Author Topic: Need a simple plan I can understand to live off my savings.  (Read 9986 times)

HumphreyB

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I am 56 and my wife of 35 years is 53, together, we have made/saved a great deal of money. We own everything outright and other than property tax, food, and utilities, have no bills. I need to do something with $1,000,000 that makes sense, and is easy for me to do. I am technical, but do not understand the first thing about handling large sums of money or things like buying stocks. Not a clue at all. As soon as you say dollar cost averaging, which I don't know what it means,  I'm going to fall asleep from boredom, I just can't learn this stuff. I am reading the blog and I'm concerned that the original blogs are dated. Is the information concerning buying a conservative dividend-paying stock index fund still current, and is the 4% rule holding still? I am a slow reader, but I press on. I figured the forum would be a more up to date place to ask questions...

So is this something I can do? I'm really afraid of making  big mistake. I have avoided contacting any local advisors out of suspicion and fear of being taken advantage of. Fear of the unknown has prevented me from doing anything. I already know I screwed up by buying a 5 year CD with an interest of 0.75%... Dumb ass here...

I have 500k immediately available for investing. I also have 500k in CD's with varying maturity dates from 15 months to 5 years. I am open to closing some of the cd's early but I have to look into the penalties. I was thinking 700k in conservative dividend-paying stock index funds, and 300k in cd's. I'm afraid to put it all in index funds. I don't know what I'm doing.

My home is worth 350k, and my property tax is over 5k. My biggest fear is I will be broke in 10 years, as money continues to be worth less every year, and I have zero income.

I also have these tid-bits of which I know nothing about...

We have a Merrill Edge Blackrock basic value FD Inc A IRA with 64k. It averaged to 4% for it's lifetime, 20 years. They sent me a letter describing a new law that says they have to give advice that is in the customers best interest, so among the changes they will no longer give advice. I have never talked to them in the 20 years I've had the product so don't see how this will impact me. lol But there are other things on the list that I do not understand. I need to know what this is and if the money should be elsewhere. They said in the letter my choices are

1 online investing and trading
2 New Merrill Edge guided investing
3 Invest with an Advisor

We have two traditional IRA's with 60 month term that are matured. Not sure what that means as it's an IRA and I suppose I can't touch it till I'm older. Both have 23k. Not sure what to do with them. The bank has a transfer out fee. Not sure what it is.

That's the best I can put together as a "portfolio" I guess.

I'm hoping some kind person in here can help me out. I have tried to understand, but it's too much, and I can't get past the fear and unknown of visiting a financial planner. I'm smart enough to accumulate the wealth and yet dumb enough not to know how to invest it in a way it could provide my living expenses and provide for my two children when the wife and I pass. It's incredibly unnerving...

Thanks and best regards, Humphrey B.

neo von retorch

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Re: Need a simple plan I can understand to live off my savings.
« Reply #1 on: June 26, 2017, 01:43:41 PM »
First you would call Vanguard (800-205-6103), or if you can handle doing things online, set up an account that way - https://personal.vanguard.com/open-account/oax/app/psptlanding#/

Read the information that the web site asks for. You can "fund" a new account with a little bit of money, which you'll transfer from your checking account. You can use your bank's routing number and your checking account number to set up transfers. Once and done. Both of those tidbits of information are on each of your checks.

Buying stocks is done by logging into the Vanguard web site after your account is created. You will have to move cash from your bank to the site, but all of that can be done from their web site once your initial set up is done. The link is titled "Transfer to/from bank." You can move it as cash, into a money market settlement fund, or directly place an order for a Vanguard mutual fund. You can ask the MMM forum for the "symbol" which is just the letters representing a fund you want to buy. With your funds, you'll be able to get SUPER low cost (expense ratio) index funds. Here's an example, and you can find others to pick from at this site, but you should only need a really short list of "total market" type funds, or a target retirement date fund. It's a one page wizard with a second page to confirm the purchase. Done. You just bought stocks.

2Birds1Stone

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Re: Need a simple plan I can understand to live off my savings.
« Reply #2 on: June 26, 2017, 01:59:28 PM »
If you are afraid of a DIY approach, then something like Vanguards advisory service might be worth it.

Their cust is just .30% of assets under management and they will stick you into a very low cost etf/fund portfolio as well as help with investments/financial advice outside of the accounts you hold there (insurance, pension, SS strategy, taxes, estate planning, etc).

I'm a big believer in DIY, but if this is the type of stuff that bores you or gives you anxiety, a low cost fiduciary advisor like Vanguard might be worth a shot.

Lady SA

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Re: Need a simple plan I can understand to live off my savings.
« Reply #3 on: June 26, 2017, 02:09:41 PM »
Sounds like going the DIY handling of your stash isn't a good route for you. DIY would be most efficient and you would hold onto the most of your money, but if your anxiety is that high about it I think it's worth having Vanguard's advisory service take over.

