses - ie I made expenses fit income. Hindsight says it was due to not hitting my at age 63 in 2003 by getting layed off at 50 in 1993.

Heavy dividend stock, RE rental income, a small pile of cash, a couple of temp jobs( one yr. in total).

With the march of time - (non cola pension @55, SS @ 62, cap gains from selling DRIP plans, RMD from inherited IRA with my IRA looming on the horizon.

I'm not getting any younger.

heh heh heh - agile, mobile and hostile - expenses are easier to control than Mr Market.

 

[easysurfer]

Same here.

The Other is for those that utilize a combination of all or most of the above or another unique way.

 

[jebmke]

Total return. Although we spend less than the dividends and interest right now.

 

[old woman]

I will use up my SS and dividends first and rental income the first few years so my withdrawals are as small as I can deal with. I expect to not have a roommate after the first few years so I will need a higher withdrawal.

I will stay invested pretty much so my investments can grow until I am over 80 then start to spend down some principal.

 

[Alan]

I voted "other".

What I needed was a "some of all the above" option.

Same here.

Non-COLA pensions covered 70% of needs + wants in year 1.

Difference is filled in mostly by dividends. Using a cash reserve through age 60 to fill in gaps until dividends from IRA funds will be used.

 

[mickeyd]

I voted Other as nothing listed applied to me exactly. We are currently living solely on pensions (3) and SSA (2) (modified) so we have not had to touch our stash, in fact we are still adding about a grand a month to savings so that the checking account is not top heavy.

Life is good if you LBYM.

 

[clifp]

Dividend Income, although in 10-15 years I'll add social security to the mix and someday rental income.

 

[SteveR]

"Other" for me too. Different stages of ER; different income sources...some come...others go away at different times. Combination of dividends, bond interest, CDs, IRA in a couple of years, etc.

 

[bigla]

While I clicked customized portfolio spending, we also have pensions and will rely on SS. For some of there is more than one income stream.
Larry

 

[calmloki]

Other here - income is primarily from rentals, then interest on various loans and Cds (maybe a 1/3 -1/2 the amount of the rents), pretty quick SS income will contribute a dab equal to about 1/3 to 1/2 the interest income (as befits our tiny earned income SS contributions). Down the road we will probably sell off the rentals, which will remove that income stream but generate some stress free cash.

Stocks and bonds? - we have a few, but selling them all would only generate a little over a year's outgo. Big maybe on whether we would put rental property sale proceeds into stocks and bonds.