Reached escape velocity

[NW-Bound]

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.

 

[daylatedollarshort]

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.

 

[NW-Bound]

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.

 

[Animorph]

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.

 

[aja8888]

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.

 

[Mulligan]

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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[NW-Bound]

Hey, I am back.

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.

 

[Mulligan]

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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[NW-Bound]

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.

 

[Fermion]

For a lot of Americans retirement is missing the seat:

 

[NW-Bound]

That looks, umm..., uncomfortable. I'll keep my pogo stick, thank you.

 

[Mulligan]

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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[NW-Bound]

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

 

[Lsbcal]

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.

 

[eta2020]

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.

 

[Fermion]

If we get a 1930s meltdown I plan to buy glass dinnerware. Some of that stuff is worth a fortune from the last meltdown in the 1930s.

 

[Lsbcal]

If we get a 1930s meltdown I plan to buy glass dinnerware. Some of that stuff is worth a fortune from the last meltdown in the 1930s.

I am envious, you will be very well off in 2098!

 

[Lsbcal]

Another consideration for OP, NYTimes article today about pension safety: http://dealbook.nytimes.com/2014/06...lans/?_php=true&_type=blogs&ref=business&_r=0

More than a million people risk losing their federally insured pensions in just a few years despite recent stock market gains and a strengthening economy, a new government study said on Monday.

The people at risk have earned pensions in multiemployer plans, in which many companies band together with a union to provide benefits under collective bargaining. Such pensions were long considered exceptionally safe, but the Pension Benefit Guaranty Corporation reported that some plans are now in their death throes and could not recover. The aging of the work force, the decline of unions, deregulation and two big stock crashes have taken a grievous toll on multiemployer pensions, which cover 10 million Americans.

Are you absolutely sure you are safe? I do not mean to be an alarmist. Just that one should look at worst case possibilities.

 

[daylatedollarshort]

Another consideration for OP, NYTimes article today about pension safety: http://dealbook.nytimes.com/2014/06...lans/?_php=true&_type=blogs&ref=business&_r=0

Are you absolutely sure you are safe? I do not mean to be an alarmist. Just that one should look at worst case possibilities.

In our case we have several private pensions from different companies between us that last time I looked up were at least ~90% funded, so they would all have to go 100% belly up as well as the PBGC corporation for us to not get anything. But even if that happened it wouldn't be the end of the world because we have other retirement income streams and we are working on keeping our fixed expenses relatively low.

 

[Mulligan]

Another consideration for OP, NYTimes article today about pension safety: http://dealbook.nytimes.com/2014/06...lans/?_php=true&_type=blogs&ref=business&_r=0

Are you absolutely sure you are safe?

I for one will not say absolutely since I cannot control it. But our system is not pooled, though the legislatures have tried in the past as ours is the best system. I live on about 60% of mine, so I am in decent shape and the system is not in any short or midrange danger, being over 85% funded. They have many levers at their disposal including increasing contribution rate, extending service years etc. They already capped COLA to automatic 2% increase unless CPI is over 5% then it is 5%. On the negatives, we did not pay into SS, nor are we part of the pension guarantee fund.


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[dtbach]

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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The market can stay irrational longer than you can stay solvent.John Maynard Keynes, (attributed)

 

[Koolau]

<SNIP>

In my own case I live very nicely on a defined benefit pension and SS. No debts of any sort, own the home, home has recently been completely renovated, new vehicle. I am a widower and have no one else to be responsible for.

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.

Heh, heh, what does it say about me that I was expecting you to say "So I don't need to take any more risk because I already have enough!"

To each his own, as always. Personally, I prefer a smoother ride to the prospect of a potential big pay day (with possibility of a significant loss). That is, of course, if you don't really need the big pay day to meet your 100% confidence in not running out of money. Once again, YMMV.

 

[Chuckanut]

Many have reached escape velocity using a pension and SS. The only danger I see is that an exogenous event may change your course and send you plunging back to ground. Will you have enough fuel to alter course and avoid a collision?

I can think of two things that might send one crashing back to the planet. One is a serious economic event that causes a pension to be drastically reduced. Detroit comes to mind. So, how safe is your pension?

The other is that Congress will continue with its decision to do nothing about SS funding and somewhere in the next 10-15 years we will see SS cut back about 25%. Can you survive that?

Can you survive both? If so, place those bets in Las Vegas and put your nest egg at risk. Otherwise, growing it a bit would not be a bad idea.

Have you read the book "The Martian"? As long as we are using outer space analogies you might consider that having resources that can be re-purposed is not a bad idea.

 

[W2R]

I am pretty sure that I have reached escape velocity. The bull market makes it harder to tell, but even so I am pretty sure I am there. I am learning to loosen the purse strings a little more each year. Still, my nestegg keeps on growing by leaps and bounds faster than I can loosen them, despite living off my nestegg and my three figure FERS mini-pension.

And this morning, I sent off my marriage license and divorce decree to Social Security at their request, so that hopefully they can begin to pay me divorced spousal benefits while my own benefits continue to grow until age 70.

I was poorer than dirt for years and years, and now suddenly this? Life is strange! I am not religious, but still this almost feels like some sort of test.

 

[Lsbcal]

You deserve it all W2R . Time to enjoy life a lot.

Nice avatar.