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Old 04-03-2012, 07:43 PM   #1
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The Retiree Toolkit

Just a good summary of the tools we all have to work with from Wade Pfau's excellent blog. The link is worth reading in it's (short) entirety IMO.

Pensions, Retirement Planning, and Economics Blog: The Retiree Toolkit

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The Retiree Toolkit
Developing a retirement income strategy is an individualized process which uses building blocks from a retirement toolkit. No single approach or product works best for everyone. But crafting together these various pieces can help result in a strategy to obtain a sustainable income for the remainder of one’s life. I’ve taken to calling this the retiree toolkit and “building blocks” for the toolkit. Recently I read an article by Steve Vernon describing* the same basic idea, and he calls it the retirement income menu.

The way I see it, the basic building blocks for a retirement income strategy are:

1. Social Security:

2. Part-time work:

3. Bond ladders:

4. Single Premium Immediate Annuities (SPIAs):

5. Systematic withdrawals from a volatile portfolio:

6. Variable Annuities with Guaranteed Lifetime Withdrawal Benefit riders:

Other honorable mentions for this list include reverse mortgages, long-term care insurance, and life insurance.

That’s the basic list. Now it is just a matter of fleshing out the details for each of these building blocks, quantifying their pros and cons, and considering how to best combine them to help individual retirees to best meet their goals.
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Old 04-04-2012, 05:57 AM   #2
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Thank you for sharing, Midpack.
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Old 04-04-2012, 07:33 AM   #3
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I'd put SS and COLA-adjusted pensions as 1A) and non-COLA adjusted pensions as 1B). I am thinking you might take a very different strategy for COLA and non-COLA income.

Number 2 made me throw up in my mouth a little bit........
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Old 04-04-2012, 09:18 AM   #4
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RMDs?
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Old 04-04-2012, 09:32 AM   #5
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I'd put SS and COLA-adjusted pensions as 1A) and non-COLA adjusted pensions as 1B). I am thinking you might take a very different strategy for COLA and non-COLA income.

Number 2 made me throw up in my mouth a little bit........
+1 I can't imagine a retirement tool kit that doesn't include pensions. And, it's important to differentiate between COLA and non-COLA.
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Old 04-04-2012, 09:36 AM   #6
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Wade actually included pension is #1.

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(Any other defined benefit pensions could also be grouped in with this category if it is thought of more broadly as social capital).
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Old 04-04-2012, 09:38 AM   #7
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Pensions were mentioned along with Soc Sec in 1). However, at the moment when I try the link, the blog post seems to have changed completely Not sure if it's temporary or what...
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Target AA: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
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Old 04-04-2012, 09:42 AM   #8
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RMDs?
* Acronyms and Slang Frequently Used on the Forum *

^^^^Acronyms found here - in FAQs ^^^^^^

(Required Minimum Distribution)
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Old 04-04-2012, 01:13 PM   #9
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Thanks Midpack, most of those already in use...a few more being looked at such as LTC.

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I'd put SS and COLA-adjusted pensions as 1A) and non-COLA adjusted pensions as 1B). I am thinking you might take a very different strategy for COLA and non-COLA income.

Number 2 made me throw up in my mouth a little bit........
If you are a HNW (i.e. "rich") person, be careful counting SS. Any attempt to do means testing could dramatically lower or eliminate your SS payments for folks under about the age of 57. Why 57? Based on every proposal I've read over the past 2 years or so....they all protect anyone within 10 years of retirement. I'm 50...so in my planning I estimate I'll only get 50% of what SS says I will. If I end up getting more...great!!
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Old 04-04-2012, 01:24 PM   #10
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Thanks, MP.
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Old 04-04-2012, 03:53 PM   #11
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Thank you for sharing, Midpack.
+1
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Old 04-04-2012, 04:42 PM   #12
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Pensions were mentioned along with Soc Sec in 1). However, at the moment when I try the link, the blog post seems to have changed completely Not sure if it's temporary or what...
I had rental RE early on which I sold and consumed the cash later - all in the early phase of our ER.

heh heh heh -
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Old 04-04-2012, 05:16 PM   #13
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RMDs?
Wouldn't RMD's fall under #5? An IRA portfolio is "volatile", isn't it--even if the IRA holds a CD ladder, the interest rates change as each CD matures and is rolled over into a new one (or not).
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