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Old 05-17-2014, 05:42 PM
Location: SC
8,794 posts, read 5,682,944 times
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Not really all, I should have said 70% stocks.

I have more than enough in the Stock Market, I just passed my "safety amount" last week. I am thinking about finishing out the year (working) and then looking to see then if I still feel the need to retire (can't imagine I won't - but who knows).

But in the long run, I am thinking about keeping the cash in the market and allowing it to continue to grow as risk does not scare me that much.

Has anyone here retired "on the Market" and left all their money there? If not, where did you move it?
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Old 05-17-2014, 06:11 PM
Location: WA
5,399 posts, read 21,431,388 times
Reputation: 5914
Works fine as long as you don't need the money at a crash or during the recovery. I was forced to sell some in 2000 at a loss and 2008 at a large loss... I now allocate with less in equities.
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Old 05-17-2014, 06:30 PM
Location: Florida
4,383 posts, read 3,724,411 times
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You need to have a reliable cash flow. Thus you need several years of cash to cover expenses that exceed ss, pension etc. You do not want to be forced to sell in a down market. Remember the market could take 10 years or more to recover.
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Old 05-17-2014, 06:47 PM
Location: Haiku
4,188 posts, read 2,610,813 times
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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.
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Old 05-18-2014, 05:22 AM
Location: Mount Airy, Maryland
10,490 posts, read 5,957,375 times
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I am a pretty aggressive long term investor but I will never ever never be in all stocks at retirement age. If you have 2 years of reserves then you have a lot of money in a vehicle that I would think is too conservative, so you are not all in with stocks. I don't see how you can be both.
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Old 05-18-2014, 05:34 AM
72,003 posts, read 72,043,164 times
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the biggest danger of high stock allocations if spending down is bad sequences the first 5 years can be quite harmful.

after an up cycle you are good to go and in 146 years of studying rolling 30 year time frames there has never been a failure in the ability to keep producing that income from 100% equities spending down in good and bad years directly..

the drag of cash and bonds in up years weighs down the gains . the extra cushion obtained by the high equity positions in up years more than offeset spending down in the bad years.

from a mathamatical standpoint if you cleared any early disasters you are good to go.

emotionally though not many of us have the pucker factor for huge swings in retirement so mentally is another issue.

the first 5 years though are the real danger as bad sequences of gains and loses can have you spending down excessive amounts early on and that cannot be made up later.
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Old 05-18-2014, 06:53 AM
Location: it depends
6,074 posts, read 5,345,517 times
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How much danger is there, if you can live off the dividends, with a margin of safety in case of dividend cuts. Berkshire Hathaway will get a dividend on its Coke stock of more than 28% on its original cost this year. The first year, back in the 1980's, the yield was 3.2% but it has gone up every year since. Every year. Tech wreck, 9/11, financial crisis, recession, high interest rates, low interest rates....the dividend went up every year.

The fact that the price of Coke stock goes up and down, and fell by more than 50% from its 1990's peak, makes no difference. The retiree should be buying groceries with portfolio income, not statement value.
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Old 05-18-2014, 07:09 AM
72,003 posts, read 72,043,164 times
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dividends are no different than not getting a dividend and just selling a piece of a growth stock off on your own. if total returns are the same ,they are the same except you may have a small commission to pay on the sale.

they are still just stocks and have to be treated as such.

the problem is dividend cuts follow bad drops like night follows day. that shortfall in income will have to be met by selling off stocks at a loss to make up the difference.

when spending down averages do not count , the fact a stock recovers is a moot point if you need to make up a shortfall in a down year or down years . ..

look at the beating the most select group of dividend payers ever assembled took in the wall street darling DVY during the 2008-2009 downturn . DIVIDENDS WERE CUT OR SUSPENDED ALL OVER THE PLACE.

dvy fell more than the market once dividends were cut. those that thought dividends were like interest on a bond found out they made a pretty wrong assumption if they had no other sources of income other than those dividends..

dividends are best re-invested and left to grow to be converted during favorable times to spendable income. in my opinion they should not be counted on day in and day out as a direct source of income. they are subject to change or failure just at the worst of times.

they should be kept as stocks and treated like stocks. a retirement income should be safe ,secure and consistant . dealing with equities directly in any shape or form make it anything but that.

that is why folks keep a year or 2 in liquid assets that are more consistant. 2 years may not even be enough to clear some downturns,especially if you are a new retiree who has not had an up cycle or 2 yet take place.

a retiree having to sell stocks at a loss early on is like a trader having a string of bad trades . that money is gone forever no matter how well the averages do later on.

Last edited by mathjak107; 05-18-2014 at 07:37 AM..
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Old 05-18-2014, 07:56 AM
Location: Pittsburgh
17,967 posts, read 18,303,391 times
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I am currently all stocks, but I have been an investor since at 15. I most likely will be all stock, but have been thinking of some real estate in there. I don't think there is any reason you can be all in the stock market, but be your own mutual fund so to speak. Diversification and plenty of blue chips. Energy is usually a good bet, like big oil. Big oil will always rule even if we switch more to other sources because they have the money to own them as well. Enjoy your retirement!
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Old 05-18-2014, 08:03 AM
Location: Maryland
282 posts, read 306,763 times
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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.

Last edited by CSRSJim; 05-18-2014 at 08:07 AM.. Reason: misspellings
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