Where did it say that? I said…gifts and travel were part of our retirement budget. I never mentioned using my principal for that.
But let’s move on.
I’m loving that I can do the things I want to do in my retirement.
I retired at age 60 from my full time job, and then worked leave positions for about 10 years. It took planning to be able to do that…and I’m pleased we could make that happen.
I never suggested that the vacation discussion should be moved to a new thread; I simply pointed out the irony of you suggesting that investment of retirement funds should be moved to a new thread while discussing vacations in a thread titled “How much do you need to retire?”.
I think it is all useful to read about, and if a topic does not interest someone, it is easy to scroll past. Also, some topics may not apply to my life at the moment, but it may be useful to know of them in the future.
I believe that until fairly recently (the last several months maybe) this was the ONLY “retirement” thread, and we talked about all kinds of things, in the meandering way of many threads on CC. Just lately other threads have been started, related to non-monetary things. I’m fine talking about pretty much anything related to retirement in this thread, but certainly money/investment related issues seem reasonable to me. I have no probably with overlap between threads either.
The #1 concern for retirees is running out of money and investments are the main source of funds for most retirees (outside of social security and maybe a pension).
That’s true, but the nitty-gritty of the types of investments one should choose is based on many personal variables. And yes, I agree that several topics have spun off. It would just be reasonable for this to be another one to be spun off if it’s going to be specifically about types of investment choices available to people for different reasons. It’s an issue not just about retirement but about in financial planning in general. That would be a wonderful separate topic.
Let’s all review the general rules in civil discourse. Several posts deleted
In modern times where you can do no-fee stock/fund sales online without involving a stockbroker, it’s trivial to create a cash flow with equities. For example, my primary brokerage is Fidelity. Fidelity permits fractional share transactions, such that I can choose to sell $1000 of a fund, rather than n shares. I also use Fidelity as my primary bank, so my credit card and other bills are paid from the same account where I made the transaction above. If my cash balance for paying bills gets lower than I’d like, then simply sell whatever amount I’d like to restore balance. It takes under 2 minutes. There is probably a way to automate this transaction each month, such that I have a monthly cash flow without needing to click anything.
Whether this is defined as selling principal is not the key metric. Far more important is whether my portfolio balance is increasing or decreasing over my desired retirement time horizon. With the discussed 4% withdrawal, balance is extremely likely to increase over a long time horizon.
Out of curiosity, I tried some other portfolio distributions and time horizons, again focusing on historical events. In this example “stocks” are S&P 500 and bonds are “10 year treasury”. It’s slightly different than the earlier Trinity study, so slightly different results. Using Monte Carlo type analyses and stress tests of particular types of challenging situations (50% US stock market crash that takes 10+ years to recover from, high inflation/stagflation, fed rate low for extended periods, currency devaluation, …) instead of historical analyses point to a similar conclusion with benefits of a majority equity portfolio. However, they also emphasize the benefits of diversity beyond just US equity, which I expect would have eliminated most of the 1960s/1970s retirement failures below. Results are below:
10 Year Time Horizon, 7% Withdrawal
- 100% Stocks – 1% Fail, Failure Year = 1973, Median End = 100% of Initial
- 75% Stocks / 25% Bonds – 0% Fail, Median End = 90% of Initial
- 50% Stocks / 50% Bonds – 0% Fail, Median End = 70% of Initial
- 100% Bonds – 0% Fail, Median End = 40% of Initial
20 Year Time Horizon, 4.5% Withdrawal
- 100% Stocks – 1% Fail, Failure Year = 1969, Median End = 170% of Initial
- 75% Stocks / 25% Bonds – 1% Fail, Failure Year = 1969, Median End = 140% of Initial
- 50% Stocks / 50% Bonds – 0% Fail, Median End = 100% of Initial
- 100% Bonds – 12% Fail, Failure Year = 1968, Median End = 30% of Initial
30 Year Time Horizon, 4% Withdrawal
- 100% Stocks – 3% Fail, Failure Year = 1969, Median End = 290% of Initial
- 75% Stocks / 25% Bonds – 3% Fail, Failure Year = 1969, Median End = 200% of Initial
- 50% Stocks / 50% Bonds – 3% Fail, Failure Year = 1969, Median End = 100% of Initial
- 100% Bonds – 51% Fail, Failure Year = 1973, Median End = 0% of Initial
40 Year Time Horizon, 3.5% Withdrawal
- 100% Stocks – 1% Fail, Failure Year = 1969, Median End = 500% of Initial
- 75% Stocks / 25% Bonds – 0% Fail, Median End = 300% of Initial
- 50% Stocks / 50% Bonds – 2% Fail, Failure Year = 1966, Median End = 150% of Initial
- 100% Bonds – 60% Fail, Failure Year = 1972, Median End = 0% of Initial
Well we can all rethink our retirement if this is the definition of “middle
Class” 
“Bill Gates Bought His Daughter A $16 Million Horse Farm As A Graduation Gift — But Ex-Wife Melinda Says The Kids Were Raised Very ‘Middle Class’ “
Melinda contradicts herself – we raised our kids in a perfectly normal environment, but also “You know, you really are not allowed to tell other people how we flew on this trip… otherwise it will separate you from other children.”