Plus, that doesn't have to be forever. You can continue learning and reading and figuring things out, and if you become more comfortable, you can start to take over control if you want. Take some money out of the advisory service and put it in a normal brokerage account that you control. But meet yourself where you are, don't stretch yourself too far. If where you are is "not ready to manage your stash", then so be it and seek out assistance.

You are well ahead of many who allow their savings to be actively managed to the tune of 2-5% fees per year. As long as you don't make that mistake, you can buy yourself time to learn the ins and outs.

LifeHappens

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Re: Need a simple plan I can understand to live off my savings.
« Reply #4 on: June 26, 2017, 02:10:21 PM »
You may be the perfect candidate for a Vanguard Target Retirement Fund.

You can follow neo's instruction for setting up and funding an account with Vanguard, transfer your liquid savings, and purchase whichever fund best describes your timeline. As your CDs mature you can purchase more of that single fund. All the rebalancing is done for you, so you don't have to think about it after your purchase.

Laura33

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Re: Need a simple plan I can understand to live off my savings.
« Reply #5 on: June 26, 2017, 02:10:48 PM »
First, you can do this!  It doesn't have to be as hard as brokers make it seem -- remember, it is in their best interests to convince you that it is too complicated and you need help, because then you will pay them more to do it for you!  You have time -- you do not need to know all of this today, right now.  So take your time, learn, and move cautiously until you feel comfortable.

Second, I think it makes sense for you to get an overall plan that includes any pension and future Social Security.  To do that, you look for a "fee-only" planner -- and specifically, you want someone who will charge you an hourly rate to develop a plan for you.  Tell them that you do not want someone to manage your money, you want someone to look at your situation and tell you what to invest in and how much you can afford to withdraw every year.  I would even tell them that you want to know what Vanguard funds you should be in so you don't have to worry about going to different places.

Third:  you are correct, the general advice is that you can withdraw 4% of your initial portfolio value every year, and adding a little more to that amount every year to account for inflation.  BUT:  that 4% assumes that your money is invested in the market -- in stocks and bonds.  Money that is in bank accounts or CDs is not going to grow enough to support a 4% withdrawal rate.  So in your situation, if you plan to have only $700K in funds and keep $300K in cash, I would base the 4% withdrawal on the $700K (or starting with $28K/yr), instead of the full $1M.

If you want to do it yourself -- and you really can -- I would take your $700K (or whatever other figure you want to invest) and split it 60% into the Vanguard Total Stock Market Index and 40% into the Vanguard Total Bond Market Index.  That is a solid starting point.  Vanguard will also be happy to help you roll over your IRAs into their funds -- as neo said, just call.  I am not sure what your "matured" investment is -- that makes it sound like something like an individual bond, or an annuity, or something else.  But that is something that an advisor can probably help you figure out, and again, Vanguard will be happy to help you move that over to them.

HumphreyB

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Re: Need a simple plan I can understand to live off my savings.
« Reply #6 on: June 26, 2017, 02:15:08 PM »
Hi 2birds, I'm committed to do as much of this as I can, just need simple answers to confusing questions. Thanks

Hi Neo, thanks for the reply. I went to the Vanguard website and am immediately stalled.

They tell me to choose from a list of account types. I am always confused by when anyone uses the word retirement in banking or investing, as I am not old enough to be "retired", even though I no longer am in the workforce. I don't want to incorrectly choose an option that is really for only accessing the money after 65 or whatever it is. I know I want  index funds at Vanguard which pay quarterly dividends. That's all I know. I will check out the MMM forum as you have suggested. Thanks

Account types:
Individual
Roth IRA
Traditional IRA
Rollover IRA
UGMA/UTMA
Joint
SEP IRA
College (529)
Trust account
Variable annuity
Individual 401(k)
Simple IRA

ixtap

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Re: Need a simple plan I can understand to live off my savings.
« Reply #7 on: June 26, 2017, 02:16:49 PM »
The basic investing advice given both here and at bogleheads.org is actually geared towards people like you (and me). And it is basically what you have laid out:

Open an account at Fidelity or Vanguard and funnel your funds into basic index funds (ie, total market, S&P 500) until you reach a comfortable balance between what is in you index funds and what is in your CDs (70/30 is a good starting point at your age). DO NOT try to pick individual stocks, DO NOT try to time the market.


Bicycle_B

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Re: Need a simple plan I can understand to live off my savings.
« Reply #8 on: June 26, 2017, 02:24:24 PM »
Hi 2birds, I'm committed to do as much of this as I can, just need simple answers to confusing questions. Thanks

Hi Neo, thanks for the reply. I went to the Vanguard website and am immediately stalled.

