Retirement Senarios

[KTMarty]

Here are two scenarios for retiring. Which one would you do and why.

1) Get pension paid $4000 a month for life (expected to live 30+ yrs)
2) Get a one time lump sum payment of $800k

Case 1 would not be able to invest the $4k per month since would be use for expense.
Case 2 would be invest the $800k and take out $4k a month for living expenses.

Case 1 take the $4k a month and not worry about the market and live happy every after.

or go for the gusto:

In running the DCAModelCalculator from Dave Smith Drip site I get the following numbers

Case 2a
Intial investment $800k
Outgoing expense  $4k
Div yield   3%
Div growth 5%
Std deviation 4%
Beta 0 (so not too run the difference cases)
In 39 yrs I would have $204k left

Case 2b
Going to the opposite end buying high div
Intial investment $800k
Outgoing expense  $4k
Div yield   8%
Div growth 1%
Std deviation 4%
Beta 0 (so not too run the difference cases)
In 30 yrs I would have $4,469,552 left

Case 2c
Buying high div taking out enough which will run out in 30 yrs
Intial investment $800k
Outgoing  expense  $6200
Div yield   8%
Div growth 1%
Std deviation 4%
Beta 0 (so not too run the difference cases)
In 30 yrs I would have $36k left

Is Case2b unrealistic?
For case 2b & 2c how many high end 8% div stock would you buy? Which ones?
Case2c is nice if you do not expect to have any unexpected expenses at the end of your life but who can predict that.


Have fun and submit all you ideas.

[rayray]

Man, IDK, in and around the 8% overall divi return would be tough, imho. I would be concerned that these investments would not be swan stocks at a time in life when it would most be welcomed in order to be as stress free as possible in regards to investments.

As far as overall divi return

I'm shooting for 3 to 3.5 (I believe this to be doable in a very safe way)

But I'd like to get that up to 3.5 to 4

[Rasec]

I wouldn't pick stocks with 8/9% yields. Maybe CEFs but defo not a basket of stocks. And even CEFs have their risks as well.

I also fail to understand model 2b, but I didn't take it to an Excel sheet to be honest, just doing math out of my head.

[KTMarty]

(03-04-2017, 10:00 AM)Rasec Wrote: I wouldn't pick stocks with 8/9% yields. Maybe CEFs but defo not a basket of stocks. And even CEFs have their risks as well.

I also fail to understand model 2b, but I didn't take it to an Excel sheet to be honest, just doing math out of my head.

I ran this version D From Dave Smith Drip site


There are some great picks that are close to 8% Here are a couple: OHI 7.57% , GAIN 8.56% EVA 8.7%

I would think there are people that do this for just income and was wondering if anyone here is doing this type of investing.

Probable the best case would be picking some high end stock and CEF' and lower divs to balance things out like I'm doing now (do not own any CEF's).

Right now I have and average of 3.45% div Highest OHI at 7.57 and lowest NKE at 1.27%. Plan to get that up to 4% before requirement in a few years.
[url=https://seekingalpha.com/account/research/subscribe?slug=rida-morwa][/url]

[rayray]

Being in the accumulation phase myself, I haven't run any real numbers in regards to what I need in order to retire, or what do I need to yield from that hunk of cash. For the time being I'm quite content doing what I've been doing the last 3 years and just keep chugging along. I do have a number in my head; however, its not set in stone and I'll know more within 5 years of retirement.

Another thing to look at is where is this money coming from and how will it be taxed? Or if a ROTH, there will be no taxes due which would help alleviate the reach for that 8% overall yield.