I finally got busy this week doing a lot of work on my retirement spending plan. This has been a work in progress for several years as I have acquired TIPS and I-Bonds as part of my Failsafe Retirement Plan grand strategy. But interesting things are happening (including getting older) and the time has come for me to get more specific with a plan for how I am going to use my retirement assets to provide spending money. I’ll try to explain my logic without giving too much away or boring you.
I recently wrote an article about not letting a retirement age select you. So, I spent some time this week thinking and talking with some folks – mostly myself – about targeting a specific year and month for my retirement. Based on all of this, and because of the lead time involved, I made a preliminary decision about when my “retirement” would commence. I’m not going to share it here yet because not all of the stakeholders in this decision have been consulted or informed.
After I identified my target retirement date, I randomly came across a video about an awesome adventure undertaken by someone I know because he went to school with my oldest son. His name is Jed Jenkins. He is the son of Peter Jenkins who wrote the best seller A Walk Across America.
Jed recently quit his job to embark on a mostly solo bicycle trip from Oregon to the Patagonia at the southern tip of South America. The video displays vignettes from the trip while Jed explains why he is on this journey. It inspired me and made me believe even more in the decisions I am making about my own journey into a post-working life. You can and should watch Jed’s story here.
This what I did this week to construct my retirement spending plan:
- I updated my retirement spending budget (which is part of my Failsafe Retirement Plan). What I did primarily was to expand it slightly from an “I won’t starve or be homeless” budget to “I can enjoy some fun in retirement” budget.
- I created a new “Retirement Spending Plan” spreadsheet with active links to the investments listed in my Net Worth spreadsheet and to my retirement spending budget spreadsheet. The Retirement Spending Plan spreadsheet allows me to budget yearly expenses and allocate income sources to those expenses for every year of my retirement, extending to age 95.
- I moved some of my retirement portfolio into extremely secure investments (Treasury bonds) and very secure investments (defined maturity bond ETFs.)
- I think I have decided on a withdrawal strategy for the not so secure component of my retirement portfolio. (I am a liability-based investor. This means that I cover the retirement “needs” with secure, mostly inflation-protected investments. The retirement “wants” are covered by a more traditional mix of bonds and equities, using a well-designed withdrawal strategy that may produce variations in yearly income depending on market performance.) More about my chosen withdrawal strategy in a future post.
My retirement spending plan is not finished but it should be within the next 90 days. Currently, I have the first thirteen years of retirement spending covered by a combination of Social Security, Treasury Bonds (mostly TIPS) and seven different defined maturity bond ETFs from Blackrock iShares. My spending over the ten years thereafter will be mostly covered by Social Security and I-bonds. I will be working on filling the retirement spending gaps for years 14-29 over the coming weeks as I liquidate and/or move some investments around. When it is complete, I will write more about it.
Have you started building a spending plan for your retirement?