Quantum Sufficit
Recycles dryer sheets
- Joined
- Jan 24, 2011
- Messages
- 128
I would like to run this by the crowd here. I currently have a diversified portfolio of 65% equities/35% total bond market type bonds. I am 46 and want to pull the plug at 53. My current portfolio size is 1.2M. I will not have any pensions and healthcare will be all on us (wife and I). Home is worth 400k and is paid off. Office is worth at least 150k and is paid off. This plan below will not likely receive a warm reception here but here goes:
I hope to save at least 150k annually for the next 6 years. Most of the 1.2M is after tax money currently invested in a very tax efficient "boglehead" style portfolio of index funds as above. ok....here is the plan.
By the time I reach 53, I would like to have a 2M dollar portfolio not including any of the real estate. At retirement (or as soon as I hit 2M), I will liquidate the portfolio....and ...invest it in the Vanguard Long term corporate portfolio.
Right now, tax considerations are paramount for me and maybe I am greedy but I would like a shot at a bit more than 2M, so I am keeping the above boglehead portfolio. My annual expenses all in are about 50k including just about everything I can think of as well as 2 nice vacations a year.
I would like to see the NAV of the Long corporate fund back under 10 dollars a share. If that is the case and using 2M and a 9.50 nav we have
2M/9.5 = 210,526 shares x 0.044 dividend = 9,263 per month dividend
This dividend payout has decreased with falling interest rates but that is the current dividend and I would think it possible to fall further but not by much further.
How many of you have a 5% withdrawal rate that yields more than 2x annual expenses without touching principle. Nonspent dividends are reinvested at the end of the month into more shares of the fund. If need be, we have no heirs I would tap a reverse mortgage at age 62. This does not include any social security and does not include sale of office building near retirement.
If everyone clings to 4% as the absolute golden rule (with inflation adjustment) what is wrong with 5% dividend rate, no use of principle, with reinvestment of excess as an inflation hedge? I would never consider an annuity in these low interest rate times. I would be giving away my principle for the same payout rate of about 5% (I ran the numbers).
I considered abandoning the 65%/35% portfolio now but the NAV of the bond fund is too high at 10.50 to dump 1.2 million into the fund right now. If it was 9.50, I would do it today and just keep buying shares of this fund until retirement accumulating at a rate of 150k/9.50= 15,800 shares annual. I know this seems rather simplistic and naive to people but there are plenty of retires who live on CD income (good luck with that now) and are risk averse, avoiding stocks completely. I have seen 13 years of stocks going nowhere.
What if the sequence of returns is similar (or worse) in 2019? Would I want to take 4% of a declining portfolio-I know it would make me very nervous to wonder whether this black swan was right around the corner. There are risks everywhere I know this but this seems as good a plan as any other.
Let the flames begin!
I hope to save at least 150k annually for the next 6 years. Most of the 1.2M is after tax money currently invested in a very tax efficient "boglehead" style portfolio of index funds as above. ok....here is the plan.
By the time I reach 53, I would like to have a 2M dollar portfolio not including any of the real estate. At retirement (or as soon as I hit 2M), I will liquidate the portfolio....and ...invest it in the Vanguard Long term corporate portfolio.
Right now, tax considerations are paramount for me and maybe I am greedy but I would like a shot at a bit more than 2M, so I am keeping the above boglehead portfolio. My annual expenses all in are about 50k including just about everything I can think of as well as 2 nice vacations a year.
I would like to see the NAV of the Long corporate fund back under 10 dollars a share. If that is the case and using 2M and a 9.50 nav we have
2M/9.5 = 210,526 shares x 0.044 dividend = 9,263 per month dividend
This dividend payout has decreased with falling interest rates but that is the current dividend and I would think it possible to fall further but not by much further.
How many of you have a 5% withdrawal rate that yields more than 2x annual expenses without touching principle. Nonspent dividends are reinvested at the end of the month into more shares of the fund. If need be, we have no heirs I would tap a reverse mortgage at age 62. This does not include any social security and does not include sale of office building near retirement.
If everyone clings to 4% as the absolute golden rule (with inflation adjustment) what is wrong with 5% dividend rate, no use of principle, with reinvestment of excess as an inflation hedge? I would never consider an annuity in these low interest rate times. I would be giving away my principle for the same payout rate of about 5% (I ran the numbers).
I considered abandoning the 65%/35% portfolio now but the NAV of the bond fund is too high at 10.50 to dump 1.2 million into the fund right now. If it was 9.50, I would do it today and just keep buying shares of this fund until retirement accumulating at a rate of 150k/9.50= 15,800 shares annual. I know this seems rather simplistic and naive to people but there are plenty of retires who live on CD income (good luck with that now) and are risk averse, avoiding stocks completely. I have seen 13 years of stocks going nowhere.
What if the sequence of returns is similar (or worse) in 2019? Would I want to take 4% of a declining portfolio-I know it would make me very nervous to wonder whether this black swan was right around the corner. There are risks everywhere I know this but this seems as good a plan as any other.
Let the flames begin!