“Yes, the Gates kids had an allowance”
What she didnt say: “We had to do annual split gifting on their allowance to avoid tapping into our lifetime gift exemption”.
Glad you have perhaps pinpointed your BFF panic reason.
Kinda like thinking you are a self-made man when you started your business 40+ years ago with $14 million from Dad…
We are a couple, and with our home we are about at $3 M. We both turn 68 this year, and have both been retired - for me almost 3 years and DH 3 1/2 years retired. We probably will be selling our home in 2026 (timing to have it listed at the right time), and sometime after that purchasing a home where DD1/SIL/5 grandkids live. Expect to pay more and get less on home (quality and size) but location of that home is key - to be convenient for me to be a helper for the grandkids. DH is on the same page with clearing out all the ‘stuff’ we don’t need or want to move, and we have been working on clearing stuff out. Have about half done in short order on the garage. We plan to work on a good weather day where both of us are fully available to finish organizing and tossing more (we got cut short with thunder and rain, so we had to throw stuff in bins and shove back into the garage).
DH is not totally convinced about the move. SIL has to make a job transition first, and that might drag out. He is in a good field of work and should be able to make the transition (out of the Army) but nothing is certain until it happens. But DH does want to sell this house I believe. He didn’t want to pay to clip our hedge ($800) and did it himself in one day. DH maintains the front lawn beautifully and does enjoy doing that, but it is work. I don’t want to do it.
DH may want to rent something locally to keep living in our current area stretch out - he has a hobby he is very involved with. But I will see about a home planned near DD1/family. Our marriage doesn’t mean having us both be always together in a location. I have been away twice for a month - once in Switzerland in 2016, and last month being with DD1/SIL/family with their 5th child being born and baptized.
So, we are taking ‘baby steps’ for now and seeing what develops for SIL and for us.
@Youdon_tsay - Thank for the Ramit Sethi rcommendation. Yesterday while running I listened to podcast of this interesting discussion. (It was long, but lots of various topics including unwise ski trip surprise/splurge, upcoming wedding and possibility of the wife going to grad school for three years / no income). Unbelievably they have income over $300K with rent being only $2500.
@Youdon_tsay I’m so glad Ramit has gained another listener! A lot of value to his work.
Especially the question, “What is your vision of a ‘rich life’ (be specific)?” DH and I have had good conversations with talking that question over between us, and it has helped us focus on what we want to do going forward as well as how we want to spend/save/invest our resources.
If I had full confidence that SS would not collapse and that Medicare at today’s relative cost level would continue to be available, I would feel good about where we are. Because I don’t, I am not certain I will ever think we have, “enough.”
Dh has retired twice. Both times he was, “found,” for other roles. He will never make the amount of money he did at the height of his career, but he still makes a decent salary. Enough that we are continuing to build some wealth because we live (as we always have) well below our means. I don’t know how much longer he will work (he is 62). I honestly prefer that the continues both for the money and because he simply likes working.
Nothing is guaranteed but Im confident that social security wont collapse for those over 60 for a few reasons.
Older people vote. Social security and Medicare are sacred cows. No politician is dumb enough to let it collapse.
There are fixes. Raise the social security wage base, increase the FRA for younger workers, etc.
Please let it be true! I do agree with you.
I like to think you are right, but nothing anymore makes sense so …
I’m more concerned that Medicare could be dismantled. Without it, how many of us would be able to find medical insurance at the ripe age of 80?