Here's a piece I wrote for my wife...

[Cb]

...I expect to retire very early next year, and my wife plans on hanging it up a year or so later (she's got a decent shot at a pretty nice separation package when she hits a certain age + service sum). At any rate, I've tried to explain SWR's and portfolio diversification, etc, etc, for some time now but she's got precious little interest, and trusts me to look after trivial matters such as these.

I didn't feel too comfortable with that, and wanted her to have a fair understanding of "the plan" before hanging it up at work, so I took a bit of 3:1 time and wrote up the following paper and had her read it during a recent car trip. As noted a the end of my FIRE Manifesto, I still owe her a section on health coverage.

I figured I'd share this with you folks in case any of you (or your SO's) might benefit from it, and I'd also welcome any thoughts, comments, critique...

http://www.geocities.com/gnobsfolder/RE_plan.doc

...<edit>or here if that doesn't work:

http://gnobility.com/MTTF/RE_plan.doc

Cb 

 

[justin]

Great piece of work! I'll have to put something like that together for my wife. In 10-20 years...

I like the Jonathan Clements quote. I borrowed it and sent it to some fellow investors here at work. I'm hoping it will prove persuasive, or at least start a dialogue about the values of index investing.

Also, hope the wife didn't hit you too hard when she got to the part where you note how much of a bacon lover she is!!

 

[dandan14]

Excellent! I like it (and saved it for later reference).

Good job.

 

[Patrick]

Excellent job! How did you get the results for the "Fifteen Equity Portfolios" chart?

Thanks,

Patrick

 

[Texas Proud]

Too many people have read it and the site said you have exceeded your allocated download

Oh well, maybe latter

 

[Cb]

I'll move it to another server in a bit.

The 15 Portfolio's chart was taken from a paper on asset allocation by Roger Gibson...you might start here:

http://www.financial-planning.com/chat/gibson.html

I was just trying to give my wife a painless primer on diversification in that section

Cb

 

[Cb]

I've added it to another server:

http://gnobility.com/MTTF/RE_plan.doc

Thanks for your kind remarks, but the credit for the "heavy lifting" really belongs to folks like Intercst, Dory36, raddr, SG, Ben and others - I've only tried to summarize what I've learned from those folks and many others.

Cb

 

[Sheryl]

That was a nice, thorough document - I don't think I can get my SO to read anything over two pages though.

No matter what detailed plan I show him, he just glances at it then says, we need more money, we can't quit yet.

Sigh.

 

[TromboneAl]

Wow, really nice, clear summary.

You say "Regularly rebalancing our portfolio, thereby obtaining a small increase in returns," but I'd think that the return expected from a particular asset allocation assumes that it will be rebalanced periodically.

 

[Cb]

Wow, really nice, clear summary.

You say "Regularly rebalancing our portfolio, thereby obtaining a small increase in returns," but I'd think that the return expected from a particular asset allocation assumes that it will be rebalanced periodically.

Yeah...what I was referring to was the 0.2-0.5% rebalancing "bonus" Bernstein writes about, above the simple mathematical average of 2 indexes. After we're both retired and roll our 401K's over to IRA's we'll be able to slice & dice to a somewhat greater extent, perhaps grabbing another tenth or two with a "barbell portfolio" on the domestic side, and something similar internationally. I think that'll be worthwhile effort at that point, but our current investment options are such that I make use of our employers lowest cost S&P500-ish offerings, then augment them with extended market indexes & other indexes in our IRA's.

Say Al, go up a couple levels in my website & check out our cover of "Killer Joe"...that's some guitarist, innit?

Cb

 

[Cb]

That was a nice, thorough document -  I don't think I can get my SO to read anything over two pages though.

No matter what detailed plan I show him, he just glances at it then says,  we need more money, we can't quit yet. 

Sigh.

LOL! That's why I had to wait for a long car trip, just after she finished her (first) novel! Her only comment was, "I liked the part about the commodities...there was a guy on the finance talk show on WLW the other day who said something about how oil was going to go up and commodities might be a good investment now..."

Cb

 

[TromboneAl]

Say Al, go up a couple levels in my website & check out our cover of "Killer Joe"...that's some guitarist, innit?

Yeah, nice group! I liked your drumming, too. Is that a plane you are posing under? If so, check out a publicity shot from a group I was in:

 

[Cb]

Yeah, we played a benefit dinner at a local airport a while back during an airshow weekend. They had a handful of WWII planes scattered around a large hangar (can you say "reverb"?) and we opened for an excellent big band in period clothing doing something of a variety show with a lot of Glen Miller & Andrews Sisters tunes & skits. They were a bit of a change of pace from our beatnik blues & acid jazz...

