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We’re probably financially independent (FI). Based on multiple retirement calculators and hours upon hours of studying the issue, I’m confident, if my wife and I were to quit making money today, our nest egg, along with Social Security, would provide us a comfortable living for the remainder of our lives. The only reason I’m still working is because my wife has the desire to travel more frequently and spoil our grandchildren in various ways. I’m not certain we could safely generate the kind of income that would allow enough travel and spoiling to suit her. Working another year or two would help secure the kind of lifestyle that would keep her happy.
So we are on the verge of having “won the game” and now I spend a lot of time thinking about “de-risking” my 90% stock 10% cash portfolio as we prepare for the decumulation phase of life. But I have a different problem than most investors. I was born with a temperament for stock market risk. It doesn’t bother me in the least. In fact, having my money out of the stock market makes me lose sleep. A couple times in my life I have attempted to add bonds to my portfolio to adhere to conventional wisdom, only to quickly move back into stocks. The 10% I’m holding in cash right now are proceeds from the recent downsizing of our home. There are many days I am tempted to move this into the market.
Are there others out there like me? What are your thoughts about my aversion to stock market de-risking? Is the mantra to “stop playing once you’ve won the game” critical to retirement success or just an ultra-conservative move for those who are risk averse?
Hi Matt,
I burned out / retired early in 2015 figuring that we had about enough assets based on the 4% rule with 95% in stocks (index mutual funds/EFTs), 5% in cash and no mortgage or debt. Dividends provide about 2% of our income annually and even with some stock sales our portfolio has doubled, though who knows if it will do as well in the next 10 years. We have spent the past 2+ years traveling in Europe and have not regretted the 2015 decision at all. Go for it while you still are young enough to take full advantage of your mental and physical health.
Thanks for the encouragement, Alistair.
Matt, If you are working now to travel and spoil grandchildren – two good objectives by the way, does your FI allow continuation of both after you fully retire?
That’s the plan. I don’t want to retire voluntarily until I’m confident we can maintain the life we want throughout retirement.
Matt…
You didn’t mention your age, and my first comment is age related. I retired in January of this year, from a job I loved, but with relatively newer management whose sole focus was on DEI, racism, and misandry. I had originally planned to retire in 2020, when I turned 70, but we all remember COVID. Why retire, when the government had shut our country down, and traveling was such a pain in the as_.
The one and only reason I wish I had retired in 2020 is because it would have given us more time to travel, at a finger age. That is something you might want to consider, depending on your health and vitality, now vs. later.
Since I had technically, “won the game,” when I decided to retire, I gave 6 months notice, so a replacement could be found, vetted and hired (I was an academic.)
My (our) portfolio had been 80/20 Stocks and Bonds until mid-2023. At that time, I purchased a series of Income Annuities to replace 100% of my bond holdings and then some, and left 100% of my invested dollars with Vanguard, in VTI and VXUS. (90/10)
Our Social Security and two of the annuities are currently providing us with a low 6 figure income, and only the social security dollars are taxable, as the annuities were purchased with Roth Dollars.
As you can see, based on my owning annuities, I do not share your aggressiveness in retirement, as I did in my preretirement days. Today, since I know my income is all guaranteed dollars, and the fact that I have 2 income annuities growing internally by 8.25% annually, to offset any sequence of returns risk, I feel quite comfortable with 100% of my invested dollars being in equities. Since we have no debts, no mortgage, and 2.5 years of retirement expenses in cash, in addition to our equities, which we are not drawing down, life on earth is good!
We also have no grandchildren, regrettably, so that was not a consideration.
Like you, up until I decided I was no longer willing to work for an institution that no longer represented my values, I saw no real reason to retire. I earned a good income, had 8 weeks PTO annually, great health benefits, and I loved my students and my job.
If you feel like working a few more years and spending money on your grandkids and travel… Just Do It!
Matt, I notice you use “I” and “my” exclusively when talking about your portfolio, but it’s not just yours. It’s also your wife’s, isn’t it? Does she have the same high-risk proclivities? Is she unconcerned about having a 90/10 retirement portfolio?
If not, one idea might be to turn over management of half the portfolio to her. You can continue to exercise your all-in inclinations, and she can invest in a lower-risk way if she prefers.
Good point, Mike. It is “our” money and I discuss things like this with her frequently, but she would have no interest in splitting our money and managing it separately.
My dad said, “It’s a smart man that knows his limitations.” Mine is that when I retired at 56 having sold my family’s company when I was 54, I lost all interest in dealing with money. I decided to hire my wife’s friend’s son who worked for the best-known money manager in our town to handle all my money. I told him I would not interfere and just take care of us.
I worried about outliving our money for about 20 years. I reached a point where that is no longer possible. My plan to leave money to my heirs was to buy life insurance so I would never have to choose between them and ourselves.
We took one big trip a year for about 20 years. We have reached the point when we are no longer traveling overseas. We are beginning to spend less. Our stock holdings are down to about 40% of the portfolio as we have less time to recover from downturns.
Could I have made more, had better cars, a bigger house, and more stuff? Yes, but our health and quality of life were far more important.
When I was working, my attitude about money was that I could always earn more. I could be in retirement for more years than I worked. That takes a lot of cash and living below our means. So, we stayed in our house and kept cars twice as long. We were into experiences, not things.
When I was in business, I managed risk every minute of every day. I wanted to retire from that, too. I wanted zero stress in retirement. I got close.
To me, having money in the stock market is not “investing”. It is simply legalized gambling. Investing is when I invest in new companies that use my money to grow. My accountant cried every time I found a new company to invest in. He wants me to stop because, at my age, I am running out of time to see returns if there are any.
Everything in moderation worked for us. We are now happily coasting to the end.
Know thyself.
Kudos Richard!
I don’t agree with everything you wrote but that was extremely well done.