If you are retired, do you keep an emergency fund? (move, fighting)

[mathjak107]

Originally Posted by lieqiang

For someone who's entire portfolio is in the stock market your post makes sense.

Here in reality land where most people have a mix of stocks and bonds, it doesn't. We're about 65/35 stocks/bonds. Are you 100% in stocks?

i was always 100% equity in my accumulation years . never needed bonds unless it was a capital appreciation play on emerging market or high yield bonds .

the most efficient retirement portfolio is not something i would do but it is 2 years withdrawals in cash and the rest all in equity's .

[aslowdodge]

Originally Posted by mathjak107

well we are retired and keep two years withdrawals ready to go in cash and a 50k emergency fund .

so it is quite a bit of cash . but being newly retired i have not had an up cycle yet while spending down so cash is about 10% at the peak and gets spent down from there . .


but after an up cycle i may keep the current year and 25k as an emergency fund . i do it for mental comfort . math says i could just as easily not do it and just spend down systematically with no cash once i get a decent up cycle..

What is this up cycle that you speak of?

[mathjak107]

a typical decent run up where you develop a few years worth of withdrawal money up front .

on the other hand a hit day 1 in retirement while spending down is like a trader having a string of loosing trades out of the gate . the money you need to generate future income is gone .

but once you have a cushion in place you can deal with occasional down years and losses. spending down systematically will work fine with no cash buffers once you are a head of the curve .

[lieqiang]

Originally Posted by mathjak107

i was always 100% equity in my accumulation years .

What? You've got so many posts from before you retired talking about your bond funds, this doesn't make sense.

Originally Posted by mathjak107

you may want see why you want to own intermediate bonds at this point.

I am using them to control volatility but as soon as rates trend up they will likely be sold for better choices in funds.

the 6-7% they returned this year was better than most other conservative investments so far performing well so I am holding them.

Originally Posted by mathjak107

I USE INTERMEDIATE TERM BONDS MYSELF. since i am no longer doing the permanent portfolio i use them more to just balance the portfolio's volatility.. i also do not marry an asset class. when it's time is over and rates rise that bond money will be deployed in other types of funds depending what the big picture calls for.

Originally Posted by mathjak107

i own quite a bit of fidelity and vanguard short term bond fund but it is only a temporary holding place until new investment opportunity elsewhere presents itself.

etc.

[mathjak107]

I changed my portfolio over to get ready for retirement in 2007 -2008 since we expected to retire sooner when we had the house in pa .


when we sold the house and decided to stay here I decided to work longer but the portfolio remained in place since retirement was open ended and I could retire whenever I wanted. I was working part time in the final years so we were all ready drawing some money off the portfolio before I fully retired.

but prior to changing over I was always pretty much 100% in equity's for the most part with an occasional emerging market or high yield bond fund

[Robyn55]

We keep about 2 years worth of living expenses in "cash". A "high yield" savings account yielding about 1%. We don't call it an "emergency fund" - but it can be used for emergencies/"rainy days". One of the main reasons we have it is so if either of us died - the other would have some breathing room to figure out what to do next. Another possibility might be if one of us had a catastrophic health event - like a stroke. And needed to go into an ALF or a SNF. Another possibility is we get a note from our insurance company saying it will cancel our homeowners' policy unless we put on a new roof in X months. Yet another is our car dies and we need a new car. There's always the possibility of dental expenses too . I suppose you could call our fund the "unexpected big ticket items" fund. Robyn

[lieqiang]

Originally Posted by mathjak107

I changed my portfolio over to get ready for retirement in 2007 -2008 since we expected to retire sooner when we had the house in pa .

Not to hold your feet to the fire, but this doesn't make sense either. The internet always remembers.

You from 2006:

another thing i want to add is my system for dealing with the dips...we have 3 seperate portfolios running depending when we may tap the money.....a short term 1-3 years ,,,a medium term 3-6 years and a long term looking out about 6yrs and more......the 1-3 is mostly cash, cd,short term bond,,,,the medium is growth and income funds and bonds,,,the long term is aggressivly invested just like when i was 20 yrs old as its money we wont need for years,,,the dips never bother us this way

Surely you've had more than just 100% equities during accumulation years.

[mathjak107]

it may have been 2006 -2007 and not 2007-2008 , i thought it was 2007-2008 but it could be earlier when we bought the house , never gave it much thought . I would have to search back to see the exact point .

but we did convert for retirement somewhere around that time . up to that point we used the fidelity insight growth model since 1987 . did some playing around with the 4 part permanent portfolio for a bit too but that was never our main portfolio and more just an experiment . I experimented with a few different models but always ended up staying wiith the insight models



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[Larry Caldwell]

Originally Posted by lieqiang

For someone who's entire portfolio is in the stock market your post makes sense.

Here in reality land where most people have a mix of stocks and bonds, it doesn't. We're about 65/35 stocks/bonds. Are you 100% in stocks?

You apparently don't understand bonds. If interest rates rise, you are going to have to hold the bonds to maturity to get the face value out of them. If you have to sell them to meet an emergency, you will have to sell at a discounted price. At the same time, rising interest rates will also cut the legs out from under the stock boom, so you won't have a good option either place. A forced sale will cut into the principal of your portfolio.

[Larry Caldwell]

Originally Posted by mathjak107

well we are retired and keep two years withdrawals ready to go in cash and a 50k emergency fund .

so it is quite a bit of cash . but being newly retired i have not had an up cycle yet while spending down so cash is about 10% at the peak and gets spent down from there . .


but after an up cycle i may keep the current year and 25k as an emergency fund . i do it for mental comfort . math says i could just as easily not do it and just spend down systematically with no cash once i get a decent up cycle..

It's all up to your personal situation. My wife and I have everything we need from SS and pensions, and have no debt, so our emergency fund really is an emergency fund. I keep about $40k in a money market that I can just write checks against, and another $50k in 5 year share certificates at my credit union with a 1.62% apy. Everything else is invested. We have a luxury Medicare supplement health insurance for medical financial emergencies. My wife is recovering from kidney cancer surgery that took a team of surgeons and a week in the hospital. It cost us less than $200 out of pocket.

I guess when I was thinking "emergency fund" I was not thinking about actually having to live off our investments. I just had a 6 man landscaping crew here for an 8 hour day, and I'll write the check out of cash flow. I couldn't do that every month, but every other month I could handle. Anything I can schedule is not an "emergency." Next year I have to start taking RMDs.