Poll:Are you in the "Won The Game" Club with reference to Fixed Income Investing?

[John Galt III]

I really wanted vote in the 'no stocks' circle, but I do have about 10% in stocks. All else is CD's, bond funds, cash, and stable value funds.

 

[friar1610]

Like others have mentioned, I feel like I have "won the game" in that pension + SS and occasionally spending a very small amount of RMDs covers our current needs quite nicely. We have liability matched our projected future needs for 20 years or so with fixed income. But stuff happens and I'm not so sanguine that future needs won't change. So we still keep a 40-45% equity allocation and may raise that to 50% down the road. So, yes we kinda, sorta feel like we've won. But not so much that we're all fixed income. Therefore, NO on the poll.

 

[W2R]

Like others have mentioned, I feel like I have "won the game" in that pension + SS and occasionally spending a very small amount of RMDs covers our current needs quite nicely. We have liability matched our projected future needs for 20 years or so with fixed income. But stuff happens and I'm not so sanguine that future needs won't change. So we still keep a 40-45% equity allocation and may raise that to 50% down the road. So, yes we kinda, sorta feel like we've won. But not so much that we're all fixed income. Therefore, NO on the poll.

+1 Same here.

Last year I spent pension, SS, and only 0.60% of my portfolio. My fortunate situation is certainly not due to investing brilliance; it is due to luck IMO. Market and sequence of returns luck over the past decade of retirement didn't do me any harm, that's for sure. And then there's the luck of not having any dependents to support, not having my home destroyed by a hurricane, not going through a catastrophic health crisis, and more.

Still, I have seen life's ups and downs, and I know luck cannot be relied upon to last forever. Who knows what the future will bring? Future needs, economic climate, or other factors could change markedly.

Right now I have a 42:58 AA and I am slowing moving it towards "age minus 110" equity allocation. Should be there in two years.

So far I have been doing quite nicely, but IMO the game isn't over until we are dead and gone.

 

[dtbach]

I have basically won the game, but keep about 60% in equities. It's what got me here and will continue to reward me I feel. Plus it's kind of fun seeing them bouncing up and down. . . .

 

[Sunset]

Sorry. I could say that I won the game 35 years ago on my 32nd birthday (trust fund) but I just don't buy the whole 'won the game' framework. Even the phrase grates me. (yes, I've been out drinking in the hot tub just now, so forgiveness, please)

Ok, that is pretty funny in a stereotype way of trust fund kids.. (yes I'm jealous).

Maybe it's semantics but I really think it's a bad way to put it and maybe a little too self-congratulatory. I really don't think you can claim victory until you and your spouse are both six feet under.

Looking out 20 or 30 years there are just too many variables and things that can go wrong to just sit back and let things take care of themselves with bonds and CDs as noted within the context of the OP.....

Absolutely, I agree with you. Another risk is people/institutions will STEAL from you.

Some folks here might be surprised to find out, that some banks will renew year long CD's for another year long CD automatically.
Sounds innocent enough !

So I'm doing taxes for this really old guy, and I see he has 3 CD's each is a year long at a bank, and they are earning 0.07% (yes 7/100ths of 1 percent).

We are talking about $200K in CD's, it turns out he had just let them renew and ignored them.
So last week I helped him cash them all, so he can earn 2.75% CD rates at a different bank

If you have older relatives, you might want to check what interest rates they are getting on CD's at their favorite bank.

 

[Dd852]

We feel like we won the game, and we lowered our equity exposure considerably upon retiring after taking considerable risk while working.

But we still stay around 50/50 to 60/40. I see it as evenly hedging my bets.

We have a big war chest of cash available for short term needs. Our income exceeds our expenses. We should be able to survive a long downturn (knock on wood). So I feel like we have a large personal financial safety cushion and am comfortable with moderate equity exposure.

Our retirement assets well exceed 20x to 25x annual expenses.

+1 over the years I have followed this board @audreyh1 a lot of your comments have mirrored my thoughts and actions. This one too! Stay hedged, stay flexible, worry less, be happy.

