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Old 07-18-2012, 12:00 PM
 
29,764 posts, read 34,851,819 times
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If interested this will hopefully be a thread to discuss and help each other with questions and best practices on retirement planning after retirement. Working on a thirty year plan once you retire presents different needs and thoughts after retirement. The FireCalc calulator suggested by a few in the forum has been helpful. One of my intial questions is about how to determine retirement spending over the next thirty years with income strands increasing yet there being so much uncertainty. Peak income years won't necessarily match peak retirement health years so I am currently trying to evaluate that. Please don't come in and start bashing anyone. If this topic is something you want to participate in do so if not don't. I know others are juggling with howmuch of a nest egg do you want to leave and that is a question I am trying to work with etc etc etc.
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Old 07-18-2012, 06:54 PM
 
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I do like firecalc but the big unknown is the world changed so much that all that back testing no longer applys.

30 years ago interest rates were double digits and not zero.

Market returns held up well and saw 11% average annual returns , today we have
Had no real gains in 12 years.

All of the above makes the data in these calculators suspect.

Wall street used to tell folks when they retired to run with a 60/40 mix.

If they did they can draw out 4% a year ,inflation adjust it and they would be fine.

They were told they can draw the money each year from the ple chart without worrying about if markets were up or down.

Well with no interest and no market growth new retirees realized that thinking was wrong.

It now requires real planning and knowledge to create a system for withdrawing money in good times and bad.

Study after study started to show wall streets thinking was wrong.

Where you pulled your money from mattered all to much.

Pulling dividends directly was shown to hurt your sustainability. Those dividends shouldnt be spent early on but reinvested to grow and flourish for spending decades later.

Stocks should never be sold into a down market and 15-20 years of other income sources should be spent down first.

I think by now everyone is familiar with my bucket system i use for spending down but i stumbled upon a simple variation i like.

Il contine on in the next part as im typing on a nook color and im afraid ill lose the above.
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Old 07-18-2012, 07:10 PM
 
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The system i found that rivals the ray lucia one uses 3 buckets too.

Lets say you have 500k and want 20k a year.

Bucket one gets 5 years of withdrawals which is 100k.

That goes in cd's , bonds,tips,money markets all laddered out to 5 years.
Any money not spent over the 5years gets thrown in bucket 2

Bucket 2 gets 15 years of dough ,thats 300k in laddered bonds,inflation proof bonds,high yield bonds ,income funds.

That takes us out 20 years now.

Bucket 3 is your stock bucket which had 100k left to put in it.

It has been growing for 20 years and also collecting all those reinvested dividents.

That bucket gets sold off as you need cash and spent down.

Its a good plan that trys to keep you from being effected by all the short term noise and events.
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Old 07-18-2012, 08:04 PM
Status: "Support the Mining Law of 1872" (set 5 days ago)
 
Location: Cody, WY
9,570 posts, read 10,912,012 times
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I suggest that before people become too euphoric about the economic future they take a very close look at Ben Bernanke's remarks to Congress. This doesn't seem to be very encouraging for anyone who wishes to plan for thirty years.

What happens to the states and federal governments if borrowing costs go up? Think about that as you read the following.

FRB: Testimony--Bernanke, Semiannual Monetary Policy Report to the Congress--July 17, 2012
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Old 07-18-2012, 09:19 PM
 
Location: Great State of Texas
86,093 posts, read 72,469,891 times
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Quote:
Originally Posted by mathjak107 View Post
The system i found that rivals the ray lucia one uses 3 buckets too.

Lets say you have 500k and want 20k a year.

Bucket one gets 5 years of withdrawals which is 100k.

That goes in cd's , bonds,tips,money markets all laddered out to 5 years.
Any money not spent over the 5years gets thrown in bucket 2

Bucket 2 gets 15 years of dough ,thats 300k in laddered bonds,inflation proof bonds,high yield bonds ,income funds.

That takes us out 20 years now.

Bucket 3 is your stock bucket which had 100k left to put in it.

It has been growing for 20 years and also collecting all those reinvested dividents.

That bucket gets sold off as you need cash and spent down.

Its a good plan that trys to keep you from being effected by all the short term noise and events.
Wow...that is something along the lines of how I have always invested..short/medium/long term and for me that was 5-10-15 years out.
What I didn't use for short term I stashed into medium and long term.
On top of that I have a 1-3-5 year personal plan and my short term investing takes care of that.

While I was working though the withdrawals were for big ticket items..house, college, vehicle, vacation, etc.
But now that I'm retired I've been floundering a bit on how to organize myself, both for investing and my personal plan.

Thanks for this post, your timing couldn't have been more perfect

Do you have any more information on it ? Link or book perhaps ?
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Old 07-18-2012, 09:27 PM
 
29,764 posts, read 34,851,819 times
Reputation: 11675
Quote:
Originally Posted by mathjak107 View Post
The system i found that rivals the ray lucia one uses 3 buckets too.

