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Retirement Corner

beebee
edited March 2018 in Off-Topic
Retirement is either something we should be planning for, saving for, or in the middle of.

I personally retired from a 33 year career in my early 50's. I traveled for a few years, moved to a low income state and have taken care of an elderly parent (full-full time...for anyone who is a care givers that's 24 hour days) for the last 5 years. I am knocking on 59.5 (in one year) and I believe I have positioned myself well for retirement.

MFO has helped me share and find great information regarding mutual funds, but retirement is much more than just saving for retirement. I thought a thread specifically aimed at retirement topics / golas might be worth organizing.

As an example here's a website (blog) that is aimed at 'Retirement Planning for the Unwealthy"...hmm sounds a lot like me. This link is to an article regarding: Unraveling Retirement Strategies: Variable Spending from a Volatile Portfolio

From the link:
Constant-dollar spending is like the Stephen Colbert joke about a man whose beliefs are constant. He believes the same thing on Thursday that he believed on Tuesday ... no matter what happened on Wednesday.

That doesn't work well for retirement planning, either.

Variable-spending strategies are similar to constant-dollar strategies in that they spend periodically from an investment portfolio but differ in that they spend a periodically updated amount based on portfolio performance – they spend more in good markets and less in bad markets.
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Comments

  • larryB
    +1,,,, excellent article.
  • beebee
    By Just typing in the word "retirement" in the MFO search box a wealth of retirement discussions and links are available to you.

    Scroll down to "next" button at the bottom of the search page for earlier dated threads...it goes back and back and back....

    https://mutualfundobserver.com/discuss/search?Search=retirement
  • beebee
    edited March 2018
    T Rowe Price and The Washington Post have created a pod cast series linked here called the:
    The Confident Wallet

    One of the first episodes / articles relates to:
    Building a retirement strategy
    It's challenging to focus on something that seems so far away. With our experts’ help, you can develop a more comprehensive understanding of how to build a solid retirement plan.

    podcasts/series/confident-wallet/building-a-retirement-strategy
  • Sven
    @bee, Really appreciate your informative posting. It is never to early to learn and make informed decision early in the planning phase. We still have 10+ years to go as our kids are entering college now.
  • beebee
    edited March 2018
    Thanks @Sven, hopefully others will add to this thread regarding retirement topics.

    Here's another T Rowe Price Podcast on Estate Planning. Something many of us are neglectful in setting up, forgetful in revisiting, and fearful to share with loved ones:
    confident-wallet/getting-your-estate-in-order
  • TedTed
    edited March 2018
    @MFO Members: Retirement planning from Vanguard, AARP, Consumer Reports, and Social Security Administration.
    Regards,
    Ted
    Vanguard:
    https://investor.vanguard.com/retirement/planning/

    AARP:
    https://www.aarp.org/retirement/planning-for-retirement/

    Consumer Reports:
    https://www.consumerreports.org/retirement-planning/new-rules-of-retirement-planning/

    Social Security Administration:
    https://www.ssa.gov/planners/retire/
  • ronorono
    Howdy bee/all,

    Congratulations. Retirement is the second favoritest thing I've ever done.

    I really liked the flexibility argument in the first article. Key. Stuff happens.

    I retired in 2010. Knew that I had to stay productive (however I defined it but still adding value). I knew I had to keep learning or my brain would turn to mush. What I missed was the change in physical activity. Even in a sit down office job, just going to work, with all that consists of, probably accounts for 3000 calories a day. Now that you're not going to work, those 3k wind up around your waist.

    As for your wealth strategies, I still go back to the Elder Baron R. - to protect yourself from economic calamity, you want to invest 1/3 of your wealth in securities, 1/3 in real estate, and 1/3 in rare art [this could probably be other things but it's not Beanie Babies].

