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In fact, if I may, I'd like to invite any one else who un-retired
to share their stories (or again, provide urls for us late-comers to this forum :)

For those who un-retired, and also for those who are early-retired,
and stayed or staying that way, I'm curious about some numbers anyone would be kind enough to not mind sharing..particularly your ratio, that is, the year you retired, your net worth divided by your annual living expenses, what was the ratio?

If people un-retired, was it because they decided their ratio was too low? If so, was it because you estimated your living expenses correctly but decided the ratio needs to be bigger, like 25 instead of 20 (living expenses 4% rather than 5% of total NW)? Or unexpected expenses e.g. health care? other?

Thx,
Imag
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I think that if I told my actual ratio the room would erupt in disbelief and unasked-for advice that I'll never make it. I will only say that it's lower than 20. Health insurance is the biggest culprit, but I should be able to cut that down quite a bit when I qualify for VA healthcare in the next few months.

Hedge
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Don't forget that plenty of people "unretire" out of boredom more than out of financial need.

Mel Karmazan was on Charlie Rose last night. He is now running Sirius Satellite radio. He had been in on the merger of CBS and Viacom and was doing great, but found himself on the outs.

He said he decided it was time to do something else when he found himself helping his wife fold sheets.

Especially for business executives, retirement can be a major change that requires some adjustment. Going in stages works better for many. That gives you more time to decide how you will spend your time. Temping. Working part time are standard ways to do this. Quitting cold turkey is tough on some.

Of course others decide to go back to work because expenses turn out to be higher than expected or because of reversals in their investments. There is nothing like building in a safety factor to cover for the unexpected.
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Kudos to you Hedge for being the first to break the taboo and giving
at least some information about your ratio.. I mean you never know what to believe from all those articles and advice columns from Money magazine
to other personal finance websites..so anything shared amongst us mere 'regular folks' is helpful.. :-)

As I said earlier, I'm not planning to retire but to semi-retire
in a way that would still cut my income by more than half (and cut my hours by less than, but not much less than half..) so I don't have a number right now but I'm shooting for 20+ ..keeping in mind that I'm hoping to cover more than 50% of my living expenses (ideally 100% and thus breaking even, but I want to be realistic) when I do semi-retire.

Your candor already is very helpful in focusing discussion and sharing ideas...such as...maybe we can all share tips on how to best retire or how to best semi-retire when one's ratio is less than 25 or even less than 20..financial strategies, strategies for which sources to tap first, etc..

Hopefully others will chime in too..

Imag
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I didn't even really make it to full retirement. Once it was known I was retiring from full-time employment, I was offered a variety of projects. I did those and really only kept a couple. I probably work 25% time and actually make more than I did my last year of regular employment.

I thought my husband was more interested in retiring than he is. I now know it's unlikely he'll retire for at least 10 years because he gets more than 4 weeks a year vacaion and every other Fri off and enjoys his job.

I seem to be saving most of what I make. I had thought I would do 72t distributions but there's no need. 2 of 3 kids are out of college and the last one has 1.5 years left. Our expenses have been declining and should decline a bit more with a move to a condo in the spring but the move was about convenience.

We never passed up a matching penny and took advantage of all IRA opportunities except non-deductible traditional ones because they made no sense to me. We recently increased my husband's 401K contributions to the maximum(had only done to the match before) because we had extra money.

I'm not sure what ratio you're looking for.

rad
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I'm not sure what ratio you're looking for.<i/>

I think it's your total amount of retirement funds divided by the amount withdrawn this year, or yearly, to supplement SS, pensions, etc.

Example:

Retirement funds: 500K
Yearly withdrawal: 25K
Ratio is 500/25 or 20
Also known as 5%

Doug
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I withdrew 0% and actually don't really ever expect to use the IRAs - my husband will have a pension if he ever retires and eventually we might see something from SS.

We planned for no pension or SS and it seems like they will be there.

rad
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I withdrew 0%....

You can't divide by zero and still be in the ratio club.

Sorry. It's not my rule.

Doug
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I withdrew 0%

Rad, the definition given was

your net worth divided by your [first year's annual living expenses,

In other words, if you retired on Dec 31 2005, take that day's net worth and dividing by annual living expenses at the time. Another simpler way of saying it is "how many years' worth of expenses" but I avoid that since it's misleading as living expenses are not a constant..

So the question is, the day one took the Big Plunge and retired, if you take your annual living expenses (whatever they were that year), how many times that was the net worth?

So it doesn't matter if you withdrew 0%. If your net worth the day you retired was (to use Doug's numbers) was 500K and your annual expenses
were 25k, then your ratio was still 20 just as Doug said.

(Here "Expenses" means what's left over after pension, annuity, ssa, etc if any, which needs to be covered by one's savings)

Imag
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The financial advisor columns usually tell us all to have 20 to 25 times as much in savings as our cost of living after soc security, pension etc.

It's not my rule, honest :-) See for example

http://money.cnn.com/popups/2006/moneymag/25_rules/10.html


"Aim to build a retirement nest egg that is 25 times the annual investment income you need."

So are people taking that advice? IF so, how are they fairing? If people are not taking that advice, what ratio do they use instead? What was your "ratio" the day you took the big plunge and retired? And how are people fairing if they use a higher or lower ratio?

Hope that's clearer :-)
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<<I withdrew 0%....

You can't divide by zero and still be in the ratio club.

Sorry. It's not my rule.

Doug
>>



You don't have to divide by zero to calculate 0% of something.


0
___ X Any number = 0 Any Number
________________ = zero

100 100




Seattle Pioneer
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You don't have to divide by zero to calculate 0% of something.

True, but the question at hand is assets divided by withdrawals. If there are no withdrawals, the ratio is undefined (and the patient is probably starving).

Hedge
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Yeah, the patient is either starting, or able to meet 100%
of their living expenses through a comb of pension, ssa annuities and other guaranteed, or I suppose might get free room and board, etc. In any case, the "Rule" cited by Money and other isn't really directed at this small group..most of us will need at least some income beyond
ssa/pension/annuities and other guaranteed...

...some expenses that we must cover with our nest egg..that's true for most retirees. And the advice not just by CNNmnoney but others is the 20 to 25 range for what the ratio should be of networth divided by one's annual income needs..as I said I'm wondering how people fared who heeded those numbers, and how people are faring who didn't heed them (in your case Hedge it looks like you're not heeding it but can say that so far you're doing ok..)

Still (naiively?) hopin' for a few more data points :-)

Imag
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Yeah, the patient is either starting, or able to meet 100% of their living expenses through a comb of pension, ssa annuities and other guaranteed, or I suppose might get free room and board, etc.

Whether or not you use pension or SSA or an annuity or whatever, you are still making withdrawals to meet the bills. In the case of someone who has retired but the spouse is still working and providing all of the income; well, the family "unit" hasn't actually retired, and it's the unit that must be considered for that case.