They tell me to choose from a list of account types. I am always confused by when anyone uses the word retirement in banking or investing, as I am not old enough to be "retired", even though I no longer am in the workforce. I don't want to incorrectly choose an option that is really for only accessing the money after 65 or whatever it is. I know I want  index funds at Vanguard which pay quarterly dividends. That's all I know. I will check out the MMM forum as you have suggested. Thanks

Account types:
Individual
Roth IRA
Traditional IRA
Rollover IRA
UGMA/UTMA
Joint
SEP IRA
College (529)
Trust account
Variable annuity
Individual 401(k)
Simple IRA

Individual.  That's the category for investments you buy with plain old money. 

neo von retorch

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Re: Need a simple plan I can understand to live off my savings.
« Reply #9 on: June 26, 2017, 02:28:03 PM »
Hi 2birds, I'm committed to do as much of this as I can, just need simple answers to confusing questions. Thanks

Hi Neo, thanks for the reply. I went to the Vanguard website and am immediately stalled.

They tell me to choose from a list of account types. I am always confused by when anyone uses the word retirement in banking or investing, as I am not old enough to be "retired", even though I no longer am in the workforce. I don't want to incorrectly choose an option that is really for only accessing the money after 65 or whatever it is. I know I want  index funds at Vanguard which pay quarterly dividends. That's all I know. I will check out the MMM forum as you have suggested. Thanks

Account types:
Individual
Roth IRA
Traditional IRA
Rollover IRA
UGMA/UTMA
Joint
SEP IRA
College (529)
Trust account
Variable annuity
Individual 401(k)
Simple IRA

First the main three options I think are relevant for you are the first three:

Individual: this is a soup to nuts brokerage account. You buy stocks. They pay dividends and grow. You can sell them (basically) at any time and move money back to your bank account. But you will pay taxes on the dividends and taxes on the growth.

Roth IRA: this might an interesting option for you, but MDM is probably better for speaking on this. It's a "special" retirement account... (IRA stands for Individual Retirement Account.) Basically, you can put $5500 in it each year, and take it right back out, and pay no taxes. The growth and dividends are not taxable either. And since you're over 50, you can put more money in here, too (called "catch up contributions). This might be a nice "side" account for you to build funds inside, but it won't be your "main account." Also - the growth will be "stuck" in there until you're 59.5 (so not quite so limiting as the 65 you feared!) Get comfortable with an Individual account, and come back to this before tax time next spring!

Traditional IRA: this would be useful if you were planning on working and having a taxable income, as you could reduce the tax load, but it probably won't apply based on what you are describing.

Absolutely based on your description, you want an Individual account. (It's technically called a Brokerage Account, but that isn't too important... all that means is "You can buy stocks using the account!"

neo von retorch

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Re: Need a simple plan I can understand to live off my savings.
« Reply #10 on: June 26, 2017, 02:34:02 PM »
As for funds - others have said "Get a target retirement fund." Here's a good breakdown...

https://investor.vanguard.com/mutual-funds/target-retirement/#/mini/overview/0304

If you scroll down, you'll see VTTVX is highlighted. It's currently about 65% stocks, 35% bonds. In about 5 years, it'll have shifted to about 56% stocks, 44% bonds. It'll continue slowly shifting into more stable, but slower growing bonds as time goes on.

HumphreyB

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Re: Need a simple plan I can understand to live off my savings.
« Reply #11 on: June 26, 2017, 02:47:39 PM »
Thanks for all the replies. I read too slow and type slower. I can't reply to everyone. Thanks for the encouragement Laura33.

It asks me "why are you investing?" Retirement, General Savings. Again, the "retirement" word. I think I select General Savings...

It asks me "Select your account type" Single, Joint. I think I select Joint so the wife and I are the owners...

Thanks!

neo von retorch

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Re: Need a simple plan I can understand to live off my savings.
« Reply #12 on: June 26, 2017, 02:57:41 PM »
Thanks for all the replies. I read too slow and type slower. I can't reply to everyone. Thanks for the encouragement Laura33.

It asks me "why are you investing?" Retirement, General Savings. Again, the "retirement" word. I think I select General Savings...

It asks me "Select your account type" Single, Joint. I think I select Joint so the wife and I are the owners...

Thanks!

You got it! Don't worry too much about the terminology. If you get a normal Individual/Joint account, it'll work just how you're hoping. The reason for investing... that's just for them to hopefully guide you as you set things up.

