Since we stoped adding to our retirement accounts last year, we have less then the year before. We did not need to touch them during our first year in retirement.For those of you who have had to withdraw the 4 percent or so how are your accounts holding up? And how do you have the funds allocated.I stuck with the 20 percent cd laddering ( but some funds are only earning 3 percent) 80 percent is in stocks and this year was not good.
For those of you who have had to withdraw the 4 percent or so how are your accounts holding up? And how do you have the funds allocated. After adjusting for inflation, my withdrawal rate for most of this year has been 4.59%. I too have a ladder, but found some high earning cds and a good part of my ladder is in bonds earning over 6%. I have about 60% in stocks. My portfolio too would have been lower than last year. I wouldn't have been too worried about that though--last year my accounts increased even though I was making withdrawals. The Firecalc says that this WR is 95% safe. However, I have now returned to work. So I've stopped withdrawals and started adding to my retirement accounts again.
We're lucky in that we have Social Security coming in (and that almost covers most basic living expenses all by itself!), plus a tiny pension.This year, we've had to dip into the IRA pool for extra to finish the addition to our home (which ran over estimates, of course), but I have hopes that we will not have to use ANY IRA money for a while, barring disasters!No, it has not been a great year for investments, but with the addition finished, I hope to be able to resume spending time carefully stockpicking and even doing some day trading (when I spot GOOD one) to build it up again!Vermonter
http://www.fpanet.org/journal/articles/2004_Issues/jfp1004-art6.cfmI thought this article might be relative to this thread. According to the article, we are not to take out money from equities during a down year. This makes since to me. If we take it out during up years only, we will lock in our earnings from the stock market. It also states that we not take the inflation raise. In my case, it would mean one less dance trip or visit to the kids. I all ready have my other expenses low. Other costs, such as health costs go up every year no matter what the market does. And, according to the article, we are not to make up for the lost money, when the equities go up again.
Kath:I guess I just break rules by my nature. <s> I did take some out this year because we NEEDED some to finish our addition! However, it is already climbing back up toward where it was when I started withdrawing, so... I guess it's not so bad.In our case, Social Security (mostly) and a small pension pretty much cover retirement living expenses, except for major purchases and/or a construction project, of course, so occasional withdrawals (when we are not taking any out otherwise) don't seem that bad.Vermonter
<<Kath:I guess I just break rules by my nature. <s> I did take some out this year because we NEEDED some to finish our addition! However, it is already climbing back up toward where it was when I started withdrawing, so... I guess it's not so bad.In our case, Social Security (mostly) and a small pension pretty much cover retirement living expenses, except for major purchases and/or a construction project, of course, so occasional withdrawals (when we are not taking any out otherwise) don't seem that bad.>>I think your approach to funding your retirement illustrates the limitations of the theoretical descriptions given in the article.There is a lot to be said for reasonableness, flexibility and prudence in managing your finances in retirement. If you have expenses like your addition that you deem to be necessary or wise, it probably makes good sense to go ahead and fund them, regardless as to what a "safe withdrawal rate" might suggest.Other years, you might find it wise to spend less than the "SWR" might suggest to make up for earlier spending or to respond to high inflation rates, high taxes or poor investment returns.Wisdom and good judgement are qualities which permit a lot of people to retire early. I suspect that they are qualities which will lead to a better life in retirement than the application of rigid rules about a Safe Withdrawal Rate, although such finding are no doubt a useful guide to behavior. Seattle Pioneer
Vermonter,Do you keep all the IRA savings in equities or do you do the cd laddering?
SP:There is a lot to be said for reasonableness, flexibility and prudence in managing your finances in retirement.Yes, indeed -- and those are qualities we can always use more of throughout our lives!I really am appalled by what I call the "dummification of America" all around us. My biggest concern is simply that far too many people these days act like brainless fools who blindly follow the herd (as I have often said), in any arena, rather than doing some reading, listening in a discerning way to what others say, and then doing what THEY think they should do, regardless of what the "herd" suggests!My motto has always been "Do what really works for you." Period.Vermonter
Kath:I have nothing in CD's right now because they offer such a paltry return.In the 1980's, I remember enjoying an amazing return on a CD! I had some IRA money that rolled over when I changed jobs, and I knew nothing about what to do with it back then, so I simply went to my bank and poured it all into a 5-year CD -- at 13%! Imagine a return like that today? If I could even get a guaranteed 8% or better today, I'd probably just dump it all into an instrument like that and stop bothering trying to balance my portfolio at all! However, diddling with 1% or 2% locked in simply isn't what I want to do. A decent bond fund can do better, I think.I maintain about 25% or so in two bond funds, 40% or so in a couple of domestic mutual equity funds (my biggest being Fidelity's Low Priced Stock fund), 10% in Fidelity's Pacific Basin fund, and the rest among some hand-picked stocks that I sometimes buy, sell or trade, depending on ambition or a sense of potential! (I can trade at $8/trade in my Fidelity IRA.)Right now, among others, I have some shares of Sirius Radio (SIRI), for example, bought when it was about $4. If it takes off, I'll be tickled, but it's at around $6.65 or so now, anyway, and I have a stop limit in at just under $6, so.... <shrug>... at worst, I make a few bucks!Hope you enjoyed Thanksgiving!Vermonter
<<I have nothing in CD's right now because they offer such a paltry return.>> True, the return is paltry. But alternatives such as the stock and bond market carry substantial risks at a time when interest rates are still low and the risk of increases in interest rates are high.In a couple of years, you might find that the rate paid on a CD or money market fund is much higher while you have suffered losses on bonds and stocks because interest rates have gone up.Seattle Pioneer
SP:In a couple of years, you might find that the rate paid on a CD or money market fund is much higher while you have suffered losses on bonds and stocks because interest rates have gone up.I understand, but I monitor my portfolio more closely than most, I imagine, and actively "cultivate" and modify it, sometimes weekly and sometimes even daily, so I try to shift as things change. We'll see how it goes! If CD rates start to look attractive, I'll shift. Meanwhile, the banks are ripping everyone off by charging high loan rates vs paying very low interest rates on everything. (Remember savings accounts that paid 4-5% APR?)Vermonter
The banks are not "ripping everyone off by charging high loan rates vs. paying very low interest rates on everything." Banks are a business, they exist to make money. Their method of making money is charge borrowers more interest than they pay out themselves. I seem to remember loans being at or around 21 or 22% (Farm related loan in the early 1980's) while passbook savings were at 4-5% and CD's were maybe 2-3% higher.
Whatever you say.However, they ARE reporting VERY high profits. Yes, they're in business and are entitled....
Back to the initial question my portfolio is up about 12% YTD due to being well diversified. Foreign funds/ETFs have done well as have commodities and REITs.So I would be up about 8% after 4% w/r. I am however still working so not withdrawing (yet!). Cheers! Ben
Ben:Hard to say how my portfolio has done this year because I pulled out some money to finish a major construction project we've now finished! (Cost overruns, so to speak! <s>)12% is respectable! I'd love to do thatevery year! I did 40% a couple of years ago, but that was exceptional, and I was also very actively working at it and day trading some hot prospects in a hot market!Vermonter
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