Question for those already retired......

[Rukh O'Rorke]

So, I'm still working on finalizing my plan and I and have been working on reducing risk. Still a long way to go there and not sure what my goal is - but I have a year or 2 or hopefully not 5!

Anywho......looking into my accounts etc. and thinking about cashing in and withdrawing money on a regular basis has me a bit.....freaked out? I will be retiring before taking soc sec, no pension, just me and my big ole pot o' gold.......I think if the market was going gaga at the time I could handle it, but if it was flat - or worse! declining, not sure how I would handle that from an emotional standpoint.

how are you all handling that? I am going to have a big annual withdrawal for a while (100k+ as I have plenty-O-debt), although that will go down markedly over time, and then I will get to soc sec which will then cover at least 50% of epenses at that time (based on current estimations....)

So - I'm very worried about a bad market the first 5-8-10ish years.......

How do you handle your pot getting smaller, even on a hopefully temporary basis?

[minnesotapaintlady]

As usual, I'll refer to the Bogleheads that have researched the hell out of these kinds of things. 

Year 2000 was probably the worst year to retire in recent history and this thread is about them 18 years later.

www.bogleheads.org/forum/viewtopic.php?t=237334

[Tiny]

I am not retired (yet), but I too had fear about the withdrawal part of retirement.  I'll have some years where I will be relying solely on my savings/investments so I do have some "relief" if you will when my pension kicks in (and then again when I take SS).   I'm not convinced that the pension and SS together will be enough to cover more than basic expenses kind of like an emergency fund that's intended to cover long term job loss (which is short term (a year or two)  when thinking in terms of 5 years/10years/20years of retirement)   

I've quieted some of my fears of drawing down too much investments early on by  having some "buffering" - having up to 3 years of expenses NOT invested - so during "bad investment years" I can hopefully withdraw less (or none) and so ride out a downturn.    

That's also kind of scary - having so much money NOT invested...  but it does let me sleep at night.  

I started building a "buffer" a couple of years ago.    Buying I-bonds the last few years is part of this...   (fwiw back in 2006 I started a monthly i-bond purchase with a measely amount - with the long term plan to bump up the purchases so I'd reach a goal of one year's anticipated retirement expenses in IBonds.  (back then the amount was something like 40K which is too low.).     The 2008 downturn - spooked me and I stopped the tiny monthly purchase.  I wish I hadn't done that. The amount was inconsequential in the short term and in the long term I never restarted that part of the plan.            

Anyway the goal is to have the I-Bond "bucket" - I truly do not foresee needing to use it to cover a year of expenses - but rather as "flexibility". 
and then some sort of years expenses in laddered CDs or TIPS again more as flexibility.  (I'm working on that) 
to have a "cash" bucket   of a years expenses (an EF)  again more as "flexibility"  (I've got this and slowly turning it into laddered CDs/Tips) 

In a typical year - I'd first  tap my tax advantaged investments based on what's happening in the world and what's happening in my Real Life.   
The above 3 buckets smooths out any lumpiness or Life Happening. 

I'm expecting the tapping of tax advantaged investments to happen once a year (or maybe twice) versus "monthly".   The monthly seems really stressful to me.  I'd rather just rip off the band-aid and do it all at once.       

I guess for savings I'm all for DCA  (because I've never had a lump sum to invest)  but for retirement I'm planning to go Lump Sum (in reverse.)

I have a couple of retired relatives (who are not solely relying on their investments) who do the once a year "lump sum" withdrawal.    I think they have some sort of "buffer" they could pull money from rather than investments.   They also have pension and SS money coming in.    

[tallguy]

Jan 30, 2024 9:50:08 GMT -5 Rukh O'Rorke said:

So, I'm still working on finalizing my plan and I and have been working on reducing risk. Still a long way to go there and not sure what my goal is - but I have a year or 2 or hopefully not 5!

Anywho......looking into my accounts etc. and thinking about cashing in and withdrawing money on a regular basis has me a bit.....freaked out? I will be retiring before taking soc sec, no pension, just me and my big ole pot o' gold.......I think if the market was going gaga at the time I could handle it, but if it was flat - or worse! declining, not sure how I would handle that from an emotional standpoint.

how are you all handling that? I am going to have a big annual withdrawal for a while (100k+ as I have plenty-O-debt), although that will go down markedly over time, and then I will get to soc sec which will then cover at least 50% of epenses at that time (based on current estimations....)

So - I'm very worried about a bad market the first 5-8-10ish years.......

How do you handle your pot getting smaller, even on a hopefully temporary basis?

I don't know.  Maybe I can tell you when it actually happens.  

I retired early over six years ago, and could have gone sooner.  From my last day of work until yesterday, my investments are up 77% even without adjusting for the little bit I withdrew.  Admittedly, I don't spend nearly enough, but in that time I also had a 33% drop due to COVID.  That part did not worry me at all, because I knew I had way more than I needed anyway, knew it would bounce back in fairly short order, and had no need to sell when it was down.  Should have taken advantage and done a bigger Roth conversion though.... 

I have always been a saver, and more than a few would call me extreme.  I just have never had a "spending gene."  The biggest reason I have zero financial stress is that I have planned my affairs to keep necessary expenses low.  That has afforded me tremendous freedom and flexibility to do pretty much whatever I want.  The only problem is deciding what that actually is.  I have never been able to spend just for the sake of spending, nor can I easily replace things that are still good just because something else is newer and better.  That's why I still drive a car I've had for 20 years.  I spend several months away from home each year, but most of that is done pretty inexpensively.  Some bigger trips had to be cancelled, and I am hopeful those can be done later.  I also have some house things I am procrastinating on, but they are "desires" and not "needs."  Ultimately, what it means is that I have a seven-figure portfolio of which I need only a fraction, and not a particularly large fraction at that.  The key is (necessary) expenses.  Always.  For me, the tradeoff was time and freedom over things.  Some people can do that.  Some people can't.  But if you can, I HIGHLY recommend it.   

 

[plugginaway22]

We were always savers too! Until we had no income to save beginning in January 2022 when DH retired. Our net worth at year end 2021 is the highest it has ever been. Our retirement monies are almost back there, but YES, it has been difficult to watch. We did what Tiny above talks about. Had about 3 years of expenses in cash/CDs/iBonds so no need to pull from invested money. We are able to survive on 45-50K/year, but with travel and other things we spent 75K in each of our first 2 years of retirement. So now at the beginning of our 3rd year of retirement, we have relaxed a bit and feel more confindent that all will work out. 

My question now is what AA to keep our money in going forward. If we have 'enough', should we just move it all to something safer ie: Treasuries and fewer stocks.

[tallguy]

Jan 30, 2024 15:40:15 GMT -5 plugginaway22 said:

We were always savers too! Until we had no income to save beginning in January 2022 when DH retired. Our net worth at year end 2021 is the highest it has ever been. Our retirement monies are almost back there, but YES, it has been difficult to watch. We did what Tiny above talks about. Had about 3 years of expenses in cash/CDs/iBonds so no need to pull from invested money. We are able to survive on 45-50K/year, but with travel and other things we spent 75K in each of our first 2 years of retirement. So now at the beginning of our 3rd year of retirement, we have relaxed a bit and feel more confindent that all will work out. 

My question now is what AA to keep our money in going forward. If we have 'enough', should we just move it all to something safer ie: Treasuries and fewer stocks.

I would never presume to advise anyone on what they should do here.  It's called "personal" finance for a reason, and the "tried and true" advice has worked for a lot of people over the years.  It is not correct for everybody, however.  I know a lot of things about myself, and one of them is that I am not suited for investing in bonds or fixed income.  The math doesn't work for me, and I will never do it.  I can afford to because of my situation.  An awful lot of people can't.  Other people also worry more than I do.  I am fortunate to not have to.

One thing to keep in mind is that just because something works for someone else, it is not necessarily right for you.  Another is that nothing here is fixed or permanent.  If you try something and it causes you worry, change it.  You can be 60/40, or 40/60, or 100/0 like I am.  The only person who can say that any of those are right or wrong for you...is you.

