OK, I want an "Other" choice now!
I went with this one:
Income generation is my primary goal. I am also hoping for some capital appreciation for the first X years. (This implies that expected portfolio yield exceeds income requirements early in retirement; this portfolio is probably large.)
Or, in other words, "You want to work how long?"I'm working, husband is retired, I expect a (somewhat) COLA'd* pension. Our pensions will be enough to cover our expenses, if life goes on as it has; but we know perfectly well that it won't. Therefore, I want enough extra to cover LTC for husband and eventually, for me. Plus hire other people to do stuff that we now do for ourselves. So, I need an option for "Has pension; also needs to preserve capital for first part of retirement; needs to generate income/have enough capital to spend down for LTC part of retirement."
A.
*As I've posted many times before, the COLA is pegged to the CPI, a woefully inadequate inflation measure. Still, it's better than no COLA at all.
If I may . . .Thanks Audrey. I still don't understand how the concept of SWR is in conflict with the concepts in the poll. Maybe I'm stupid or something....
The SWR method does not rely on income from a portfolio. It is based on the total return (both income AND cap gains together) for each given AA over several decades based on historical data.Thanks Audrey. I still don't understand how the concept of SWR is in conflict with the concepts in the poll. Maybe I'm stupid or something....
Yep. It's also known as a Total Return approach.Thanks for the explanation Audrey. In other words, people who focus only on SWR alone will not care whether the SWR comes from dividends, interest or capital. Now I get it.
Plan A is to maintain the real value of my portfolio indefinitely and live of less than 100% of the income.
Number 1 is the best fit.
While this is a valid plan very few can retire early with such an approach.
DD
I follow this method and agree to a degree but...The SWR method does not rely on income from a portfolio. It is based on the total return (both income AND cap gains together) for each given AA over several decades based on historical data.
And the SWR method does not seek to preserve principal, but instead expects to spend principal down in some cases, even if temporarily. Instead you pick an SWR and AA that has a high chance of the portfolio not going to 0 before a certain number of decades has passed.
I don't actually agree with the above. I suspect many of us choose this approach as a reasonable way to get at a safe income stream over the course of retirement. I also suspect that many of us (I include myself in this group) are prepared to adjust our approach, scaling back if necessary if we find ourselves on a course that takes us far toward portfolio exhaustion. For me that is one of those artsy "I will know it when I see it situations." I am not pre-planning a specific point that I would start scaling back and am not worried that I need to.Note that this also means - "I don't care about capital preservation, nor do I care what income is generated by the portfolio."