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View Poll Results: Which of the statements below best describes your RE portfolio goals?
Capital preservation is my primary goal. Income from dividend and interest income is my secondary goal. (This implies that the portfolio is sufficiently large that withdrawals will not exceed yield, or that there is another source of income.) 16 17.39%
Capital preservation is my primary goal for the first few years. After that, my primary goal will change to income generation. (This retiree either has a cash "bucket" or part time w*rk) 17 18.48%
Income generation is my primary goal from Day 1. My capital may be partly depleted over time, but I hope to have some residual capital to leave as a legacy. 21 22.83%
Income generation is my primary goal from Day 1. My capital may be partly depleted over time, but I want to keep enough to purchase an annuity at a later date. 1 1.09%
Income generation is my primary goal. I am also hoping for some capital appreciation for the first X years. (This implies that expected portfolio yield exceeds income requirements early in retirement; this portfolio is probably large.) 19 20.65%
I have retirement income sufficient to meet my needs independent from my portfolio, which I can spend, or not, at my discretion. (This retiree has a COLA'd pension and healthcare is covered). 18 19.57%
Voters: 92. You may not vote on this poll

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Retirement Portfolio Goals Poll
Old 04-18-2010, 01:52 PM   #1
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Retirement Portfolio Goals Poll

Here is the poll Midpack was considering, with my edits.

The desired balance between capital preservation, income and growth is key to finding the right asset allocation.
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Old 04-18-2010, 02:55 PM   #2
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OK, I want an "Other" choice now!

I'm retired, DW works for now but we supplement her income with our portfolio. I don't invest for dividends and interest, nor do they provide enough income for us, I mostly sell equity shares to meet my income needs (just last week even!). At the same time, our portfolio value is still growing well above inflation now and should continue to grow above inflation after DW retires. Not preservation in the sense of spending only dividends and interest, nor in terms of a constant portfolio in dollars. But I'm definitely not spending it down.

Number 1 is the best fit, but not a good one.
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Old 04-18-2010, 03:48 PM   #3
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The best answer for me is #2. Preservation of capital is crucial during the first few years (not sure yet whether it's going to be by living on a fixed % of portfolio, or having a significant cash bucket, or pulling a Norwegian Widow move and using dividend income as a backstop) with more focus on income starting in our 60s (no need to leave a legacy).
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Old 04-18-2010, 04:01 PM   #4
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I voted for income generation and hoping for some capital appreciation.

I don't plan to spend more than my dividends, so hopefully there will be some capital appreciation. However, suppose that some day I become a Big Spender and want to spend more than my dividends, up to my chosen SWR? That would be perfectly OK as long as that is what I want to do. Right now, I just think "Why?"
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Old 04-18-2010, 04:20 PM   #5
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I'm working, husband is retired, I expect a (somewhat) COLA'd* pension. Our pensions will be enough to cover our expenses, if life goes on as it has; but we know perfectly well that it won't. Therefore, I want enough extra to cover LTC for husband and eventually, for me. Plus hire other people to do stuff that we now do for ourselves. So, I need an option for "Has pension; also needs to preserve capital for first part of retirement; needs to generate income/have enough capital to spend down for LTC part of retirement."
A.
*As I've posted many times before, the COLA is pegged to the CPI, a woefully inadequate inflation measure. Still, it's better than no COLA at all.
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Old 04-18-2010, 04:38 PM   #6
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OK, I want an "Other" choice now!

I went with this one:

Income generation is my primary goal. I am also hoping for some capital appreciation for the first X years. (This implies that expected portfolio yield exceeds income requirements early in retirement; this portfolio is probably large.)
My portfolio yield is mixed - the "yield" will hopefully be sufficient. I have some investments in dividend-yielding stocks and bonds, some in stocks or mutual funds with capital appreciation possibilities. It's not a huge amount of money which is why I'm having trouble with "this portfolio is probably large".

I have no pension to carry me through - careful investing and virtually no debt is my normal lifestyle.
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Old 04-18-2010, 04:49 PM   #7
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OTHER! - Total Return approach with 3.5% fixed SWR

Well - none of these meets the classic Trinity Study type SWR. That does not worry about "Capital Preservation" nor "Income Generation" (if by income generation you mean interest and dividend income).

By definition, the Trinity Study model does NOT seek to preserve capital as you can go to 0, nor does it rely on interest or dividend income by themselves.

Those of us operating on the Trinity Study model - whether using the initial SWR inflation adjusted OR the fixed SWR % recalculated each year - do not fit in the above poll.