There is certainly something to be said for the idea of, "Why continue to play if you have already won the game?"  On the other hand, there is also something to be said for the idea of continuing to play to win if you are in no risk of losing.  Generally, the best course of action is the one that allows you to sleep better at night.  

[soupandstew]

Jan 30, 2024 16:39:39 GMT -5 tallguy said:

Jan 30, 2024 15:40:15 GMT -5 plugginaway22 said:

We were always savers too! Until we had no income to save beginning in January 2022 when DH retired. Our net worth at year end 2021 is the highest it has ever been. Our retirement monies are almost back there, but YES, it has been difficult to watch. We did what Tiny above talks about. Had about 3 years of expenses in cash/CDs/iBonds so no need to pull from invested money. We are able to survive on 45-50K/year, but with travel and other things we spent 75K in each of our first 2 years of retirement. So now at the beginning of our 3rd year of retirement, we have relaxed a bit and feel more confindent that all will work out. 

My question now is what AA to keep our money in going forward. If we have 'enough', should we just move it all to something safer ie: Treasuries and fewer stocks.

I would never presume to advise anyone on what they should do here.  It's called "personal" finance for a reason, and the "tried and true" advice has worked for a lot of people over the years.  It is not correct for everybody, however.  I know a lot of things about myself, and one of them is that I am not suited for investing in bonds or fixed income.  The math doesn't work for me, and I will never do it.  I can afford to because of my situation.  An awful lot of people can't.  Other people also worry more than I do.  I am fortunate to not have to.

One thing to keep in mind is that just because something works for someone else, it is not necessarily right for you.  Another is that nothing here is fixed or permanent.  If you try something and it causes you worry, change it.  You can be 60/40, or 40/60, or 100/0 like I am.  The only person who can say that any of those are right or wrong for you...is you.

There is certainly something to be said for the idea of, "Why continue to play if you have already won the game?"  On the other hand, there is also something to be said for the idea of continuing to play to win if you are in no risk of losing.  Generally, the best course of action is the one that allows you to sleep better at night.  

[resolution]

I don't plan to start withdrawing from retirement savings until my husband retires, but I have withdrawn a lot from my brokerage account over the past few years while renovating my house. I have found that I don't mind seeing the number go down nearly as much as I mind selling stocks at a loss.

Right now I am maintaining about a year of expenses in a money market account so that if I need money for a large project I don't have to sell stocks. By the time my husband retires, I would like to maintain 3 years of expenses in the money market. Then if the market crashes, I can just withdraw from cash instead of selling at a loss. I think I will be ok with the overall number going down as long as I haven't locked in the loss by selling.

My parents' neighbors retired in 2000 and didn't have a large enough buffer to survive the 9-11 market crash. They ended up taking out a reverse mortgage on their house to get by. It sounds like a nightmare, but they ended up doing ok, they were able to stay in their house and lived a decent life until they passed away in the pandemic.

[MN-Investor]

When we were working, we lived off of our wages.

Our 401(k)s, IRAs, and brokerage accounts accumulated interest and dividends while the value of the assets went up or down, but we just ignored that as far as money to spend. We kept investing and let it grow.

In 2016 my husband joined me in retirement. Because we had saved and invested for so many years, we planned on waiting until 70 to collect social security. I had been keeping track of our expenses and had a good idea of what we would be spending in retirement, and we kept several years of planned spending in short term bonds and money market accounts in our taxable brokerage account.

My sweetie passed away in 2018 and it only made sense to start collecting social security as a surviving spouse at that point. Then I had an AHA moment. As I said, I had mostly ignored interest and dividends during the accumulation years. NOW it made sense to track exactly how much I was receiving in interest and dividends. I figured that if I could keep my spending under what I received in Social Security + Interest + Dividends, then I could go on forever, never having to sell the income producing assets. Cool.

So I'm not spending more than my income. I re-invest the interest and dividends in my tax deferred accounts and take the equivalent money out of the money market account in my taxable brokerage account to pay for my expenses. It's working for me.

