The Intersection of FIRE and Disney

[Frwinkley]

How do you feel about aggressive asset allocation when retirement is just a few years away? 60 years old, retiring in 3 years with a pension that will cover our monthly expenses. Retirement assets are 40/40/20 (stocks, international stocks, bonds). We will have no need to touch this money until RMDs are required.

Are we being too aggressive?

I'm inclined to think not since we can weather the ups and downs of the market. The pension income provides us with security so we can be a bit more aggressive.

I'd love the thoughts of others.

 

[Carol_]

Just paid $17,000 on the student loan. Still owe 180k. But at this point, I’m more than 50% down on the behemoth.
I think it’ll take me another 4 years or so.

 

[Starport Seven-Five]

How do you feel about aggressive asset allocation when retirement is just a few years away? 60 years old, retiring in 3 years with a pension that will cover our monthly expenses. Retirement assets are 40/40/20 (stocks, international stocks, bonds). We will have no need to touch this money until RMDs are required.

Are we being too aggressive?

I'm inclined to think not since we can weather the ups and downs of the market. The pension income provides us with security so we can be a bit more aggressive.

I'd love the thoughts of others.

While in your plan you can weather the ups and downs, there is also some concern about what happens if you need the money. Particularly in the realm of health concerns where things can change relatively quickly as we get older.

Just something to think about. I obviously don't have a full view of your financial picture and you may have funds or insurance to cover that.

 

[BridgetBordeaux]

How do you feel about aggressive asset allocation when retirement is just a few years away? 60 years old, retiring in 3 years with a pension that will cover our monthly expenses. Retirement assets are 40/40/20 (stocks, international stocks, bonds). We will have no need to touch this money until RMDs are required.

Are we being too aggressive?

I'm inclined to think not since we can weather the ups and downs of the market. The pension income provides us with security so we can be a bit more aggressive.

I'd love the thoughts of others.

On the surface my first impression is yes................80 percent in stocks is too aggressive...........and having half of that in international is also aggressive.

I encourage you to consult with a fee based financial planner where you can reveal all the details. Context matters.

 

[beck02]

I don't necessarily think 80% stocks in retirement is aggressive, since I'd have a pension & social security that will cover all my necessary expenses if needed. I would also have one years worth of living expenses parked in easy to reach stuff like CD's or money markets, so if the market did tank, and tanked for awhile, I wouldn't need to pull from when stocks were really down. I wouldn't do 40% international, but that's just my personal opinion.

I also wouldn't wait until RMD to start withdrawing funds. It's tax deferred, not tax exempt... taxes have to be paid eventually & if you bleed off a bit thru the years you pay less taxes than if there's a huge lump. If you don't need the money, just put in an outside investment thru vanguard or whatever.

 

[peabody58]

Both retired in 2015 at 57.

IRAs: 60/40 S/B Vanquard Funds Won't need till RMD if at all. At times I wish it was more aggressive, but I sleep well at night and that was the goal.

Taxable savings: 90/10 Vanguard Funds. Doing very well with great yearly Div/CG. Helps our cash flow and spontaneous purchases.

2 small Pensions - solid cash flow and security for DW.

SS both of us at 62. DW has Spousal Make-up and will soon exceed amount contributed. Another good cash flow portion.

We are now actively spending after a few years of mental adjustments from 4 decades of saving to being able to spend guilt free. Hence DW's 'new-to-her' 2014 VW Eos Executive 46K miles which we're restoring to show quality.

 

[Mome Rath]

I think aggressiveness can be balanced out with a good emergency fund, and double and triple checking those monthly expenses to make sure everything is included in your figures. Every single person/family has their own individual risk tolerances, so blanket statements are hard to make. For some, 80% would be just fine...

 

[bernina]

How do you feel about aggressive asset allocation when retirement is just a few years away? 60 years old, retiring in 3 years with a pension that will cover our monthly expenses. Retirement assets are 40/40/20 (stocks, international stocks, bonds). We will have no need to touch this money until RMDs are required.

Are we being too aggressive?

I'm inclined to think not since we can weather the ups and downs of the market. The pension income provides us with security so we can be a bit more aggressive.

I'd love the thoughts of others.

I don't have a lot of input on if the mix is too aggressive, just wanted to share something that made a lot of sense to me when I was asking about portfolio mix with a pension.

In summary, having a pension that covers the majority of your living expenses both allows you to have a more aggressive portfolio and reduces the need for you to be aggressive.

In my situation (still 8 years out from retirement) I chose to maintain a relatively aggressive mix in the hopes that it may make a slightly earlier retirement possible. Having that pension to fall back on gave me the safety net to take more risk.

I could have also went with a much safer mix knowing that only minimal growth was needed to stay on course.

No right or wrong approach, just two ways of looking at the situation.

 

[Frwinkley]

OP here:

We have plenty of cash on hand to whether the markets ups and down, as well as emergency fund cash on hand should we need it. We also have a taxable brokerage account that is very aggressive.

I'm going to reduce the amount in the international portion.

