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Old 12-30-2014, 08:59 AM
 
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If you don't get a pension, how do you fund your retirement financial needs, other than Social Security?

The dividends and interest from Stocks, Bonds, ETF's and Mutual Funds

OR

Withdraw a certain percent of the money from your investment portfolio on a scheduled or needed basis.

OR

Another approach (Please explain!)


(I put this on the retirement board instead of the financial board because I want to hear only from retirees.
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Old 12-30-2014, 11:51 AM
 
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it is called systematic withdrawals and it has been the standard way to draw an income for decades.


the money is pulled either from all assets equally or you keep a few years worth of cash and then liquid bonds and equities to refill as needed.

trying to spend dividends or interest directly can make for an undependable income stream when rates are non existant and or dividends are slashed or suspended in downturns.

it really does not matter one bit if your growth comes from interest ,dividends or capital appreciation. it all amounts to the same thing.

your allocations ,risk tolerance and desire for slack in the plan will determine how much you can take .

Last edited by mathjak107; 12-30-2014 at 12:13 PM..
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Old 12-30-2014, 12:02 PM
 
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Funding retirement with dividends and interest while automatic and no effort usually means higher ordinary tax rates although "qualified dividends" such as those from equity dividend ETFs but not those from REIT ETFs have lower tax rates.

Using withdrawals by selling a portion of your assets such as broad market equity ETFs like the SPYs and QQQs requires more effort by doing the actually sell orders on a regular basis but if you just let the assets grow and are not a day or short term trader, those will have lower long term capital gains rates.
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Old 12-30-2014, 12:57 PM
 
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So far our retirement is almost entirely funded by our company pensions (we are still too young to draw social security). We have managed to avoid touching our capital so dividends and interest have been reinvested.
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Old 12-30-2014, 01:02 PM
 
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in that case the pay check never really did stop. you are for all purpose still in the accumulation stages.
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Old 12-30-2014, 01:16 PM
 
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If I sell stocks to fund my 4% systematic withdrawal I have to pay commissions and worry that the stock I picked to sell may have been on it's way up. If I fund my retirement through dividends then I just have the dividends transferred to my cash account to pay bills and I can forget about the stock market.
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Old 12-30-2014, 01:18 PM
 
Location: in the miseries
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I withdraw money as needed.

Don't usually need to, though.
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Old 12-30-2014, 01:23 PM
 
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Quote:
Originally Posted by Quick Thinker View Post
If I sell stocks to fund my 4% systematic withdrawal I have to pay commissions and worry that the stock I picked to sell may have been on it's way up. If I fund my retirement through dividends then I just have the dividends transferred to my cash account to pay bills and I can forget about the stock market.
Do you send in 1/2 an electric bill if markets fall for a few years and dividends are cut?

If inflation kicks up and interest and dividends lag you would have to
sell stocks at a loss to make up shortfalls.

Most retirees keep a few years of withdrawals in safe money. Then dividends and interest is reinvested and can grow. Keep a few years in fixed income and you have money to replenish the safe money until stocks come back and you can refill at a gain.
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Old 12-30-2014, 05:13 PM
 
Location: Near a river
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Quote:
Originally Posted by Jaggy001 View Post
So far our retirement is almost entirely funded by our company pensions (we are still too young to draw social security). We have managed to avoid touching our capital so dividends and interest have been reinvested.
You did read the bolded underlined words in the OP?
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Old 12-30-2014, 07:37 PM
JRR
 
Location: Middle Tennessee
3,676 posts, read 2,223,468 times
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We are withdrawing 1% from our 401ks every quarter, so the amount fluctuates. We keep approximately 2 1/2 years of withdrawals in short term bond funds, replenishing the withdrawal amounts as stocks reach our sell trigger. We did sell our Apple stock yesterday, so this quarter withdrawal will come from those proceeds instead of the short term bond funds.

I supplement the withdrawals with what I make trading in a taxable account.
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