    When you have a few minutes, run your numbers. First time I did about 10-12 years back, I blew chunks.

    and so it goes,

    peace,

    rono
  • msf
    I think you'll find that commuting to work accounts for at best 300, not 3000 calories. The average daily calorie consumption is under 3000:

    https://www.cnpp.usda.gov/sites/default/files/usda_food_patterns/EstimatedCalorieNeedsPerDayTable.pdf

    "I knew I had to keep learning or my brain would turn to mush."
    I hope it's not too late:-)
  • circa33
    Bee, would like opinions on dividends only and little or no capital gains needed.All funds are in two roth ira,s. Ages 85 and82 husband & wife. Zero Debt very low six digit figures. fidelity is our manager. Maybe edit this Question so others in this age bracket might benefit.

    Highest Regards
    circa33
  • beebee
    edited March 2018
    circa33 said:

    Bee, would like opinions on dividends only and little or no capital gains needed.All funds are in two roth ira,s. Ages 85 and82 husband & wife. Zero Debt very low six digit figures. fidelity is our manager. Maybe edit this Question so others in this age bracket might benefit.

    Hi @circa33, Maybe if you could provide of picture of:

    -Does your SSI, Pensions, annuities, CD/Bond ladders meet your monthly livining expense?.

    -Do you need added income (from other sources) to help you meet monthly living expenses?

    - At what rate are you spending down your "6 figure assets"? Is your balance growing, stable, or losing ground?

    -How many months of living expenses do you hold in Safe investments (cash or near cash)?

    -Is your "6 figure assets" invested to provide part or all of your monthly income right now?

    -List other goals for the "6 figure assets" - one time expenses (gifting, medical expenses, inheritance, etc.)

    Lots more questions than answers....sorry, but if you want some advice these are just a few of the questions you should first ask yourself.

    A few funds to Review for consideration:
    Balance Fund - VTMFX or USBLX
    Conservative Allocation Funds - VWINX, PRSIX, FTANX, FASMX
    Bond Funds - THOPX, PONDX, CTIVX, DLSNX, Target Funds 2020 or less
    Near Cash Bonds - PSHDX
  • circa33
    Bee,thank you for the starting help. Will get back to you with the
    information as soon as I do what I should have done at first, My post office
    pension from 30years in Ca. and Our 2 SSI .income more than meet our
    needs. We live in Idaho now the last 15 years.So cost of living is much
    lower than Monterey Bay area in Ca. MY pension was earned when wages
    were low. total of $2600.00 A month plus approx. $300. a month in dividends
    from our 2 Roth IRA,s total of+or- $150.000 so not much return with low
    interest rates. The Roth of ours <2> moves up or down very little.Our
    cash is in money market fund with Fido. and some paper I bonds enough for
    for 2-3 years. We go back to Fund Alarm Days
    thank You For Your Time again
    Circa33











  • ronorono
    Howdy,

    Actually, I wasn't talking simply commuting to work but the entire routine of going to work, taking breaks, getting coffee, going to meetings, going to lunch, etc. However, I checked and it's a little over 1000.

    https://www.fitnessblender.com/articles/calories-burned-by-occupation-how-many-calories-does-my-job-burn

    That said, my point stands, that in retirement you must take steps to stay physically active and fit. And, no matter what job you retired from, you are behind the curve on calories.

    and so it goes,

    peace,

    rono
  • TedTed
    edited March 2018
    @MFO Members: Which States Tax Social Security? Your monthly check could take a hit if you live in one of these 13 states.
    Regards,
    Ted
    https://www.kiplinger.com/article/retirement/T051-C000-S001-which-states-tax-social-security.html

    State-By-State Guide To Taxes On Retirees:
    https://www.kiplinger.com/tool/retirement/T055-S001-state-by-state-guide-to-taxes-on-retirees/index.php
  • beebee
    edited March 2018
    @rono...I will keep your carb burning in mind. Also, a dog is a great workout partner and companion in retirement. Thanks.

    Also, I wanted to link one of @Ted's articles from Jonathan Clement...thanks Ted.