 

[Ready-4-ER-at-14]

It was interesting in the choice of the title Won the Game. This particular game (that you must play to win for this thread) is have enough life expenses and play money using non stock market products or simply have bought fixed income that will last past your highly probable demise point, or maybe even a very very full cash stuffed mattress. Even if this depletes your assets totally.

Asked another way might be are you boycotting wall street?

So the real estate crowd here may be doing this at least till their passive income exceeds expenses by a factor of two and then they may want to diversify into fixed or invest in other companies for dividends or capital gains.

Annuity only people would win. Pension & social security only people would win.
Retired gem thieves selling off findings only would win.

I am all for redundancy and back ups when it comes to living expenses. One pot for fixed income bonds, CDs.
Second pot for insurance company IOUs annuities.
Third pot for dividend paying stock and maybe capital gain, index and managed funds.
A final fourth pot for government old age survivors insurance (now comingled and rebranded as social security now being restricted as charity.

Since I have some market exposure I am still playing the game.

 

[Stonewalker]

Perhaps I provide TMI

Not sure how to respond since I put everything into Bitcoin.

Kidding, right?

I have some stocks, I like dividends, but CDs make up most of our investments. It is not the fear of missing profits, so much as the fear of taking another hit like in 2008. Protect the Principle is our motto.

And, not to change the topic, but I'll not let anyone ever handle our money for us again. Nobody cares for your money like you do. Most want your money to be THEIR money, otherwise their "fee" would be based on percentage of profit instead of percentage of YOUR principle.

Sorry. Ranting again! Stocks for fun, but not necessarily profit. CDs to provide some income and protect the principle.

 

[jollystomper]

I have won *our* (DW & I) game. I do not believe there is a single "game" to be won, but that each must decide the game they want to play, and how they define winning. A lot of people are playing a "game" but do not have a good definition of what it means to "win" for themselves.

I am still about 40% equities. Unless a guaranteed 6% or greater steady annual return comes around, I am not going to go lower (this is a great way to scare off folks trying to become our financial advisers). My equity level is influenced by the question "If you equities dropped in value by half, would you still be winning your game?". This would not impact our retirement lives, only what we could leave for others. So I am willing to take that level of risk to potentially leave others more after DW and I are gone.

Having a pension and (when I decide to take it) the maximum allowable social security available certainly makes a difference for me. Many might feel that with these items I could take more risk with equities, and do not need as much cash on hand as I do. But part of winning our "game" is the "sleep well at night through any storms" factor, and I have found the levels at which I am able to do this.

 

[Mdlerth]

I'm a Born Loser

I intend never to win this Game.

Barring the zombie apocalypse, and assuming I'm still above the sod, when I finally tap it at 70, SS and pensions will likely cover DW and my expenses with a satisfactory cushion. I probably won't need investment income to live on, but I expect I'll still have a bit.

Whatever portfolio remains will sit and compound at something like a 75/25 AA. If I don't absolutely need it, there's no downside to holding equities. Lose it all in the Big Crash? Meh.

OTOH, there's significant upside, at least for our 5 children to inherit. (Or maybe the angels will escort DW home first, rendering me a 92 year-old bachelor with millions so some Anna Nicole Smith clone will be all over me! )

 

[marko]

Ok, that is pretty funny in a stereotype way of trust fund kids..

I guess that came out a lot worse on my part than it was intended.

Now sober, my point was that if you're 82 with a bad ticker and a 1% WDR I guess you could say that you can easily run out the clock.

If on the other hand, you're 45 with potentially half a century ahead of you there's a lot that can change (taxes, markets, social issues, technology) that could jeopardize your early claim to winning.

Folks just don't live the same as they did even 30 years ago and what they spend their money on--and how much-- is a lot different from not so long ago.

While I'm sure there a some ironclads I worry about folks who might be lulled into a false complacency ("I have one milllllion dollars! I'm all set!")

