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Author: RetiredVermonter Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 1488  
Subject: Re: Others with un-retirement? Your ratio? Date: 11/11/2007 4:22 AM
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Imag:

Let's discuss some of what you posted.

1. IF you retired in 1977 with $1,000,000 (which was worth considerably more than than today, so a lot of money) but had it all in bonds..and took out 6% per year, you'd be broke, account would be emptied by 1998, 21 years into retirment. Same with short term Treasurey bills.

Wait a sec.

What are you assuming that $1,000,000 is earning while you're taking money out? Yes, if you stick $1,000,000 in a sock, and put it in the closet (big closet or big bills!), and then take 6% per year, you may end up with nothing in X time, but, assuming the money is also GROWING some along the way, will that 6% annual withdrawal still totally deplete it in that time? (I haven't done the math because I don't know what EARNING figure to apply.)

2. Investing same i stocks entirely would leave one with $12 million by 2007 (adjusting for inflation it's less than that but still a very nice sum)

WHICH stocks? Are you assuming an index fund or what? Makes a difference.

A mix of 50%/50% or something close to that is what they recommend, yes, close to 50% stocks even at age 65, due to longer life spans, inflation risks, among other things.

I have ZERO money in bonds or bond funds, so I guess I'm balanced poorly. (I do maintain a chunk in my Fidelity "Cash Reserves" fund, which pays a small percentage.) However, again, I have never had much faith in these "pat" percentages and such.

If I understood you correctly, you have been skillful enough
as a trader of stocks to keep your net worth to be the same, or higher, than the previous year, even after your withdrawal?


Skillful or lucky enough? Basically, I guess, yes.

I think these are perilous times. Some of the talking heads talk of "recession" while others in positions of power or authority insist we're going to be okay. Who knows who is right?

At the moment, like many people, current stock market woes have hurt me, too, so I've been trying to carefully make my way through the mine field, keeping some money in what seem to be good dividend-paying equities, while also carefully selling some things and putting more in my Cash Reserves fund -- just in case. I want to try to have enough sitting in there, earning at least something, but in a "stable" place, so that, combined with anticipated income from our Social Security, plus some typical supplemental needs, we can hope to hang in there for a year or more without feeling panic!

Again, I do NOT recommend that others do what I do, just as I choose not to do what they do. I've been dabbling with investments for more than a decade, and I think I've learned a few things, but NO ONE ever can always be right!

Vermonter
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