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Just a couple thoughts:

I'm trying to transition from a go-go growth formula to something that provides the income I'll need in retirement, mostly because my company (Ford) is laying off folks like crazy and I may well be one of them. So, this is relatively new to me and is subject to on-going adjustment....

Since I may be retiring earlier than planned, I have less money than I'm working on compensating for that. On one hand, we're downsizing our housing and overall budget big time. That's actually liberating to us. A lot of stuff is a burden eventually (to us anyway). On the other hand, I not only want income, I want to have some growth so I can pile it into generating more income in the future. On-going inflation is reality.

Please be patient with the length and rambling nature of it. I'm kind of thinking this through as I'm writing it. Heheheh....

So, this is what I'm working toward:

Step 1: Develop a budget to determine income needs
Still working on that, but I've got an initial working estimate that is only a little more than half my current income. That is *not* in comformance to typical guidance, which suggests something closer to 80-100%. I think the 55% or so is adequate to begin with. Even though I'm only 55 and only have 23 years of service to the Company, it entitles me to a pension that is equal to about half that 55% that I'm looking for....and includes medical benefits.

Step 2: Bridging the gap
Still working on this as well. Speaking in broad terms, it looks like I need about half of our 401k/IRA funds to be earning 10% in order to bridge the gap. Normally, 10% is very aggressive, but in today's environment, not so bad:


1) REITs: There are high quality REITs whose preferred shares are paying 8%. There's an excellent Fool board for these:
2) MLPs: It seems like this is easiest in a tax advantaged account, in order to avoid filing for state income taxes in a couple dozen states (every state that the company has operations in). These companies do stuff like operate pipelines. They *can* be quite safe, but like any of these, research is advised
3) BDCs: I've got a little money in one of these already...and its a bit risky. There's an excellent Yahoo! group that discusses and analyzes these.
4) Common stocks, bonds...and related mutual funds for income: Good opportunities, but I haven't found anything there quite as interesting to me....yet. I'm sure there are folks here with their favorites, but I'll take a REIT preferred first, most likely....

Step 3: Growth for the future

This is my true investing love. :)

I'll be changing my plans here as well, growing more conservative:

1) Selected mutual funds and ETFs
I'll be picking up some different funds and adding some EFTs. Looking at a Latin American fund plus CGMFX. I may put a third of our "non-income" funds here for growth
2) Lock and load....rock and roll.....LOL....Special companies
Growth does not have to be related to risk. There are companies that are what I call "no brainers", that offer extraordinary returns with very little risk....if you don't have to sell them at any *particular* time. They can be volatile, but volatility and risk are correlated only if you have to sell at a time that is not your choosing. Anyway, I've got a substantial amount of our portfolio in a few of these no brainers. I'll just mention two of them: ISRG & AAPL....we've got about 30% of our total portfolio here right now. I've got some others that aren't *quite* no brainers, so I won't go into that right now....

Anyway, thanks for your patience. These are *my* thoughts on preparing for retirement right now....

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