Fixed income question

[Dtail]

Yep. I agree. And if rates go higher even better to just use that?

Yes I would agree and this way hopefully mr market continues for you overall.

 

[corn18]

I have taken a weird approach to bridging to SS and determining a safe spend rate. Well, maybe not weird, but it works for me.

I picked an AA that I am comfortable with: 60/40. Now all my money is fungible. That is, I don't need buckets, just a 60/40 portfolio. Plan to retire @ 55.

55-70 bridge years

$44k COLA pension
$53k SS bridge
?? SWR

70+

$45k COLA pension (survivor benefits paid off)
$53k SS
SWR

The SWR amount is what I calculate. That is what is left of my portfolio @ age 70 after I get done bridging to SS. Then I take 4% of that and add it to my retirement income.

This is what it looks like:

55-70 bridge years

$44k COLA pension
$53k SS bridge
$26k SWR

70+

$45k COLA pension (survivor benefits paid off)
$53k SS
$26k SWR

To fund the bridge and SWR, I'll just withdraw from my 60/40 portfolio per iORP and rebalance as required to stay at 60/40. Easy Peasy. The 40% bit of my portfolio @ retirement is 7 years of the SS bridge and SWR amount, so that seems about right for my risk tolerance. Once I hit 70 and start drawing SS, the 40% is like a gozillion years of the SWR amount, so I might invest for my heirs at that point. Or spend more.

 

[OldShooter]

... Eeeghads! I have a lot of slop in there.

I think that's the answer. When I look at the money we draw from investments, in any given year somewhere between a quarter and 40% goes to charitable spending and international travel. That's slop, to use your word. We too could cut back quite a bit if the road gets really bumpy. My intent in posting was simply to remind the OP that his/her travel down the road of retirement is unlikely to be smooth despite the very smooth numbers being discussed in the thread.

There is an understandable tendency here to extrapolate carefully from past events and to project numbers in very precise detail far into the future. How do you know that economists have a sense of humor? They use decimal points.

 

[corn18]

I think that's the answer. When I look at the money we draw from investments, in any given year somewhere between a quarter and 40% goes to charitable spending and international travel. That's slop, to use your word. We too could cut back quite a bit if the road gets really bumpy. My intent in posting was simply to remind the OP that his/her travel down the road of retirement is unlikely to be smooth despite the very smooth numbers being discussed in the thread.

There is an understandable tendency here to extrapolate carefully from past events and to project numbers in very precise detail far into the future. How do you know that economists have a sense of humor? They use decimal points.

Ok, where's the like button? Great post.

 

[pompanobeach]

I think that's the answer. When I look at the money we draw from investments, in any given year somewhere between a quarter and 40% goes to charitable spending and international travel. That's slop, to use your word. We too could cut back quite a bit if the road gets really bumpy. My intent in posting was simply to remind the OP that his/her travel down the road of retirement is unlikely to be smooth despite the very smooth numbers being discussed in the thread.

There is an understandable tendency here to extrapolate carefully from past events and to project numbers in very precise detail far into the future. How do you know that economists have a sense of humor? They use decimal points.

Well said. Thank you

 

[imoldernu]

Has been fun reading this thread. Brought on a feeling of deja vu... from a different time, a different ( much lower) financial situation, but essentially the same question. What to do?...

No recommendations as to the $$$ question, but the decision process.

30 years ago age 53... retire or go back to w*rk?.... 9 years to SS @ age 62.

Process:
- refine actual expenses in detail, spread sheets
- make comfortable changes as needed to fit
- three scenarios... optimum, nominal, austerity
- peace of mind understanding that change could happen and nothing is written in stone.
- adjust plan as needed, always prepared.

Result... only minor changes along the way. Pluses and minuses averaged out, and it all worked out fine. Healthcare plan cost was the variable... We used savings to cover until medicare kicked in.

Best wishes for a happy retirement...

 

[Ed B]

I have taken a weird approach to bridging to SS and determining a safe spend rate. Well, maybe not weird, but it works for me.

I picked an AA that I am comfortable with: 60/40. Now all my money is fungible. That is, I don't need buckets, just a 60/40 portfolio. Plan to retire @ 55.

