UnThreaded | Threaded | Whole Thread (6) | Ignore Thread Prev Thread | Next Thread
Author: cyclelex One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 74759  
Subject: retirement income Date: 1/28/2007 7:56 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
My retirement plan has changed from a defined benefit plan to a defined contribution plan. My retirement therefore will be dependent on my investments ability to produce income. I have been doing pretty well investing so far, but it is mostly through a stocks growth. I am curious how I change my investments to produce more income as I get closer to retirement.

Right now my portfolio produces about 1.8% yield from dividends. Even if I achieved a million bucks in stock that is only 18,000$ a year - not much of a retirement salary.

Does anyone know a good book or have good ideas on how to slowly convert your stocks into income producing investments. Of course I would like to preserve the principal and not chip away at it :)

Thanks
Cyclelex
Print the post Back To Top
Author: DeltaOne81 Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 55447 of 74759
Subject: Re: retirement income Date: 1/28/2007 8:40 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
It certainly does make sense to move more conservative investments as you approach retirement, but do not think that you need to leave stock entirely. And also, you need not make your retirement income purely off of dividends/interest, etc.

Typically it is suggested that you limit your annual withdrawals to 4% of your balance. Doing this with a portfolio of 50% stocks/50% bonds, over the history of the last century or so, you never would have run out of money (that doesn't mean you can't, but its what we got :) ). The bonds provide good income and the stocks provide the growth you need going forward.

In other words, I wouldn't feel bad about using some of your principal, so long as your withdrawals are low enough, and so long as you maintain enough in stocks to continue to benefit from their growth.

You may wish to check out this:
http://www.retireearlyhomepage.com/
and this:
http://www.retireearlyhomepage.com/novtips.html


Print the post Back To Top
Author: CABob Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 55449 of 74759
Subject: Re: retirement income Date: 1/28/2007 11:05 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
You should be thinking in terms of real return rather than just dividend yield. Real return is how much you get from your investment from growth and dividends over and above inflation. When you withdraw money from the account it doesn't matter much whether the money comes from growth or dividends. The important thing is that its value grows to support the withdrawals you will be making.
That being said, however, most would recommend that you decrease your stock/bond ratio as you approach retirement but this is for safety and risk reduction reasons rather than increasing dividends.

Bob

Print the post Back To Top
Author: cyclelex One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 55457 of 74759
Subject: Re: retirement income Date: 1/29/2007 10:24 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Thanks for the input. I like the sounds of that approach. I will investigate the webpages you recommend.

Print the post Back To Top
Author: vickifool Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 55465 of 74759
Subject: Re: retirement income Date: 1/29/2007 9:40 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
I am curious how I change my investments to produce more income as I get closer to retirement.


Here's a detailed example of how to manange your investments in retirement:
http://bobsfiles.home.att.net/retireCH.html

As you approach retirement, start building a 5-year bond/CD ladder.

Vickifool

Print the post Back To Top
Author: Watty56 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 55467 of 74759
Subject: Re: retirement income Date: 1/29/2007 10:28 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
...Does anyone know a good book ...

“The Bogleheads' Guide to Investing” is a good beginning book and easy to read, the “Four Pillars of Investing” is also good but a bit more advanced. The last time I checked Amazon had these at a good discount.

Greg


Print the post Back To Top
UnThreaded | Threaded | Whole Thread (6) | Ignore Thread Prev Thread | Next Thread
Advertisement