So figure out your total income from your assets. Not all of your spending relies on selling securities. It can help ease some of your stress.

[The Walk of the Penguin Mich]

The only thing I’ll say about this is to research the hell out of what health insurance will be.  Costs are incredibly regional and for us locally, going on the ACA with no subsidies would us each of us about $1300/mo for a pretty crappy plan.  This is largely due to the county we are in, we could move 100 miles away and have different/better options.  

Because of this, TD managed to act as a part time consultant for healthcare.  He worked within one firm that had phenomenal healthcare plans, even to add me to the mix as it would have been far cheaper than a Medigap plan.  He had hoped to keep that to 65, but that didn’t happen.  The last year, he wound up at another consulting firm whose healthcare insurance was crap.  They’d cover 50% of his plan, but to add me was $1300.  I found a Medigap plan, and he paid $750/mo for the crappy insurance, up until we went on the 6 month cruise.  We bought a healthcare policy for while we were traveling, and he turned 65 right before we got home.  

[jerseygirl]

Walk those medigap prices are awful. We both use Transamerica Life for medigap. Jerseyguy pays about $800 a quarter and I pay about $700. We’re older than you if it’s available for you should be less
My former company reimburses half

[bookkeeper]

DH and I retired in 2014.  We were ages 55 and 50 at that time, so we knew that most of our retirement savings would need to be invested more aggressively to fund our time line.

We also learned (from these boards) that we needed some cash to make day to day living easier and smooth out any market downturns.  We started by spending DH's deferred compensation accounts and after some consolidation, started taking annual draws for our income.  DH took his pension as a lump sum upon retirement.  He manages his own 401k account and we have an advisor for the lump sum retirement that rolled over into a traditional IRA.  DH took his SS at age 62.

We keep around $150,000 in the money market portion of DH's 401k.  This is the "life happens" buffer to spend from without taking money from other investments.

Health insurance is a huge concern.  DH goes on Medicare soon, so yay!  We have kept our income at about $100,000/year, which in turn, allows us a subsidy to help pay for marketplace insurance.  Choices for health insurance on the marketplace are few for us because of where we live.  Healthcare costs are expensive as we age.  DH had a serious car accident that cost about $10,000 out of pocket.  I had a hip replacement and DH had cataract surgery with corrective implants another year and we both hit our $7000 deductible.  My glaucoma condition costs me a couple thousand each year.

We have been fortunate that our plan has worked.  I think a big part of that success was knowing what we spend and accounting for increasing costs and inflation as part of the plan.

[teen persuasion]

We are easing into full retirement.

DH retired mid 2021 and I'm still working part-time, pretty low income and half going into my SIMPLE IRA. So we still have some net income, but under 50% of expenses.

We'd built up a cash pile in anticipation, so worked thru that initially. This past fall was when it ran down, so moved onto my next step - reimbursing ourselves from the HSA for past medical expenses. I'd paid everything OOP until then, so had a chunk built up. Transferred that to checking.

When that runs down, I will begin withdrawing from Roth. I've done 2 Roth conversions so far, and intend to do them every year. Partially it's a long term plan to shift tIRA to Roth to limit RMDs later, but it works as a way to access tIRA funds w/o penalty while we are under 59.5, too.

We are planning to wait until 70 for SS to max the benefits, and for more Roth conversion space. Once we get to SS it will cover most of our desired spending target (it should be more than current spending), so withdrawals at that point will be lower, but withdrawals prior to 70 will necessarily be higher. We are essentially making a part of our stash a DIY SS, it's a chunk I expect to consume. So I mentally divide our stash into two parts: the part that is replacing SS until we get to 70 (gets used up), and the other part I expect to draw a % from forever.