SSA has a value, and should be considered as part of your retirement assets. So should all the rest; including a working spouse. :)

Hedge
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Sorry about that - 1/4 time consulting is paying me more than my wages my final year of FT employment so I took nothing from IRAs. Our expenses didn't increase since they used to include kid stuff and don't really anymore.

I honestly don't track our expenses anymore so I'll bow out.

When my husband does retire, he'll get 100% of his salary and our state doesn't tax pension income so there will be an increase in spendable money there(~4.75%). Add ss if it's there in 10 years. The nest egg issue will be projecting RMDs and deciding if starting distributions at 59.5 and moving that to taxable accounts is a better choice.

We assumed neither pension nor SS would come through so we started IRAs in our 20s and took all the matching money offered in 401Ks.

Current net worth / current income = 11.17.

rad
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So should all the rest; including a working spouse. :)

I thought he would be retiring. He likes what he does so he'll probably work until he doesn't or until work interferes with biking and skiing.

In the case of someone who has retired but the spouse is still working and providing all of the income;

He's not but what he does provide that is important is the health insurance.

rad
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Who knows. My income from social security, two small pensions and two part time jobs (one seasonal and one year round) are more than enough to meet the bills, including my health insurance. I have no plans to withdraw anything from my other retirement accounts until I am forced to at age 70 1/2. I would likely have waited awhile longer before taking the pensions, but the amount would not have increased if I'd waited so I started them at 65. I just hit SSNRA this month.

I mostly work because I'd be bored if I didn't. I have no expectation that will change any time in the near future. Both jobs are such that I can continue working for them as long as I care to.

I didn't necessarily plan to retire when I did - my position was eliminated - but I'm very glad I did.

Rose
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I am *not* retired yet (just a FIRE wannabe!), but I am aiming to FIRE within the next 10 years when I'll be in my early-mid 40's. My plan is to have enough investments to only extract 3.5% or so per annum inflation adjusted for the following years. The one big hazard to my plan is healthcare. Since I don't have a crystal ball, I'll just have to wait and see how it all plays out and adjust my plan accordingly.
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Thanks clrodrick.. I guess that makes your ratio 1 / 0.035 or about
a little bit more than 28.5..even higher than the recommendations,
is what you're aiming for savings to annual expenses for the year you plan to retire..I'm aiming for as high a ratio as I can get..

I may only have $22 or $23 or so of networth for every $1 of annual expenses the year I stop FT employment..but I'll probably be like many others here: part time work, and if I can meet my expenses (or most of them) for say 5 or more years, then if investments grow at 8%+ per year and inflation is less, then the ratio should be higher over time, so long as I'm breaking even (or close to) with partime jobs initially..

As for healthcare, that's the biggest question mark, especially if you're among those of us on this board who live in the U.S. where it's tied to employment (skip soapbox about "unlike EU, unlike Japan, Canada, and the rest of the western industrizlied world" here..) But if you're relatively healthy, there's always high deductible policies for individuals which run not much more than $100 per month, if a few thousand dollars is the annual deductible..will be looking into those as a way of protecting against financial catastrophe but covering out of pocket
the more basic care, occasional doctors appointments, etc. Some plans, I understand, also give you the negotiated rates so even for the part you do pay out of pocket, say blood tests, you pay the nego. rate, which is often much lower than the astronomical charges they will charge "a person who just walked in off the street" for the lab tests.

Imag
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I am age 52 and I unretired back in 2005. However I didn't un-retire because of unfavorable ratio. I had been making 4% withdrawals and my nest egg was not in danger of running out.

The reason I went back to work is that I wanted to increase my annual withdrawals at a sustainable rate for my nest egg. You see I had retired early on a "barebones" budget--with the thought that I would work just enough to bring pay for discretionary spending. From a financial standpoint I was successful at this. However I found that some of my money-making/saving schemes were just as stressful as my ole "9-5" profession--for a lot less financial return! So while I was still young and able, I decided to go back to work fulltime to increase the nest egg. I also promised myself that I would maintain a good work-life balance this go-round. So far I have been able to keep that promise to myself. I have even had to quit and turn down jobs in order to keep that promise.

My ratio when I retired was 21% on a "barebones" budget. Now I am at 23% using an expense amount that is easier to live on. I didn't include in Social security in either calcualtion--if I did the ratio would be higher.


Before I retired, I was racing to retire by any means possible. The approach I am taking now is more balanced, feels like a good compromise and currently works for me.
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Thank you for this very helpful background, workwayless. This is just the kind of sharing that makes this group very valuable, including to those
of us who haven't (semi)retired yet but hope to do so within the relatively near future.

I assume you meant not literally 23% but that you meant that you retired with a 21 to 1 ratio, with savings at 21 times annual "burn rate" for a percent of 1/21 or about 4.7%

When you say "Before I retired, I was racing to retire by any means possible" I hear you. Many aspects of my job are very nice but others maybe I just need a break from..maybe take a year or half year off..instead of rushing to semi retire.

I've put a lot of thought to not only the possibility of having to un-retire, but also to avoid a situation where there is just as much stress as FT work..This is one reason (not the only reason) why I don't plan to retire, but to work PT, receive probably 1/3 or 1/4 my salary, and just meet expenses, "Break even" and allow my ratio to get better over time. I might get a lot of energy after a year or five of that and decide to go back to FT for a bit, though for various reasons in my profession (which I'm shying away from giving details about) that may not be easy. So I'm not even shooting for retirement (too poor to do that in the next five years anyway..I'm under 50..but have enough due to very frugal life, to make downshifting that early, do-able) but to do semi retirement, at least for a while, maybe even permanently (in which case helping improve the state of our world, as well as creative endeavors, would make up the rest of my schedule)

You see I had retired early on a "barebones" budget--with the thought that I would work just enough to bring pay for discretionary spending. From a financial standpoint I was successful at this. However I found that some of my money-making/saving schemes were just as stressful as my ole "9-5" profession--for a lot less financial return!

Would love to hear any lessons you have to share...I do worry about it being "just as stressful" and have given that some thought, but not sure what the details of "just as stressful might look like". Are we talking about work as a consultant, or online gigs, that kind of thing, which end up turning into a "run faster just to stay in place"? (those are some of my worries with the online ventures I'm thinking about using for part-time income when I take the plunge..) Or am I way off?

Thanks again for your post which I'm about to Rec :-)

Imag
Imag
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I semi retired 2 years ago when Chevron Bought Unocal - right place, right time, right package. The ratio at that point was 18.3. I now work about a third of the time, make the same money and the job stress level is way way down. the ratio has climbed to 26.6 in the last two years.

The three biggest stress reducers:

No Company Politics....