HumphreyB

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Re: Need a simple plan I can understand to live off my savings.
« Reply #13 on: June 26, 2017, 03:23:47 PM »
Thanks again Neo, I got to the point of adding the bank transfer number, which I can get, but it tells me it will transfer the money when I enter the info. Can I put in $5 to get it going? I have to move the money into the account to transfer it before I can do anything large. Also where is the money going as I have not bought anything yet? I suspect it's held in a basic holder till they know what to do with it. Taking deep breaths... lol :)

I save my work and am at least registered on the website now.

neo von retorch

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Re: Need a simple plan I can understand to live off my savings.
« Reply #14 on: June 26, 2017, 03:27:02 PM »
I'm not 100% sure of the minimum, but I think you can do $5! (Or the web site should tell you when you try it.)

Yes, when you first "transfer in", there's a "settlement fund" which holds money (and gets a tiny amount of interest, I think.) In the future, you can "Buy & Sell" and specify what fund to put the money in (another way of saying "buy a mutual fund"), directly from your bank account.

Lady SA

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Re: Need a simple plan I can understand to live off my savings.
« Reply #15 on: June 26, 2017, 03:50:39 PM »
You are setting up the account, which is just a "box" that you put stuff in. The "stuff" you put in the box can be straight cash in a money market/settlement fund, or actual stock/index funds that you've purchased.

Most funds have a minimum initial investment of $1000-3000. So until you get to $3k, your money will sit in the settlement account doing nothing. Or if you want to skip the settlement fund part altogether, you gather at least the minimum investment amount and set up the bank transfer and select the fund(s) you want during the account setup.

Basically, just think of the account as a box that holds the stocks/funds you buy. It can be a fancy jewelry box with bells and whistles, or a shoebox. From what you've said, the "individual" account with both you and your wife listed as joint owners sounds like your best bet.

HumphreyB

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Re: Need a simple plan I can understand to live off my savings.
« Reply #16 on: June 26, 2017, 04:44:43 PM »
Ok wait a second... I have never really understood the ups and downs part of the market. I understand if I get a fund that has the majority of the stocks included it's diversified and in that regard it basically follows the value of the overall stock market. Now I just did a look at the history and I see a major correction in 2000 from 6500 to 1800 over some months. Do I ever owe money if that occurs again, or does the value go down and no dividend paid till they regain value? How does that work? I want to live off the interest, and can survive probably two to 3 years without drawing anything. But the stock market value right now is pretty high. I thought I understood the 4% rule and how the long term it makes money, but is it time for a correction? Should I wait before buying? It's basically doubled in the last 5 years. I can't expect it to continue to go up, and that's the only way to draw from it. So confused...

2Birds1Stone

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Re: Need a simple plan I can understand to live off my savings.
« Reply #17 on: June 26, 2017, 05:18:00 PM »
Ok wait a second... I have never really understood the ups and downs part of the market. I understand if I get a fund that has the majority of the stocks included it's diversified and in that regard it basically follows the value of the overall stock market. Now I just did a look at the history and I see a major correction in 2000 from 6500 to 1800 over some months. Do I ever owe money if that occurs again, or does the value go down and no dividend paid till they regain value? How does that work? I want to live off the interest, and can survive probably two to 3 years without drawing anything. But the stock market value right now is pretty high. I thought I understood the 4% rule and how the long term it makes money, but is it time for a correction? Should I wait before buying? It's basically doubled in the last 5 years. I can't expect it to continue to go up, and that's the only way to draw from it. So confused...


Since the stock market's long term trajectory is up, you will more often than not be at "record highs", so waiting for a correction is futile "market timing".

The second thing you should do a bit of research into is drawdown strategy. Your money will more often than not be best withdrawn at your desired rate, by selling funds, using dividends, etc.

Living "off the interest" is a common misconception. Once you figure out your desired asset allocation (per your own risk tolerance) you can just withdraw your desired amount each year and adjust for inflation. If you have the ability to scale back in a down market, even a bit.....the 4% rule is ultra conservative as it is, it doesn't take into account social security, pensions, etc etc.

2Birds1Stone

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Re: Need a simple plan I can understand to live off my savings.
« Reply #18 on: June 26, 2017, 05:19:46 PM »
If you want to be really conservative you could chose a 3-3.5% withdrawal rate and historically you have have pretty much as close to 0% chance of failure over a 50+ year period.

That's based on an overall balanced asset allocation, and does not rely on dividends on interest on bit.

HumphreyB

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Re: Need a simple plan I can understand to live off my savings.
« Reply #19 on: June 26, 2017, 05:38:25 PM »
I appreciate the advice thank you all. I still do not understand how the ups and down affect my ability to live off my investment. Say I have 700k in the dividend paying index fund. I receive payments quarterly. The market goes down just a little. Do I keep getting payments only smaller in value, or do they stop till the market is more then when I bought?

My window of desired performance is 25 years. That would make me 81 and honestly I probably will be dead by then...