55-70 bridge years

$44k COLA pension
$53k SS bridge
?? SWR

70+

$45k COLA pension (survivor benefits paid off)
$53k SS
SWR
.

I am not sure this is about buckets vs AA. The fixed income part, whether it is bonds, CDs, a Stable Value Fund, or a combination thereof is where I assume my yearly distribution will come from but that will be s year to year decision. One way to rebalance is to fund a given year's distribution by selling equities in good market years to return to the 60/40 or 70/30 AA. But during down years I would take from the Bond or CD side. In sideways years we could take from both and in all cases dividends are also part of this process.

Contrary to how I worded a thread I started a couple of weeks ago, I am seeing this as less about buckets vs AA+rebalancing. They are kind of different sides of the same coin. Most of us have an AA whether we think in terms of buckets, envelopes, mason jars or just generic investments.

 

[ncbill]

Ok. Good. I feel a little better. Yes, the pension does help my decision....that’s why I want to retire before contract changes come through!

Sure, retire from your current employer to lock-in that COLA pension.

But have you thought about working part-time or contract work until you start SS?

Even $1,000/month would help with meeting your goals.

 

[pompanobeach]

Sure, retire from your current employer to lock-in that COLA pension.



But have you thought about working part-time or contract work until you start SS?



$1K-$2K/month would go a long way towards meeting your goals.

Thanks ncbill. Actually, I have. But I want to take 6 months or so off before I consider it. You are correct. Making up the $2k a month on a part time job may not be that difficult.

 

[pompanobeach]

Has been fun reading this thread. Brought on a feeling of deja vu... from a different time, a different ( much lower) financial situation, but essentially the same question. What to do?...



No recommendations as to the $$$ question, but the decision process.



30 years ago age 53... retire or go back to w*rk?.... 9 years to SS @ age 62.



Process:

- refine actual expenses in detail, spread sheets

- make comfortable changes as needed to fit

- three scenarios... optimum, nominal, austerity

- peace of mind understanding that change could happen and nothing is written in stone.

- adjust plan as needed, always prepared.



Result... only minor changes along the way. Pluses and minuses averaged out, and it all worked out fine. Healthcare plan cost was the variable... We used savings to cover until medicare kicked in.



Best wishes for a happy retirement...

Imoldernu. I’m glad it all work d out and that even though it’s thirty years later, nothing has changed as far as concerns go! Keep enjoying retirement!

 

[pompanobeach]

Yes I would agree and this way hopefully mr market continues for you overall.

[emoji106]

 

[deserat]

For me personally, I would just take $140K from your stash and put it in cash investments (CD's, MM) and withdraw monthly or yearly from that for the next 7 years. All done!!

Ditto!!!!

 

[Floridatennisplayer]

I’m a keep it simple guy. I would throw it in CD’s or MM fund, get an easy no stress part time job at Home Depot and enjoy.

 

[Mulligan]

Thank you Koolah. Yes, I have very good life benefits for Health Insurance. The $7k covers all my expenses plus some cushion. It includes small mortgages on two condos. I have CT condo and FL comdo. If figure if things get messy, I can always just sell one of the condos. Plus, my pension does have a 2%-7% annual COLA depending on inflation, etc..

I know the $350k isn’t a big number but I will be making a minimum of $5k per month, plus whatever interest I can pull in from my $350k per month for 7 years until I start collecting the $2k from my SS.

It’s kind of simple but it should work...right? Do you think I am making a mistake?

Pompano, I think the most important thing is you have just shown ways to cut costs if things dont work your way. You got more cushion its just in the condos. My after tax pension is just a few hundred dollars monthly more than yours. And I never even spend it all. I didnt retire with a lot of money 8 years ago, and the money is just starting to stack up and just gets reinvested. I got the cola thing too, and it really helps.
It just boils down to expenses. I am retired and have a mortgage and pay rack rate for health insurance too. I am not a traveling jettsetter, but paid for GF and I to a nice week trip to Mexico for a week and Vegas for a week, and have the next one in October paid for already (3 weeks a year is enough for me as I have too much golfing to do). You arent heading for sleeping under and overpass in your later years, I am sure...Best of luck!

 

[kimcdougc]

Keep posting all. I am learning a lot and enjoying this thread.