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Sources of funding retirement
02-28-2014, 07:56 PM
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#1
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Thinks s/he gets paid by the post
Join Date: Jul 2007
Posts: 1,085
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Sources of funding retirement
It seems to me the expenses for retirement come from three main "buckets"
1. Pension and/or SS.
2. Income from your investments (such as dividends, interest, or other distributions).
3. The sale of some of your investments.
For those who have retired, I'm curious what percentage of your last year's expenses came from each bucket. Oh, and let me know if I'm missing a bucket - it's late and past my bedtime.
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02-28-2014, 08:30 PM
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#2
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Recycles dryer sheets
Join Date: Jul 2012
Posts: 281
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Quote:
Originally Posted by David1961
It seems to me the expenses for retirement come from three main "buckets"
1. Pension and/or SS.
2. Income from your investments (such as dividends, interest, or other distributions).
3. The sale of some of your investments.
For those who have retired, I'm curious what percentage of your last year's expenses came from each bucket. Oh, and let me know if I'm missing a bucket - it's late and past my bedtime.
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100% - I only have one bucket for my retirement living expenses & savings....and that is a pension (no SS as I'm under a Federal civil service retirement system which didn't include paying into SS). My TSP (Federal version of 401k) and meager investments are not needed for monthly expenses. There are a few previous threads with similar information, however I''m not technically savvy enough to make a link.
Cheers, Cassie
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02-28-2014, 08:39 PM
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#3
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Thinks s/he gets paid by the post
Join Date: May 2007
Posts: 1,525
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A number 4 would be an income source rarely cited by ER.org posters - borrowing. I'm thinking primarily of reverse mortgages.
Number 5, also rare here among the "early" retired, would be support from family. This could be direct payments, or an offset of necessary expenses by providing a place to live.
I'm not FIRE'd yet, but reading the posts of those who are retired it appears the percentage of income among the Big 3 categories varies significantly. And it varies not only from household to household, but it varies over time for each household.
On this last point, it seems to me that for most of us there are four financial phases to ER income:
1. prior to 59-1/2
2. 59 to 62 (or whenever one starts social security payments)
3. 62 to 70-1/2
4. After 70-1/2, when RMDs kick in
__________________
No doubt a continuous prosperity, though spendthrift, is preferable to an economy thriftily moral, though lean. Nevertheless, that prosperity would seem more soundly shored if, by a saving grace, more of us had the grace to save.
Life Magazine editorial, 1956
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02-28-2014, 09:29 PM
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#4
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Administrator
Join Date: Jul 2005
Location: N. Yorkshire
Posts: 34,128
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1) 50%
2) 30%
3) 20%
__________________
Retired in Jan, 2010 at 55, moved to England in May 2016
Enough private pension and SS income to cover all needs
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02-28-2014, 09:48 PM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2007
Location: New Orleans
Posts: 47,500
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1.) 22%
2.) 78%
3.) 0%
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities. - - H. Melville, 1851.
Happily retired since 2009, at age 61. Best years of my life by far!
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02-28-2014, 10:54 PM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2013
Posts: 9,358
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We have part time hobby jobs.
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03-01-2014, 05:51 AM
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#7
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2006
Location: Washington, DC
Posts: 11,329
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1) 60%
2) & 3) 40%
I haven't calculated the portions in 2 and 3 since a lot of interest and dividends are in tax deferred and still reinvested. I will pay closer attention when we switch over to RMDs.
__________________
Idleness is fatal only to the mediocre -- Albert Camus
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03-01-2014, 06:08 AM
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#8
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,021
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1) 44%
2) 31%
3) 25%
__________________
Numbers is hard
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03-01-2014, 06:17 AM
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#9
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2011
Posts: 8,419
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1) 40%
2) 50%
3) 5%
4) 5% hobbyjob
__________________
Living well is the best revenge!