I went from pretty excited to pretty worried. I have been putting this off for 5 years... My money could have doubled. I'm such an idiot. I refused to talk with anyone and trying to find help online in 2012 was impossible. :/ ugh


Lady SA

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Re: Need a simple plan I can understand to live off my savings.
« Reply #20 on: June 26, 2017, 05:40:46 PM »
Here is a recent topic that is very pertinent to your question:
https://forum.mrmoneymustache.com/ask-a-mustachian/not-understanding-the-4-rule-please-help/


Actually, better link to MadFIentist: http://www.madfientist.com/safe-withdrawal-rate/
« Last Edit: June 26, 2017, 05:42:57 PM by LadyLB »

HumphreyB

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Re: Need a simple plan I can understand to live off my savings.
« Reply #21 on: June 26, 2017, 06:49:25 PM »
Hi LadyLB, Thanks for the reply. I read them both. I remain very confused, and the second link lost me a few times.

I actually have 120k in my old business account, totally separate from my 1m I want to invest. I don't need to withdraw anything from my investment for a long time. I just can not wrap my head around the 4% rule as it pertains to me and the current value of the stock market. I mean, surely looking at the history of the market, one would have much less stress buying in at a value of 4k as apposed to buying in at 6k, the very top of the historical value. So even the 2007 drop recovered by 2011, 4 years. I actually think we could make it past 5 years without drawing. I am still not clear on what controls the ability to withdraw. I am sorry for the stupid questions. But I think it's sinking in. It is simply the value of the stock market that controls my ability to withdraw. All this information in the second link is simply the odds of the market being high enough long enough for you to get something more. The growth for the year is what you can withdraw if you want, or leave some for more growth. I'm tired and my head hurts. This is so depressing...


wwweb

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Re: Need a simple plan I can understand to live off my savings.
« Reply #22 on: June 26, 2017, 07:37:16 PM »
Take a deep breath! You are in a great position. You and your wife are going to be fine. Take your time getting familiar with investing - it won't hurt to spend a few weeks just gathering information.

It sounds like you are confused about the mechanics of the 4% rule. Here is an simple example of how it works with some sample numbers.
1) You invest $1,000,000 in 70% stocks 30% bonds.
2) The first year you withdraw $40,000 from your account. The inflation rate is 2%
3) The second year you withdraw $40,800 (1.02*40,000) from your account. The inflation rate is 5%
4) The third year you withdraw $42,840 (1.05*40,800) from your account. The inflation rate is 3%
and so on. You have to handle the withdrawals (no one sends you a check). If the market falls, you still withdraw the calculated amount for that year.

As you do this the value of your investments will fluctuate. Sometimes they will double in value. Occasionally they will fall by 30% or more. They are likely to fall below their original value at some point. To follow the 4% rule you need to be able to stomach this. The worst thing you can do is invest your money in stocks, panic when the market falls 30%, and withdraw all your money. In my opinion, the most important thing you can do right now is get comfortable with the way the markets work. It is okay to take your time doing this. If you don't think you will be able to watch your net worth fluctuate by 30% or more in year, then all the advice to setup a Vanguard account is premature. Instead ask lots of questions and don't be afraid to ask for clarification if you don't understand something.

I hope this is helpful. If not feel free to ignore it.
« Last Edit: June 26, 2017, 07:39:48 PM by wwweb »

neo von retorch

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Re: Need a simple plan I can understand to live off my savings.
« Reply #23 on: June 27, 2017, 07:12:36 AM »
...

Agreed. Good advice. The mechanics involve stock value, dividends, inflation and finally, the fabled 4%. How it works is long-term averages.

Dividends pay something like 1.5-2.5%, and that happens largely whether the stock values are growing or not. For one individual company, they might pay dividends one quarter, and none the next. But when you own thousands of companies, on average, you're getting dividends each quarter. But you're not spending them - you're buying more stocks with them.

So in addition to those dividends, the market will fluctuate, but again, on a long enough timeline it averages (including dividends) about 10% growth each year.

Then inflation (on average) means you lose 3% so you're down to only gaining 7% net each year.

So what is 4%? That's assuming some things about your mix of stocks and bonds. Something like 70% / 30% assumed? Someone will have to correct me. But since the above numbers are averages, and there are going to be some really bad years where the value drops a bunch before climbing back, 4% is a point at which your odds of still having any money left over after 30 years is pretty good.

4% does not account for social security. 4% does not account for being smart and flexible, and saying "whoa, the market just crashed 30%, I'm going to cut my spending for a little." I'm not sure it even accounts for saying "hmm I'll spend my bonds which didn't crash nearly as much as stocks, until the market recovers, and continue to re-balance." It's a safe withdrawal rate. Some might even say it's conservative.

Note... that the 4% does factor in time periods just like this one, where the market has been doing well for a while. (And might have a correction soon.) That's included in the study that arrived at the conclusion that 4% is safe.