    From the article:
    Right now, at age 18, 50 seems so far away. You think people who are 50 are ancient, but when you get there yourself, you’ll realize 50 isn’t old at all. Fifty is when you can really start to dream about a life not burdened by the daily grind. A life where you can pursue your interests and passions. My advice: Remind yourself of that every day—and start saving every penny you can.
    jonathan-clement-s-blog-my-younger-self
  • davidrmorandavidrmoran
    Reduced activity aside, the chief thing about aging is that your burn rate is so much lower and decreasing, so while we should be eating and drinking less, some of us don't find appetites declining much at all.
  • MarkMark
    Sorry JC, I was dreaming of that life starting at 18. Only took me 50 more years to rock n' roll.
  • Derf
    Kiplinger needs to recheck their facts. If you retire in WI. you will probably owe taxes on some of your S.S. benefits.
    Derf
  • msf
    I've never paid taxes in Wisconsin, but its Pub 126, Section 4(B) says:
    B. Social Security Benefits
    Federal tax treatment
    Up to 85% of your social security benefits may be taxable.
    Wisconsin tax treatment
    Social security benefits are not taxable by Wisconsin.
    https://www.revenue.wi.gov/DOR Publications/pb126.pdf

    The instructions for Form 1, line 9, read:
    Line 9 Social Security Adjustment
    Social security benefits are not taxable for Wisconsin. You may subtract any social security benefits that were taxable on your federal Form 1040 or 1040A. Fill in on line 9 the amount from line 20b of federal Form 1040 or line 14b of Form 1040A
    https://www.revenue.wi.gov/TaxForms2017through2019/2017-Form1-Inst.pdf

    Perhaps you are owed a refund?
  • Derf
    msf: you are correct, I was thinking Federal. I confess I haven't filled in the blanks for at least 5 or 6 years.
    derf
  • beebee
    Added @Ted thread on Retirement readiness. From Ted's linked article (HumbleDollar):
    WANT TO DOUBLE-CHECK your retirement readiness? There’s a slew of online calculators available, but one of the best is NewRetirement.com. The site strives to deliver great content and foster an active community, and it does a decent job on those two fronts. But the site’s heart and soul is its super-sophisticated, comprehensive retirement calculator.
    Ted's Thread:
    jonathan-clements-newretirement-com
  • beebee
    edited March 2018
    Interesting Articles on Safe Withdrawal Rates in retirement.
    CAPE and Safe Withdrawal Rates
    image
    link to article:
    https://finpage.blog/2018/02/28/cape-and-safe-withdrawal-rates/

    Kitces 2008 Paper:Resolving the Paradox – Is the Safe Withdrawal Rate
    Sometimes Too Safe?
    today’s (paper written in 2008) accepted safe withdrawal rate of 4% - 4.5% may be “too safe.” In reality, withdrawal rates that low are only necessary in certain investment environments, and such situations can be determined ahead of time by considering market valuation...(such as we are experiencing today in the US?)
    https://kitces.com/wp-content/uploads/2014/11/Kitces-Report-May-2008.pdf

    Global CAPE (Country by Country):
    https://starcapital.de/en/research/stock-market-valuation/

    Simple Formulas to Implement Complex Withdrawal Strategies
    Simple Formulas to Implement Complex Withdrawal Strategies

    Optimal Retirement Planner (Calculator):
    -Well designed calculator that helps you strategically map out your withdrawals
    https://i-orp.com/dividend/index.html
  • beebee
    How to Extract Income from a Retirement Portfolio

    news.morningstar.com/articlenet/article.aspx?id=855700

    You Are Not a Monte-Carlo Simulation

    https://blog.thinknewfound.com/2018/03/you-are-not-a-monte-carlo-simulation/

  • Old_JoeOld_Joe
    edited March 2018
    @bee- Lucky for you that MJG isn't here!:)

    BTW- I think that the six questions that you asked Circa33 (above) are excellent... in fact, crucial.