 

[BridgetBordeaux]

We are now actively spending after a few years of mental adjustments from 4 decades of saving to being able to spend guilt free.

Of the 2 of us, I am the one who most recently retired and COVID meant my first year off was a dud.

I am also adjusting to spending without feeling guilty after saving and scrimping for so long.

 

[Eastern]

How do you feel about aggressive asset allocation when retirement is just a few years away? 60 years old, retiring in 3 years with a pension that will cover our monthly expenses. Retirement assets are 40/40/20 (stocks, international stocks, bonds). We will have no need to touch this money until RMDs are required.

Are we being too aggressive?

I'm inclined to think not since we can weather the ups and downs of the market. The pension income provides us with security so we can be a bit more aggressive.

I'd love the thoughts of others.

'Aggressive' is relative. I think it is aggressive. I think you should be prepared to lose 50% of whatever you have in stocks. Recovery timelines vary and are not guaranteed. If you are ok with this, you are fine.

 

[QueenIsabella]

Even though we're approaching 60 (yikes!), we still invest a lot in stocks--I would say I'm moderately aggressive, Dh is more so. Some of our money is in less-aggressive stuff--we have one starting college this fall, one starting in 2024, so the money earmarked for them is less-aggressively invested. In our case, DH's 4 pensions, plus SS, will be more than his current salary. Plus, we already have RMDs from inherited IRAs (received prior to 2019, so paid out over DH's lifespan). So, we feel very comfortable leaving our own IRAs to grow.

In answer to another question (sorry, I was on vacation for a couple weeks, didn't keep up): Even though we're in good shape, DH still contributes to his 401k, up to the match. It seems silly to pass up free money. We don't "need" it, but we have things we can tap if we need to--say, if your idiot husband scrapes the side of your nearly-new minivan and pops off a couple clips on the front fender. Speaking in hypotheticals here, I'm not bitter.

And is a cute follow-up to previous mentions of my DD18 and her job at Starbucks--at her shift yesterday, she was told to pick up her tips. She didn't know she had them/how to get them! So, she brought home a paper bag with $134, with $94 of it in $1 bills. Needless to say, she was thrilled. I changed her out, and now I have to take the stack of $1's to the bank. She figures she earns ~$1 an hour in tips--we're having her keep track so we can report it as income, but I doubt she's going to earn enough to matter.

 

[dvcgirl67]

We're 80/20 stocks/bonds now...vanguard, index funds. We beefed up our emergency fund during the pandemic to two years of expenses, but moved all but one year of emergency fund back into the market. And that's probably pretty conservative given the level of inflation we have now and will likely have for the next year or two. We're about 5 years out from transitioning to at least part time/nomad retirement, but we still wouldn't need to pull funds at that point. We'd still be able to save, even if we have a decreased income. We're thinking that would be when we may beef up our "emergency fund" to about 2-3 years of expenses....and put less in the market....so that we can weather a 5-10 year bear market. At 53, with in-laws about to turn 90 and my mother certainly will live into her 80s....we'd still have a very long timeline for a market to recover. Once we completely stop working we'd likely go down to 70/30 or 60/40 stock/bond index funds.....but I don't see us ever completely going to cash. I've seen it play out with my in-laws....and it's not pretty.

 

[Frwinkley]

Yep. You read so much about growing your money from age 30 to 60, but much less about growing your money from 60 to 90.

 

[dvcgirl67]

Yep. You read so much about growing your money from age 30 to 60, but much less about growing your money from 60 to 90.

This is so true. The focus on hitting your "number" is really all that you read/hear about in the personal finance world. My in-laws retired fairly late. My MIL was 65, FIL was 68. They hired a very small "wealth management company" (just a husband and wife duo) in their town, based on hearing this couple on the local AM radio. They apparently had a "show" every Saturday, which was really just a commercial to attract new customers. They advised my FIL to take a "lump sum" and let them handle the investing for them....instead of taking the company pension. That's not necessarily bad advice, but my in-laws, the pension would have been far better choice. Even right up until the point that DH and I found out how horribly things were going for them financially, my FIL would say that they were very happy with this firm. My in-laws enjoyed the summer picnic held for their "wealth fund investors".....every summer. We think it made my FIL in particular feel like he was a big shot...when they really didn't have much money invested with these people. They truly did a terrible job...and in our opinion did not act as the fiduciaries as they are required by law to do.

The real lesson is that you have to understand how your own financial situation and how the money is being invested. They just had no idea, and because talking about finances was taboo in DH's family....by the time we found out, the damage was already done. Twenty three years later, the nest egg is nearly depleted. The "firm's" original owners have passed this business on to their adult children. Hopefully they're doing a better job than their parents did. Another huge lesson to anyone who has parents who are retired....it's a really good idea to talk about family finances.

 

[Starport Seven-Five]

Yep. You read so much about growing your money from age 30 to 60, but much less about growing your money from 60 to 90.

Most of the safe withdrawal rate discussion centers around this topic. It's not so much a worry of growing your money as making sure you don't run out in retirement.

