Fender's final approach to retirement.

[fenders53]

I am thrilled my retirement is soon approaching.  It's actually 15 months away but it's time to lock in a plan that is as solid as possible.  I'm sure adjustments will be in order but I don't want to impulsively swing with emotion.  I hope some of you will check in now and then and offer guidance.  Years ago it was my intention this phase would be very simple but that's not reality.  I was supposed to buy an annuity and ride off into the sunset.  Things change, and while my financial future is secure, it will not be simple the first three years as my pension start dates are spread over the course of 2 years.  Longer if I don't take SS early.  I am blessed to have pensions when many don't these days.  I am thankful but four primary income streams makes this more complicated.      

Today my thoughts are....
-Gradually move my allocations where I want them.  Commit to a plan that doesn't need adjusted for years.
-Reduce the amount of investing screen time by reducing my trades.  I enjoy it now but that's not how I plan to spend my retirement.
-Educate myself on tax implications.
-Lock in my strategies, with an eye towards more simplicity over time.  This will be very important.  I am not going to sell 30 positions over night and flip to the new plan.  But I can move towards the desired endgame as the market provides opportunities.  

If there is any feedback on this thread I'll share more details and ask for input.  I don't know anyone local with a clue on financial management.  It's an exciting time but more complicated than I planned and the day is fast approaching.  My asset allocation (strategies) will probably be the most controversial.  I'll probably share that next, and be open to constructive criticism.

[ChadR]

This is a good plan. I'm a lot more than 15 months away from retirement, but this is similar to my plan. The move to simplicity is important. This is big in my plan too as my wife doesn't follow the market and won't be buying and selling any stocks. I'm headed towards the hold and forget model. This way if something should happen to me, all she has to do is pull out the cash each month.

[crimsonghost747]

A little thought on the whole screen time thing.
I know options are a pretty big part of your cash flows. And that might cause some issues.

Now I know that you will find yourself trading during your retirement too. Sometimes you just get bored and let's face it, options can be fun. At least when you get them right. But I would really love to see you in a situation where the other streams of income are enough. This is just so that trading is indeed a fun hobby you do and your monthly income or even your splurging money is not dependent on it at all. Then, and only then, will it truly become a hobby and you can put it down if you feel like it and go fish for two weeks without a worry in the world.

If options/trading are a big part of your monthly income, you will think about those on your 2 week fishing trip. Or at least that happened to me a couple of times during my year off when I made it a mission to survive on investment income alone.

Honestly I think that during retirement you should be able to spend what you want without worrying about the money. I know this is more of a dream than reality to most, but that's how it should be. Same goes to where that money comes from - it should be on autopilot. Doesn't mean you shouldn't trade, but you should trade because you want to trade, not because you want more money.

These are just my own feelings. As you might remember I had a "mini-retirement" and I honestly didn't know if I was ever going to come back to work. But I quickly noticed that I wasn't enjoying it as much as I could have been because I was worrying about finances. So a few more years of work and more predictability into my cash flows and then I'll consider retiring again.

[ken-do-nim]

I would assume that any "hold and forget" model would involve dividend producing ETFs rather than individual stocks, right? Something like VIG perhaps?

[fenders53]

The sad reality is I am very likely to outlive my younger wife but we never know. I will make it as simple as I can for her with most of my money in case I am wrong. I think I am gong to make it easier in stages. My current intention is to start with 50% Boglehead strategy. I invested with my hair on fire for decades and it worked but it's hard to objectively believe his methods are not time tested and solid. Buffet preached the same. That half of my port might live forever.

The next 25% will probably be DGI. I need to sell a lot of stocks to make that happen. I have time to cull the lesser stocks. This won't be easy. It probably won't be a bad thing if I am forced to pick a dozen I truly believe i holding.

I discovered three years ago my conservative income strategies will crush normal dividends but it requires constant attention. I am approaching 3000 option trades now so I am confident it works in all but a crashing market. I have some control of the risk level and the frequency of trades. I have to control myself or I'll continue to stare at a monitor daily. It's fun now but I need to curb it when I retire. Wish I could skip it but the income is way more than your normal DGI stock with less risk.

[fenders53]

(08-09-2021, 01:45 PM)ken-do-nim Wrote: I would assume that any "hold and forget" model would involve dividend producing ETFs rather than individual stocks, right?  Something like VIG perhaps?

Long term stock holders can do that with with ordinary DGI stocks they are up big on if they have a good YOC.   I came to the game late except for few long term DGI holds so its not where I am now.  DGI ETFs are definitely the no stress ride if DGI is your strat.  I am not completely convinced a ten year hold on a batch of DGI stocks is the same as buying the ETF.

[ken-do-nim]

I'm really curious after you educate yourself on the tax consequences if you decide to add tax-free municipal bond etfs to your retirement portfolio like HYMB and HYD. Both of those have yields in the high 3s, which is pretty good for tax-free.

[fenders53]

(08-09-2021, 02:41 PM)ken-do-nim Wrote: I'm really curious after you educate yourself on the tax consequences if you decide to add tax-free municipal bond etfs to your retirement portfolio like HYMB and HYD.  Both of those have yields in the high 3s, which is pretty good for tax-free.

98% of my retirement is in tax deferred accounts such as my IRA so it doesn't come out until I truly need it.

[ChadR]

(08-09-2021, 01:45 PM)ken-do-nim Wrote: I would assume that any "hold and forget" model would involve dividend producing ETFs rather than individual stocks, right?  Something like VIG perhaps?

My "hold and forget" model will end up consisting of over 100 different DGI stocks and no ETFs or mutual funds.  So if some of the stocks end up going to $0, it's not the end of the world and the growth of the other dividends should cover the loss.  Of course this can always change, but this is my current plan and what I am working on building.

[fenders53]

(08-09-2021, 02:41 PM)ken-do-nim Wrote: I'm really curious after you educate yourself on the tax consequences if you decide to add tax-free municipal bond etfs to your retirement portfolio like HYMB and HYD.  Both of those have yields in the high 3s, which is pretty good for tax-free.

Chad will correct me if necessary....

Generally munis work for those in a high tax bracket due to their income level or state they live in.  During normal times you lose a lot of yield in munis.  You could give up a dollar to save 75 cents on your taxes.  I am sure there are calculators.  If tax rates rise on lower brackets munis may make sense for more people someday.

[ChadR]

Yes, munis make more sense for those in the higher income tax brackets. Or if they are exempt from your state taxes. Putting them into a retirement account is a waste. Also, you will need to check if the muni you are buying is exempt from your state taxes. Some states only exempt muni interest if it is from that state. So it could be exempt from federal taxes, but taxable for state taxes. And if you are in a state that doesn't have a state income tax, they are less valuable.

[fenders53]

Sweetest tax deal I ever got was when I was deployed. I was allowed to start a separate ROTH. The good part was the money was tax exempt on the way in as well. Most military savings programs are in affect just a 401K/traditional IRA.