Over the past decade there were a lot of football teams who knew they 'won the game' only to have Tom Brady crush them with 3 touchdowns in the last 2 minutes.

The longer your horizon but more risk you have to unseen and unanticipated events/changes that may come. IMO, it's nice to have a seat belt.

YMMV

 

[Jolleyjohn]

Stocks, bonds P2P lending for income on my end. It has done me well so far.

 

[daylatedollarshort]

While I'm sure there a some ironclads I worry about folks who might be lulled into a false complacency ("I have one milllllion dollars! I'm all set!")

Over the past decade there were a lot of football teams who knew they 'won the game' only to have Tom Brady crush them with 3 touchdowns in the last 2 minutes.

The longer your horizon but more risk you have to unseen and unanticipated events/changes that may come. IMO, it's nice to have a seat belt.

YMMV

If a retiree has a $1B portfolio in TIPS and CDs and spends $50K a year they are all set, barring perhaps an asteroid type event where money is worthless. At the other end of a spending to assets continuum, $1M and $50K spending at 40 years old is not looking so good. I don't think the $1B guy has a false sense of complacency. Most posters here likely don't have $1B, but may well be on the very safe end of a continuum of spending to assets so that they don't have to wait until they die to know they had enough.

 

[Jolleyjohn]

If a retiree has a $1B portfolio and spends $50K a year they are all set, barring perhaps an asteroid type event where money is worthless, $1M and $50K spending at 40 maybe not. I don't think the $1B guy has to wait until he is dead to know he isn't going to run out of money.

Agree, unless the $1m guy is generating decent returns on his investments. For example, $1M generating 10-15% is totally doable, especially if he/she can live in a place that keeps expenses down. I think this way, retiring on $1m at 40 is totally doable.

 

[daylatedollarshort]

Agree, unless the $1m guy is generating decent returns on his investments. For example, $1M generating 10-15% is totally doable, especially if he/she can live in a place that keeps expenses down. I think this way, retiring on $1m at 40 is totally doable.

It is totally doable, but he is the kind that won't really know if he had enough until after he dies.

 

[Jolleyjohn]

It is totally doable, but he is the kind that won't really know if he had enough until after he dies.

Hmmm, not sure I totally agree but understand where you're coming from.

If the $1M guy knows he's making say 10% from regular income investments (so $100k per year) and he's living somewhere that he can comfortably live on say $25k per year, then he's pretty set in my eyes. Beating inflation AND putting money in the bank and increasing investments each year!

I know people that are living in a similar situation now.

 

[daylatedollarshort]

Hmmm, not sure I totally agree but understand where you're coming from.

If the $1M guy knows he's making say 10% from regular income investments (so $100k per year) and he's living somewhere that he can comfortably live on say $25k per year, then he's pretty set in my eyes. Beating inflation AND putting money in the bank and increasing investments each year!

I know people that are living in a similar situation now.

Okay, then change the $1M to $500K if you want a different end point for the continuum where retirement savings might / might not be enough. That is the end where you won't know if you had enough until after you die, not the $1B end.

 

[youbet]

If a retiree has a $1B portfolio in TIPS and CDs and spends $50K a year they are all set, barring perhaps an asteroid type event where money is worthless.

It might take MUCH less than a total earth-devastating event, such as "an asteroid type of event" to knock folks content with their currently generous wealth-tracking computer entries (ie. your brokerage account and bank statements) out of the game. Think about the wars, regional natural disasters, financial collapses, political upheavals, etc., that have impacted millions and millions of folks as recently as the past century.

In retirement, our computer entries are only worth as much as the "tangible goods and services" younger, producing people are willing to give us for them. I enjoy re-watching the movie "Dr Zhivago" (set approximately a century ago) not only for the superb acting but also for the vivid illustration of a bit of a "political disagreement" tossing the Russian economic system up for grabs.

But, admittedly, since you choose a far-out example (a billionaire rather than, say, just a $10MM retiree), the odds of things going so horribly wrong in the world economic/currency system that he/she is in trouble are very, very low. Probably..........