I can't remember how many parts he's up to now but ERN has a series of articles about safe withdrawal rates:
https://earlyretirementnow.com/2016/12/07/the-ultimate-guide-to-safe-withdrawal-rates-part-1-intro/

 

[FreeDiningFanatic]

Even though we're approaching 60 (yikes!), we still invest a lot in stocks--I would say I'm moderately aggressive, Dh is more so. Some of our money is in less-aggressive stuff--we have one starting college this fall, one starting in 2024, so the money earmarked for them is less-aggressively invested. In our case, DH's 4 pensions, plus SS, will be more than his current salary. Plus, we already have RMDs from inherited IRAs (received prior to 2019, so paid out over DH's lifespan). So, we feel very comfortable leaving our own IRAs to grow.

In answer to another question (sorry, I was on vacation for a couple weeks, didn't keep up): Even though we're in good shape, DH still contributes to his 401k, up to the match. It seems silly to pass up free money. We don't "need" it, but we have things we can tap if we need to--say, if your idiot husband scrapes the side of your nearly-new minivan and pops off a couple clips on the front fender. Speaking in hypotheticals here, I'm not bitter.

And is a cute follow-up to previous mentions of my DD18 and her job at Starbucks--at her shift yesterday, she was told to pick up her tips. She didn't know she had them/how to get them! So, she brought home a paper bag with $134, with $94 of it in $1 bills. Needless to say, she was thrilled. I changed her out, and now I have to take the stack of $1's to the bank. She figures she earns ~$1 an hour in tips--we're having her keep track so we can report it as income, but I doubt she's going to earn enough to matter.

I'm not sure how Starbucks tipping is handled on the corporate side, but I know you can tip through the app, electronically in-store and of course, in cash. If management is pooling and distributing the tips, they may be reporting the tips, especially likely since there is a digital trail of the gratuities. Your DD should review her paycheck and see if there is a category for gratuities. Sometimes restaurants will request that you self-report gratuities into their payroll management system each day.

Also, my DH didn't go to the hazmat recyling center to turn in old paint, get confused by the cones, drive over an old tree stump and pull our entire front fender off, to the tune of $500. Hypothetical, of course.

 

[QueenIsabella]

I'm not sure how Starbucks tipping is handled on the corporate side, but I know you can tip through the app, electronically in-store and of course, in cash. If management is pooling and distributing the tips, they may be reporting the tips, especially likely since there is a digital trail of the gratuities. Your DD should review her paycheck and see if there is a category for gratuities. Sometimes restaurants will request that you self-report gratuities into their payroll management system each day.

Also, my DH didn't go to the hazmat recyling center to turn in old paint, get confused by the cones, drive over an old tree stump and pull our entire front fender off, to the tune of $500. Hypothetical, of course.

Thanks for the info. She doesn't think corporate tracks her tips, but since she gets direct deposit, I don't think she's really looked at her pay stub. I will try to take a look at the next one through.

The latest funny Starbucks story is that she got hit on at work today...by a woman. Apparently DD is very good at schmoozing the customers while they wait for their drinks. She's done with this woman, and DD's like, "Wow! I'm really slaying it today! She thought I was hysterical!" Her coworkers are like, "MMM-kay!" But hey--no harm, and maybe the woman will become a regular and a big tipper.

 

[WVMomof3]

They say comparison is the thief of joy and I have to tell you that is true reading this and the Boglehead forums at times. I think we are doing pretty well until I read about how everyone is maxing out contributions, not only to 401ks, but also Roth IRAs and HSAs and then people even have extra to put into other investment vehicles. Ackkk. lol We have never even been able to max our 401k, not once in over 25 years. But I still feel like we are doing OK. Maybe it is because we are not really looking to RE in the under 50 sense. Well, I guess technically, I retired early at the age of 30 after baby #3. I thought I would go back to work but here I am still not working and all my babes are in college or older. DH can fully retire at 57. That is our plan right now, but I am not sure I will be able to get him to leave. We will see, 7 more years to go. I thought these retirement savings/net worth calculators were interesting. The numbers make me feel pretty good about where we are, especially as DH will get a pension that is not added into our numbers. Reading the responses on the Boglehead forums have me pretty baffled. A lot of responders were in the 99% and still not feeling good about their numbers. I am happy to be somewhere in the 90th percentiles. Thought there is a weird jump between ages 49 and 50. We are doing much better as 50 years olds than 49. lol (we will both be 50 this year) At what point are you happy with your numbers? Are you striving to be 1%ers? Though I guess you could be 1% at 30 and then if you did FIRE would that be enough? So many variables. I guess I need to stick to not comparing with others because every situation is different.

Retirement Savings by Age

Average Net Worth By Age

 

[Starport Seven-Five]

At what point are you happy with your numbers? Are you striving to be 1%ers? Though I guess you could be 1% at 30 and then if you did FIRE would that be enough? So many variables. I guess I need to stick to not comparing with others because every situation is different.

I think you said it best when you mentioned "comparison is the thief of joy" up front.

I'm only paying attention to what we need in retirement. I actually feel a bit bad for the people chasing money that they'll never spend because they likely would make different decisions without the paycheck.