Investing in Retirement

[pjigar]

OP,

Adjust your stock allocations according to your risk tolerance. Risk tolerance = Ability to NOT hit the "sell" button when portfolio loose over 50% of paper price. You can't "make up" for your financial mistakes after you retire i.e What would you do if your "opportunistically aggressive" investing results do not repeat in future? Adjust your AA which will let you NOT worry about the portfolio in ANY market condition. After that just relax and KNOW that you probably will not run out of money if you keep your (inflation-adjusted) expenses to the level you say they are.

 

[stephenson]

Philly17,

You’ve won the savings game - you probably know mist of what others have offered, here.

At your age, imo, the only thing that matters is whether you are READY to NOT be at work, NOT be a part of a work team, etc.

Pulling the plug makes one feel free - but, some do this too early, and some too late.

 

[freddyw]

With the substantial retirement portfolio you have amassed and the fact that you no longer have that "fire in the belly" needed for a professional sales career, you are in a great position to make a change in your life. I had a very similar situation to yours when I pulled the trigger and have not regretted doing so one bit. As others have wisely stated, very few folks have regretted retiring early rather they regret they didn't do it sooner given their circumstances.

My suggestion is that you put away a portion of your portfolio in no risk investments to carry you through if the market were to take a significant downturn thus allowing you to weather a long term "storm" without having to withdraw monies from securities. With the remainder, select an AA that allows you to comfortably sleep at night (very important to the mental health aspect of your retirement) and stick to your plan. Replenish the no risk bucket as needed to maintain a comfortable buffer of risk avoidance over your retirement. Trust that you are in a very good financial position because you are! Enjoy your retirement because you earned every penny of it and now time is what you have to capitalize on not financial gain. Good luck.

 

[Markola]

Though this is not as risky to us as it seems since the dividends are probably about twice our living expenses.

Wow! Talk about set-it-and-forget-it. You’ve built a financial fortress. Enjoy!

 

[tdv2]

I'm 60/40 since fire'd 3 years ago. I have been diligent about maintaining my allocation and exposure to asset classes of my choosing. Mostly low cost broad market indexes. I rebalanced into the pain in March 20' and sold off equities on the ride up in the second half of last year. Also raised some cash for a big purchase by selling equities recently while holding my AA to within a point or two. A part of me wants to reduce my equity exposure by another 10% and go 50/50 (sort of a won the game thought process)....100% of our funds are for DW and me to enjoy in retirement. Withdrawal rate in 2020 was less than 2%. Ratcheting it up to 3% this year I expect.

 

[YVRRocketSurgery]

My portfolio is close to a 50:50 split between taxable accounts and retirement accounts. The taxable account is primarily dividend growth stocks while the retirement accounts are primarily equity/bond index funds. I'm in the camp that investing in retirement is different than before retirement because the challenges are different.

I'm trying to address different types of risks the following way:
Investment risk (returns and sequence of returns)
- Start with a larger nest egg with buffer so I'm not dependent on high returns.
- Increase fixed income allocation in my retirement accounts leading into and early into my retirement.
- Being flexible on my spend so that during down years, I don't have to draw as much from my accounts
Inflation risk
- The dividend stocks I hold have good track records in increasing their dividends annually (the great recession and covid being exceptions)
- Keeping a minimum 60% equity allocation in my retirement accounts
Longevity risk
- My preference is to not touch the capital in my taxable account and just let it churn out dividends.
- I'm going to consider converting some of my fixed income to an annuity in my mid-70's.
- I'm not dependent on government benefits in my calculations
Spending shock risks
- Being flexible on my spend (while also having upper and lower bands to try to maintain some consistency)
- Building up a small contingency fund
- Having access to a line of credit for situations exceeding my contingency fund
Declining cognitive ability risk
- Annuity consideration for a simple, consistent income stream
- Use all-in-one ETF's

I can appreciate that some people don't love the dividend approach and annuities but it's just the hybrid strategy I'm comfortable with and it's kind of working for me so far. I'm also ok that there's a possibility that I can end up with a large estate if markets over-cooperate but am ok with that and look to ramp up spending as conditions permit.

 

[firewhen]

Wow! Talk about set-it-and-forget-it. You’ve built a financial fortress. Enjoy!

The only downside is we do not qualify for ACA subsidy. Obviously a first world problem, but it sort of annoys me. Granted many would say we should not qualify anyway, even though we have no eaned income, we do have 6 figure passive income.

 

[indiajust]

i've had a motley fool subscription at least 20 years, so I have the vast majority of my funds in individual stocks. I dabble in country specific etf's, commodity etfs. I have REITS for cash in the Roth. MLP's on the taxable side for cash. No bonds or mutual funds currently. I have a mortgage fund that pays 10% and that covers most of my living expenses.

 

[ychuck46]

Took me even less time

[QUOTEWhen I quit it took me about 20 minutes to adjust. I never looked back and never regretted my decision.[/QUOTE]

It actually took me no time at all to adjust, since I had mentally checked out years before retiring.