    Good work- OJ
  • TedTed
    @MJG: Speaking of MJG, I haven't seen any post from him in quite a while. I hope everything is OK !
    Regards,
    Ted
  • Old_JoeOld_Joe
    @Ted- Yes, I was thinking the same thing. It's been about a month since his last post.
  • beebee
    edited April 2018
    I find the Blog (The Financial Buff) by Harry Sit a worth while weekly read. Here are two recent articles on Estate Planning that many of us neglect or forget to get around to doing. Also I often get as much out of reading the comment section of these articles.

    Making a Will and Trust:
    https://thefinancebuff.com/will-and-trust-through-employer-legal-plan.html


    Switching Brokerage Account Into A Trust: Fidelity, Vanguard, Merrill Edge
    https://thefinancebuff.com/switching-brokerage-account-trust-fidelity-vanguard-merrill-edge.html
  • beebee
    edited April 2018
    How to "Pensionize" your IRA or 401K Plan
    With the decline of traditional pension plans, 401k) plans and IRAs are now the dominant retirement vehicle in America. Many older workers are approaching their retirement years with no pensions, and they have a number of important questions that will influence their decision about how and when they can retire.

    Do they have enough money to retire? How will they deploy their savings in retirement? When should they claim Social Security? These are complex questions that are difficult for many older workers to answer effectively.

    In collaboration with the Society of Actuaries, the Center has completed a major study of retirement income strategies that integrates IRAs, 401(k) plans, and home equity. This study has identified a straightforward strategy that can be implemented in virtually any IRA or 401(k) plan, possibly with minimal input from a financial adviser. It’s called the Spend Safely in Retirement Strategy. It should help older, middle-income workers make important life decisions, such as how long they should continue to work full time, whether they should transition into retirement with part-time work, when they can fully retire, and how much money they can spend in retirement.
    link:
    longevity.stanford.edu/wp-content/uploads/2018/03/How-to-Pensionize-Your-401k.pdf
  • msf
    Interesting study. The summary linked to is a bit vague, though.

    For example, it talks about an SS/RMD ("Spend Safely in Retirement") strategy to supplement SS after age 70 with RMDs. But it's not clear about what rate of return is assumed:
    Our analyses support investing the RMD portion significantly in stocks – up to 100% – if the retiree can tolerate the volatility. ... to implement this strategy, a retiree could select a low-cost index fund, whether it’s a target date, balanced, or stock fund.
    If one is really interested in more details, here's the full report (I've yet to skim, let alone read):
    http://longevity.stanford.edu/2017/11/29/optimizing-retirement-income-by-integrating-retirement-plans-iras-and-home-equity-a-framework-for-evaluating-retirement-income-decisions/

    One of the things I like (from the summary) is that one the eight metrics they used was Magnitude of Shortfall (p. 5, pdf p. 6). Omission of this consideration is one of the issues I have with most Monte Carlo simulations. Those simulations tell you the odds of "success", but not how badly you miss in the failure cases. If there's a 10% chance of missing by at most $10/month, I can live with the 90% success rate. But if there's a 1% chance of missing by $100K lifetime, that 99% success rate is unacceptable to me. Magnitude of shortfall matters.

    The paper suggests bridging the gap from age 65 to SS at age 70 (if you don't continue working) by creating a "retirement transition bucket" consisting of a MMF, short term bond fund, or stable value fund (p. 10, pdf p. 11). I'm wondering why the authors didn't consider a temporary life annuity. That's an annuity lasting until the target date (age 70) or until you die, whichever comes first. Because the annuity doesn't last longer than life, it has a higher payout than investing (especially in a MMF) yourself. So you don't have to set as much aside, and there's more left for you after age 70.

  • beebee
    @msf, that one was a bit long (122pps I believe), so I had not gotten through it.:)

    I stumbled upon this as a result of @Ted link today.

    Thanks, to both of you for your contributions here at MFO.

    Ted's link:
    https://mutualfundobserver.com/discuss/discussion/40066/jonathan-clement-s-blog-longevity-stanford-edu-mentally-sharp-physically-fit-financially-secure#latest
  • msf
    Just started skimming through the full study. Lots of nice data, reasonable inflation/return assumptions. Could have fun with this for days if not weeks.
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