I can laugh at requests to go to Nigeria and other garden spots

A 12 hour day pays 12 hours
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I assume you meant not literally 23% but that you meant that you retired with a 21 to 1 ratio, with savings at 21 times annual "burn rate" for a percent of 1/21 or about 4.7%




You are right, I should meant to say ratio instead of %. Was at 21 ratio when I retired and am now at 23 ratio. I should never to post too late in the PM :-) However my burn rate was only 4% not 4.7% I was able to take lower withdrawals due to income and cost reduction moves.
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I've also thought about planning on doing a MOOTFL (moving out of the fast lane) in say 5 or so years. At that point I'd be lucky to have a 1 to 20 ratio of yearly budget to total investments. I'd have to fidn a suitable part time job to cover expenses with some mad money left over and allow my investments to continue growing till I reach a ratio of 28 to 1.

I guess all I can say is I aim to be flexible with my decision. 5 years is a long time, and who knows how much I'll love/hate my job by then. Right now I'm pretty burned out with work and am wondering how I can last another 5 years. Luckily, I will be taking 3 weeks of vacation soon and hope to recharge. I also have to gauge how much MOOTFL will cost me in terms of years till 100% retirement. Not sure if MOOTFL and doing part-time work for 6-7 years would be any better than sticking with current job for another 3-4 years and being fully financially indepedent. Guess only time will tell.
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Clrodrick,

Thanks for sharing this. Sounds like we have a lot in common as far
as the planning game goes.

Yeah, I too am not going to wait until the ratio is 25 before semi-retiring (maybe radical down-shifting is a better term, to borrow the former term from the "Radical simplicity" movement, about which I have only some knowledge)

And likewise hope to work PT aiming to have that meet two conditions: i. good conditions at work while working about half the hours and ii. aim for breaking even with expenses

if both are meet, then i. makes it worthwhile to quit the fulltime+ job and ii means the ratio will grow over time..BTW, once the ratio hits 28 or 30 and you're can live on 3% per year then unless there is a financial calamity the ratio would still grow over time, most likely, even if not working (for pay) at all..

I too have thought about how I really feel about the ol job..one small, and probably obvious, but to me helpful discover was that now that I realize that I can semi-retire in a few years, it makes it a little easier to smooth out the rough parts of the job..probably folks who are 64 years old in the traditional retirement, have this too, a little more serenity knowing it's not that much more years to go..

Don't know your situation but if you're feeling burned out, it might be helpful to look in the mirror and tell yourself: these poor souls around me will most of them be stuck either here, or at a simliar company, for way more than 5 more years...long, long after I'm living a slower, less hectic, less stressful life with much more freedom from external demands and control, these folks will still be here...even if it's not
the people around you who are the source of the burned-out feeling, just the extra feeling of compassion for them might be helpful in dealing with whatever the actual source of the burnout feelings is...Or maybe I'm way off..just some thoughts..

The other thought on my own life situation is, if I need to I could, in a couple of years, take 3 to 6 months off from the job, I've looked into it and very likely I would be able to get it or very similar job back at same employer. Realize this isn't true universally. But in a couple of years I could do that and live off my savings for that long and not really hurt my long term ratio...and it means if pressure built, I could do that, which would probably recharge my batteries for a good 2+ years more at work, which would help the ratio much more than even taking otu 6months (half a year) of expenses from the total.. So that's another strategy I've been thinking about..

There is always the other opposite danger..that we keep talking ourselves out of is and don't do it until 4, 5 or more years later than we needed to have...and later regret that we were in the daily grind for that many more years than necessary. OVerall though I think it's prudent to err on the side of making sure you have 20+ in your ratio AND have several prospect PT jobs EACH of which has hours, and working conditions, that would truely and honestly be far less stressful, while breaking even with living expenses...

Imag
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I hope to hold out till I get to 20-25 before quitting my "day job." I will then work PT or FT in a OOTFL job I enjoy for a few more years - it will meet my actual living expenses and hopefully offer health insurance. My real goal is to have 33 times, once there I'll feel comfortable totally pulling the plug (will have a 40-60 year retirement to pay for) if I choose. I will probably always have a little bit of earned income but look forward to not needing it.

FoolNBlue (FIREbound)
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<<I guess all I can say is I aim to be flexible with my decision. 5 years is a long time, and who knows how much I'll love/hate my job by then. Right now I'm pretty burned out with work and am wondering how I can last another 5 years. Luckily, I will be taking 3 weeks of vacation soon and hope to recharge. I also have to gauge how much MOOTFL will cost me in terms of years till 100% retirement. Not sure if MOOTFL and doing part-time work for 6-7 years would be any better than sticking with current job for another 3-4 years and being fully financially indepedent. Guess only time will tell.
>>


It helps to consider issues like this carefully, over a period of years until the decision that is correct for you matures and becomes clear. And as you suggest, the answers can change over time.


My observation is that a lot of people who think they will be happy with a long worklife change and discover that work becomes increasingly burdensome. It helps to have the savings to make a choice freely, rather than be stuck on the Cross Of Gold working for a living when you are sick of it.



Seattle Pioneer
Reetired Memorial Day, 2007 at age 57
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"My observation is that a lot of people who think they will be happy with a long worklife change and discover that work becomes increasingly burdensome. It helps to have the savings to make a choice freely"

Well said Seattle Pioneer.

But there are also those who dream of being retired with free time on the hands to allow them to pursue whatever their hearts desire. Some of them realize when they retire, that retirement is not all its cracked up to be.

Work can be a source of pride, a fun thing to do, and a great social experience after you work side by side with people who become almost like family.

Retirement can be quite a come down. That is why some do it in stages. Work part time for a while. Or even go back to work after retiring for a while.

To each his own.

Fooldom seems to focus mostly on making retirement financially possible. But putting some time into the psych aspects can also be a good idea. Get ready to retire before you pull the switch.
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<<Don't know your situation but if you're feeling burned out, it might be helpful to look in the mirror and tell yourself: these poor souls around me will most of them be stuck either here, or at a simliar company, for way more than 5 more years...long, long after I'm living a slower, less hectic, less stressful life with much more freedom from external demands and control, these folks will still be here...even if it's not
the people around you who are the source of the burned-out feeling, just the extra feeling of compassion for them might be helpful in dealing with whatever the actual source of the burnout feelings is...Or maybe I'm way off..just some thoughts..>>

Heh...I do feel sorry for some of the people I work with that are staring 50 in the face and keep talking about how they wish they could retire at 55 but know they will need to keep on trudging along until at least 65.

Then there are those who are in their 40's and 50's and like spending 40-60 hours a week doing what they do and can't imagine retiring anytime soon. To them I say great! Everyone needs to know themselves and do what makes them happy, not necessarily what everybody else says is the proper thing to do. I know without a doubt that I will be a happy FIRE person. I can take several weeks off from work, do nothing but hang around my area and do activities I enjoy doing and have no remorse at all at not being at work.