Laura33

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Re: Need a simple plan I can understand to live off my savings.
« Reply #24 on: June 27, 2017, 07:14:09 AM »
A few more thoughts:

1.  In terms of the types of account you open, be careful of an IRA or Roth.  You must have earned income to be eligible to contribute to those kinds of accounts.  So if you are already retired and don't have a job, you cannot put money into those kinds of accounts.  You want a basic individual account if you are single, or a joint account if you are married.

2.  If you have questions about these sorts of things, just call Vanguard directly and they will walk you through it.  The website assumes you know these things, but they have real live people who can help if you don't.

3.  The 4% rule has nothing to do with the value of the market today, next week, or 10 years from now.  It is just how much of the starting value of your investments you can withdraw every year, with increases for inflation, with a very very low risk of running out of money over 30 years.  See wwweb's post for an example.  If you are worried about a bad year, you can cut back your withdrawal rate to be extra safe.

4.  With respect to dividends, these will continue if the market is down, but will probably drop off.  These are just regular dividends, like if you owned the stock directly.  So for ex., if you own a S&P500 index fund, many of those companies will pay a dividend.  The index fund collects those dividends, and then pays you your share, based on whatever percentage of that entire fund you owe (so if they collect $1M in dividends, and you own 1/1,000,000 of the fund, you would get $1 in dividends).  You can have those dividends reinvested in your account, or mailed directly to you as a check.  Usually, when the market goes down, companies pay less in dividends, which means the fund manager has less money to pass along to you.  But companies can also increase or decrease their dividends for a bunch of other reasons, too.

But the dividends are the tail wagging the dog.  You are not limited to living on the dividends -- again, the 4% rule says you can take out up to 4% of the starting value of your portfolio, plus inflation.  How you take that out is irrelevant -- you can take it out in dividend checks, you can take it out by selling shares in the fund, or you can take out some in dividends and make up the rest of the 4% by selling shares.  The only thing that matters is that you keep the total amount you take out to that "4% of starting value + inflation" figure.

R62

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Re: Need a simple plan I can understand to live off my savings.
« Reply #25 on: June 27, 2017, 07:51:29 AM »

Seconding the recommendation that you secure a fee-based (not commission-based) fiduciary/financial advisor to assist you in your journey.


4tify

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Re: Need a simple plan I can understand to live off my savings.
« Reply #26 on: June 27, 2017, 08:01:05 AM »
I'd vote for Vanguard Personal Advisory as well. You can get full service with a 500k investment, and they'll also advise how to deal with the rest of your egg too. It's totally worth the cost if you're not into DIY. Alternatively, a target date fund would work just as well and uses roughly the same information the advisory service does (except no one to chat with about other things than portfolio). Good luck!

HumphreyB

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Re: Need a simple plan I can understand to live off my savings.
« Reply #27 on: June 27, 2017, 10:04:51 AM »
wwweb, I found your explanation very understandable. Thank you very much.

Everyone who has responded, thank you all so much. I should have titled this thread Humphreys meltdown...

It was 1995 and I was employed as an electronic engineer, and doing well. I found a niche market, and developed products for it and in within a couple months had to quit the day job to commit myself to full time self employment. I quit the engineering gig and the wife and I built a business from my products. I was in charge of developing the products and creating a platform for selling them, the wife was in charge of fulfilling the orders. Fast forward to 2012. The company was the wife and I, two or three outside employees, and our two children. I was on the top of the world. We were pulling in 1.4m in sales for the last 4 years and I spent the day with the family. I even bought a brand new car for my parents! There were ups and downs but we generally got it done in a fun environment.

All of a sudden, the wife gets diagnosed with a severe form of arthritis. She is unable to do the work anymore. The children have no interest in taking over the business. I find a buyer for the business and in less than a year I sold it for 1.2m. After all the dust had settled we had 11 checks for 100k each. We added an in ground pool and some niceties to enjoy in our early retirement. I was not prepared for the overwhelming emotional issues I would face sitting on so much cash, when so many were not able to make it month to month. I felt completely abandoned and way too much time on my hands. Deep depression set in for years. We ignored the money and only cashed a check when the account got low. In fact we had to get the checks re-issued due to the fact that they were so old.

We paid for health insurance over 2000 a month till Obamma Care was passed and our insurance was canceled. We tried to get insurance through the market, but with 0 income was told we had to go to the expanded medicare route. This infuriated me to no end for obvious reasons. We applied and was accepted and now had health insurance again. I decided to try and create a small business and found it impossible to manage. The insurance we have requires re-applying two times a year. The forms for being self employed are impossible to fill out accurately with no idea of what type of income you will receive. They want to know what you make, when you get paid, and what that cost you to do it. I have no freaking idea, and it will change from month to month. The want to be notified of any change to income immediately. It was so beyond reason I had to just quit trying to make money, for fear of being kicked off the insurance. How do I transition to trying to make an income when I have to make enough to pay for 20k insurance? How can we live in a country that makes you worry about health insurance every 4 years without stressing? It's not right and we as a society can do much better.

