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03-10-2017, 03:48 PM
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#21
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Moderator
Join Date: Nov 2014
Posts: 9,171
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Quote:
Originally Posted by Cheesehead
We have a pension and social security, but need an additional $18K (after taxes, 25% bracket) a year for living expenses. We are retiring and now need for $700000 to get 3% annually for income and I’d like some advice as to how to do this.
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Do you really care? I didn't do all the calculations, but one simple calculation is $700,000/$18000=38.8 years. Do you really need guaranteed income for longer than that? Seems like even a couple percent would extend that quite a few years (that's the calculation I didn't do - sorry). So you would likely only care if your desire was to have the $700,000 there when you die. If not, put it into something ultra safe and it should last you 40 years.
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03-10-2017, 05:24 PM
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#22
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2014
Location: Spending the Kids Inheritance and living in Chicago
Posts: 17,087
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OP - how about this:
Put 150K in WFC-L , a preferred share paying 6.23% at todays price.
Put 150K in BAC-L , a preferred share paying 6.15% at todays price.
(150000×.0623)+(150000×.0615) = $18,570 / yr.
put the remaining 400K in Schwab SCHD which pays div of 2.81% = $11,240
The SCHD will grow, especially if you let the div mostly re-invest.
The preferred will stay fairly range bound for many years, but have a nice consistent payout.
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03-10-2017, 05:37 PM
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#23
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Full time employment: Posting here.
Join Date: Jan 2008
Location: Flyover America
Posts: 679
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Quote:
Originally Posted by Sunset
OP - how about this:
Put 150K in WFC-L , a preferred share paying 6.23% at todays price.
Put 150K in BAC-L , a preferred share paying 6.15% at todays price.
(150000×.0623)+(150000×.0615) = $18,570 / yr.
put the remaining 400K in Schwab SCHD which pays div of 2.81% = $11,240
The SCHD will grow, especially if you let the div mostly re-invest.
The preferred will stay fairly range bound for many years, but have a nice consistent payout.
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+1 Agree Totally.....
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03-10-2017, 07:22 PM
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#24
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2009
Posts: 9,343
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Quote:
Originally Posted by capjak
+1 Agree Totally.....
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Cap, you know I am a preferred honk and have close to half my stash in 2 companies. But I would be too weak kneed to suggest that to someone else. Company concentration and sector concentration would be too much for me despite the company's current financial strength.
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03-10-2017, 08:05 PM
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#25
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Recycles dryer sheets
Join Date: Sep 2012
Location: Madison
Posts: 180
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[QUOTE= I suspect that there is not a year in the last 10 or even 20 years where Wellesley has not distributed less than 3% so you should be all set..[/QUOTE]
Yes, PB, I am probably overthinking it.
And thanks everybody, good advice. My wife's pension is COLA'd at 3% a year guaranteed which is a comforting factor. I suppose balanced is the way to go, should be easy in good times to get 3%. Now thinking $300K in Wellesley, $300K in Vanguard Lifestyle Conservative Strategy and the remaining $100K perhaps following Bob Brinker's newsletter or Dan Wiener's Vanguard Newsletter in their Income Portfolios.
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03-10-2017, 09:08 PM
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#26
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Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 4,872
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Quote:
Originally Posted by Jerry1
Do you really care? I didn't do all the calculations, but one simple calculation is $700,000/$18000=38.8 years. Do you really need guaranteed income for longer than that? Seems like even a couple percent would extend that quite a few years (that's the calculation I didn't do - sorry). So you would likely only care if your desire was to have the $700,000 there when you die. If not, put it into something ultra safe and it should last you 40 years.
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Exactly....the OP is in a happy place. The could buy a joint lifetime annuity and generate $40k per year for life if guaranteed income was the only criterion. An the should be plenty to cover inflation if they need an inflation adjusted $18k. But the OP has a COLAed pension and SS so why not be a bit more aggressive than the Wellesley and a Conservative Lifestyle fund. My situation is similar as I have a pension to cover most of my expenses and I have 60% in stocks and I'm letting the that drift upwards as I get older.....it actually might now be 65% after the past few months.
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”
Current AA: 75% Equity Funds / 15% Bonds / 5% Stable Value /2% Cash / 3% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
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Need 3% of $700K Annually. What AA is best?
03-11-2017, 04:08 AM
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#27
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Thinks s/he gets paid by the post
Join Date: May 2014
Posts: 1,867
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Need 3% of $700K Annually. What AA is best?
I've studied the variability of dividend paying funds payout during downturns - not nearly as variable as the market. IDV, DVY etc.
Thats my plan at least.
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03-11-2017, 07:20 AM
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#28
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Recycles dryer sheets
Join Date: Sep 2012
Location: Madison
Posts: 180
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Since I posted last night I revisited one of my favorite retirement blogs, a software engineer who retired early and he explains a lot about different retirement strategies but what worked best in the real world for him:
Income Archives - Can I Retire Yet?
Check him out. I want to keep it simple.
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03-11-2017, 07:34 AM
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#29
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Recycles dryer sheets
Join Date: Mar 2008
Posts: 153
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I'm going to suggest something a little different:
How about Vanguard Managed Payout?
-Monthly checks
-simple 1 fund solution
-just a small amount of fixed income
-endowment style investing so it your money should last a good long time
-4% annual withdrawal; live a little
-Vanguard handles all the math
Just a thought...
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03-11-2017, 07:39 AM
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#30
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Recycles dryer sheets
Join Date: Sep 2012
Location: Madison
Posts: 180
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Hi Frank,
I looked into them, seemed like a perfect solution, but all the reviews were bad:
http://www.investmentnews.com/articl...l-to-investors
Maybe that's why they only have $1.8 bin in assets under management? Also, at 4%, they can dip into one's principal, so I will do more of a bucket strategy and try to use balanced funds which will do the AA rebalancing for me. Thanks
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03-11-2017, 07:48 AM
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#31
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Full time employment: Posting here.
Join Date: Jan 2008
Location: Flyover America
Posts: 679
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Quote:
Originally Posted by Mulligan
Cap, you know I am a preferred honk and have close to half my stash in 2 companies. But I would be too weak kneed to suggest that to someone else. Company concentration and sector concentration would be too much for me despite the company's current financial strength.
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Good point some diversification and a strong pension.
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03-11-2017, 10:02 AM
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#32
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Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 4,872
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Quote:
Originally Posted by Cheesehead
I want to keep it simple.
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50% joint SPIA for $20k annual income and 50% Vanguard Total Stock Index.......or Balanced Index, Wellington or Wellesley if you are a little more conservative.
Sent from my iPhone using Early Retirement Forum
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”
Current AA: 75% Equity Funds / 15% Bonds / 5% Stable Value /2% Cash / 3% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
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