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Old 04-18-2010, 04:49 PM   #8
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Quote:
Originally Posted by Amethyst View Post
I'm working, husband is retired, I expect a (somewhat) COLA'd* pension. Our pensions will be enough to cover our expenses, if life goes on as it has; but we know perfectly well that it won't. Therefore, I want enough extra to cover LTC for husband and eventually, for me. Plus hire other people to do stuff that we now do for ourselves. So, I need an option for "Has pension; also needs to preserve capital for first part of retirement; needs to generate income/have enough capital to spend down for LTC part of retirement."
A.
*As I've posted many times before, the COLA is pegged to the CPI, a woefully inadequate inflation measure. Still, it's better than no COLA at all.
Or, in other words, "You want to work how long?"
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Old 04-18-2010, 04:59 PM   #9
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I didn't include "other" because of the original discussion. If one of the Mods would like to do so now, please go ahead. It's not like we're doing a scientific study or anything!

With 30 votes, nobody has voted for income all the way.
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Old 04-18-2010, 05:06 PM   #10
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I'm not really asking for "OTHER" - I'm pointing out that the Trinity Study type SWR model is missing from the poll, and IMO that is a pretty huge omission.

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Old 04-18-2010, 05:10 PM   #11
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I am not familiar with the Trinity SWR model. But I'm happy to learn if you would like to explain it, Audrey.
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Old 04-18-2010, 05:19 PM   #12
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When on this forum we talk about SWR (Safe Withdrawal Rates), and FIRECalc and portfolio survival based on historical data - that is all based on the Trinity Study model and variations to it.

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Old 04-18-2010, 05:25 PM   #13
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Thanks Audrey. I still don't understand how the concept of SWR is in conflict with the concepts in the poll. Maybe I'm stupid or something....
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Old 04-18-2010, 05:33 PM   #14
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Quote:
Originally Posted by Meadbh View Post
Thanks Audrey. I still don't understand how the concept of SWR is in conflict with the concepts in the poll. Maybe I'm stupid or something....
If I may . . .
Say a retiree has constructed a diversified portfolio that meets his/her risk tolerance. The retiree plans to withdraw 3.5% of the ending balance of the portfolio each year. Which poll answer would this retiree pick? Or, say the retiree plans to take 3.5% of the initial portfolio and increase this amount for inflation every year--which poll answer should this person choose?
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Old 04-18-2010, 05:33 PM   #15
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#6 for me, but not on a scale large enough that I can live off a modest pension and annuity forever. Health bennies are covered and self paid.
My medium size portfolio, still under construction, is the protective cushion if SS does not turn out to be (in 11 years) what my statements say it will be. The portfolio will be just about the right size at about the same time I have to make the "take it or delay it" decision about SS at age 62.
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Old 04-18-2010, 05:36 PM   #16
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Thanks Audrey. I still don't understand how the concept of SWR is in conflict with the concepts in the poll. Maybe I'm stupid or something....
The SWR method does not rely on income from a portfolio. It is based on the total return (both income AND cap gains together) for each given AA over several decades based on historical data.

And the SWR method does not seek to preserve principal, but instead expects to spend principal down in some cases, even if temporarily. Instead you pick an SWR and AA that has a high chance of the portfolio not going to 0 before a certain number of decades has passed.

That is why I am saying it is not included in the above poll. There is no capital preservation. There is no investment income goal. It's all based on an SWR and a time period.

Could be described as "My goal is portfolio survival for X decades based on a Y SWR".

Note that this also means - "I don't care about capital preservation, nor do I care what income is generated by the portfolio."

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Old 04-18-2010, 05:45 PM   #17
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Thanks for the explanation Audrey. In other words, people who focus only on SWR alone will not care whether the SWR comes from dividends, interest or capital. Now I get it.

I guess I am not a "pure" SWR fan. I will be looking at the absolute numbers and the underlying portfolio structure.
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Old 04-18-2010, 06:33 PM   #18
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I'm with audreyh1.

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Old 04-18-2010, 07:18 PM   #19
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Plan A is to maintain the real value of my portfolio indefinitely and live of less than 100% of the income.

Number 1 is the best fit.
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Old 04-18-2010, 07:35 PM   #20
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I chose #5. I expect to run surpluses (dividends > expenses) in the next 10 years or so (on my non-retirement investments) although I will probably begin to run deficits for a few years until I can tap into my three "reinforcements" which are (a) IRA, (b) frozen pension, and (c) Social Security (if it is still there).

I am not assuming any long-term reduction in my expenses due to HI reform, though.
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