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Steady as He Goes

Richard Quinn

WHEN I GRADUATED high school in 1961, my parents offered this advice: “Find a good company to work for and stay there.” At the time, my choices were the phone company, a major insurance company and a utility. I applied to all three and would have taken a job with any of them, but ended up at the utility. I worked there until I retired in January 2010.

Today, my parents’ advice seems almost quaint, especially with the average job tenure at less than five years. Still, while I may have missed opportunities that’ll be forever unknown, following that 1930s-style advice served me well, giving my wife and me a financially secure, no-forced-frugality retirement.

I enjoyed a steady paycheck for half a century—and I’m still focused on collecting a steady income. Today, that income comes from several sources. There’s my pension and our combined Social Security. Together, those income streams exceed my base pay on the day I retired. That’s the income we live on.

When my former employer cancelled Medicare supplemental coverage for retirees in 2021, it provided us with a health reimbursement account to buy replacement coverage. While it won’t be true later in retirement, for now that money covers our Medigap and Medicare Part D premiums.

My annual required minimum distributions from my IRA provide additional income. I wish it didn’t—because I’d rather the money stayed invested. I generally reinvest the net proceeds in a taxable account, but this year some of it was spent on remodeling projects. Meanwhile, our investments in a taxable brokerage account provide capital gains and interest payments. Those are currently reinvested, but they’re available if we need extra income.

Three municipal bond mutual funds pay tax-free interest every month, which we again reinvest. We opened those funds when I took Social Security at my full retirement age of 66. I was still working, so we invested both my wife’s and my Social Security benefit in the three muni funds.

Finally, we own two utility stocks—one is my former employer’s. Those pay regular dividends, also at present reinvested, but that may change if we need to accumulate more cash.

It all boils down to income streams. For sure, my pension makes me somewhat atypical. Still, I’d argue it’s important to build a retirement income stream that’s as far removed from the gyrations of the stock market as possible. I claim no expertise when it comes to investing. But my approach keeps me happy, my wife happy, and someday my children and grandchildren will be happy. I hope.

I forgot one item: There’s also income from my blog. Last month, I earned $5.54. The hosting company doesn’t pay me until the amount owed is $100. When I get paid, it goes to my PayPal account, which I then upload to my Starbucks account. Ya gotta cover all the bases.

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Richard Gore
Richard Gore
1 month ago

Your portfolio although not entirely orthodox seems perfectly reasonable and you are in an enviable position. Now, thinking of earlier post of yours, I would like to suggest again that there is simply no reason for you to monitor your investments on a daily basis. Forget about the stock market and enjoy the freedom and peace of mind your wealth provides.

R Quinn
R Quinn
1 month ago
Reply to  Richard Gore

Of course you are right. It’s a bad habit I can’t seem to break, but at least I never make trades.

William Perry
William Perry
1 month ago

Good morning Richard. As usual I enjoyed your thoughts. I have started my RMDs this year and I am thinking about taking some additional above the RMD from my tax deferred accounts to fund Roth contributions (via conversion) that I hope will eventually go to my kids after my wife and I die should life events allow. As I still have earned income the current tax code affords me some flexibility to fine tune my taxable income and savings buckets after year end via traditional or Roth IRA contributions for me and / or my spouse. I would appreciate your thoughts for age 72+ Roth contributions or conversions. Thanks.

R Quinn
R Quinn
1 month ago
Reply to  William Perry

I’m not an expert, but i concluded that given the five year wait period converting to Roth at age 70 wasn’t worth it. Now at 79, i’m pretty sure it isn’t, but I’d like other opinions from HD readers. .

mytimetotravel
mytimetotravel
1 month ago
Reply to  R Quinn

My interest in a Roth is in reducing the size of my RMDs. Thanks to my pension my tax bracket has never been really low in retirement, but I took advantage of the non-RMD year during Covid to convert some money from my regular IRA to a Roth. I have no expectations of needing the money in the next few years, and I hope to add to it next year when the entry fee for a CCRC should give me a sizeable medical deduction. I paid the taxes on the conversion from taxable funds.

William Perry
William Perry
1 month ago
Reply to  R Quinn

Thank you. I had read in the guide where Jonathan wrote about his retirement – If I am not quite at the top of the bracket, I’ll probably seize the chance to convert more of my traditional IRA to a Roth – but it seems to me that you have to read between the lines that the decision is impacted by both your age at the time of conversion and the relative tax rates between my MFJ return and my kids return at the time withdraws are made. As long as I continue to work the tax math just does not seem to work for me to make major Roth conversions. As my post W-2 years MFJ taxable income will be in the low brackets my goal is to have enough in a contributed Roth to cover funeral and immediate post death expenses so I will not put a tax burden on my family. I opened a small Roth seven years ago to start the five year clock on Roth contributions.

Edmund Marsh
Edmund Marsh
1 month ago
Reply to  R Quinn

Yes, maybe the experts will weigh in. I think my best time is between retirement from my job and RMD age, but I will probably pay for advice to be certain my thinking is right.

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