So relating this bs to the stock market... I do not know how taxing works. I mean it's already been taxed. I would rationalize that I only pay tax if the money I take out was from growth. But I can easily see how abundantly complicated this can get. And out of my ability to understand. So getting my money into the stock market is a tiny problem compared to the big picture of how to best protect my wife from going without insurance. I am typing this in a panic. I'm short of breath and this folks is how a "millionaire" can be driven to suicidal thoughts. I do not know how to find someone I can trust to help me with the BIG picture. I need to feel like I have worth. Due to reasons I will not get into neither of my children will have children and in that regard I feel empty. I have to stop typing...
« Last Edit: June 27, 2017, 10:07:06 AM by HumphreyB »

anotherAlias

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Re: Need a simple plan I can understand to live off my savings.
« Reply #28 on: June 27, 2017, 10:39:17 AM »
wwweb, I found your explanation very understandable. Thank you very much.

Everyone who has responded, thank you all so much. I should have titled this thread Humphreys meltdown...

It was 1995 and I was employed as an electronic engineer, and doing well. I found a niche market, and developed products for it and in within a couple months had to quit the day job to commit myself to full time self employment. I quit the engineering gig and the wife and I built a business from my products. I was in charge of developing the products and creating a platform for selling them, the wife was in charge of fulfilling the orders. Fast forward to 2012. The company was the wife and I, two or three outside employees, and our two children. I was on the top of the world. We were pulling in 1.4m in sales for the last 4 years and I spent the day with the family. I even bought a brand new car for my parents! There were ups and downs but we generally got it done in a fun environment.

All of a sudden, the wife gets diagnosed with a severe form of arthritis. She is unable to do the work anymore. The children have no interest in taking over the business. I find a buyer for the business and in less than a year I sold it for 1.2m. After all the dust had settled we had 11 checks for 100k each. We added an in ground pool and some niceties to enjoy in our early retirement. I was not prepared for the overwhelming emotional issues I would face sitting on so much cash, when so many were not able to make it month to month. I felt completely abandoned and way too much time on my hands. Deep depression set in for years. We ignored the money and only cashed a check when the account got low. In fact we had to get the checks re-issued due to the fact that they were so old.

We paid for health insurance over 2000 a month till Obamma Care was passed and our insurance was canceled. We tried to get insurance through the market, but with 0 income was told we had to go to the expanded medicare route. This infuriated me to no end for obvious reasons. We applied and was accepted and now had health insurance again. I decided to try and create a small business and found it impossible to manage. The insurance we have requires re-applying two times a year. The forms for being self employed are impossible to fill out accurately with no idea of what type of income you will receive. They want to know what you make, when you get paid, and what that cost you to do it. I have no freaking idea, and it will change from month to month. The want to be notified of any change to income immediately. It was so beyond reason I had to just quit trying to make money, for fear of being kicked off the insurance. How do I transition to trying to make an income when I have to make enough to pay for 20k insurance? How can we live in a country that makes you worry about health insurance every 4 years without stressing? It's not right and we as a society can do much better.

So relating this bs to the stock market... I do not know how taxing works. I mean it's already been taxed. I would rationalize that I only pay tax if the money I take out was from growth. But I can easily see how abundantly complicated this can get. And out of my ability to understand. So getting my money into the stock market is a tiny problem compared to the big picture of how to best protect my wife from going without insurance. I am typing this in a panic. I'm short of breath and this folks is how a "millionaire" can be driven to suicidal thoughts. I do not know how to find someone I can trust to help me with the BIG picture. I need to feel like I have worth. Due to reasons I will not get into neither of my children will have children and in that regard I feel empty. I have to stop typing...

Ok, deep breath.  If you feel comfortable sharing financial details, go over to the case studies sub forum and write up a full case study.  There is a template at the top.  We can all try to help you get a better handle on where you are at and exactly what steps you need to take. 

FrugalFisherman10

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Re: Need a simple plan I can understand to live off my savings.
« Reply #29 on: June 27, 2017, 11:37:01 AM »
I am typing this in a panic. I'm short of breath and this folks is how a "millionaire" can be driven to suicidal thoughts.
Hey man - seriously, if you're considering things like this I would call somebody like a counselor or psychologist today to have them hear you out. They can be really helpful, I've been to one myself.

I do not know how to find someone I can trust to help me with the BIG picture.
If you want somebody to trust with getting this financial stuff rolling you really can't go wrong with calling up Vanguard and spending a while on the phone with them. All the people on this forum are recommending them with good reason, and at some point you're going to have to trust somebody.

