Funding your living expenses in retirement should be your most important goal right now, but a lot of people get distracted by college bills — and the feeling that you're doing well, so you don't have to save so much toward retirement.
These are safe high yield plays that can buttress an early retirement portfolio by making it completely unnecessary to sell shares to
fund living expenses.
This isn't a problem for investors with long time horizons (say 10 + years to retirement) or large enough portfolios to live entirely off dividends, but if your portfolio is small and you need to periodically sell shares to
fund living expenses (such as with the 4 % rule), then this short to medium - term risk is something to be aware of as you think about portfolio diversification.
Note: This article has been updated to reflect the fact that the Freedom Fund has been redefined and its only purpose is to
fund our living expenses.
Retired investors who do not need their entire RMD to
fund living expenses could find this to be a particularly attractive strategy.
The aging domestic population will continue to impact the defined contribution and 401 (k) market as older plan participants enter retirement and begin to withdraw investments to
fund living expenses.
This is especially important for those investors in the retirement stage, drawing down their accounts to
fund living expenses.
I persist because I know that when the dust settles I'll be collecting enough dividend income to
fund my living expenses.
The idea is to do everything possible to reduce the frequency with which stocks are sold — by keeping enough cash to
fund living expenses and by keeping rebalancing to a minimum.
If your portfolio consists entirely of an S&P 500 index fund, and you're selling shares each day to
fund living expenses, the volatility you'd be concerned with is the daily volatility of the S&P 500.
Harvest to reduce risk — If you will eventually need the proceeds from the security to
fund your living expenses, selling other securities in your portfolio with unrealized losses can be one way to offset some gains realized over time as you trim down the position.
However, I consider this cash as part of my e-fund in a way because if I loose my job this cash will be going to
fund my living expenses and not toward the «stuff» new car / more expensive house like I expected it too.
Most aggressive investors either want to accumulate substantial wealth in the future, are in a hurry, have enough income from other sources to
fund their living expenses, and / or have plenty of time to work and recoup losses.
They can use this money to pay off a mortgage, pay college expenses or
fund living expenses.
Even if the cost of gas and water could be passed onto the tenant, people's ability to
fund their living expenses is not unlimited.