I really hate bonds, but held my nose and shifted 30% of our stash to total bond sometime after we turned 50, because BH convinced me I needed some bonds. Then continued saving, always to stock funds. So AA has drifted more stock heavy, and stocks grew more as expected, and bond values tanked (not as expected, so much for holding value). Sorry, not rebalancing, I'm good where we are. DH has been consolidating his various employer plans to a tIRA. The last rollover ended up in the settlement fund, and since rates are not bad lately we left it there instead of shifting it to total stock. With our last Roth conversion, we converted from the settlement fund instead of total stock, because we anticipate withdrawing from Roth in the near future, to shield against sudden market fluctuations for that chunk. So I have this year's expected withdrawal waiting in the settlement fund in Roth, and the equivalent of several years' future conversions/withdrawals in the same in a tIRA - but I'd opportunistically convert total stock instead if it tanks, to convert more shares. So I have different options depending on how things play out: take spending out of cash funds, take out of bond funds, stop reinvesting DIVs and take those, or if stocks are flying high then spend from them.

Then there's when to start SS. DH should definitely wait to 70, but not as clear for me. Opensocialsecurity says I should start at 62, but I'd rather have the max I can get, AND I want more space for Roth conversions. I can play it by ear, and start at any time if truly needed.

[Rukh O'Rorke]

Jan 30, 2024 22:57:59 GMT -5 resolution said:

I don't plan to start withdrawing from retirement savings until my husband retires, but I have withdrawn a lot from my brokerage account over the past few years while renovating my house. I have found that I don't mind seeing the number go down nearly as much as I mind selling stocks at a loss.

Right now I am maintaining about a year of expenses in a money market account so that if I need money for a large project I don't have to sell stocks. By the time my husband retires, I would like to maintain 3 years of expenses in the money market. Then if the market crashes, I can just withdraw from cash instead of selling at a loss. I think I will be ok with the overall number going down as long as I haven't locked in the loss by selling.

My parents' neighbors retired in 2000 and didn't have a large enough buffer to survive the 9-11 market crash. They ended up taking out a reverse mortgage on their house to get by. It sounds like a nightmare, but they ended up doing ok, they were able to stay in their house and lived a decent life until they passed away in the pandemic.

I have about 2 years in cash right now as I've been emotionally in spot where I facilate between, I can work a few more years and reach my number and.....I need to resign next week! At the least by the time the week is up I have marshalled my resources to soldier on a bit more....

But I do focus more on the overall balances and while I would hate even more to spend out of depreciated stocks, spending cash and stocks go down or even flat would be a negative on the balance.

I guess this is just something I'm going to have to grapple with at some point and just get over it. I know that there are some very happy people who retired and their holding just went up much faster than they could spend and they never needed to worry about going below their initial level, but I worry about the other side of it.

[resolution]

Jan 31, 2024 11:47:00 GMT -5 Rukh O'Rorke said:

Jan 30, 2024 22:57:59 GMT -5 resolution said:

I don't plan to start withdrawing from retirement savings until my husband retires, but I have withdrawn a lot from my brokerage account over the past few years while renovating my house. I have found that I don't mind seeing the number go down nearly as much as I mind selling stocks at a loss.

Right now I am maintaining about a year of expenses in a money market account so that if I need money for a large project I don't have to sell stocks. By the time my husband retires, I would like to maintain 3 years of expenses in the money market. Then if the market crashes, I can just withdraw from cash instead of selling at a loss. I think I will be ok with the overall number going down as long as I haven't locked in the loss by selling.

My parents' neighbors retired in 2000 and didn't have a large enough buffer to survive the 9-11 market crash. They ended up taking out a reverse mortgage on their house to get by. It sounds like a nightmare, but they ended up doing ok, they were able to stay in their house and lived a decent life until they passed away in the pandemic.

I have about 2 years in cash right now as I've been emotionally in spot where I facilate between, I can work a few more years and reach my number and.....I need to resign next week! At the least by the time the week is up I have marshalled my resources to soldier on a bit more....

But I do focus more on the overall balances and while I would hate even more to spend out of depreciated stocks, spending cash and stocks go down or even flat would be a negative on the balance.

I guess this is just something I'm going to have to grapple with at some point and just get over it. I know that there are some very happy people who retired and their holding just went up much faster than they could spend and they never needed to worry about going below their initial level, but I worry about the other side of it.

