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Old 06-30-2014, 11:07 AM   #21
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The fact that SS and pension act as a counterweight to stocks has been talked about often. The OP meant the same thing probably, when he talked about being 100% in stocks.

However, during a market downturn, one can "buy low" if he has bonds to sell, but how does he rebalance SS or pension into equities?

Again, some people will say that equities will win in the long run, so it does not matter. The problem is how long? We have seen the S&P being flat from 2000 until recently, if we look at market top to market top. And if we count inflation, the S&P dividend is not enough to make up for that.

Other than accumulators, there are people who got ahead, myself included, by rebalancing. In an overall-sideways but volatile market like the recent past, rebalancing is the only way to get ahead.
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Old 06-30-2014, 11:13 AM   #22
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For the OP, I would not say that the advice, rules of thumb, etc go out the window. Your plan should be the result of deliberate analysis. It may be that when you apply them, you conclude that you can financially bear a high level of volatility/risk in your investment portfolio.

You should also contemplate how you emotionally handle large swings in portfolio value. Would they be highly stressful and make it difficult to carry our your investment plan? Your personal tolerance for potential portfolio losses may affect your asset allocation.

In addition, you may consider whether other priorities such as charitable support, etc now have a more prominent place in your life since you are no longer concerned about financially providing for a spouse/family. In addition, your desire for travel, hobbies, education, supporting causes, etc, may expand since you have the financial wherewithal to dream bigger dreams. All those things could have a bearing on the desired withdrawal rate from your portfolio and the asset allocation.

Just some thoughts as you assess your situation and make your plans. Best of luck.
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Old 06-30-2014, 11:16 AM   #23
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Other than accumulators, there are people who got ahead, myself included, by rebalancing. In a sideways market like the recent past, rebalancing is the only way to get ahead.
If your crystal ball is telling you we are in for years of sideways markets, covered call selling is another way to get ahead.
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Old 06-30-2014, 11:22 AM   #24
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The fact that SS and pension act as a counterweight to stocks has been talked about often. The OP meant the same thing probably, when he talked about being 100% in stocks.

However, during a market downturn, one can "buy low" if he has bonds to sell, but how does he rebalance SS or pension into equities?

Again, some people will say that equities will win in the long run, so it does not matter. The problem is how long? We have seen the S&P being flat from 2000 until recently, if we look at market top to market top. And if we count inflation, the S&P dividend is not enough to make up for that.

Other than accumulators, there are people who got ahead, myself included, by rebalancing. In a sideways but volatile market like the recent past, rebalancing is the only way to get ahead.
You get ahead if you have a plan and stick to this plan.

I think your approach is as good as mine and is as good as someone's who stayed in PD or Air Force for 20 years to get nice retirement.

You just need a plan and stay with it
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Old 06-30-2014, 11:25 AM   #25
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My plan is to buy low, sell high rebalance, and I try to time the market do it in a most lucrative manner.
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Old 06-30-2014, 11:39 AM   #26
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If your crystal ball is telling you we are in for years of sideways markets, covered call selling is another way to get ahead.
Yes, I have done a bit of covered call. However, my timing or strategy was not good, and I often got called on my better stocks and missed out on a lot of gains, while was left holding the stinky stocks that nobody wanted.

Good thing that I only tried that on about 2 or 3% of my holdings. It did not make me that much money, but I am doing it more for fun than anything else. When I no longer see the fun in it, I will stop.
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Old 06-30-2014, 11:43 AM   #27
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Because we will be dead anyways? If we hit a mid 1960s stretch to 1982, I may be in big trouble. 15 years is a long time to someone pushing 70. Maybe I am a nervous Nelly, but hey, since Obygn hasn't posted much lately someone has to take the voice of concern.
With pensions, SS, semi-passive hobby business income and modest portfolio returns, we're in the won the game, stop playing camp. I also think at my age the long term for a recovery might be too long. We ran the numbers earlier this year and decided even a 15% drop would wipe out many years of retirement living expenses for us, and we would rather not risk it.

We decided the thing we wanted to buy most with our money is the freedom to not having to worry about stock market returns.
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Old 06-30-2014, 11:51 AM   #28
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I don't wanna stop playin' the game. It's too much fun! Life would be too boring.

