Retirement...never thought it was that close

Discussion in 'Off Topic Area' started by Xue Sheng, Jul 1, 2019.

  1. jmf552

    jmf552 Member

    I retired two years ago, when I thought I would need to work another 5 to get there and even then, we would be eeking by. This may not apply to everyone, but something I strongly recommend for those it does apply to is getting a really good financial planner, one of the rare ones who know how to plan distributions. Most planners are all about retirement investments and run with the theory that "If you have a million bucks, it doesn't matter how you use it." Okay, sure, but I am never gonna have a million bucks. What now?

    Only a few planners understand how to set up a retirement portfolio that preserves the principal while providing income. They understand the "4% rule" and the pros and cons of annuities, versus stocks, versus pensions. They also understand diversification, so that a substantial amount of your income is shielded from economic disaster. You also have to also be wary that there are a lot of charlatans out there.

    We retired comfortably five years before we thought possible, on a lot less than "they" say you need and two years later it is going even better than planned. It is great not having to work for someone else. You don't fully realize until after retirement how oppressive even a good career can be.

    That being said, I also recommend you spend a lot of time planning your life after retirement, not just your finances. You think it will be one big vacation, but vacations and hobbies are breaks from work. If there is no longer any work, the breaks don't mean as much. I initially failed on this one. I got really depressed and I did not see that coming. It just snuck up on me. I tried to work hard on my hobbies, but the thrill was gone.

    Back to the main subject of this site, I found my solace in martial arts. I had studied Karate', Judo, Japanese Jiu Jitsu and Tai Chi for about 25 years, ending decades ago. I really liked it, but life got in the way and I got out of shape and lost a lot of my skills. I decided to get back into it. I tried Krav Maga, but no offense to that art, but it didn't click for me. Now I am training in Muay Thai and BJJ at a great gym. I am hooked. At 69 years old, I am sore every day, but I have decided martial arts is now my "vocation." It has given me purpose.
     
    aaradia, axelb and Kemposhot like this.
  2. Kemposhot

    Kemposhot Valued Member

    I look forward to one day reaching this point, God willing. I began martial arts in high school about 18 years ago, I’ve managed to balance it over the years with real life including college, career and beginning a family. But, like you said, it’s tough, I’ve missed a lot of class times cause of outside events and work.

    I hope you can train for years to come! And I look forward to one day joining you as a full time student of MA!
     
  3. YouKnowWho

    YouKnowWho Valued Member

    Do you draw pension check? If you draw pension check, does 4% rule still apply?
     
  4. jmf552

    jmf552 Member

    My wife and I have modest pensions, but they were not supposed to be the mainstay of our retirement funding. The 4% rule does not apply to pensions or annuities. It applies to investments that accumulate interest with the markets and inflation, like 401k's, IRA's and stock portfolios. And 4% is just an estimate. It could be higher or lower depending on your portfolio, how the market goes, your goals, your age, inflation, etc. With the help of our planner, we calculated it out to age 99. And it turns out that so far, we haven't needed the 4%, so we have let it ride. We are getting by on the pensions and an annuity. So the interest accumulating accounts that we planned to be our main incomes are growing really well. We will kick in the 4% rule if our expenses go up.
     
  5. YouKnowWho

    YouKnowWho Valued Member

    Thanks for the information. I didn't know age 99 is the calculation base.
     
  6. jmf552

    jmf552 Member

    Sorry, I probably made myself misunderstood. There is nothing magic about 99. We just picked that out as a likely age my wife and I will NOT live to, so we can be sure we don't run out of money. The age can be whatever you want it to be. It probably should be the top of the range of your actuarial death calculation, if you can get that. I think there are some sites you can use to figure it out.

    In fact, all the numbers in the "4% rule" can, and probably should be adjusted to your preferences. You might choose something other than 3% for inflation or a different rate of appreciation for your portfolio. The genius of it is that is possible to estimate the draw down of your principal to keep you funded the best you can be for the rest of your life.
     
  7. YouKnowWho

    YouKnowWho Valued Member

    The reason that I ask about that age 99 because I don't know which one is worse.

    - When I die, I haven't spent all my money yet.
    - Before I die, I already spent all my money.
     
    axelb likes this.
  8. jmf552

    jmf552 Member

    You definitely want the first one, no question. But you don't need to have too much left over. That is what the "4% rule" calculations are intended to estimate. Then you see how it goes each year and adjust.

    Our calculations are based on maximum life expectancy, with some extra built in, just in case. So far, we are running ahead of plan, so at some point, we'll have to start spending more money!
     

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