Several of my parents' neighbors had issues because they panicked and sold everything at the bottom, instead of holding until things went back up. They locked in all of their losses and then didn't have a chance to regain anything when the market went back up.

I think it's important for everyone to consider their comfort level with losses and then allocate accordingly, even if it means having less overall in the end. If it prevents a hasty panic sale, then it is worth it.  If I didn't have any sort of passive income, I would consider buying a small immediate fixed annuity so that I had some guaranteed income while I let the rest of our retirement funds grow.

[minnesotapaintlady]

Jan 31, 2024 12:23:47 GMT -5 resolution said:

Jan 31, 2024 11:47:00 GMT -5 Rukh O'Rorke said:

I have about 2 years in cash right now as I've been emotionally in spot where I facilate between, I can work a few more years and reach my number and.....I need to resign next week! At the least by the time the week is up I have marshalled my resources to soldier on a bit more....

But I do focus more on the overall balances and while I would hate even more to spend out of depreciated stocks, spending cash and stocks go down or even flat would be a negative on the balance.

I guess this is just something I'm going to have to grapple with at some point and just get over it. I know that there are some very happy people who retired and their holding just went up much faster than they could spend and they never needed to worry about going below their initial level, but I worry about the other side of it.

Several of my parents' neighbors had issues because they panicked and sold everything at the bottom, instead of holding until things went back up. They locked in all of their losses and then didn't have a chance to regain anything when the market went back up.

I think it's important for everyone to consider their comfort level with losses and then allocate accordingly, even if it means having less overall in the end. If it prevents a hasty panic sale, then it is worth it.  If I didn't have any sort of passive income, I would consider buying a small immediate fixed annuity so that I had some guaranteed income while I let the rest of our retirement funds grow.

I'm considering this for a small amount, so combined with SS I'd be ok regardless of what the market was doing and could totally ignore it for years if need be.

[The Walk of the Penguin Mich]

Jan 31, 2024 9:13:00 GMT -5 jerseygirl said:

Walk those medigap prices are awful. We both use Transamerica Life for medigap. Jerseyguy pays about $800 a quarter and I pay about $700. We’re older than you if it’s available for you should be less
My former company reimburses half

The prices I quoted were for ACA plans without a subsidy and what one employer charged for their plan per person.  TD just became eligible for Medicare this year, he pays 1/3 of what I do for a Medigap plan because mine is for disability, not being 65.  Next year, I should be able to shift and I’ll have more options.  

Locally, I have 2 plans available to me, one is an Advantage plan.  I chose the other, as it leaves me access to my orthopedic surgeon.  I pay $361/mo for that.  

I don’t remember seeing Transamerica in the offerings, even for those 65.  Costs and availability of plans is VERY location dependent.  If we moved to Seattle, I’d have far more options.

[jerseygirl]

I exercised stock options and did very well. Put into individual bonds mostly corporate. That company was bought and I started consulting, Jerseyguy has a small pension, we both have SS (his at 62 me at 66).
I bought an annuity with the bonds about 4 years ago. Get about 8% interest on the principle and comes in monthly. Almost like a pension and better interest than the bonds. Also some RMDs Last year started to have dividends from brokerage account sent to us instead of reinvesting. We’ve had more expense this year as hired a full time housekeeper due to our health problems.
Our other funds are in stocks since living costs are covered by stable funding and dividends are fairly predictable
If we need funds for big expenses we’ll take from brokerage as that would be capital gains- less taxes that from IRAs. Also have Roth that wouldn’t be taxed
So we have stability but inflation should be helped by the investments not needed for living expenses

[azucena]

Jan 31, 2024 12:56:47 GMT -5 jerseygirl said:

I exercised stock options and did very well. Put into individual bonds mostly corporate. That company was bought and I started consulting, Jerseyguy has a small pension, we both have SS (his at 62 me at 66).
I bought an annuity with the bonds about 4 years ago. Get about 8% interest on the principle and comes in monthly. Almost like a pension and better interest than the bonds. Also some RMDs Last year started to have dividends from brokerage account sent to us instead of reinvesting. We’ve had more expense this year as hired a full time housekeeper due to our health problems.
Our other funds are in stocks since living costs are covered by stable funding and dividends are fairly predictable
If we need funds for big expenses we’ll take from brokerage as that would be capital gains- less taxes that from IRAs. Also have Roth that wouldn’t be taxed
So we have stability but inflation should be helped by the investments not needed for living expenses

Dumb question - what do you mean by 'exercised stock options'? I haven't been playing in the big leagues very long so I'm just starting to have my company stock vest each year. Seems like it tends to be $10-15k/year.

[jerseygirl]

I was given options to buy stock when I joined to company and yearly thereafter.
When I was given the big number of options on joining, had to wait for them to vest (forgot how long, 5 years?). No charge for the options, they are just given
The options on joining the company were for a price about $15? The yearly options depended on the price of stock at the time.
, also needed to vest
When the company was bought the stock price was maybe $56. So the money I made for ‘exercising’ or selling the options received on joining the company was $56 (price of stock when company being sold) minus the $15 of the stock option given on joining company. So $41 .
The yearly options were really lucrative since some were at $4 as the company stock had fallen that year. So $56 minus $4 or profit of $52
Made about $2 million minus taxes. Gave half to family and bought annuity with this and money from individual corporate bonds I already had
Start up companies give people these options to buy stock as incentive to join. If start up does well Nice! If start up doesn’t then options may be worthless

[haapai]

I am not retired.  I know that your question was aimed at those who have already retired, so you can ignore me if you want to.  I may not have anything worthwhile to say but at least I have bumped your thread. 

You've actually asked two questions.  One was quite explicit -- how to deal with heavy withdrawals from your pile o' gold on an emotional level.  The second question was a bit more muted -- how risky is it to stop working and draw heavily from assets in the early years of retirement.

I think that the answer to the first question is quite simple -- stop looking at that big pile o' gold.  Divide it up into separate piles instead.  Only one of those piles has to last for the rest of your life, the other piles are going to be consumed by financial obligations that will eventually go away.  

I can't answer that second question.  I don't even know how to approach it.  Why is this?  It's not like you are alone in this situation.  There are tons of folks out there who are considering quitting paid work while they still have student loans to pay off (either their own or their kids'), well before they qualify for Medicare (maybe not you), years before they plan to file for social security benefits, and while they still have mortgage debt (which is less important than it once was due to the very low interest rates that most folks have locked in and the long-term nature of that debt).  Why is it that I don't have a clue how to answer this question or modify the typical Monte Carlo simulation to account for heavy withdrawals in the first years of retirement? 

[snapdragon]

Here's what I have done so far - 

I have about 3 years of living expenses in liquid funds.

I have created a 4 year CD ladder with the amount that I was originally living on when working plus a bit more.

I do a few more things but I won't go into those because I have the feeling what you're really trying to get is the emotional aspect that I can't help you with. 

Peace of mind for me is having the CD ladders for future. 

I got a really good umbrella policy for those what just happened moments. 

[jerseygirl]

For us peace of mind is important. Stability of funds coming in - SS pension annuity meet all our living expenses and money we give to littles every year for college funds.
Just this year started taking dividends instead of reinvesting.

We would be nervous if only taking principle from IRAs since vagaries of the stock market.

[azucena]

Feb 2, 2024 15:11:14 GMT -5 jerseygirl said:

For us peace of mind is important. Stability of funds coming in - SS pension annuity meet all our living expenses and money we give to littles every year for college funds.
Just this year started taking dividends instead of reinvesting.

We would be nervous if only taking principle from IRAs since vagaries of the stock market.

Jersey - curious what % you have allocated to funds with dividends if you don't mind sharing.

