New to this site - 63, FI, Plan to retire in a couple years

[stedmakr]

Hi,
As stated above I'm 2 to 4 years from retirement and hope to gain insight from this site for the move from the accumulation to distribution phase. I also hope to gain non-financial early retirement insights.

I am fortunate that I still have some fire in my belly when I go to work everyday but more important to me is that I really enjoy my teammates at work. I love my job! My wife is already retired and that is what will drive this near term decision.

Financially our mantras have been to live within our means, develop a plan and stick to it and we buy and hold. I've never taken money out of our portfolio.

Upon retirement I will receive inflation adjusted define benefit pensions of $130K per year. We've never actually spent close to this much money in a year so I think we will do fine on the pension alone.

Annual contributions since we were in our mid-20s has allowed us to accumulate a portfolio that will (should we decide to tap it) provide annual withdrawal returns greater than my pension. Across our portfolio we are totally in indexes and our equity to fixed ratio is 80 / 20).

I think we are in a good place financially but fear the upcoming correction and I'm concerned that upon retirement its hard to recover from a financial mistake. We do not have a financial planner but do use an investment adviser who manages the portfolio in accordance with our AA model.

 

[wmc1000]

Were we in your situation where the pension will most likely be more than your projected expenses without the need for annual withdrawals we would stay the course and not worry about a correction occurring in the short term. However, having said that it is really how much a downturn would affect your mental feelings of security more than what is does to your actual NW. If it would cause sleepless nights then by all means adjust your AA to give you better peace of mind!

 

[VanWinkle]

You are an example of someone who has "won the game" and your asset allocation is only important from a peace of mind perspective. If you are losing sleep worried about a possible correction, then it would make sense to reduce your equities to a point where you can sleep at night. I am close to your age and have a 50/50 allocation to equities/bonds and cash. No one would consider you overly conservative if you reduced an 80/20 portfolio at your age. Just remember that you could be 100% equities with your ability to handle risk from an income standpoint. Do what reduces worries, the effect on health is not worth it.

VW

 

[pb4uski]

There are two schools of thought in your situation... one extreme is that since you don't need money from your portfolio to live on since your pension exceeds your spending that you should totally derisk and put that money only in safe investments.... the other extreme is that since your don't "need" that money that you can swing for the
fences and go with a high equity allocation.

If you have heirs, I would invest in an AA that they would have (probably high in equities) since in reality that will end up being their money. If you have no heirs, you need to start thinking about how you will spend or give away that money.

Given that you have plenty of money, I would suggest that you seriously consider changing course and retiring now.... you have no idea of how much time you have left and you can never get those two years of freedom back.

 

[Ronstar]

Welcome aboard, stedmakr! Sounds like you are financially set. I also suggest that you retire sooner rather than later. Your working may inhibit your wife's enjoyment of retirement. Maybe she wants to travel or do things together that can't be done while you're working. And besides - wouldn't you have more fun being retired and spending time with your wife rather than spending time with your teammates at work?

 

[brucethebroker]

Welcome, and well done!
Have you considered keeping more of your savings in cash? That way, instead of worrying about a market correction, you would welcome one as an opportunity to purchase great stocks at a discount.

As far as non-financial insight, consider what you would do it you suddenly did not love your job/co-workers. Many here, myself included, "loved" our jobs, until we didn't! And sometimes it comes out of the blue!

If that happened, and you were still driven to "do something", what would you like to do? You would not really need the "big money" which would allow you to work PT or pursue a "passion" type job. Now is the best time to think through that scenario.

 

[Golden sunsets]

We are a few years older, just retired, have roughly 20% more in cola'd defined benefit pensions and annuities than you and from the sounds of it around the same sized investment portfolio. Because we feel we've won the game, we have increased our spending so that we withdraw just shy of 1% of our portfolio to juice our spending and are maintaining an AA of 54/41/5. We will reduce the equity portion 1% per year until it reaches 50% and hold it there indefinitely. In a word SWAN. YMMV


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[Red Badger]

When I got to where I could choose between spending time with my work colleagues or my DW, I promptly said goodbye to the work crowd (I do meet up them for a few brewskies 1-2 times a month).

 

[joeea]

I am fortunate that I still have some fire in my belly when I go to work everyday but more important to me is that I really enjoy my teammates at work. I love my job! My wife is already retired and that is what will drive this near term decision.

I think we are in a good place financially but fear the upcoming correction and I'm concerned that upon retirement its hard to recover from a financial mistake. We do not have a financial planner but do use an investment adviser who manages the portfolio in accordance with our AA model.

I am retired but my wife is still working. She really loves her work and is terrific at it.

When I was nearing retirement my wife and I had lots of long talks. I wanted to make sure that she felt like she could work as long as she still enjoyed it. I would have plenty to do while she worked, and we'd have plenty of time to do couples things once she decided to retire.

I've tried to reinforce that sentiment several times since I retired. So far, so good.

If you really enjoy your work, sit down and discuss the situation with your spouse. You don't want to get to a point where you feel resentful or she feels guilty that you left an enjoyable and satisfying job just because she has already retired. Together, you'll decide what is best. Consider part-time work if available - sometimes that is the best of both worlds.

It sounds like you are financially secure. Well done!

But if you are really concerned about a correction, it would be worth a bit of time and a few dollars to contact a fee-only financial planner, and have them help you develop your financial plan. Having someone knowledgeable to bounce ideas around can be very comforting. And a good financial planner will help you think through your goals and how to achieve them, and have some ideas that wouldn't occur to you.

It appears that an 80/20 mix might be too equity-rich for you today. But talk that through with a professional and see what comes of it.

 

[mickeyd]

We do not have a financial planner but do use an investment adviser who manages the portfolio in accordance with our AA model.

Welcome here.

Consider cutting loose that "investment adviser" that you have attached to your stash. He is probably draining you of 1% or so of your assets ANNUALLY. You will soon be able to manage it all yourself with ease if you do as most of the folks here have done ~Do it yourself.


Follow what you learn here but remember what you paid for the advice.