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Old 12-30-2015, 10:38 AM   #41
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I don't have a withdrawal plan from my portfolio. My pension, SS, and part-time work (Jan to April and I enjoy, keeps me mentally active) pays for all day to day and month to month expenses. The entire portfolio is my reserve fund for out of ordinary expenses. In past, I've used it for the occasional newer car update, major vacation, or remodel project. Loosely monitor withdrawal rate but as long as under 2% per year, I don't give it any real thought. Most years it is closer to 1% and some years next to zero. I have noted that I've gotten much less concerned over LBYM..... no need to deliberately save for future.

But when I retired, I had two small boys to raise so was careful with spending at first to insure we could live comfortably for next 20 years. In setting our lifestyle, I chose to lead by example and not set a standard that each boy may struggle to maintain as adults. They see their parents earning money by working and giving spending on "wants" careful consideration.

Through the wonders of the FAFSA formula, I expect my withdrawals to be about 5-6% for the next five or six years due to college expenses, then drop down to the 2% level again. While the boys have about half college costs set aside in 529 plans, they are counted as parent's assets both by FAFSA and my accounting.
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Old 12-30-2015, 10:44 AM   #42
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Dreaming of things you would want to do or places you would want to visit is normal.
I knew it, I just knew it!!! Finally, here is definitive proof that I am NOT normal. I can safely say that I have never dreamed of a place that I would want to visit, or of doing anything that I am not already doing in retirement.

I am already living my dreams, right now. I have my dream house and live next door to Frank, who is a wonderful man and we enjoy each other's company every day. For me this is my dream come true.
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Old 12-30-2015, 10:47 AM   #43
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Like others here our income streams from outside sources (SS, pensions, VA etc.) pays for most of our expenses. In fact, we often have enough to increase our cash reserves a bit.

I just completed my first RMD recently and just exchanged TSM for taxable STB fund less taxes. I consider my STB as cash reserves also.
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Old 12-30-2015, 10:47 AM   #44
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definitive proof that I am NOT normal.
Why would you want to be?
Boring!
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Old 12-30-2015, 10:53 AM   #45
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Why would you want to be?
Boring!
Good point! Boring for me, anyway. Who wants to sit around longing to go to some dumb place, when they could be enjoying life at their present location. And heaven knows, I have zero desire to go zip-lining or jumping out of airplanes or bronco riding. At my age, it's sometimes an adventure just to engage in normal daily activities.
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Old 12-30-2015, 11:15 AM   #46
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We all lived below our means, saved and invested to get where we are, but once we get there why not enjoy a little? If you are retired with a pension that covers all of your expenses and have another million in your portfolio why wouldnt you enjoy .
Who said we do not enjoy?
We do and it is covered by either pension or investments.
We have a travelling budget and go out eating, to a concert or whatever when we wish. We do not live in depriviation.
But simply spending what is left at the end of the month would not bring more joy nor fun into our life.
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Old 12-30-2015, 11:31 AM   #47
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Who said we do not enjoy?
We do and it is covered by either pension or investments.
We have a travelling budget and go out eating, to a concert or whatever when we wish. We do not live in depriviation.
But simply spending what is left at the end of the month would not bring more joy nor fun into our life.
Thats great. To each his own. If you are happy and are buying the things that give you happiness then you have a great life. Im talking about people who deep down would like to upgrade their lives a bit but dont because they cant shift from saver to spender even though all of their expenses are paid by their pension and they still have a large portfolio to draw from (per the OP).

Im talking about people who are driving a 12 year old vehicle that needs repairs every other month but wont buy a new car because thats the way they have always been.

Or people who have lived in the same house for 20 years and its too small for family gatherings and the carpet is matted down and worn badly, but they wont put in new carpet or nice hardwood floors or move to a bigger house with granite counter tops ect. You get the idea. If your carpet is worn out and new carpet wont give you more happiness then I dont know what will please you besides a large bank account.
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Old 12-30-2015, 11:33 AM   #48
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Who said we do not enjoy?
We do and it is covered by either pension or investments.
We have a travelling budget and go out eating, to a concert or whatever when we wish. We do not live in depriviation.
But simply spending what is left at the end of the month would not bring more joy nor fun into our life.
This is my approach too. I like nice things, but don't find myself wanting to spend money unnecessarily. When I go on vacation it's usually a bicycle tour because that's what I like. I will stay in a mix of fancy hotels, hostels and go camping. I could afford a round the world cruise, but I prefer bicycle touring a it's a lot less expensive.

I don't feel I scrimp on much, if I need a new car I buy one. I currently have a 9 year old Honda Civic with $135k miles. It gets serviced regularly and works great. I hope to get a few more years out of it yet, but I will definitely buy a new car when the time comes.
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Old 12-30-2015, 12:48 PM   #49
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Our pensions and rentals cover about 70% of spending. The taxable portfolio closes that gap via dividends and occasional selling. After SS, there's no gap... at least if everything goes according to plan. With so many unknowns (LTC, inflation, longevity... to name a few), we still try to strike a reasonable balance between planning for future contingencies and spending every penny that FIRECalc says we can. I concede that with only 2.5 years under my belt, I'm gravitating to the conservative side.
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Old 12-30-2015, 01:20 PM   #50
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For me a pension is 7 years off, but when it comes it will most likely cover all my expenses (though I admit I don't have extravagant tastes). If not, it will be close and when SS starts they combined will definitely cover my expenses. My current plan is to stay mostly in equities, and withdrawing just dividends as play money. When RMDs start, that money will most likely just get transferred to my brokerage account. Assuming Roth IRAs are still available, I plan on giving my only son enough each year to max out a Roth IRA as soon as he is eligible. If nothing else, he will have that as an inheritance.
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Old 12-30-2015, 01:34 PM   #51
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This describes my plan for retirement. If I get the pension I'm working towards, it will cover my current standard of living plus a significant increase in travel. If I still have rental properties at the point, the income will be set aside for unexpected expenses or the occasional splurge. I don't expect to need my portfolio at all, but it'd be great to increase giving and leave a substantial inheritance to my family. I'll keep the investments as they are - aggressive. I don't see any reason to pull it out and have buckets of cash I don't need.


