UnThreaded | Threaded | Whole Thread (8) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: gdett2 Big red star, 1000 posts Old School Fool Ticker Guide Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75383  
Subject: Re: 60 and retired Date: 5/4/2013 2:14 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Elavats,

Thanks for you informative reply. To clarify my post, I am recently retired and have calculated that my retirement income is well above my expenses; the nest egg is frosting on the cake. Would you still recommend the same strategy?

Basically, yes.

Your investments need to be diversified. Different asset classes by size and geography. Have stock and bond assets.

It looks like your cash management will generally revolve around your retirement income.

I always maintain a cash cushion in our passbook savings to cover the shortfall between our income and expenses for 6 months plus some extra for emergencies. I also keep some cash in out taxable brokerage. We have near-cash in an IRA annuity that can provide money in 3 market days (21% of our portfolio). (In 8 years, we have not had to use that option.)

Our cash cushion serves 2 purposes: Cash for normal expenses and an emergency fund. We have had a number of big expenses(Replace heat pump, replace refrigerator, etc) that we could pay with a card then pay the balance without being required to sell stock.

pauleckler mentioned inflation in his response which is always a concern going forward. SSA and most government pensions are adjusted somewhat for inflation but effective inflation for a person can vary from that.

If you have excess funds after getting a cash cushion in place, use it to add to funds in your taxable account. (So far, we have lived entirely on our taxable brokerage account.)

Time will tell you how the income/expense balance is working and if you need to tap the IRA.

Since you mentioned IRA, I will assume traditional not Roth. If that is true, 10 years from now, in the year you turn 70 1/2, you will be taking Mandatory Required Distributions from your traditional IRAs (includes 401k/403b/457b accounts both traditional and Roth, but not Roth IRAs) RMDs normally amount to slightly under 4% each year. This can be used for spending or saving in your taxable account. Under current regs, it can be gifted directly to charity.

Based upon the numbers you provided, your taxable income will raise a little with the RMDs but it should not be significant. Depends on your other income, its tax status and amount. You can figure that as you get closer to 70.

I have been very(maybe excessively) conservative in our planning for expenses, savings, etc. That has served us very well through the market dips and side-ways trends. It is very reassuring to have a big chunk of money available to use if it is needed. One never knows what the future will bring.

Gene
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (8) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement