No. of Recommendations: 1
Subj: An Intrusive Question
Date: 95-07-25 19:48:23 EDT
From: Brazen1
Posted on: America Online

MF Ham,

Now that you have "retired" and are no longer thinking of reaching that
blissful, eagerly awaited state but are actually there, I would appreciate
your thoughts re a pet theory of mine. I earn my living travelling the
countryside for a major benefits provider (and no, I am not in sales by
any stretch of the imagination). My job entails conducting personal
financial planning/retirement planning seminars and workshops for the
employees of the companies using our benefits plans. For the younger
employees and spouses, the task is straight forward: Give the nuts and
bolts on the "how to's" of financial planning and establishing investment
objectives. Then show them the mysterious magic of compounding so they
can see how they'll be able to reach the pot of gold provided they start
early and have a viable plan in place.

For those at retirement, the job is tougher. I'm often asked what I will
do with my money when I finally retire to ensure it will last. So I give
them what I intend to do: Determine how much money I will need in the
first five years of retirement. Put the first year's need in a money market
account and use that for expenses. Put the next four year's needs in
bond funds (I know squat about buying the actual securities) to minimize
interest rate risk and preserve the capital. Everything else gets invested
for the long term with a minimum 80 percent in stocks. In year two, look at
cash needs for the next five years (taking inflation into account). If the
long term portfolio is NOT in a down cycle, cash out a portion to fill year
two needs and build up the short term bond accounts if necessary because of
inflation. If the long term portfolio is in a slump, take the needed year
two money from the short term bond portfolio. Replenish the short term
portfolio when the long term holdings recover. Continue this process
ad infinitum or until the money runs out. If the latter happens, I did
a poor job of accumulating my nest egg during my working years anyway,
so I have no one to blame for that circumstance except myself.

That simplistically stated theory has a lot more to it than the
abbreviated discussion above, but the outline of my plan is there.
I think it will work -- for me and perhaps others who think like me.
Yet I'm not retired, so I'm not faced with such a decision yet and
won't be for at least seven more years. Therefore, I still think
long term (probably always will, too). You, on the other hand, are
there and are faced with the predicament of "how to make it last."

Question: What approach are you taking with (dreaded thought!) all
the money you probably will have for the rest of your life?? If that
ain't nosy, I don't know what is, so tell me to MYOB if I'm being
too personal. Nevertheless, I am interested and promise not to tell
a soul except the 5,000 or so folks I'll be educating over the next year.
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