This Q is targeted at those FIREd retirees who are 15 or more years out from collection of annuity, social security , and do not have a pension at all coming in today and will not have a sizable pension way out in time.. Ie, You rely on what assets you have right now.
Are you doing anything differently now that the market has corrected? Yes, I changed allocation last year to increase cash as I was concerned the market would make a major correction. However, I also have significant Real Estate and passive business interest with absolutely no debt.
What is your source of living expenses? Wife and I are covering 100% of our budget with income from part-time consulting, passive business and loans so we don’t need to tap the Nest Egg. We figured might as well make some money part-time while we can. Thus, the withdrawal rate on the investable assets is zero. Also, I have my kids college education funds fully funded and very conservatively invested so no current or future drain on the budget. It's nice to give them a debt free start to life.
Are you selling anything. or spending principle (cash) or only living on dividend and interest income. Re-allocated in 2015 and use very little of the dividends.
Any other sources of passive ( you're retired right) income such as real estate or hobby income? Yes, consulting, passive business and loan income.
At what market level from the top do you start to be very concerned about capital preservation in the short run ? Down 10-20-30-50-66 percent etc
I always concerned about capital preservation but when get the cyclical economic correction that causes a 30+% drop in the market coupled with a slowdown in business, etc. that is a double whammy. A recession in the early years of retirement makes it more difficult to generate part-time work income one might want to help offset the loss in capital due to the market correction. So, as indicated above I felt it necessary to lighten up until I see the volatility normalize.
What's your asset allocation ? On a total NW basis, I am 20% Equities, 15% Bonds, 30% Cash and 35% real estate.
How many years of "cash" do you need to feel secure - for living expenses
Notwithstanding the above asset allocation, I keep 2 years of living expenses in cash in case things get tight. Probably overkill but, I have lived thru a couple recessions and I like having solid liquidity when the **** hits the fan. There will still be some income from dividends, passive business and loans, so two years really extends to more like 4 to 5 years and would get me thru the correction. Also, I have my kids college education funds fully funded and very conservatively invested so no current or future drain on the budget. Again, it’s niice to give them a debt free start to life.
Do u have dry powder to throw at the market if so what percent of portfolio ? 30% or more if I were to sell some bond holdings in favor of stocks.