<<There is always the other opposite danger..that we keep talking ourselves out of is and don't do it until 4, 5 or more years later than we needed to have...and later regret that we were in the daily grind for that many more years than necessary. OVerall though I think it's prudent to err on the side of making sure you have 20+ in your ratio AND have several prospect PT jobs EACH of which has hours, and working conditions, that would truely and honestly be far less stressful, while breaking even with living expenses...>>

This is one thing I want to avoid too. Time is precious and these are years I will never get back. On the flip side, making the jump too soon can be disastrous to security in one's later years when working is impossible due to age and health reasons. That is why I'm picking a ratio of 28 to 1 as far as investments to yearly budget. 25 to 1 most likely will be safe for a 40+ year retirement, and I'd feel really secure with a 33 to 1 ratio but am not sure I want to put in the extra working years to achieve this. A 28-30/1 ratio is a happy medium for me, although I reserve the right to change my mind in 5-8 years. :)
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<<It helps to consider issues like this carefully, over a period of years until the decision that is correct for you matures and becomes clear. And as you suggest, the answers can change over time.


My observation is that a lot of people who think they will be happy with a long worklife change and discover that work becomes increasingly burdensome. It helps to have the savings to make a choice freely, rather than be stuck on the Cross Of Gold working for a living when you are sick of it.>>

I totally agree Mr. Pioneer! I've spent more hours than is probably healthy mulling over various scenarios and analyzing what makes me tick and the type of person I am. I'm sure the self-examination will continue right up to the year I do choose to make the leap to FIRE.
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I 'retired' at 52.5...well, actually took a buyout package of a year's salary and years medical paid....so I guess you could say I became 'retired' at 53.5.....

THen, since I had been 'laid off', I did collect unemployment for a few months......

My decision to retire was based upon a conversation I had at work with a co-worker. One day we were talking about what it would take to retire.

There were some on-line planners (not there today) that allowed you to run all sorts of scenarios, allowing you to input annual returns, expected inflation, etc. It didn't use the 4% rule, but had it's own set of tables. You could enter Social Security and when you would take it, and other pensions.

It dawned upon me that at that time, I could retire and safely withdraw more than I was making each year by working. As I discussed relative levels with co-worker, he commented that "If you can earn the same by being retired as you are working, why are you working just to pay Uncle Sam with the money you'll earn for the next 10 years? Why would you be working for 'free'?

He had a point. If I had enough assets to retire, and have the same income (actually more since I wouldn't be paying SS taxes) and wouldn't be saving 15-25% of my paycheck for 'retirement savings'......

Why should I work just to accumulate more assets that Uncle Sam would tax at 55% when I die?

If I didn't need the money to live on (and maintain my same standard of lving), I was merely putting in hours to earn money that Uncle Sam would tax away, and my heirs would get. It would literally do me no good.

Now, I suppose I just could have not retired, and tried to spend 30-40% more each year while working, but I didn't 'need' or really 'want' a fancier car. I didn't have the time to take fancier vacations, and the ones I took were nice. I don't need $300 or $500/night hotel accommodations to feel 'pampered' - and don't even like fawning service people. I simply don't have 'expensive tastes' and they aren't my bag.

So when I figured that I would be working primarily for the benefit of Uncle Sam...and my relatives years down the road...I figured it was time to get out of the deteriorating telecom business.

That turned out to be wise decision because my company laid off 50% of the people in my department with almost no severance pay (2-6 weeks) vs my package a year earlier. I would have worked a year - instead I got paid for nearly all of it for 'not working'.

Now, I take about a 2.5% withdrawal rate. I could take more, but simply don' t enjoy spending more. I live in a nice suburban house, just bought a new car.....have zero debt. Travel wherever I feel like it. And don't buy gadgets just to keep up with the Jones. I don't need a 72 inch plasma..there isn't enough to watch on TV anyway. But I could easily buy one.

I would feel comfy at a 4% withdrawal rate. Next year I start on SS, so I'll have another grand a month more to spend. I'll have to work at it.

t.
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Hey t, thanks for sharing your story.. After seeing you on oil and other
boards on fool.com it's nice to learn some of the rest of the background..

I'll be doing what you did in maybe 4 years..I'm already making a mental note to pick your brain sometime about withdrawal strategies (is
there a MF forum?) for those of us who retire long before the age 59 etc rules..Last line in your profile (no one ever said on their deathbed
they wished they spent more years at the office) is one I saw somewhere some years ago and lost track of that quote...love the quote..
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t,

I do have a couple of questions about your post actually. When I started this thread it was originally about the ratio during one's first year of retirement.

You indicated that today your expenditures are about 2.5% of your savings, so you have about $40 in savings for every $1 you (annually) spend...I imagine that your investments grew during your 10? or so years in retirement, so wondering what the ratio was that first year, say, when you were 53.5, if you looked at how much your annual spending was for that particular year, as a percentage of your total savings you had then, what was it?

Was it the much-talked-about 4% (that is when you were 53.5 your spending that year was 1/25 of your total savings back then)? Higher? Lower?

Thanks,
Imag
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Imag: "You indicated that today your expenditures are about 2.5% of your savings, so you have about $40 in savings for every $1 you (annually) spend"

Yes, that is the current situation. I just don't feel a need to spend the other 1.5% I could. I have enough gadgets and hobby things. Too much junque in the house.

I sot of got burned out on travel. Was gone about 1/3rd of the time for the first 3 years of retirement. Trips to the Caribbean and Europe and Asia and Central America. The hassle factor of 9-11 made travel a much bigger pain, and the cattle car crowding on planes, delays, and trying to buy tickets is just a royal pain these days.

"...I imagine that your investments grew during your 10? or so years in retirement, so wondering what the ratio was that first year, say, when you were 53.5, if you looked at how much your annual spending was for that particular year, as a percentage of your total savings you had then, what was it? "

Back then, the SWR was about the same as today. Got clobbered a bit in the dot.com bust, and some stock in retirement accouts couldn't be sold fast enough to avoid some meltdown.(some WCOM ESOP type stock). Example: GE stock still not back to all time highs. Still solid stock and still yearly increasing dividend.

For a few years, in terms of inflation adjusted income, I spent more for those first couple years on travel than I do today...then again travelling 1/3rd of the time, with 50% of that international, was a fair expense.

Insurance/medical now a growing part of expenses (rates were a lot lower 10 years ago for coverage plus had decent group insurance plan then). Now individual policy with large deductible and co-pays - plus 10 years older which runs up category rate.

"Was it the much-talked-about 4% (that is when you were 53.5 your spending that year was 1/25 of your total savings back then)? Higher? Lower? "

Never exceeded 4%, and never exceeded 3% at any time. I had to work at spending that. I'd rather stay at a small tourist hotel in the Caribbean that a humongeious 'name hotel'.... less hassle. I don't want six waitpersons hovering over me at dinner, refilling my glass every time I take a sip, and eager to snatch my plane the second they think I am done using it. I don't need a wine sommelier, nor do I need $6/bottle 'imported beer'.


Of course, my house is paid for, I have zero credit card debt, cars are paid for - so I just have annual living expenses.

In terms of real dollars, I am spending less despite 10 years of inflation without the international travel. Now I am gone about 15% of the time on trips, and most of them by car.


Next year I'll buy a new road car likely....about $25,000 which will maybe bump up next year's withdrawal to between 3 and 4% for the year. The current one has 170,000 miles and is going on 7 years old.

I could live on, should everything go to heck in a hurry, on a current 1% of portfolio - with minor cutbacks. Of course, if that happened, and the markets dropped 50%, that would be about 2-2.5% of portfolio since I am about 71% in equities at this point.

Oh, and I haven't 'inflation adjusted' like I could have according to the SWR model. With a 2% annual inflation, I could be taking 25% more per year from the initial 4% rate. (or 5% now of the initial amount).

Now, one of the reasons I never starting taking 4% is that my portfolio is not as diversified as the 'ideal' case of a basket of index funds. I would take a large tax hit to accomplish that, and I am changing things slowly over time into better diversification.

I am comfortable with what I am doing. I sleep well at night.

The 4% rule applies for a diversified portfolio. If you are skewed one way or the other, you need to evaluate your risk and adjust accordingly.

t.
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A discussion on retirement draw-down would be interesting.

My wife and I retired when I was 50 and she 49. We both have an excellent, inflation-adjusted pension and guranteed health insurance. When we retired, we had about 15 times annual living expenses in investments (about half in rental real estate and half in equities). The generous retirement plan made it possible for to retire at the time, and we haven't had to touch the investments since.

It's now thirteen years later. They've been very good years and we've done our share of traveling, and have remained active. Neither of us has ever considered un-retiring -- this is what we worked for!

Now I'm starting to think about liquidating investments and spending the money. I'm not really sure on what, but seems like we really ought to reward ourselves (or something).
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"Now I'm starting to think about liquidating investments and spending the money. I'm not really sure on what, but seems like we really ought to reward ourselves (or something). "

It sounds like the money is burning a hole in your pocket.

Don't fritter away money on 'stuff' or 'things' until you figure out what you really want to do.

You are still 'young' and have another 30-40 years possibly.

I don't see any bonds or inflation hedges in your portfolio - TIPS or Ibonds or gold. You might be rather lopsided in diversity.

Why go out and buy a big fancy car if you aren't going to feel comfortable in it a few years later, if it really isn't you?

the more 'things' you have, the more hassles you have maintaining them ....

I could 'afford' lots of things. I just really don't want them.

Spending money because you need to 'reward yourself' is nothing put Madison Avenue hype..."you deserve it" type justification for binge spending.

t.
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I just came across your post and read the thread. It was interesting. Here's my long tale, if it is of interest.

Before I start, let me say that we've both been happily, totally retired for several years, have NO desire to work, and thoroughly enjoy just plain doing whatever the hell we feel like every day. It has NOT gotten "old"! But that's just us. We're not rich, and have little or no pension income, but SS income plus a little now and then from my IRA enable us to live rather nicely because we do not toss money around on costly frills or expensive "toys".

I was laid off from a middle manager job just before turning 58. I got a decent lump sum settlement that served as the down payment for our cozy little dream retirement home here, AND was also able to collect unemployment for 26 weeks. I paid COBRA (costly but necessary) for 18 months for health insurance both of us.

Thankfully, I got some consulting jobs in my profession (including a couple with the company who had laid me off) to help tide us over for a year or two. I also had started dabbling in the market some years before, within my IRA, so had learned a bit about how to carefully nudge my investments upward. One past age 59-1/2, I started sometimes taking some money from my IRA as needed. Luckily, the tech boom or bubble hit about then, and one company I had bought quite a few shares of at about $5.50 soared to over $80 in a year, so I happily plucked fruit from that tree for about a year before that source suddenly dropped.

My wife also had to quit her job the following year because her widowed mother needed help just surviving (dementia, etc.), so we both had our hands full with her, AND my dad (a widower) was even older then her mom and also needed assistance, though he did pretty well on his own in a small place not far from us.

In other words, before we were 60, we were both unemployed, with no pensions to speak of, and "out in the world". Thankfully, all of our children were grown, through college, and married, so those costs were mostly behind us -- except for some college loan coupons I still had to pay.

Not long after that, my dad died. My mother-in-law's infirmity worsened, so she ended up living here with us for about a year before her condition reached a point where we had to let her go to a local nursing home. She died there about a year after that, a few years ago.

So here we are. I "work", if you will, at shepherding my IRA fund at or above where it was some years ago, withdrawing sums as we need them and can afford them.

I do NOT follow a "formula". If we need some extra money for the lump sum oil bill each year, a new well pump (as we had to do recently), or other major things, I see what I can deal with and take it. So far, we've done okay.

We also still have a small mortgage on this house, simply because it is at a low rate (5.5%) and to pay it off would cut too severely (we think) into our rather modest "boodle".

I should also say that I use TurboTax for my taxes, and we have paid almost no income taxes (state or federal) for three years now, thanks to our rather modest income and deductions for taxes, interest, donations, health costs, etc.

By the way, do not think that health care is "free" if you are on Medicare! Part B coverage for two of us, plus another $260/month for AARP's Medigap coverage, costs us some $450/month, and we have NO dental coverage, which sometimes can be costly.

I'd be happy to reply to any questions.

However, as I have often said, I think that everyone needs to REALLY think about what HE or SHE wants and needs, and forget what "everyone else" says! Do what works for you and what feels right.

Good luck.

My two cents.

Vermonter
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Hi Vermonter
I'm with you. We are both retired and try to live within our means. We are both eligible for s/s next year. You mentioned medicare medi gap, do you have an RX program also ? Our private Blue Cross insurance is costing us $1500 a month as my wife has a lot of health issues. We are hoping that going on medicare and getting medigap and RX will lower our costs. Insurance is our biggest expense ,Health,home owners, life and car.Any info would be helpful. Thanks Rick
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RetiredVermonter,

Glad you enjoyed reading the thread. And thanks for sharing your own story. In the spirit of the thread, would you mind sharing what your ratio was the year you retired. That year's net worth divided by that year's total out of pocket expnses, came to what, that critical retirement year?

Imag
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Imag:

In the spirit of the thread, would you mind sharing what your ratio was the year you retired. That year's net worth divided by that year's total out of pocket expnses, came to what, that critical retirement year?

In all sincerity and honesty, I can't answer your questions, simply because I have no idea what my/our income was back then or what our out of pocket expenses were, nor I have I ever paid any attention to any "ratios".

As I've said, I manage my own IRA investments, and have for several years, so I simply try to maintain my IRA balance at (or above) what it was by limiting withdrawals vs what I'm able to do to adjust my investments.

I would probably shock and horrify some by admitting that I've already withdrawn perhaps 10 or 11 percent this year, but the balance is still right up there, because of buys and sells made of various equities or mutual funds during the year.

Sorry not to be more helpful!

Vermonter
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Rick:

Ouch! That Blue Cross plan is awful -- but I'm not surprised. Those plans have increased a LOT annually. However, if you have health issues, you have no choice, I'm sure. (I'm sorry to hear of your wife's problems, by the way.) Our Blue Cross plan cost us $325/month several years ago. In 4 years it had more than doubled to $725/month (!), with an even larger deductible! Medicare and our AARP Medigap plan were a godsend, even if not "free". They now cost about $450/month for Medicare Part B for both of us plus the AARP Medigap plan, but there are now no huge deductibles, either!

No, we do not carry an Rx program, though we are both eligible to do so. Doing the math, there simply was absolutely no reason to do so, for either of us.

I'm slightly older than my wife, so I enrolled in the cheapest one I could find two years ago (Humana). My only prescriptions then (and now) have been for blood pressure, and the generic drugs still come to just about $13.00/month.

The one year I had Humana's plan, the plan I used COST about $13.00/month, covered the prescriptions, and had NO copay, so I figured it was a "wash" and enrolled. However, last year, they cheerily announced (with a booklet showing smiling and laughing people on the cover, for some reason!) that that plan was going up to about $23.00/month PLUS a $5 copay, so I would have been paying them $23.00 + $5.00 + $5.00 (two copays) = $33.00/month for $13.00 worth of meds!

I therefore went through the annoyance (and it was that) of writing to them to CANCEL me from the plan and refund money already withheld, which they eventually did. Since my wife still needs NO prescriptions, she never enrolled, either. We calculate that, between the two of us, we are saving about $43.00/month or more than $500/year right now by NOT having an Rx plan, and I'm sure that cost will go up in 2008.

Yes, I have been told, "You're gambling! What if you suddenly need prescriptions?" If so, I'll find the best plan and enroll, perhaps losing some cost that year.

When the time comes to enroll in Medicare and find a supplemental Medigap plan, please check around and see what is the best deal for YOU in YOUR STATE. They vary!

Good luck to you!

Vermonter
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Vermonter,

Thanks for sharing what you're able to recall. I'm not suprised
you never paid attention to ratios, but I'm a bit suprised if you didn't worry about, and remember, an equivalent piece of information..that is, what percent of your total portfolio you took out that first year. For example taking out $40,000 out of 1,000,000 would be taking out 4% that first year, or $30,000 out of $500,00 would be taking out 6% of one's net worth, that first year..or maybe you didn't worry about what percent you were taking out? Me I worry enough to want to play it conservatively when I to take the plunge, going for 4% or less, but want a dose or reality to compare with what the talking heads (or writing heads ;-) who write all those personal finance articles...After all they may be making us worry too much, or too little, with that conventional wisdom, so was curious for stories of how much people had, if whether some people did ok while taking out more than 5% per year, or whether someone took out 4% or less but still got in trouble. It's cool if you don't remember the percent, just letting you know where I'm coming from as far as my curiosity.

By the way USA Today Fri Nov 9 page 3B has these factoids:

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.

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)

3. BUT 100% stock portfolios are not a sure thing either since i fyou retired in 1972 yo uwould have been broke by 1985, under the same "take out 6% per year", "high inflation and lousy stock returns woul dhave clobbered your retirement savings"

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'm hoping to tak out 2% or 3%, not beucase I'm rich, but due to working part time (for a while at least) plus being pretty frugal, that way the total, and even the so called ratio, hopefully would get even better over time.

I simply try to maintain my IRA balance at (or above) what it was by limiting withdrawals vs what I'm able to do to adjust my investments.

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?

Or does "Balance" refer to the mix of large cap, small cap, bonds, etc?

I would probably shock and horrify some by admitting that I've already withdrawn perhaps 10 or 11 percent this year, but the balance is still right up there, because of buys and sells made of various equities or mutual funds during the year.

Same question...just to make sure I followed you..


Enjoying the exchanges,

Imag
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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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I've found this thread interesting since I'm considering retirement. I'm 59 and have 23-25 times expected expenses in the nest egg. Since I haven't done a real good job of categorizing expenses it's hard to go back for the last year and do so. For instance when we pay for groceries using a debit card sometime we get cash, so adding up grocery expenses doesn't necessarily tell me what we spent on groceries since we dispose of receipts once the checking account is balanced. Also DD is a senior in college, and while she pays most of her expenses there are still some DW & I pay. That will hopefully go away when she graduates or soon thereafter.

At any rate I have a pretty good idea of expenses. The other issue for me is what do I do when I retire. That's a little off topic here so I'll assume for now that I will find ways to fill that time. However, the on-topic part of this paragraph is that I've reduced my working hours over the last 3-4 years to about 60-75% of "full time". I have my own 1-person computer consulting business so I can control my hours to some extent. DW works but not for pay (at least I think that's the politically correct way to say she a homemaker and volunteer). I have been able to do cut back so far without dipping into our nest egg. I'm planning next year to reduce my hours a little more and give myself a couple of full days off each week to see how I adjust. This will require dipping a little into the nest egg (1 - 1.5%).

Also since my company reimburses all of our medical expenses, working part time will allow us to continue that until I qualify for SS. I may rethink this issue but since that is such a volatile expense I would rather my company pay for it at least for now.

When the time comes for full retirement (hopefully next 2-3 years) I think we will be sort of like Mr. & Mrs. RetiredVermonter. DW and I are diligent about not going into debt. We don't spend on many extravagances. We have traveled more than usual in the last 3 years due in part to DD spending a semester and a summer in Seville. But that won't continue. We will have a budgeted amount to spend and we will just tighten the belt rather than spend more (except for emergencies). Like I said we're pretty much that way now.

So in full retirement I plan to withdraw no more than 3 - 3.5% of the nest egg each year. I guess we'll find out how all this really works out but that has been my thought process so far.

Thanks again for the thought-provoking posts.

Salecat
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RetiredVermonter,

Just to clarify, what you've been referring to as "my assumptions" are not mine, but those of the USA Today article. Not my main source of financial advice but I did come across that article..Actually not USA Today's assumptions but apparently those of a T. Rowe Price study. The author isn't 100% clear when he (John Waggoner) is quoting from T Rose Price and when he is adding his own comments. So please give them the credit/blame for assumption, not me, ok? ;-)

He spoke with Christine Fahlund, "Senior financial planner at T. Rowe Price" For the third factoid, about running out of money if you invested it all in stocks in 1972, going broke due to "high inflation and lousy returns" by 1985, they don't spell it out but I assume the answer to "what are you assuming you earned?" that they would give would be something like the SP500 or wilshire 5000 or something alone those lines.

For factoid 1 T. Rowe Price's assumptions are probably that the money is in some analogous aggregate for bonds/bond funds, given what those were earning in 1977. It's kind of a silly statistic in the sense that even stocks which, over the long term, have higher returns, aren't going to grow enough to safely take out 6% every single year, so at least on average, taking out 6% over the long term out of bonds isn't safe, so T. Rowe Price would be proving the obvious there, I suppose..

For the second one,

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)

again I don't know since the article didn't spell it out but imagine that T Rowe Price was using average aggregate (SP500, etc) annual returns starting that year, 1977... For withdrawals the article just states, "T. Rowe Price tested a variety of portfolio mixes to see how they fared when taking withdrawals. The mix with the greatest success was about 50% stocks and 50% bonds"

As far as "pat" percentages, my feelings are like yours..don't believe in them. However, I do find the arguments made not just in this story but in other sources, quite convincing, that since there are fewer pensions and people are living longer, that some of the old percentages like 70% or even 80% for bonds might be too high, that is equities being too small a percent, if one went by these (so called) old rules.

Of course there are more options than bonds and stocks..cash as you said, but also REITs and even immediate annuities can round out the mix.

A little google shows T Rowe Price is making the rounds on this one..found an online version of the USA today article,

http://tinyurl.com/2tattm

and in NY Times, http://tinyurl.com/3a3tqz Fahlund is quoted among others. Merrill Lynch, Fidelity, Charles Schwab, others, are quoted and most are gearing up to increase their education efforts, "Other companies, like Vanguard, plan to mix advice, education and financial products..said Robert Nestor,..'Everyone's looking at the demographics and saying trouble is coming if we don't prepare people accordingly,''"

Of course they are not charities and these folks want to profit so skepticism is warranted..but I'm not going to argue with the need to improve how well educated Americans (or others in Europe etc for that matter) are about retirement

''The baby boomers are retiring, and just like everything the baby boomers have done or needed, it has determined very sharp trends and sharp needs,'' said Cynthia Egan, executive vice president of Fidelity's Retirement Income Services. ''As they begin to shift from accumulating for retirement to actually living in retirement, it will require a great deal of thought as well as a great deal of education.''

Perhaps among the most useful things were the url for
http://www3.troweprice.com/ric/RIC/ for retirement income calculator (the fine print also lists some of their assumptions, like 6.5% returns for "Investment-Grade Domestic Bonds" etc. Think I'll give the RIC a spin..

Imag
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The critical issue here is that your nest egg provides for expenses over and above your other income.

If you have SS income,and or pension income, that is someone inflation adjusted, you do not need to 'replace that' with withdrawals from your portfolio.

This SS and pension income can be looked at as an annuity equivalent, or an indexed bond. It is a fixed income asset, and inflation adjusted to boot.

Thus, you can easily justify a higher percentage of stocks in your portfolio.

However, the Safe Withdrawal Studies indicate that the survivability of al all stock portfolio for 30 years is dependent upon taking no more than 2.3% or so of your nest egg initial value for that 30 years period. (more if less years).

Yes, there have been several times in history when all all stock portfolio failed the 4% SWR test. around 1966 and 1972 I believe are 2 of the times.

MOst of the previous studies were done based upon 30 year treasury bonds (they were the only things with a track record going back that far). Now you can diversify with REITS, GNMA funds, I-bonds and TIPs in various accounts. You might wish to consider international exposure, both in bonds and stocks since this is a global economy.

Scott Burns writes a weekly column and has tracked his 'Couch Potato' portfolio. Lots of good reading at his site.

Remember, the stock market crashed in 1929, and took over 2 decades to recover to the same level! If you had 50% bonds in 1929, you would have not been all that unhappy compared to someone with 'all stock' - even dividend paying ones. Dividends got quickly chopped in the depression!

t.
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t:

However, the Safe Withdrawal Studies indicate that the survivability of al all stock portfolio for 30 years is dependent upon taking no more than 2.3% or so of your nest egg initial value for that 30 years period. (more if less years).

All well and good IF it is assumed that the holder of the account does NOTHING to enhance or positively alter his/he portfolio. In other words, if he or she just sticks the money in there and does nothing but "safely" withdraw 2.3% (or whatever).

Scott Burns writes a weekly column and has tracked his 'Couch Potato' portfolio. Lots of good reading at his site.

Exactly. "Couch Potato" account. I'm not a "couch potato". If the holder of the account DOES actively and successfully manage the account, buying and selling stocks, and perhaps managing to realize good dividends or other returns, those numbers may be far off.

Vermonter
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salecat:

You have some serious expenses still in the mix. However, your occupation also gives you many advantages. Good for you.

Thankfully, when we were forced to retire (I was laid off at 58 and she had to quit teaching toi care for her ailing mother), all of our kids were grown, through college, married and on their own, though I still had some of those infamous "college loan coupons" to pay (as did the kids)!

That said, you sound like very sensible people in that, unlike many, you're planning and actually beginning to cut back to see what it's like. Will you stay where you are or will you plan to move to a retirement location elsewhere? Selling our first home enabled us to pay off literally everything, plow a big chunk into reducting this mortgage to a very small amount, and even adding onto this home for cash.

Yes, I had done a careful "plan" showing what I expected to have to pay to live when we retired. I looked back at that the other day, in fact, and kind of chuckled! It wasn't TOO far off, except for health insurance (!) which doubled in 4 years, and some other expenses, like gasoline and heating oil.

I have to confess that our "nest egg" was and is only a FRACTION of that $1 million, so we have to really watch it like hawks! (If we had $1 million, I'd feel very rich, indeed!) For me to start taking even 6% per year, without doing anything to actively sustain it, would be a disaster.

Right now, this market gives me the willies, needless to say, so I;m trying to carefully balance SOME growth in good stocks with cautionary shifts to "safe" places, including certain mutual funds.

Vermonter
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pauleckler:

...there are also those who dream of being retired with free time on the hands to allow them to pursue whatever their hearts desire.

Right here, to name two of us!!!

Some of them realize when they retire, that retirement is not all its cracked up to be.

Ah, yes, but some find it just wonderful -- as do we, even now, several years later. FREEDOM! Freedom from jerkwater bosses, freedom from expensive commutes and all that wasted time out of one's "soul", as I called it, driving to and from work; freedom to do EVERY day pretty much WHAT you choose, IF you choose, and HOW you choose. Love it.

