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I TOOK MY REQUIRED minimum distribution, or RMD, at the end of July. I was planning on taking it at the end of the year, but my allocation to stocks was more than five percentage points above my target of 40%. I thought selling some of my stocks would be a good way to rebalance my portfolio and fund my RMD, so I sold a portion of my overweight in Vanguard Total Stock Market ETF (symbol: VTI).
I’d been thinking about increasing my stock position from 40% to 45%, but I decided against it. I recalled the saying, “Bulls make money, bears make money, pigs get slaughtered.” Although I have a fairly conservative portfolio, I thought greed was the real reason I wanted to change my asset allocation.
The stock market had been posting solid gains up to that point. I’m not saying my desire to own more stocks was some type of sentiment indicator predicting a market correction—though it did turn out that way. I would, however, suggest you periodically look at your asset allocation to make sure it hasn’t strayed too far from your target.
Our current portfolio of 40% stocks, 55% bonds and 5% cash investments has served us well. It’s given us enough growth and income to fund our six-figure living expenses, which includes $45,000 for travel this year. I know to some that might sound like a ridiculous amount, and I wouldn’t disagree. I never would have thought we’d be spending this much in retirement. But I also know, at age 73, that I don’t have much time left to do the things I want to do while I’m still healthy.
Our income from our Social Security benefits and my RMD is enough to cover our expenses. In addition, my wife will start taking her RMD in six years. If we can live off our Social Security and RMD, we should never run out of money. According to Vanguard Group’s Personal Advisor Select, our portfolio should continue to grow over time.
I realize we’ll probably have to rely more on our investments as we grow older, because there are major potholes you sometimes can’t avoid and which can derail your retirement. Failing health is one of them. I was reminded the other day of how fragile my health is.
I was walking down the street to my car when I tripped over the uneven surface between the sidewalk and the curb. It felt like someone grabbed my right foot. I instinctively put out my arms and hands to break my fall. I was able to keep most of my body and face from hitting the pavement. I ended up with a cut lower lip, a small scratch on my right knee, a bruised right hand—and my pride wounded.
My wife said I was lucky. “You could have lost some of your teeth or broken a bone.” She’s right. I was very fortunate. Still, I’d like to think exercising played a major role in keeping me from getting seriously injured. All the weight-bearing exercises, including pushups, gave me the upper-body strength to keep myself from hitting the pavement harder.
I often wondered how much exercising can improve your health. I hadn’t really seen the true benefits until I took that spill. Now, I know.
It goes to show that all our good work doesn’t always produce significant results right away. You sometimes can’t see the benefits even when it does. It reminds me of one of my visits to see my primary care physician.
Many years ago, I saw Dr. Riley about my arm, which was bothering me. He wanted to give me a shot. He said it was the same shot he took when he had a problem with his shoulder. After he received the injection, he was immediately able to lift his arm above his head.
“I believe this shot can help you, too,” he said. He could see I wasn’t convinced. Then he sat down and looked me in the eye. “I want to level with you. Very rarely do I get a chance to see a patient walk out of my office feeling remarkably better than when they walked in. I know I help my patients, but I often don’t get a chance to see it.”
I took the shot thinking it might not only make me feel better, but also Dr. Riley. Unfortunately, I didn’t feel any different when I left his office. My arm did start feeling better that evening and I believe it sped up my recovery. Dr. Riley just didn’t get a chance to see it.
We all yearn to see the results of our hard work and good deeds. I remember when I was working, while driving home, I’d think of all the things I accomplished that day and how my work made a difference. It made me feel good. I miss that part of my job, more than the paycheck. We can feel we have enough money, but I don’t think we can ever get enough of the pleasure that comes from achieving our goals.
Nowadays, I still take a mental inventory each day of the things I accomplished. Those accomplishments might not be as important as when I was working, but it still makes me feel good about myself. Maybe that’s because—deep down inside—I have a desire to show that, as an elderly person, I still have something to offer.
Dennis Friedman retired from Boeing Satellite Systems after a 30-year career in manufacturing. Born in Ohio, Dennis is a California transplant with a bachelor’s degree in history and an MBA. A self-described “humble investor,” he likes reading historical novels and about personal finance. Follow Dennis on X @DMFrie and check out his earlier articles.
