Transition: Accumulation to Distribution

[Geoffrey]

Perhaps this is simply another variation on the "just one more year" theme, but I am having a very difficult time adjusting to the idea of shifting from the accumulation phase to the distribution phase. There is a certain comfort factor that comes with knowing that my nest egg will increase by "x" amount every month. The thought of this suddenly ending is hard for me to "get my arms around." Logically, I know this is a necessary step . . . but emotionally it is very difficult. Has anyone else crossed this bridge, and if so, how did it play out for you?

 

[riskadverse]

I know exactly how you feel. I can't say that I've crossed the bridge though, and it has been a number of years.

The only solace I've found, is to periodically recalculate my net worth and adjust my investments to make sure that it doesn't go down. In my case that has meant ultra safe investments, and the possibility that inflation will ultimately ravage my nest egg. While this allocation is contrary to the general opinions, I have to go with what works for me. Also, there's nothing that requires me to continue my existing approach in the future, so I'm hoping that I'll be able to take a riskier approach when I'm more comfortable that risk in the market is lower. I've certainly taken on risk before when I've felt it was warranted.

 

[Moemg]

I also know how you feel . I was nervous making that plunge so I did it slowly . I went from full time to part time and then finally to one day a week . My net worth has taken a big hit this year but I'm enjoying retirement so much I'd rather cut back then return to work .

 

[dex]

A poster with the name "afraid to retire" posted the same issues - those threads might help.

 

[Independent]

Perhaps this is simply another variation on the "just one more year" theme, but I am having a very difficult time adjusting to the idea of shifting from the accumulation phase to the distribution phase. There is a certain comfort factor that comes with knowing that my nest egg will increase by "x" amount every month. The thought of this suddenly ending is hard for me to "get my arms around." Logically, I know this is a necessary step . . . but emotionally it is very difficult. Has anyone else crossed this bridge, and if so, how did it play out for you?

I'll agree that it's emotionally difficult to go from building up to tearing down. It's also emotionally difficult to keep going to work and putting up with the same old #### when you know you could be doing other things (even if "other things" include sitting on the deck and posting on an internet forum).

I'd say keep working as long as the emotional rewards of working outweigh the emotional costs. Since (it appears) you've already crossed the financial line, now you simply do whichever feels better. Don't feel like you have to retire just because you can afford to retire.

 

[racy]

I have the same fear about the transition. Here's my current thinking: when I retire I'll put 50% of my savings into Vanguard Managed Payout, Growth Fund, and put 50% in Vanguard Total Bond Market. With Social Security I'm hoping that I'll only need 4% from TBM; on average total return has been 6-7%, so the there's something to keep up with inflation. MPO Growth fund yields pays around 3% and is structured to grow. Bottomline, I'm trying to get income while still enjoying growth.

 

[blessed]

I retired 2 years ago, and I have enjoyed the less in taxes I am paying and I really saved on not having to spend so much on gas The market will recover and I am not going to spend all the money now anyway, I have about 1 year in cash reserves and with a diversified portfolio you will be so much more ahead than .01 return from treasuries. Relax and go our and watch your grass not grow this winter

 

[bigla]

5 years ago I did it and hadn't thought much about it as the market turned around in March 03' and our portfolio was going up. Seeing our IRA's losing so much in past few weeks is causing me to have similar anxieties as you are describing. From what I have read here and at other forums, a down market is not the best time to retire but everyone has to make their own decisions about what will be best for themselves.
Good Luck
Larry

 

[audreyh1]

OK - It's not just a matter of making a transition.

The things you look forward to doing in retirement have to overcome the reduced financial security of retiring. If you really aren't looking forward to retiring, but are content with your working life, the financial fears/risks probably loom large.

You should take a step back and think about what you really want for the rest of your life.

I found the idea of living off my investments quite intimidating, but I had other things I wanted to do (than my career), so I took the leap. It still took me two years after retiring to really get used to the whole "no salary" thing (the same time period that I was cheering every weekday morning for not having to commute). Then I quit thinking about it at all - it had become a non-issue.

Audrey