Work can be a source of pride, a fun thing to do, and a great social experience after you work side by side with people who become almost like family.

True. As professionals, we both felt that way, too, for most of our respective careers. However, came the time when the "bean counters" and "mental midget" bosses seemed to become predominant there, and it felt rather nice, actually, to me to be laid off with a settlement! I did some consulting for a year or two, but decided that was sort of not what I wanted any more, either. She, too, had reached a time when it was a relief to, mentally, at least, say "Take this job and shove it!"

Retirement can be quite a come down. That is why some do it in stages. Work part time for a while. Or even go back to work after retiring for a while.

Yes, for some. I doubt we'll ever get there. We still love being retired and free.

To each his own.

Yes -- THAT is the bottom line!

Vermonter
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Thanks for sharing Salecat :-)

Sounds like you have thought things out well, including the belt-tightening you're mentally ready and willing to make if that becomes necessary..I hope to be in similar boat to yours, when I reach 59..

Your 23-25 times annual expenses sounds great, very solid, particularly given that you're still a few years from retirement (if you are including things that Soc Sec checks will cover, then youre actual ratio will be even better when you retire..as telegraph said, it's only those expenses not covered by pension, soc sec, annuities, that one has to look at "what percent do I take out per year?")

As for what to do when in retirement, there are at least two areas...we probably should start a thread on each of them..feel free to do so :-) One relates to how to invest and how to withdraw, during retirement. The other set of questions relate to quality of life, having enough social contact despite not working FT (or not working at all), finding meaning and even passion in life..those kinds of issues that are very important and often dont' get the attention they deserve in personal finance articles.

When I gave the RIC calculator a spin, they only let you chose certain levels of certainty..how certain do you want to be not to run out of money while alive? There was 90%, and 99%, and numbers less than 90%..I would have chosen 95% or 97% but those were not available...if you want to be able to be in retirement for 45 years and be 99% sure you won't run out, then (at least for the other numbers I put in..I imagine it shouldn't make a difference the nest egg you have since we are talking about percents) they recommended I have more...and calculator showed they want 2.52% taken out per year, to get that "99% sure that your nest egg will last you for 45 years" But I think that's misleading. Because depending on your age and health when you retire, you're not going to just sit there for 45 years doing nothing but taking out 2.5%.

Many of us would take part time work, consult, cut back expenses, or even possibly relocate or otherwise look for less expensive housing, and so on. They are just trying to be conservative and say if you are just going to sit there and do nothing, then their Monte Carlo simulations say take out 2.5% or so every year, or even less, if you weant to be 99% sure for 45 years you'll still not starve..but most of us aren't going to just sit there..

What I wish T Rowe Price did was tell you WHAT their bad scenarios look like. If you wanted 99 out of 100 casees to be ones where you don't run out of money and their calculator says, "nope, you need more savings" because not 99% but only 95% of those scenerios were ok, then I wish they'd show you the 5% of those casese where you ran out of money in their simulation..what happened? long term market downturn plus low yields on bonds I suppose..but they don't give details..

Anyway would love to see any tips on actively managing one's nest egg during retirement, and would likewise be great if anyone knows of websites to post links to, websites about frugal but high quality life during retirement. The website for the "your money or your life" book I know of, would be great to find others...

Imag
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Imag:

Anyway would love to see any tips on actively managing one's nest egg during retirement

I've suggested before that, if they have not tried managing their own investments, people should read and study to an idea how to invest, and then TRY some actual investments with "play money" first!

Yahoo, for example, lets you set up an "account" and "buy" X shares of various stocks, and then see how it works out after some days, weeks or months. You can then find out if you have the temperament to even try that sort of thing, as well as see how you do with your "picks".

There are some equities that pay pretty nice dividends, too. Several of the Canadian Royals, as they are called, or energy stocks, pay monthly dividends that can add up to 10 or 15 percent or more, if you can ride out the price fluctuations. (Consider if you withdrew 6 percent per year but were earning 12 percent!? Not too shabby!) A few of these include PGH, PVX, HTE, and several others. Some of the bulk shippers pay nicely, too, like EGLE, DRYS, and some others. Before buying any for real, you can try them in that make believe account and see how they work out.

Just remember that NO stocks are "totally safe" or "sure", so never dabble with money you cannot afford to lose, and try to invest (or trade) carefully.

Good luck.

Vermonter
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Here, here!! Right on, Vermonter.

"came the time when the "bean counters" and "mental midget" "

Yep. For sure.

I just saw an article on office politics in a business magazine. That brought back all sorts of memories.

It is so much fun just to be able to do your thing and not have to worry about all that other stuff.

Jobs can be fun, but they are also stressful.

You have earned your retirement. Enjoy it!!
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pauleckler:

Thanks for the wishes. Same to you!

YES! Again, as I've pointed out so many times, why would anyone want to do what someone else wants them to do, exactly as the other person wants it (whether or not it even makes sense), WHEN they want it, etc., when they can do whatever they like any time? I mean, gee whiz.....!

Mind you, I CAN imagine someone who totally loves his/her job (or maybe loves his or her own business) wanting to keep doing it, but I'll bet that the MAJORITY of us who have been "in the trenches" (or in middle management -- still in the trenches) are happy as hell to escape all the egotists, Kaizen, ISO and other crap!

Why is "Dilbert" so popular? Because it IS about "real life", albeit exaggerated to be humorous.

Vermonter
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Vermonter: " Several of the Canadian Royals, as they are called, or energy stocks, pay monthly dividends that can add up to 10 or 15 percent or more, if you can ride out the price fluctuations. (Consider if you withdrew 6 percent per year but were earning 12 percent!? Not too shabby!) A few of these include PGH, PVX, HTE, and several others. Some of the bulk shippers pay nicely, too, like EGLE, DRYS, and some others. Before buying any for real, you can try them in that make believe account and see how they work out."

Many of the Canadian Royalty Trusts (CANROYS) are the same as limited partnerships in the USA. THey were set up to meet the Canadian gov't requirement for tax avoidance.

Most of them are not paying 15% dividends, based upon earnings, but are returning a portion of your capital to you, just like a limited partnership does. They are self liquidating. At some point they become 'worthless' unless other factors come into play. That may be a decade or more off.

The Canadian gov't has now proposed significant tax changes that will reduce the 'earnings' of the CANROYS and how they are taxed at significantly higher (and sooner) rates. That is why many of them have been yo-yo-ing up and down like crazy.

If you hold them in IRA, you are exempt from taxes. If you hold them in taxable account, you pay some Canadian tax on earnings. It could go up by a factor of 3. They are still fighting over it.


t.
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