PS. Wife just said she wanted to go to Costco for more food to bring up to boonies home to party! See y'all later.
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Old 06-30-2014, 12:04 PM   #29
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So to my topic that I have not seen discussed. It would seem that all the rules of thumb, conventional wisdom, expert advice about investments, allocations of stock/bonds, rebalancing, etc., go out the window. Seems to me that I can tolerate a lot more risk, i.e.. 100% stocks and more.

Thank you. I await a thoughtful discussion, that I know this forum is capable of.
My mom has expenses covered by annuities and SS. She says her portfolio is for the kids, eventually. She holds it in 100% equities. Why put her kids in 100% CD's during her 30+ year retirement?

I'm 100% equities (and retired) because it's not much riskier than the optimum for a reasonable SWR, but the final portfolio is much better. To me, that is more options in the future, most likely. We have kids, they can have the remainder if we can't spend it.

We will be drawing from the portfolio for expenses. Only about 1/3 of our expenses are covered by SS. So we're not as well covered as you are with non-portfolio income. I still hold to an AA, although it is all subdivisions of equities. I rebalance. So I'm not avoiding any of the work.

I certainly have no problem with 100% equities if you don't need to cover any planned expenses with portfolio withdrawals.
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Old 06-30-2014, 12:33 PM   #30
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Because we will be dead anyways? If we hit a mid 1960s stretch to 1982, I may be in big trouble. 15 years is a long time to someone pushing 70. Maybe I am a nervous Nelly, but hey, since Obygn hasn't posted much lately someone has to take the voice of concern.


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He's over at bogleheads with a long thread asking why he can't pull the retirement trigger.
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Old 06-30-2014, 12:54 PM   #31
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S&P 500 Dividend by Year



1960-1985 you would still get better dividend then in 1950's but I agree it would be going up slower then inflation. So agreed this would not be good.



This is where SS checks come to play a role of bond portion of our portfolio. You can view SS as one large bond holding....

This is part of the reason for my more conservative stance. I have a one legged stool. WEP puts me around $100 a month SS.


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Old 06-30-2014, 01:52 PM   #32
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Hey, I am back.

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This is part of the reason for my more conservative stance. I have a one legged stool. WEP puts me around $100 a month SS.
That's not a stool. It's a pogo stick.


I thought I had the same, meaning only my stash to rely on. Then, recently I figured SS for both of us, and it was not too bad. So, in a few years, I will upgrade from a pogo stick to a pair of stilts.
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Old 06-30-2014, 02:01 PM   #33
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Hey, I am back.





That's not a stool. It's a pogo stick.



I thought I had the same, meaning only my stash to rely on. Then, recently I figured SS for both of us, and it was not too bad. So, in a few years, I will upgrade from a pogo stick to a pair of stilts.

Well NW, stilts is better than a pogo stick. It's way too late for me to build a stool. So I'm just saving some money for lubricant to make sure it continues to bounce until I can't ride it anymore. Well I guess I could get another full time job and get it built. Naw, I will just take my chances.


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Old 06-30-2014, 02:07 PM   #34
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Actually, my reliance on just my stash would be analogous to balancing on a pogo stick, as it bounces like a yo-yo with the market.

Your pension on the other hand is stable, hence more like a one-legged stool.


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Old 06-30-2014, 02:25 PM   #35
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For a lot of Americans retirement is missing the seat:
Attached Images
File Type: jpg retirement.jpg (21.0 KB, 19 views)
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Old 06-30-2014, 02:33 PM   #36
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That looks, umm..., uncomfortable. I'll keep my pogo stick, thank you.
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Old 06-30-2014, 03:10 PM   #37
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Actually, my reliance on just my stash would be analogous to balancing on a pogo stick, as it bounces like a yo-yo with the market.

Your pension on the other hand is stable, hence more like a one-legged stool.



It's a good thing I did a double take before I made a comment. Though now I have nothing to say.


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Old 06-30-2014, 04:02 PM   #38
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That fellow had the idea of strapping the stool to himself, so he could readily bring it along wherever he went.

I linked that shocking image from this site, which I found on a quick search for a metaphor.

Cold Fusion Guy: Social Security - the One-Legged Stool
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Old 06-30-2014, 04:09 PM   #39
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For the OP: make sure your situation could have survived a 1930 meltdown. Try running this in Firecalc. Then post results here for extra credit.
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Old 06-30-2014, 04:44 PM   #40
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For the OP: make sure your situation could have survived a 1930 meltdown. Try running this in Firecalc. Then post results here for extra credit.
OP... If you need anything more then just dividend yield of your portfolio.....then do NOT go 100% into equities.
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