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Seeking Retrirement Critique

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retire@63
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Seeking Retrirement Critique  Reply with quote  

Retiring soon and wanting some feedback on my position:

• Have about 350,000 in savings tied up in TSP and Charles Schwab accounts mostly in G funds where they are not earning much of anything. Also have about 30,000 in the bank in a savings account for emergencies and such.

• No debt, house and cars paid for. Health care is thru Tricare for 500.00 a year, will be free at 65 as secondary payer to Medicare.

• Income in retirement will be about 50,000 per year not including SS. If we were to draw SS it would go up to about 82,000 per year. this income will not come from the 350,000. we have no plans to take money from there unless needed.

• We are both 63 years old in good health.

Welcome any thoughts and advice on what to do….


Last edited by retire@63 on Wed Nov 05, 2014 3:34 pm; edited 1 time in total
Post Wed Nov 05, 2014 3:00 pm
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littleroc02us
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If your conservatively investing this money, I'll give ya 10 years at most until your funds dry out if you take 350k invested at 2%, withdrawing 50k. I don't see this as a possibility. 350k isn't much and especially if you say your health is good you could live another 30 years which technically could be 4 more up and downs in the S&P 500 you'd be missing if you used a 7 year recovery window. If I were in your shoes I'd postpone retirement for another 7 years if possible and aggressively invest in the market which will return 11%. If you invest in the S&P 500 your 350k for 7 years with an ROI of 11% you'd have around 850k. Then at 70 you move half of the money into something conservative like CD's or money market fund and the other half you continue to invest aggressively. I don't see any other way due to the 50k you expect to withdrawl each year.

Risk comes from not knowing what you're doing. (Warren Buffet)
Post Wed Nov 05, 2014 3:28 pm
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retire@63
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Thanks for the reply, perhaps I should have clairified that the 50-82K per year is in additional retirement funds, military retirement, Civil Service etc... and will not come from the 350,000 in savings. We did not plan on drawing from that pot unless needed.
Post Wed Nov 05, 2014 3:37 pm
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oldguy
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Well, my advice should have helped 30 years ago - lol. (I would have suggested 'investing' rather than 'saving'.)
But since you are very risk averse, there is no point in changing now. I would just keep doing what you are good at - saving and living conservatively - with no debt, you should easily cash-flow your needs from the $82,000/yr income stream. And just leave the $380,000 in savings products - and use it for emergencies, old-age medical care, or leave it to your heirs. Very Happy
Post Wed Nov 05, 2014 4:41 pm
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littleroc02us
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Got it, then like Old Guy stated, I would just keep that 350k protected in a conservative account.

Risk comes from not knowing what you're doing. (Warren Buffet)
Post Wed Nov 05, 2014 5:04 pm
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GregFromTexas
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You don't look too bad to me at all.

You're OK living on $50K or maybe $82K right now? That's question number one, what's your target/acceptable lifestyle?

If so, then the big wildcard in this whole calculation is inflation. In theory SS is indexed to inflation assuming the government doesn't jack with it too much, so we'll call that good. How about your other pensions?

If not, then you are almost certainly going to need that $350K to maintain your lifestyle for the next 25 years even without any big ticket expense hits.

For example at 3% inflation a "real" $82K/year lifestyle costs $2,989,660 not 25x$82K ($2,050K). So with no inflation adjustment on any of the income you'd need to find another $916K to sustain your lifestyle for 25 years so you'd need to get (I'm ball parking) 7 or 8% on that $350K which means pretty aggressive investing.

You said $32K is SS, so really even if your other income is not inflation indexed your shortfall is $500K. A more conservative investment of the $320K earning 3-4% will cover that.

Of course this all gets a lot easier if you choose to live a $50K/year lifestyle, but it doesn't look like you need to do that.
Post Wed Nov 12, 2014 6:31 pm
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retire@63
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I feel comfortable with 80,000 with no bills and TRICARE for health care... The 350 in savings is tied up in a TSP account in the g fund... Don't really know what to do with that to earn at least 4-5% percent per year...would be nice to draw the 4% out each year to add to the 82... Where should the 350 be invested to earn that?
Post Sat Nov 15, 2014 7:44 pm
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oldguy
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quote:
Don't really know what to do with that to earn at least 4-5% percent per year...would be nice to draw the 4% out each year to add to the 82... Where should the 350 be invested to earn that?


The other fund choices average higher returns than G - but that is "average". So you wouldn't draw 4% out each years, you would use that 4% to offset future inflation. If inflation is 2%/year for the next 20 years, then the purchasing power of today's $350k will be only $235k. You should invest enough of your money in something other than savings to offset inflation and maintain your $350k.
Post Sat Nov 15, 2014 9:28 pm
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