If you're talking really BIG picture, life-meaning/having worth etc., which it sounds like you are, personally, I pray, but to each their own.

wwweb, I found your explanation very understandable. Thank you very much.
Agreed - that response was very good. I would stick to that for your understanding.

I would rationalize that I only pay tax if the money I take out was from growth.
that's essentially correct honestly... see, your basic understanding of how things work has proven to be helpful in understanding investing and taxes, so don't be so concerned about the complex nature of this.

My suggested simple plan for you right now would be:
1) google some counselors in your area and go talk to one some this week. They'll probably help you just have a place to vent, cool down, learn some relaxation and breathing techniques which are pretty awesome, etc.
2) Seconding the recommendation that you secure a fee-based (not commission-based) fiduciary/financial advisor to assist you in your journey. Or you can call vanguard  - that's good too.
3) Also, if you wanted to do something that costs you NO MONEY right now, go over to PersonalCapital.com, create an account, and start "linking" all your various account information to their website. It aggregates it and shows you the big picture..so how much you  have in Savings Account A, IRA with XYZ Company, how much you spend in a  year on Gas, etc.. Then, you can click on Planning and then click on Retirement Planner and it will have you walk through some scenarios and give you some advice. It allows you to put in assumptions too, like your age now 53, your age when you want to be able to pull this money out on a recurring basis (also now, 53), how much you need to pull out in order to cover your expenses for the year... This would be a very helpful and free exercise for you.
« Last Edit: June 27, 2017, 12:14:00 PM by FrugalFisherman10 »

LifeHappens

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Re: Need a simple plan I can understand to live off my savings.
« Reply #30 on: June 27, 2017, 11:50:46 AM »
1) google some counselors in your area and go talk to one some this week. They'll probably help you just have a place to vent, cool down, learn some relaxation and breathing techniques which are pretty awesome, etc.
2) Seconding the recommendation that you secure a fee-based (not commission-based) fiduciary/financial advisor to assist you in your journey. Or you can call vanguard  - that's good too.

+1

You started this thread asking for investment knowledge, but it's clear you have much bigger things going on. If you are having suicidal thoughts, please, please call the National Suicide Prevention Lifeline 800-273-8255. Everything else can wait.

Bicycle_B

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Re: Need a simple plan I can understand to live off my savings.
« Reply #31 on: June 27, 2017, 01:54:49 PM »
Hi, HumphreyB.  I congratulate you on persisting with your posts and sharing the fuller situation. 

I have lost a family member to suicide and was once thinking of suicide myself.  I am very glad that I didn't do it.  If suicidal thoughts recur, please follow the other posters' suggestions to talk to counselors, hotlines, etc.  It is impossible to realize in the moment how much better things can become, and how much more do-able they will be later.  I mean, I was there, it was not possible.  But other people can and will help you, just reach out and give them a chance. It's worth it.

When I was at my peak in this suicide loop, I felt like I had to be the one to fix everything, and I just couldn't see how to do it.  I also felt that I had no ability to do even the smallest things, so there was no hope of conquering the bigger issues.  Someone finally asked me "Well, if you can't do anything, could you wait for three months?"  I had to smile a little at that one, because just waiting was something that I could indeed do.  "You might feel better," they remarked.  And after a while, I did.

No person's details will be the same as another person's.  Your comment about trusting someone was really poignant to me because trust is always a tricky emotional issue, yet also when money is involved, a person really does have to be careful.  Luckily, the money you have earned is enough so that you will be very safe to move slowly.  I am confident that you will be able to handle all of the issues, emotional and financial, over time.  I do highly recommend some sort of counseling simply because you've clearly expressed that there is an emotional component in your situation as well as a financial one.  Professional counselors are emotional experts (not infallible, but knowledgeable), and can be surprisingly helpful.  Once the emotions become more relieved, it will be easier to sort out the financial aspects. 

Take care, and do please update us as you go along.

HumphreyB

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Re: Need a simple plan I can understand to live off my savings.
« Reply #32 on: June 27, 2017, 02:08:58 PM »
Thank you all for the comments. In tears actually. I am off to the dr. major panic attack going right now. I wasn't clear, as far as suicidal thoughts. That was a while back, but still very clear in my mind. Please I'm not in that state right now. I was trying to provide more info concerning my situation. Sorry to create concern by not being clear. I'm ok.

Moonwaves

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Re: Need a simple plan I can understand to live off my savings.
« Reply #33 on: June 28, 2017, 01:09:21 AM »
Hope your panic attack passed and that you're feeling a bit better today. I'd also like to thank you for starting this thread, it has been illuminating for me as I'm another one who struggles sometimes with the concept. The answers here have really helped me to understand it. Good luck with everything.