Retirement...and dates...

[KentuckyWildcat]

Had they not sold anything they would have been in good shape by 2005. The way to get killed in the market is to sell when it is down and fail to diversify. It’s easy to invest in broad markets with ETFs. Failure to invest in the economy means you fall behind as the US economy grows. An alternative is to have have an excellent salary get 10% increases each year. That way you will stay ahead of the economy and the broader markets.

They could have retired 10 years ago had they stayed in...now they are working until they can't.

[MickintheHam]

They could have retired 10 years ago had they stayed in...now they are working until they can't.

I’m really sorry to hear that. It breaks my heart. Risk tolerance is unique to each individual.

[Catfan73]

I was just daydreaming about retiring some day and it occurred to me that some may not be aware that social security does have a maximum benefit. It won't matter to the vast majority but I just looked it up and right now it's $3,895 per month for someone that's going to start withdrawing this year at age 70. It goes up a little every year because it's tied into national wage averages.

[VirginiaCat]

Mick, going back to your model.

I am assuming you are selling stock to get to the Minimum Distribution amount you want to have in cash. Are you trying to balance LT Gains and Losses to eliminate tax burden or are you taking your dividends and interest each year and not reinvesting and taking them to cash?

If you look at the S&P 500, back to 1933, I don't believe you will see a three year period of decline. Just shy of two years is the longest losing period. Going back to the 60s, any annual declines (I believe there are only 13 years in which there has been a decline), have been wiped out within a year.

To avoid forced selling in a down market, i.e. a required minimum distribution, I keep a minimum 1 year RMD in liquid assets, mostly cash. This enables me to do two things. First I avoid a forced sale of securities when the market declines. Two, I have cash to buy stocks when the market is down. In 2020, I hit the exacta when Congress suspended the RMD requirement for 2020. Not only did I avoid the forced sale, but I had cash to invest in early April when the market was down. I was able to buy some nice stocks at a very attractive price. The gains on those stocks has been stunning.

My investment object is to achieve returns that exceed 4%/ yr. which is also about the amount of my annual RMD. So, if I get a return of 1-2% on 4% of my retirement funds, a total stock market return of 5 or 6% keeps me well ahead of the 4% I have to earn to cover withdrawals. This keeps my core IRA balance I had at retirement intact. I view this strategy to be very conservative.

In years in which there are windfalls I feel very comfortable taking excess earnings and doing something extravagant.

The basis for my philosophy on investing, believe it or not, comes from the Gospel of Matthew Chapter 25, the parable of the talents. I believe it is a sin to bury your savings(talents) in the ground and dig it up to spend it as you go. Take what you have saved and let it grow and flourish. If things go as planned, I can live comfortably in retirement and still have the principal I saved in my working life for my heirs giving them an opportunity to let it continue to grow for them.

[TRUCKERCATFAN]

Old truckers never retire. We just get a new Peter built!

I’ll probably not retire at least not until I’m no longer capable of doing the job.

[MickintheHam]

Mick, going back to your model.

I am assuming you are selling stock to get to the Minimum Distribution amount you want to have in cash. Are you trying to balance LT Gains and Losses to eliminate tax burden or are you taking your dividends and interest each year and not reinvesting and taking them to cash?

There are no capital gains and losses in the IRA world. Everything distributed is taxed as Ordinary Income. I keep at least one year of RMD in Cash or very stable investments. That keeps me from having a forced sale in a down market to meet the RMD requirement. Much of the cash comes from current year distributions from ETfs and mutual funds (dividends, gains, returns of principle). But I always keep one year's RMD amount liquid. I don't want to be forced to time the market.

For my regular brokerage account, I sweep in the dividends and gains that are declared. I avoid selling securities for the most part, but when I do I try to match up the winners and losers to minimize the taxes. Fortunately or unfortunately, I've held most of the securities so long most all have gains. I tend to sell anything that languishes and fails to keep pace with the rest of the market. I am very partial to dividend stocks and preferred stocks. They are a great alternative to bonds. I'll keep an underperforming stock if if the dividend yield is 4% or better. That's been the case with tobacco stocks and utilities recently. Some of the electrics appear to be excellent buys right now if you are focused on yield and moderate growth.

[VirginiaCat]

There are no capital gains and losses in the IRA world. Everything distributed is taxed as Ordinary Income. I keep at least one year of RMD in Cash or very stable investments. That keeps me from having a forced sale in a down market to meet the RMD requirement. Much of the cash comes from current year distributions from ETfs and mutual funds (dividends, gains, returns of principle). But I always keep one year's RMD amount liquid. I don't want to be forced to time the market.

For my regular brokerage account, I sweep in the dividends and gains that are declared. I avoid selling securities for the most part, but when I do I try to match up the winners and losers to minimize the taxes. Fortunately or unfortunately, I've held most of the securities so long most all have gains. I tend to sell anything that languishes and fails to keep pace with the rest of the market. I am very partial to dividend stocks and preferred stocks. They are a great alternative to bonds. I'll keep an underperforming stock if if the dividend yield is 4% or better. That's been the case with tobacco stocks and utilities recently. Some of the electrics appear to be excellent buys right now if you are focused on yield and moderate growth.

Thanks, I thought as much. Sounds like we are similar investors. I loaded up on some ATT and while it is not seeing much on the stock prices side (pretty stable) the over 6% Yield is nice to have. just picked up some Abbvie that is under 4% yield has a long history of raising dividends and a solid product pipeline.

Thanks Mick.

[KentuckyWildcat]

I was just daydreaming about retiring some day and it occurred to me that some may not be aware that social security does have a maximum benefit. It won't matter to the vast majority but I just looked it up and right now it's $3,895 per month for someone that's going to start withdrawing this year at age 70. It goes up a little every year because it's tied into national wage averages.

My old boss did this. Worked out pretty well for him. He may have started before 70 but he waited as long as he thought he could after his "max age". He was still working and making a very good salary so he was able to wait. So now he is drawing close to his max. Plus retirement savings and his wife has a teacher's pension. So they are doing pretty well.

Sadly they have not enjoyed it in the way they planned. They lost their son and daughter-in-law within 6 months. So they are now raising teenage boys again. But at least they were prepared to be able to do so.

[MickintheHam]

Thanks, I thought as much. Sounds like we are similar investors. I loaded up on some ATT and while it is not seeing much on the stock prices side (pretty stable) the over 6% Yield is nice to have. just picked up some Abbvie that is under 4% yield has a long history of raising dividends and a solid product pipeline.

Thanks Mick.

Abbvie is a good one. There is an ETF out there that guaranteed a 7% yield. I’m tracking that one now and plan to buy in the next couple of days. My only reason for posting is there are a bunch of people in Money markets and low yield “safe” investments. Over time they will fall behind. If gas goes to $3 or electric and sewer rates go up 10%, a lot of safe investors will start to hurt.

[VirginiaCat]

Abbvie is a good one. There is an ETF out there that guaranteed a 7% yield. I’m tracking that one now and plan to buy in the next couple of days. My only reason for posting is there are a bunch of people in Money markets and low yield “safe” investments. Over time they will fall behind. If gas goes to $3 or electric and sewer rates go up 10%, a lot of safe investors will start to hurt.

HNDL?

[MickintheHam]

It’s yield is 6.94%