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Old 05-18-2014, 09:32 AM
 
29,789 posts, read 34,889,516 times
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Quote:
Originally Posted by CSRSJim View Post
One consideration I found was to consider what risk level all your sources of income are in retirement. If you have a government pension (safe, low risk), social security (safe, low risk), fixed annuity, etc. then your remaining income streams (stocks, bonds, CDs) can be riskier since the over all risk is the average of all income sources.

For example if a federal govt retiree has 80% of their retirement income from a pension (they paid ~7% of salary into while working 35 years), then the remaining savings (IRA, 401K, etc.) can be almost all stocks since that income is only 20% of the total.
Hmmmm, Hmmmm let me ponder your thinking along with the next post I will respond to.

Bada Bing! I resemble that thinking process. We are truly blessed because Pensions and SS are providing over 100% or our retirement income with more coming. Thus other than cash for emergency or initial draw down if the market tanks now and stays down til RMD's we are more aggressive with our AA. I am still trying to sort some things out in my mind about all of it. As a side note you would like Wilmington area as a retiree, may not if still working.
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Old 05-18-2014, 09:34 AM
 
29,789 posts, read 34,889,516 times
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Originally Posted by TwoByFour View Post
We just retired this year and have put as much as we can into equities (stocks). The key to making that work, as cdelena pointed out, is to make sure you have enough cash or something that can be quickly liquidated with little risk, set aside. For us, we calculated that to be 5 years worth of withdrawals from our investments. That comes out to about 15-20%. The trick is what to put that 15-20% into - cash, bonds, CD's or what.

But, this strategy is not the norm - most FAs (financial advisers) will recommend more like 60% equities and 40% bonds. They recommend that because the stock market is volatile, and most people associate volatility with risk. But volatility is only risk if you need to sell stock when they have plummeted in value (as cdelena had to, above). If you can avoid that by having a 5-year cash reserve to weather downturns in the market, it frees you from worrying so much about volatility. The market has its ups and downs, but historically it has always bounced back from a decline. And it usually does so with spectacular gains. If you sit pat on your stocks, they will all recover in value. The key is to be patient.

If you have reached your magic number, another approach is to go conservative and not risk any more than you have to at this point. That by far would be the safest route. You should talk it over with a FA.

At any rate, that is what we are doing. But I know it is not for everybody.
Hmmm regarding your first paragraph. Bada Bing I resemble that
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Old 05-18-2014, 09:59 AM
 
Location: Pac. NW
2,021 posts, read 1,525,590 times
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I retired in August at age 48 and will keep most if not all of my money in the SP500. It's how I got to the point of being able to retire early.

The opportunity cost of going conservative with bonds/cd's is too high. I'll keep it in the market 'til I'm dead.
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Old 05-18-2014, 10:03 AM
 
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nothing wrong with that if you got the stomach. after a while things can fall 50% and you would still be well a head of where you would have been in cd's and money markets playing it safe.
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Old 05-21-2014, 10:25 AM
 
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What is the alternative to stocks? Cash, MM, bonds all could be decimated by inflation. Real estate has very high transaction cost and ownership cost and can also be decimated maybe not by inflation but when will the next black swan come flying in? I've invested in stocks since I first worked over 40 yrs ago and they have served me well. Mostly buy and hold, still have some bought 40 yrs ago and the annual dividend is more than my basis.
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Old 05-21-2014, 04:34 PM
 
71,737 posts, read 71,853,273 times
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there are no assets that are less then fairly valued at this point.
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