Retirement - Managing your money

[MicHughV]

I havta agree with the above....having a big pile of dough in some or other account is meaningless in the grand scheme of things.

I surprise myself to see how little I need to enjoy my life and yet I manage to do most everything I ever did and perhaps even more.

But I go back to my original song..which is to ensure you are debt free as it simply makes no sense to pay " interest" fees on anything. You might as well stand next to a window and throw that money out.

[sailorboy1]

The break point of SS for collecting at 62 versus 67 is a little more than age 83. So regardless or when you start you will get the same amount of money about when you reach that age (putting off till 70 make the breakpoint age later).

BUT

That assumes no time value of money. If you start collecting SS at 62 instead of taking money out of investments and your investment grows just a little, say 3%, then the break even becomes around 87. If your invested money can make 5% you are now into you your 90s.

I am 63 and started collecting SS at 62.

[kmacdonald]

Originally Posted by Lucky Luke 1

Oct 2023 hasn't happened yet.

Nor has the maeket recovery. There is a lot of worldwide uncertainty now with unknown consequences. Cash might be king.

[kmacdonald]

Originally Posted by sailorboy1

The break point of SS for collecting at 62 versus 67 is a little more than age 83. So regardless or when you start you will get the same amount of money about when you reach that age (putting off till 70 make the breakpoint age later).

BUT

That assumes no time value of money. If you start collecting SS at 62 instead of taking money out of investments and your investment grows just a little, say 3%, then the break even becomes around 87. If your invested money can make 5% you are now into you your 90s.

I am 63 and started collecting SS at 62.

Smart man.

[Lucky Luke 1]

Originally Posted by kmacdonald

Nor has the maeket recovery. There is a lot of worldwide uncertainty now with unknown consequences. Cash might be king.

I do love cash but inflation is killing it at the moment. Nice to be paid in tax free though. That doesn't happen as much as it once did.

I'm not sure what you mean by the market hasn't recovered. From when? As of 30 April 2023 My fund is up 4.96% last 12 months and 10.19% last 3 years, 7.29% last 5 years and 8.88% last 10 years.

[denverd0n]

Originally Posted by sailorboy1

That assumes no time value of money. If you start collecting SS at 62 instead of taking money out of investments and your investment grows just a little, say 3%, then the break even becomes around 87. If your invested money can make 5% you are now into you your 90s.

I am 63 and started collecting SS at 62.

This is the calculation that so many of those who say "always delay until 70 to get the most from SS" don't seem to grasp. I realized that, given the returns I have averaged over the last 40 years on my investments, my break even point was going to be somewhere right about 100. That's when I decided it would be pretty stupid to delay my SS for even another day!

[denverd0n]

Originally Posted by Lucky Luke 1

I'm not sure what you mean by the market hasn't recovered. From when? As of 30 April 2023 My fund is up 4.96% last 12 months and 10.19% last 3 years, 7.29% last 5 years and 8.88% last 10 years.

The S&P 500 is still well below where it was at Christmas of 2021. That's a relatively short time-frame, but my guess is that is what he was talking about.

[Captain Graham]

Originally Posted by sailorboy1

The break point of SS for collecting at 62 versus 67 is a little more than age 83. So regardless or when you start you will get the same amount of money about when you reach that age (putting off till 70 make the breakpoint age later).

BUT

That assumes no time value of money. If you start collecting SS at 62 instead of taking money out of investments and your investment grows just a little, say 3%, then the break even becomes around 87. If your invested money can make 5% you are now into you your 90s.

I am 63 and started collecting SS at 62.

You and I have different retirement plans.
I am 66 and will retire at about 68.
For the first 5 years of retirement I will be working my boating business earning enough so I can delay SS to 70 and not have to with draw very much from my savings.
I will be setting up my 3 buckets to protect me from the next market down turn.

In your case you retired early at 56 and took your SS at 62.

I think it would be helpful to many if you could explain a little more about how you where able to retired early and in general where you have gotten your income from and how you have handled the current bear market.
Of course your do not have to share if you do not want to.

[s/v Jedi]

I recommend reading two books:

The Ivy Portfolio by Faber & Richardson

and

The Bug Reset by Willem Middelkoop

both available on Kindle formal.

[sailorboy1]

Originally Posted by Captain Graham

I think it would be helpful to many if you could explain a little more about how you where able to retired early and in general where you have gotten your income from and how you have handled the current bear market.
Of course your do not have to share if you do not want to.