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On my last job, it was very poorly managed and the obstacles to doing the work were so ingrained, they could not be removed. Feeling good about getting a job completed was such a rarity. I was simply counting the pension points every day, year until I left. But, I’m very happy I put in the time!
Dr. Peter Attia and others have been really emphasizing the critical importance of not just general strength training but in particular foot and (especially!) big toe strength in preventing falls. This article goes into somewhat granular detail but is at least worth a skim:
https://www.humanlocomotion.com/the-human-locomotion-fall-prevention-protocol-how-to-create-a-customized-treatment-program-to-maintain-strength-and-agility-as-you-age/
We, too, spend about $45K annually on travel. We can only do so because we do not own a home. Our SS covers 65% of our annual expenses. When we stop traveling full-time, our SS plus my RMD will more than cover our expenses (I’m 71 and my husband is 76 but he had no 401K/IRA).
We are more afraid of falls than we are of COVID! My husband fell a few years ago and ended up with a subdural hematoma and brain surgery. So we have rules which we follow religiously:
1) No roofs, no ladders.
2)three points of contact (e.g. if there is a bannister or railing, USE IT)
3)if you’re dizzy, lie down in the room you’re in—don’t try to walk upstairs to the bedroom (yeah, that was the subdural hematoma fall)
4)One thing at a time, e.g. no looking at architecture or cell phones while walking
5)Merrells! Sandals and hiking shoes—they are great for cobblestones of all sizes
We keep a running conversation between us while walking: “Curb” “uneven pavement” “hole,” etc. We hold hands as our third point of contact a LOT.
All the luck to you. Live your life. Live Your life!
I’m big on point 3. After a nasty sprained ankle caused by tripping on uneven pavement about 12 years ago, I reformed. No phone, no architecture, no people watching. There’s nothing more important in that moment than watching where I’m walking.
Margot,
Good rules to live by.
You are correct Dennis. Healthcare is the wildcard in retirement and can seriously erode even the most well funded retirement plans.
There is only so much that we can do to forestall Father Time and our failing bodies, but exercise can help a lot. I had a similar fall recently. I missed a step on our front porch steps and wound up flat on the sidewalk. I instinctively broke my fall with my hands and only had some bruising and scrapes on my hands. I will turn 80 next month, exercise and walk daily, including balancing exercises, still play golf but do not hit the ball as far, and feel very blessed to still do these things.
My older sister said “old age is not for sissies”. Boy, was she ever right about that.
I’m also glad to see you back, Dennis. And thrilled about your large travel budget as I recall several articles about your decades of frugal living. I hope we get to hear about some of the places you go!
Linda,
Thanks for the kind words.
Thanks for this post Dennis. As a fellow 73 yearly, I appreciated the message.
My holdings are similar to yours, (VTI/VXUS) with my “bonds” actually invested in annuities, and 5% in my “fun account,” BRK-B. We also have 2+ years in a cash account, earning 6.875% for the next month. (Rates change monthly.)
I recently had a fall as well, and the extent of my injury was a skinned right knee and palms of my hands…and my pride. Ha! All healed now.
Falls are the leading cause of death from injuries in seniors … balance and strength are crucial … glad you are healthy Dennis
Hi Dennis,
Glad to see you back writing for HD again. I missed your insight.
Regarding a few points you made:
“Our current portfolio of 40% stocks, 55% bonds and 5% cash investments has served us well. According to Vanguard Group’s Personal Advisor Select, our portfolio should continue to grow over time.”
A Vanguard article that was published this spring I believe calculated that with expected bond returns in the near future a portfolio of 20-40% bonds would produce a healthy return with much less volatility.
”I often wondered how much exercising can improve your health. I hadn’t really seen the true benefits until I took that spill. Now, I know.”