Are you in a band now?

Cb

 

[HFWR]

Have the acid part down, but have yet to figure out the jazz part!

Then again, acid makes EVERYTHING sound like jazz...

Not currently gigging, because it's too much like work, but mostly played classic rock and outlaw country. On acoustic, John Prine, Loudin Wainwright, Eagles, plus some newer stuff like Pearl Jam.

"Dear Abby, dear Abby, well I never thought,
That me and my girlfriend would ever get caught.
We were sittin' in the backseat just shootin' the breeze,
With her hair up in curlers, and her pants to her knees.
Signed, Just Married..."

 

[nuisance]

That was a great read. I've got some time to go, but hopefully I'll make it to your position some day.

Tim

 

[ShokWaveRider]

Great Piece of Work. Sold Me. I am looking forward to the health care Section to come....

SWR

 

[TromboneAl]

Are you in a band now?

Not really. I'm substituting in a number of bands, and playing at jam sessions. I'm focusing on my piano playing, and I'm starting to get piano gigs.

Looks like we've got a good start on an early-retirement.org forum band!

 

[Dawg52]

Not really.  I'm substituting in a number of bands, and playing at jam sessions.   I'm focusing on my piano playing, and I'm starting to get piano gigs.

Looks like we've got a good start on an early-retirement.org forum band!

I bet that would be a fun way to earn a few bucks in retirement. A good friend of mine plays in a country/rock band and also plays in a 2 man band. They are good. Of course he has a full time day job so I would be wore out with his schedule. I wonder how much he actually pockets with his band? He is always buying a new amp, guitar or something new. 

 

[sgeeeee]

. . .
Looks like we've got a good start on an early-retirement.org forum band!

Yes but the band uniforms will have to be sleevless to accomodate the armpit section.

 

[greg]

True story (really): Last Thursday nite (HGTV nite) towards the end of the 'How divine' show, I started to make noises with my armpit. Martha, of course, knew something was coming soon, so she ignored me. The noises were very feeble; I would have been embarassed if I was 12 years old. She finally said "What are you doing?" I gave her my best impish look , removed the hand, swung it in an arc toward her face, and said "It needs a better seal, could you lick it?" Her response: "That's it. I'm going to bed. Watch what ever you want."

--Greg

 

[BUM]

Yes but the band uniforms will have to be sleevless to accomodate the armpit section.

Its a constitutional amendment!

The right to bare arms!

 

[LiveWell]

Great summary! Thanks very much for sharing that Cb, it is really well written. It solidified some of the things that have been bouncing around in my head.

-LiveWell

 

[wabmester]

Her only comment was, "I liked the part about the commodities...there was a guy on the finance talk show on WLW the other day who said something about how oil was going to go up and commodities might be a good investment now..."

That's more or less what I hear from anybody I give the SWR and asset allocation spiel to. Or it's more along the lines of "OK, but what do you think the next hot sector will be?"

So, if you're trying to persuade somebody, I've found a couple of points that seem to hit home:

1) Demystify the stock market. I think the best way to do this is to show GDP growth vs stock market cap growth. Talk about how the stock market is just a proxy for the economy (long-term weighing machine vs short-term voting machine), and while you can't really predict how economies will grow, it's a hell of a lot easier than predicting how investors will vote in the short-term.

2) Show that the standard practice of chasing hot money is hazardous to your financial health. One of my favorite stats is that while the market returned an average of 13% a year in the last 20 years, the average stock fund investor made only 3.7% a year (2004 Dalbar study).

And then tell them what the next hot sector will be.

 

[obryanjf]

CB, Really good summary. My questions was where did the flexible withdrawl formulas come from. I've been playing with some strategies as advocated on analyzenow and sensible-withdrawls but I do not think they are as formalized as your take.

Again good summary. I will be trying to spoon feed my DS the paper to get her to a higher level.

job

 

[unclemick]

For the SO: "Do Something, Just Stand There."

Should I croak - follow the instruction sheet with the Will - let Vanguard continue to auto deduct the preprogramed balanced index to checking:

GO spend the money - AND DO NOT CHANGE ANYTHING!

No matter what - "Stay the course."

Not at all interested in investments - she understands spend the money and how to balance a checkbook.