I retired early by saving my money! I got the boat idea around age 47 and then focused my eye on making it happen by 55, which I extended to 56 for a few reasons. I started off with about $400k in 401Ks/investments etc and about $120k in cash. 6.5 years later I started 2023 with $402k of the 401k/IRA money (it grew as overall the last 6 years have been GREAT) and $15k in cash (my yearly spent amount and breakdowns are well posted here on CF). I weathered the recent bear market by having cash! I took just enough money out of the 401Ks each year to just meet the poverty line to get the max ACA subsidy for health insurance. Last year I had to take some of of 401k just for cash flow (could have waited till about now but there was a 15% tax advantage to do last year). At age 60 I started getting a $466/mo pension from 1 of my past jobs (this was a happy surprise). At 62 I started collecting $1917/mo SS. Currently running a cash flow of around -$1000-1500/mo (not counting growth of the 401Ks etc.). In a couple of months my wife will start getting her SS starting at age 62 and we will have a positive cash flow then. The lesson here is that if we put off taking the SS we would be running a negative cash flow of around $4k month.

We know we wouldn't boat forever. At age 70 I project that with a 3% ROI my 401k/IRAs will be $497k.

If instead we withdrew money all those years from 62-67 we would have around $600/mo more in SS at age 70, but only have $268k in 401K/IRAs. That $600/mo is going to me way offset by growth on the extra $229k.

SS is a fixed annuity that disappears when you die. Investments are compounding interest investments that you have decide the level of risk to take and pass to your heirs later.

No matter how you look at it you are playing a betting game where your life span is on 1 side and your funds the other

[sailorboy1]

Originally Posted by denverd0n

The S&P 500 is still well below where it was at Christmas of 2021.

I cry a little everytime I think about it

I find it helps my morale when looking at the S&P to set the time frame to 5 years and be happy it says 53% increase.

[Captain Graham]

Originally Posted by sailorboy1

I retired early by saving my money! I got the boat idea around age 47 and then focused my eye on making it happen by 55, which I extended to 56 for a few reasons. I started off with about $400k in 401Ks/investments etc and about $120k in cash. 6.5 years later I started 2023 with $402k of the 401k/IRA money (it grew as overall the last 6 years have been GREAT) and $15k in cash (my yearly spent amount and breakdowns are well posted here on CF). I weathered the recent bear market by having cash! I took just enough money out of the 401Ks each year to just meet the poverty line to get the max ACA subsidy for health insurance. Last year I had to take some of of 401k just for cash flow (could have waited till about now but there was a 15% tax advantage to do last year). At age 60 I started getting a $466/mo pension from 1 of my past jobs (this was a happy surprise). At 62 I started collecting $1917/mo SS. Currently running a cash flow of around -$1000-1500/mo (not counting growth of the 401Ks etc.). In a couple of months my wife will start getting her SS starting at age 62 and we will have a positive cash flow then. The lesson here is that if we put off taking the SS we would be running a negative cash flow of around $4k month.

We know we wouldn't boat forever. At age 70 I project that with a 3% ROI my 401k/IRAs will be $497k.

If instead we withdrew money all those years from 62-67 we would have around $600/mo more in SS at age 70, but only have $268k in 401K/IRAs. That $600/mo is going to me way offset by growth on the extra $229k.

SS is a fixed annuity that disappears when you die. Investments are compounding interest investments that you have decide the level of risk to take and pass to your heirs later.

No matter how you look at it you are playing a betting game where your life span is on 1 side and your funds the other

Thank you for sharing.
It is always helpful to see how people have managed their retirement.

Another question.
With what you know now is there anything you would have done differently?

[odonnellryan]

Originally Posted by sailorboy1

I cry a little everytime I think about it

I find it helps my morale when looking at the S&P to set the time frame to 5 years and be happy it says 53% increase.

Fortunately, you probably were not depositing during that time, like some of us were!

[sailorboy1]

Originally Posted by Captain Graham

Thank you for sharing.
It is always helpful to see how people have managed their retirement.

Another question.
With what you know now is there anything you would have done differently?

If I had know the market was going to do so well I would have gotten a nicer boat at the start! I have a nice cruising and living on boat, but if I knew I was going to have as much as I do at this stage I may have gone nicer. I have twice the original forecasted amount because I started with ROI assumption only being 2%.

[sailorboy1]

Originally Posted by odonnellryan

Fortunately, you probably were not depositing during that time, like some of us were!

I wish!! I sold a fixed asset and am still waiting for that to return to the original amount. But it is OK as all the money you have in stocks/bonds/401Ks/IRAs is just a number on paper till you need to take some out, and I haven't really had to. Because I took the SS instead