 

[Jolleyjohn]

Okay, then change the $1M to $500K if you want a different end point for the continuum where retirement savings might / might not be enough. That is the end where you won't know if you had enough until after you die, not the $1B end.

True, and 500k would be pushing it. 1m though I think is totally doable for retirement.

Just my 2c

 

[dtbach]

True, and 500k would be pushing it. 1m though I think is totally doable for retirement.

Just my 2c

And probably 70% of retired folks have no where near $500K saved up. But this board is different from that demographic.

 

[Jolleyjohn]

And probably 70% of retired folks have no where near $500K saved up. But this board is different from that demographic.

Yeah, but we're talking about early retirement here. So people with no pension. I would think many retired people old enough for a pension probably won't have 500k saved. But if you retire early, like age 40 which was discussed earlier, then 500k probably won't cut it unless you can live really frugally in some other country.

 

[griffithee]

Yeah, but we're talking about early retirement here. So people with no pension. I would think many retired people old enough for a pension probably won't have 500k saved. But if you retire early, like age 40 which was discussed earlier, then 500k probably won't cut it unless you can live really frugally in some other country.

I think there are a quite a few of us who retired early with a pension from the military. Off the top of my head, Nords, Flyboy, myself and a few others I know of who's names have escaped me. Some of us are even blessed to have married a SO with a retirement pension as well. (Nords and myself. We are lucky SOBs) I would even say those early retirees with pensions are close to that 500K net worth (if not considerably more). Granted the preponderance of my net worth is in my primary residence and rental property but still considered net worth according to accounting rules. I do agree with you that having only a 500K net worth without a pension would be challenging to retire on.

 

[Jolleyjohn]

I think there are a quite a few of us who retired early with a pension from the military. Off the top of my head, Nords, Flyboy, myself and a few others I know of who's names have escaped me. Some of us are even blessed to have married a SO with a retirement pension as well. (Nords and myself. We are lucky SOBs) I would even say those early retirees with pensions are close to that 500K net worth (if not considerably more). Granted the preponderance of my net worth is in my primary residence and rental property but still considered net worth according to accounting rules. I do agree with you that having only a 500K net worth without a pension would be challenging to retire on.

I stand corrected, sorry. Didn't think about the early retirees with pensions

What you say makes a lot of sense

 

[youbet]

I stand corrected, sorry. Didn't think about the early retirees with pensions

What you say makes a lot of sense

No need to stand corrected. It's commonly assumed here, when discussing FIRE portfolio value required to FIRE, that those dollars represent the only or predominant source of retirement income. Sometimes we also assume SS since almost everyone gets that. But if other sources of income such as pensions, working spouse, million dollar annuity Uncle Bux bought you, a trust fund giving you annual payments, etc., etc., are involved, they need to be mentioned. Otherwise, the required value of the FIRE portfolio is meaningless. What's the point of boasting that you could survive on a $100k FIRE portfolio without mentioning you have a $150k gov pension you're collecting? Etc. No need to correct yourself. You followed the commonly used convention of assuming no ongoing source of income if not mentioned.

When you said a half million bux, I assumed about a $20k annual income from a 4% WR. IMHO, that would be tough......... And at an early beginning age, risky.

 

[MichaelB]

It's not clear to me why you've come to this conclusion. It's not like there haven't been technological advances in the past, and yet 4% WR has worked.

The 4% WR works when the initial budget increases at the same rate as CPI. My point is, in order to enjoy the constantly improving standard of living, we may need a bit more spending above inflation. In real life this is difficult to test, because 1) we don’t know the additional cost of that SoL improvement, and 2) we are constantly adjusting our spending choices in response to price changes and new spending.

My concern would be a portfolio that can only provide for initial spending plus (inflation minus taxes) for the retirement horizon. For example, if the initial budget is $50k, and the portfolio is $1.5M, imvested in TIPs, with $50k plus inflation maturing each year. This portfolio will cover the initial spending plus CPI, but it will lose to improvements in the standard of living and any personal inflation in excess of CPI.