Retired @ 52 in 2005
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03-01-2014, 06:18 AM
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#10
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Thinks s/he gets paid by the post
Join Date: Feb 2012
Posts: 1,500
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1) 40%
2) 60%
__________________
Chief Retirement Strategist
The AR Group
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03-01-2014, 10:04 AM
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#11
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Thinks s/he gets paid by the post
Join Date: Feb 2012
Posts: 1,495
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Hmmm. 1-50%, 3-50%. For some strange reason, as a MF investor, as a matter of habit I've always reinvested dividends and cap gain distributions rather than take the cash. That goes for bond interest on those funds as well. Reason? Makes it easier to see what a fund had done for me over the life I've held it. As a result, if I need to replenish the cash (income) bucket I have to sell stuff. I get the distinct impression that I may be one of the few around here who does that, and there may be a good reason (as in it doesn't make tax sense?). Anyway, that's what I do.
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03-01-2014, 10:05 AM
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#12
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,371
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2013 (in ER before pensions and SS): 0% pensions/SS, 73% income, 27% appreciation. Income includes both taxable account income which we receive in cash and spend and tax-deferred account income that is reinvested and offset by taxable account withdrawals.
Actually, with appreciation in 2013 income and growth exceeded living costs.
Projected when we are 71 (first full year after pensions/SS kick in): 60% pensions/SS, 40% investment results.
If we have a down year, I would have to dip into principal and I am willing to do so if needed. I don't consider principal sacrosanct.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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03-01-2014, 10:40 AM
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#13
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Recycles dryer sheets
Join Date: Jan 2012
Location: Colorado
Posts: 254
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1) 80%
2) 20%
In two years, if I start SS at FRA, this will change to
1) 100%
__________________
Don't you know that dynamite always blows down ? --- Moe to Curly
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03-01-2014, 10:46 AM
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#14
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2009
Posts: 6,695
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Quote:
Originally Posted by David1961
It seems to me the expenses for retirement come from three main "buckets"
1. Pension and/or SS.
2. Income from your investments (such as dividends, interest, or other distributions).
3. The sale of some of your investments.
For those who have retired, I'm curious what percentage of your last year's expenses came from each bucket. Oh, and let me know if I'm missing a bucket - it's late and past my bedtime.
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Pardon my ignorance, but where would IRA and retirement plan distributions be placed? Would they be considered distributions in #2 (or did your use of the term "distributions" refer more to cap gains distributions?) or the sale of investments in #3?
In my case, it doesn't matter because 100% of my expenses were paid for by #2.
__________________
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.
"I want my money working for me instead of me working for my money!"
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03-01-2014, 10:58 AM
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#15
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Full time employment: Posting here.
Join Date: Nov 2008
Posts: 728
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1. 10%
2. 90%
I"m lucky!
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03-01-2014, 11:00 AM
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#16
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Thinks s/he gets paid by the post
Join Date: Jan 2008
Posts: 1,671
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If you reinvest "income" and then spend it the next year, is it still "income" or is it then "selling investments"?
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03-01-2014, 11:04 AM
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#17
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2007
Location: Independence
Posts: 7,298
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And once again, those who live off rental property income get marginalized....
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03-01-2014, 11:31 AM
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#18
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gone traveling
Join Date: Apr 2009
Location: Eastern PA
Posts: 3,851
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Quote:
Originally Posted by H2ODude
...For some strange reason, as a MF investor, as a matter of habit I've always reinvested dividends and cap gain distributions rather than take the cash. That goes for bond interest on those funds as well. Reason? Makes it easier to see what a fund had done for me over the life I've held it. As a result, if I need to replenish the cash (income) bucket I have to sell stuff. I get the distinct impression that I may be one of the few around here who does that...
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I/wife do the same thing, for the same reason; you are not alone ...
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03-01-2014, 11:37 AM
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#19
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Thinks s/he gets paid by the post
Join Date: Oct 2008
Posts: 1,608
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1) 100%
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03-01-2014, 11:53 AM
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#20
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2009
Posts: 6,695
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Quote:
Originally Posted by Htown Harry
On this last point, it seems to me that for most of us there are four financial phases to ER income:
1. prior to 59-1/2
2. 59 to 62 (or whenever one starts social security payments)
3. 62 to 70-1/2
4. After 70-1/2, when RMDs kick in
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Similar to whenever someone starts collecting SS, might there be a similar break point for when someone starts collecting a pension? Because I left my job prior to turning 55, I can't start collecting my pension, albeit a frozen one, until I turn 65. Then there is the pittance of the "cash-balance" program which replaced the (frozen) pension. I think I can start cashing that out when I turn 55 but I am not sure.
__________________
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.
"I want my money working for me instead of me working for my money!"
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