The summer I turned 50 I was in a bad bicycle accident that resulted in three fractures of my jaw and blowing out all my front teeth. A year or so later I was reviewing a request sip and puff electric wheelchair such as what Christopher Reeves used for a high level quadriplegic who was 50. I too thought that if I had not been committed to regular exercise for twenty years at that point, “there but for the grace of god go I”
“A Vanguard article that was published this spring I believe calculated that with expected bond returns in the near future a portfolio of 20-40% bonds would produce a healthy return with much less volatility.”
Actually, the most recent papers from both Vanguard and Morningstar recommend exactly the opposite: 20-40% equities:
“For retirees with time horizons both shorter and longer than 30 years, portfolios with equity weightings of 20% to 40% also generally supported higher withdrawal rates than more equity-heavy portfolios.”
In a nutshell the reason for this is that intermediate-term bonds are paying 4-5% (and if you stick to Treasuries, which you certainly should there’s no default risk), while equities are highly-valued by historical norms.
https://www.morningstar.com/retirement/good-news-safe-withdrawal-rates
I recently started taking tai chi classes. The instructor told us our balance starts deteriorating in our 40s, and regularly practicing tai chi should help. He also demonstrated something I learned a long time ago and had forgotten: when you fall you want to do it rolling on your side. Trying to break your fall when you fall forward is liable to lead to a broken wrist or arm.
well, that’s good in theory, but for most people the fall is very swift & sudden sometimes not even allowing them time to even put out their hands, one week ago I went behind some bushes to see what was behind there, I’ve seen deer coming in & out of there, upon coming out, i lifted my right foot but not high enough, the front of my sandal caught in a bramble and i fell over hard & sudden, I only realized I tripped one second before I landed hard on the ground, didn’t even have time to put my hands out, I bruised the bones above the left side of my ribs quite hard, it was quite painful to breathe deeply for the last week, still a bit painful but better now.
I’m pretty good at plugging along day by day just doing the little necessary steps that move me toward my goals. But I know what you mean about the satisfaction of seeing the result. I feel that way when I periodically think about where my finances were 25 years ago, compared to today.
It’s also true of my work. When I was doing construction, most of the projects were finished in a couple of weeks, sometimes a little longer. I could see the progress everyday, and in a short while, the finished product. Very satisfying.
By contrast, with my physical therapy patients, most of them have conditions that won’t resolve during the time they see me. And some are chronic. I have to teach them the value of just daily plugging along. It’s the mental aspect of rehab that can be just as challenging as the physical.
Dennis, I’m glad you survived your spill with minor injuries. I took a pretty serious won a few months ago, and a few of the bruises took a few weeks to heal. The worst is a torn deltoid ligament in my left ankle. It is getting better, but slowly. I did 5 solid weeks of PT to help it heal faster. Partly that was motivated by the fact that we are leaving in a few days on a 19 day trip to the Dalmation coast. I should be good for a lot of walking and stair climbing.
A few years ago your $45K travel budget would have surprised me, but not today. Travel has gotten more expensive, and using a quality tour organization has its costs and benefits. Like you, we aren’t getting any younger and there are things to do and places to see. Happy travels.
Rick, glad to hear you recovered from the spill. I hope you enjoy the Dalmatian tour as much as we did and I look forward to hearing about it.
Rick,
Sorry to hear about your injury from your fall. You’re right, travel has gotten very expensive.
Watch out for the marble pavements! You need footwear with a good grip.
I suggest a pair of Merrell hiking sandals. These were recommended for hiking in Hawaii. I wore them in Athens and when walking on marble felt like I was wearing suction cups.
We are about ten years ahead of you on the life/retirement journey. Don’t let it go by without doing the things that give you joy, including that spending on travel. You won’t regret it.
When I watch travel shows these days I often say, hey! we stood right their or remember when we were there? Far better than. I wish we had gone there or had seen that.
“I’d like to think exercising played a major role in keeping me from getting seriously injured.”
I’m sure it did. Good on you Dennis.
Love the $45k of travel. Keep up some exercise on the road.
Btw selling the stock doesn’t mean you have to take the RMD in July. Leaving it would mean six months more of interest in your IRA instead of your taxable account.
Michael,
I like to keep things simple and I don’t believe taking my RMD five months earlier will have much of an impact on our finances.
Certainly hope not 🙂