[jerseygirl]

About a third in brokerage accounts mostly single company stocks not all throw off dividends. We started taking the monthly dividends from the brokerage accounts. Needed more to pay about $5000/month for live in housekeeper.
Another third in various IRAs. For these dividends are reinvested. Only take what’s required for RMDs from the IRAs since it’s taxed as ordinary income tax

[Rukh O'Rorke]

Feb 2, 2024 14:39:22 GMT -5 snapdragon said:

Here's what I have done so far - 

I have about 3 years of living expenses in liquid funds.

I have created a 4 year CD ladder with the amount that I was originally living on when working plus a bit more.

I do a few more things but I won't go into those because I have the feeling what you're really trying to get is the emotional aspect that I can't help you with. 

Peace of mind for me is having the CD ladders for future. 

I got a really good umbrella policy for those what just happened moments. 

Yes - it is the emotinal part I am addressing in this thread - but anything helpful with mechanics is welcomed too!

your 3 year liquid funds - is that separate from the CDs? And not sure if that is stocks, bonds, cash?

[giramomma]

Jan 31, 2024 0:50:51 GMT -5 The Walk of the Penguin Mich said:

The only thing I’ll say about this is to research the hell out of what health insurance will be.  Costs are incredibly regional and for us locally, going on the ACA with no subsidies would us each of us about $1300/mo for a pretty crappy plan.  This is largely due to the county we are in, we could move 100 miles away and have different/better options.  

Because of this, TD managed to act as a part time consultant for healthcare.  He worked within one firm that had phenomenal healthcare plans, even to add me to the mix as it would have been far cheaper than a Medigap plan.  He had hoped to keep that to 65, but that didn’t happen.  The last year, he wound up at another consulting firm whose healthcare insurance was crap.  They’d cover 50% of his plan, but to add me was $1300.  I found a Medigap plan, and he paid $750/mo for the crappy insurance, up until we went on the 6 month cruise.  We bought a healthcare policy for while we were traveling, and he turned 65 right before we got home.  

This will be me.

As long as my health holds, I'll only 4 years of fully paid health insurance premiums to cover us.

I also don't think my work situation is going to drastically change.

So, the plan is for me to retire at my dayjob at 55/56, and then find some other part time job to work from 55/56-60.

We should be able to live off of my pension, teaching, and dividend income. Maybe DH will still be working, I dunno. He will get a small pension. Generally I don't count his job in anything (as a way to be more risk adverse). We won't have any health insurance bills as that point.  The goal then will be to save all the part time job work specifically for health insurance premiums. 

So long story short: at 55/56. I'll downshift from working 60+ hour weeks to about 30 hour weeks. Then I should be able to stop working by about 60.

I know personally, I cannot retire and the immediately spend 125K down of our taxable for health insurance. (But, say, I could retire and spend down 15K on a nice vacation without blinking).

And, giving up our health insurance is just not negotiable. We'll be 61 when the missy graduates HS. If I have another cancer bout, I want to be treated in the same place I was treated the first time. (I'm happily giving up travel dreams for health insurance, that's how not-negotiable giving up our health insurance is).

As much as I hate to say this, too, we're getting old enough where an inheritance could change everything. We've never planned for it. And, if something happens and DH's parents pass, we'd have some different planning to do.

Once we get on medicare, my retiree health insurance is 1K a month for the family. (We only have family and single options). We should be able to make that work between our pensions, dividend income, and one of us might take SS. I dunno. It's too hard to say.

[minnesotapaintlady]

I've been doing a lot of going down the rabbit hole researching "Dynamic Spending" after seeing this chart and have a couple links below that I found interesting that I'm going to post here if anyone else is interested and so I can come back to them later when I'm not at work. 

This page has a video explaining the Dynamic Portfolio Withdrawal.  It's long but I think there's some interesting info in there.

www.targetpercentage.com/

This is nice little summary presentation from JP Morgan about retirement in general.

am.jpmorgan.com/content/dam/jpm-am-aem/global/en/insights/retirement-insights/guide-to-retirement-us.pdf

[Rukh O'Rorke]

so much good info! thank you minnesotapaintlady!!

[minnesotapaintlady]

Interesting how female same sex couples live longer not only than male same sex couples, but hetero couples as well.

I always said my life would be so much better with a wife.