Question On Retiring & Living Off Investments

[brewer12345]

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Originally Posted by FIREdreamer First time I heard of the "norwegian widow" was from Unclemick. Don't know if he made her up or got it from another source. My understanding (Unclemick will correct me if I'm wrong) is that the Norwegian widow is a romanticized personalization of the good ol' days dividend investor. Market's up, market's down, no matter, you buy and hold dividend-paying investments and the dividend check arrives in your mailbox like clockwork. You live off the dividends and leave the working capital untouched. Off course nowadays the Norwegian widow might be invested in Wellesley and her dividends might be electronically rolled into her money market fund. She doesn't have to wait by the mailbox anymore when it's -30F outside.

My understanding is that the widow is based on a real person that Uncle knew in his *ahem* younger days who did indeed wait for that dividend check. Or maybe she was a streetwalker...

[Texarkandy]

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Originally Posted by brewer12345 Hogwash. What you really want to do is have it all omnverted to silver certificates, bury them in a coffee can in the backyard, and dig up only what you need each month. Safe as houses, as the British say.

Or maybe - (dare i say it?) - a variable annuity!


The best thing to do with your money is to diversify. Now, what we're going to do is take half of it and bury it in an old pickle jar in the backyard. The other half, we'll take to the dog races and bet on the one who does his 'business' before the race." Jeff Foxworthy

[Animorph]

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Originally Posted by haha That works very well as long as you foresee the downturns. I wold find it very nerve-wracking. Ha

Hopefully not, though I did hit this one. The idea is to pull out cash when the market is in line with, or higher than, my retirement expectations. So if the market starts on target and then jumps 30% in one year you can take out 3 or more years of living expenses. No guessing involved.

I went ahead and started with a pile of cash just to cover the first few years of retirement and try to avoid the worst case of a downturn just after retirement. And I was expecting maybe 20% down, but certainly not 50%. Even if the market went up, the cost of staying in cash was fairly small IF you went ahead and spent it down to zero before selling equities.

If the market is higher than my retirement projections I'll take out some cash. If it is lower than projections I'll spend the cash first. If I don't have any cash I'll sell equities as needed (more like once a month than once a year).

I didn't want to always have 3 or more years worth of cash sitting there over 30 years doing virtually nothing. I'd rather sell equities as needed. I'm just trying to smooth things out a bit with the cash scheme.