Comments on: Investing for Early Retirement

By: Elizabeth

Elizabeth — Wed, 03 Jun 2009 03:34:10 +0000

Hi Debbie, you sound well prepared. My biggest fear is also medical expenses. I am researching medical tourism and have several friends that have received treatment overseas and are pleased with the results.

Thanks so much for sharing.

By: Debbie M

Debbie M — Wed, 03 Jun 2009 01:50:56 +0000

Ideally, I’ll have expenses so low (with my house paid off) that I can stand a low income sometimes. And I do have savings accounts for things like home repair, car repair, and next car so that I should be able to afford those kinds of emergencies even when the timing’s bad.

I’m going mostly with index funds all with the same rather than ETFs so I can rebalance for free.

My biggest fear is huge medical expenses. Even people who stay in shape and find recipes that make vegetables yummy break down as they age.

By: Carnival of Personal Finance: Vacation-time edition : Funny about Money

Carnival of Personal Finance: Vacation-time edition : Funny about Money — Mon, 01 Jun 2009 10:30:33 +0000

[...] Modern Gal Investing for Early Retirement A variety of considerations to think about San [...]

By: Elizabeth

Elizabeth — Mon, 01 Jun 2009 04:50:03 +0000

Debbie, This is an interesting approach. I also have some investment in REITS (both US and foreign) through ETFs. With your plan, the main thing I would be concerned about is that in a year when the portfolio goes sharply down, to make sure you have enough put away in the extra cash side to tide you over.

My personal expectation is that actual inflation goes up quite a bit, and social security goes up by less, effectively devaluing it; but we’ll have to see.

Thanks so much for commenting.

By: Debbie M

Debbie M — Sat, 30 May 2009 18:58:02 +0000

I’m still working on my allocation plan. There will be mostly stocks and some bonds and some REITs. There will be lots of rebalancing. I will start off with about 10% in cash-like things (more if the market is looking bubbly, less if plummety). I will withdraw some amount (probably 4-7%, ideally growth – inflation) each year. The amount I withdraw will not be adjusted for inflation each year, but will be just the usual percentage of whatever my current total is.

This means my income will go up and down drastically from year to year but I should never run out of money. I’d rather have a few rough years here and there throughout my retirement than a lot of years at the end with no money at all.

To smooth out the roughness a bit, during those years when I withdraw more than I need, I’ll put the extra into cash, and when less than I need I can take some extra from cash. Also I will be debt free and own my house. And if I last 6 more years without the rules changing, I’ll have a pension.

I like to think of Social Security as inflation protection–there will still probably be something there by the time I qualify, but who knows how small it will be. So I will assume there will be nothing, and then when inflation or expenses go up more than I expect, maybe that will cover me.