Lets say you have 500k and want 20k a year.

Bucket one gets 5 years of withdrawals which is 100k.

That goes in cd's , bonds,tips,money markets all laddered out to 5 years.
Any money not spent over the 5years gets thrown in bucket 2

Bucket 2 gets 15 years of dough ,thats 300k in laddered bonds,inflation proof bonds,high yield bonds ,income funds.

That takes us out 20 years now.

Bucket 3 is your stock bucket which had 100k left to put in it.

It has been growing for 20 years and also collecting all those reinvested dividents.

That bucket gets sold off as you need cash and spent down.

Its a good plan that trys to keep you from being effected by all the short term noise and events.
Is that Philip Lubinkski you are sharing. Probably not. Lubinski does six 5 year buckets and funds each with enough appropriate investments to generate income for the five years etc etc. It is part of what motivated me to start this thread along with a dozen other reasons.
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Old 07-18-2012, 09:31 PM
 
29,764 posts, read 34,851,819 times
Reputation: 11675
Quote:
Originally Posted by Happy in Wyoming View Post
I suggest that before people become too euphoric about the economic future they take a very close look at Ben Bernanke's remarks to Congress. This doesn't seem to be very encouraging for anyone who wishes to plan for thirty years.

What happens to the states and federal governments if borrowing costs go up? Think about that as you read the following.

FRB: Testimony--Bernanke, Semiannual Monetary Policy Report to the Congress--July 17, 2012
We could all die of natural causes and could have at any point of our lives but yet we still planned the future in anticipation of being there. Why would listening to Bernanke change that. If anyone doesn't want to plan the future I wouldn't think they would have much interest in this thread.
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Old 07-18-2012, 11:42 PM
Status: "Support the Mining Law of 1872" (set 5 days ago)
 
Location: Cody, WY
9,570 posts, read 10,912,012 times
Reputation: 19190
Quote:
Originally Posted by TuborgP View Post
We could all die of natural causes and could have at any point of our lives but yet we still planned the future in anticipation of being there. Why would listening to Bernanke change that. If anyone doesn't want to plan the future I wouldn't think they would have much interest in this thread.
I'm hardly saying that you shouldn't plan ahead. I'm counseling cautuon. In this case that means to set up your investments so that you won't be locked in. Hedge your postions. In unsettled times we can no longer rely upon historical precedent.

When the chairman of the Fed sounds like a doomsday prophet I begin to feel edgy.

Read his presentation and keep in mind that he's as mainstream as they get.
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Old 07-19-2012, 02:08 AM
 
71,469 posts, read 71,652,652 times
Reputation: 49027
Quote:
Originally Posted by HappyTexan View Post
Wow...that is something along the lines of how I have always invested..short/medium/long term and for me that was 5-10-15 years out.
What I didn't use for short term I stashed into medium and long term.
On top of that I have a 1-3-5 year personal plan and my short term investing takes care of that.

While I was working though the withdrawals were for big ticket items..house, college, vehicle, vacation, etc.
But now that I'm retired I've been floundering a bit on how to organize myself, both for investing and my personal plan.

Thanks for this post, your timing couldn't have been more perfect

Do you have any more information on it ? Link or book perhaps ?
for lots more info on using bucket systems i suggest ray lucias books. he uses 3 buckets too but goes 7 years in buckets 1 and 2.

the thing i dont like about rays system is he uses un-traded reits for about 20% of his money.

while the dividedends are high they are costly,not transparent and like the one i own using borrowed money to pay that dividend when income falls short.

the one i mentioned above uses longer time frames for 1 and 2 . two is more aggressive and bucket one ceases to exist after 5 years.


interesting spin on it.

one thing has been proven to be a mistake in any case and folks do it all the time and that is use stock dividends as a direct source of income.

i have been against doing that for years because they are not ,safe,secure or consistant enough through good and bad times to count on.

sure companies have histories of paying but far more have histories of cutting or suspending dividends too.

1/3 of all the markets gains are from dividends so by spending those down early on by utilizing them for cash you are killing the goose thats supposed to be laying the golden eggs for years to come.

between organizing assets so they are in the right vehicles ala equities in taxable accounts, income stuff in deferred and organizing how you spend down it can make a real difference in your survival rate.

`
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Old 07-19-2012, 02:16 AM
 
71,469 posts, read 71,652,652 times
Reputation: 49027
Quote:
Originally Posted by TuborgP View Post
Is that Philip Lubinkski you are sharing. Probably not. Lubinski does six 5 year buckets and funds each with enough appropriate investments to generate income for the five years etc etc. It is part of what motivated me to start this thread along with a dozen other reasons.
actually it was an article i once read in seeking alpha.
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