Comments on: Living Off Your Investments

By: Jeff Clair

Jeff Clair — Thu, 29 May 2008 17:03:41 +0000

Clint thanks for sharing useful information.

Although, I would like to add one more thing that you will always bear fruitful results if your outlook for investment is long term.

Jeff Clair

By: Debbie M

Debbie M — Tue, 04 Mar 2008 21:17:23 +0000

My plan is to start with 4%, but then don’t increase it for inflation each year. Just keep withdrawing 4%. Over time, this will tend to increase, but this does mean that some years my income will be much higher than other years and some years much lower. In the years with extra money, I will put that money in a bond fund or something like that. In the years with less money, I can withdraw from that fund. And of course I can spend bigger in the years where I get more money and spend less in the years when I get less money.

I figure this way my money will last me forever, which I need since I plan to retire young and live to be old. (Thirty years? Hah!) My only risk will be that some years will be tight. My house will be paid off before I retire, so I could get expenses down quite low if I needed to.

When I first retire, I’ll start with some small percentage in the bond-like fund: more if the market has been skyrocketing, less if it’s been plummeting.

By: Dividends4Life

Dividends4Life — Tue, 04 Mar 2008 19:26:18 +0000

Interesting article. I, like Monevator, plan to mitigate the problem with a sound dividend strategy. It will pay me steadily increasing income over time.

Best Wishes,
D4L

By: 7million7years

7million7years — Mon, 03 Mar 2008 21:31:07 +0000

‘Standard’ withdrawal rates vary greatly by writer, and depend upon the tools that you use. For example, ‘worse case scenario planning’ (and, when it comes to your retirement should you accept only a 75% – 90% chance of success???) using:

1. Monte-Carlo Analysis generally yields ‘safe withdrawal rates’ as low as 2.5% – 3.5%.
2. Straight line methods yield rates as high as 7%.
3. Various analysts yield rates somewhere in the middle

Which do you believe … given that your ENTIRE FUTURE depends upon getting this number right?

As to how/where to invest; try these two excellent resources:

a) Worry Free Investing by Zvi Bodie – a retirement investment strategy with built-in inflation protection (using TIPS; US treasury bonds that are inflation-protected), and

b) The Grangaard Strategy by Paul Grangaard – uses a combination of stocks and ‘bond-ladders’ to generate (he claims) a 6.6% retirement stream.

Good Luck … and thanks for the great post! AJC.

AJC.

By: Carnival of Personal Finance #142 - The Homeless Edition — The Baglady

Carnival of Personal Finance #142 - The Homeless Edition — The Baglady — Mon, 03 Mar 2008 07:51:34 +0000

[...] Clint from Accumulating Money has an excellent post on how consistency in returns beats sporadically large returns when you are Living Off Your Investments [...]

By: Monevator

Monevator — Sat, 01 Mar 2008 12:33:33 +0000

I believe 4% is the standard safe rate of withdrawal given by US writers on this subject, as you probably know. In the UK, where we’re lucky enough to have high dividend paying stocks, I hope to eventually live off their yield off my investments (the income paid by the stocks) rather than selling them down.

Yes, I’m still ‘withdrawing’ but crucially I will not be forced to sell any stocks at a bad time, which I suspect will make a difference over the long run.