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Old 12-30-2015, 01:57 PM   #52
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..... To each his own. If you are happy and are buying the things that give you happiness then you have a great life. Im talking about people who deep down would like to upgrade their lives a bit but dont because they cant shift from saver to spender even though all of their expenses are paid by their pension and they still have a large portfolio to draw from (per the OP)........
I know this fellow who won't phone his siblings because it's long distance, even when I offer him my cell phone to use for free. It's too wasteful.

He won't go visit his siblings in another State, yet when one died, he went for the funeral. I've told him it would be better to visit them when they are alive vs dead. I guess if you go for the funeral it's just 1 trip.

He waits to send Christmas cards, so he won't "waste" sending one to somebody who doesn't send him one or has died.

He has the money, as I do his tax returns I know. It's really a bit sad.
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Old 12-30-2015, 02:39 PM   #53
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I know this fellow who won't phone his siblings because it's long distance, even when I offer him my cell phone to use for free. It's too wasteful.

He won't go visit his siblings in another State, yet when one died, he went for the funeral. I've told him it would be better to visit them when they are alive vs dead. I guess if you go for the funeral it's just 1 trip.

He waits to send Christmas cards, so he won't "waste" sending one to somebody who doesn't send him one or has died.

He has the money, as I do his tax returns I know. It's really a bit sad.

Very sad. This guy needs to see that cartoon with the "Time > Money" on the tombstone.


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What to do with portfolio when pension covers expenses.
Old 12-30-2015, 02:43 PM   #54
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What to do with portfolio when pension covers expenses.

I plan to contribute to my kid's Roth IRA and vacation pot. Our pensions and income covers almost all expenses. But I've been telling my kids they have to pick up their expenses, now that we are retiring, they have to pay for things that we paid before like new cell phone. We still pay for the monthly $15 per line, but that's it.
But I would like to pay for a luxury 2 weeks vacation anywhere with them if money is not an object. And I also like to donate to the arts. We buy season tickets to live performance shows, I would like to continue doing that.


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Old 12-30-2015, 02:44 PM   #55
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This thread What to do with budget surplus got me thinking about a withdrawal question for the person who has a pension that covers most or all of her retirement expenses, but also has a substantial investment portfolio. Does she withdraw 4% from the investment portfolio each year and just hold it in cash, or does she leave it invested? I would think that withdrawing the money and going to cash would be the best way to reduce risk, but I'm interested to hear others' perspectives on the issue.
There are some interesting replies here on what to do with one's surplus money, but to address the original question, withdrawing 4% and holding it in cash isn't really withdrawing anything, it's just shifting your investments to a slightly more conservative AA each year.

I might be in the same situation as you for a while, until my non-COLA pension is no longer enough. But until then I don't think I'd want my AA to get more and more conservative each year, I might go more aggressive on equities instead.
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Old 12-30-2015, 03:03 PM   #56
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Time > Money?

Time has no new car, caviar, four star daydream, or even a football team.

As about what to do, share it fairly but don't take a slice of my pie.
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Old 12-30-2015, 03:25 PM   #57
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We have been "upgrading" over the past few years since our portfolio has grown. We stay at nicer hotels in the US during our road trips. We go for longer Europe trips and stay in nice hotels in convenient locations. We hope to travel more often now that we have quite a bit set aside to fund it. At some point we may treat family to travel with us.
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Old 12-30-2015, 03:46 PM   #58
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I'm hoping this would be the case for me (pension covering all essential living expenses). I've still got 25 years to go though, so we'll see.

Assuming I stick with my current employer for the next 25 years, our pension benefit isn't reduced and tax laws don't change drastically, my estimated after-tax pension would cover ~150% of current expenditures.

My plan is to keep a fixed buffer in liquid savings to cover large expenditures (e.g. car replacement, home repair, travel, etc) to be replenished once a year as needed. Anything above that amount will be (re-)invested in VTINX and/or VWIAX (~30-35/65-70). Very conservative portfolio I know but I'm not much of a risk taker.

I don't plan on depriving myself (for sure, any air travel will be on business class or better, flying coach feels like torture) but neither do I see much point in withdrawing a fixed 4% from the portfolio adjusted yearly for inflation if I don't need it.
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Old 12-30-2015, 04:56 PM   #59
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Thats great. To each his own. If you are happy and are buying the things that give you happiness then you have a great life. Im talking about people who deep down would like to upgrade their lives a bit but dont because they cant shift from saver to spender even though all of their expenses are paid by their pension and they still have a large portfolio to draw from (per the OP).

Im talking about people who are driving a 12 year old vehicle that needs repairs every other month but wont buy a new car because thats the way they have always been.

Or people who have lived in the same house for 20 years and its too small for family gatherings and the carpet is matted down and worn badly, but they wont put in new carpet or nice hardwood floors or move to a bigger house with granite counter tops ect. You get the idea. If your carpet is worn out and new carpet wont give you more happiness then I dont know what will please you besides a large bank account.
How do you know any of the people you describe aren't perfectly happy with their choices?

You seem to gauge happiness in terms of 'things' - some people don't believe it or not. The most important things in life aren't things...
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Old 12-30-2015, 05:03 PM   #60
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