Retirement Withdrawal Strategy

[Okenba]

For those without kids, which is the best retirement plan?

As much as you can into CPF life, so ERS if possible. And Escalating plan.

If no family, automation and regular inflation adjusted income becomes more important as you need to hedge against loss of mental faculties that might come about as you age.

 

[Value.Matrix]

As much as you can into CPF life, so ERS if possible. And Escalating plan.

If no family, automation and regular inflation adjusted income becomes more important as you need to hedge against loss of mental faculties that might come about as you age.

Thanks for highlighting.

But people say its "easy to DIY even when old". Said no one ever on the mental capacity legacy issue. I am surprised you even mention this when its clearly not even considered by the BTIR group.

 

[zoneguard]

And Escalating plan.

I have a different view. If you look at the PV for the 3 plans, Escalating plan is always lowest among them.

Closer to the starting age of LIFE payout, I suggest to use the SingStat life expectancy calculator to gauge if this is a good choice for the individual's specific situation.

Side-note: Why deferring LIFE payout to 70 is a bad idea, especially for males.

 

[Okenba]

Thanks for highlighting.

But people say its "easy to DIY even when old". Said no one ever on the mental capacity legacy issue. I am surprised you even mention this when its clearly not even considered by the BTIR group.

Surprised as in you disagree? Then what would be your proposed plan?
We don't all have to agree.

 

[hwmook]

Thanks for highlighting.

But people say its "easy to DIY even when old". Said no one ever on the mental capacity legacy issue. I am surprised you even mention this when its clearly not even considered by the BTIR group.

If you always use your brain to analyse which stock to buy and look at prospects, growth, valuations etc then you don't have to worry about your mental state. If you everyday just sit there watch TV, put everything into CPF or insurance to receive monthly payout then you might need to be concerned your mental capacity.

 

[celtosaxon]

A public pension plan like CPFL adds a unique and valuable layer of security to a diversified portfolio of investments - a good hedge against both longevity and mental capacity risks. It’s like a rock on the shore, so to speak - one that stormy seas can’t dislodge. Whether a global meltdown, a lawsuit, whatever.

 

[1nd3x1nv3stor]

I have a similar question along the line of the original question of this thread.
If during the retirement I need the money from my stock portfolio, which stock should I sell and what are the considerations?

Should I sell the stock that the price goes up because it is similar to buy low sell high?
Or should I sell the stock that have paper loss because it is similar to cut loss since the company is not really as good as when we bought it?
Other considerations?

Thank you.

 

[Value.Matrix]

Surprised as in you disagree? Then what would be your proposed plan?
We don't all have to agree.

Oh no. I am always in agreement for a backup plan. Like a backup investment manager in the case of LPA etc, so your wife or trusted person can manage it.

This is for risk management. And business succession for your investment portfolio, training your next gen to takeover.

You cant be too sure anyway.

 

[qhong61]

As much as you can into CPF life, so ERS if possible. And Escalating plan.

If no family, automation and regular inflation adjusted income becomes more important as you need to hedge against loss of mental faculties that might come about as you age.

U mean we need more money when we aged?

 

[celtosaxon]

If during the retirement I need the money from my stock portfolio, which stock should I sell and what are the considerations?

Based on your username, I would hope that the majority of your investments are in index ETFs rather than individual stocks.

At least most retirees’ stock portfolios should be in broadly diversified funds (unless you are incredibly wealthy and can afford the risk of not being diversified!). And if that is the case, you don’t need to choose which stock should be bought or sold, the index fund automatically does that for you - leaving you to simply sell shares when needed.

Let’s say you start out with an ETF portfolio of $1m and you receive $25k in dividends for the year, you could then sell $15k worth of shares to make it a $40k total withdrawal for the year - that puts you at a 4% withdrawal rate. This is a typical withdrawal strategy.

 

[hwmook]

I have a similar question along the line of the original question of this thread.
If during the retirement I need the money from my stock portfolio, which stock should I sell and what are the considerations?

Should I sell the stock that the price goes up because it is similar to buy low sell high?
Or should I sell the stock that have paper loss because it is similar to cut loss since the company is not really as good as when we bought it?
Other considerations?

Thank you.

You should see the stock that you see the least growth ahead. It is never about taking profit or cutting loss.

 

[chrisloh65]

If you always use your brain to analyse which stock to buy and look at prospects, growth, valuations etc then you don't have to worry about your mental state. If you everyday just sit there watch TV, put everything into CPF or insurance to receive monthly payout then you might need to be concerned your mental capacity.

You make a good point here, that is why all the more reason why we should learn to invest and pick stocks (like what I advocated) and not being lazy and DCA blindly into passive index ETFs and doing nothing to enhance that portfolio till old and end up with lazy and useless mental capacity and senile when old.

 

[iMac]

I have a different view. If you look at the PV for the 3 plans, Escalating plan is always lowest among them.

Closer to the starting age of LIFE payout, I suggest to use the SingStat life expectancy calculator to gauge if this is a good choice for the individual's specific situation.

Side-note: Why deferring LIFE payout to 70 is a bad idea, especially for males.

CPF Life at 65 or 70 is depending on individual need.

My taxi driver uncle every time will kpkb why collect at 65? not 60 or 55?

On the other hand, my rich boss told us he dont need the CPF-Life money at all, he have multiple private properties for rental income. And he wishes that there is a option for those who dont wish to take out and let it continue to compound until he died. He will leave the money for his wife and children.

 

[zoneguard]

My taxi driver uncle every time will kpkb why collect at 65? not 60 or 55?

On the other hand, my rich boss told us he dont need the CPF-Life money at all, he have multiple private properties for rental income. And he wishes that there is a option for those who dont wish to take out and let it continue to compound until he died. He will leave the money for his wife and children.

If RA met FRS at 55, your uncle can withdraw from SA/OA from 55.

Your boss can top-up his family members' SA/RA if they are eligible to receive top-ups (SA below FRS or RA below ERS) for the compounding to continue at 4%. Or he can top-up back to his RA (up to the current ERS) if he doesn't need the money.

 

[celtosaxon]

Just a note on stock picking vs. indexing… if anyone thinks they can consistently beat the index by stock picking, there is an easy way to prove it - just buy & hold half your portfolio in the index and pick your own stocks in the other half - if you add new money, split it 50/50, as long as you add the same amount at the same time, it’s fair. See which half ends up larger in the end.

An interesting fact to note is that nearly 90% of professional fund managers are unable to beat the index year after year, despite their training and doing it full time. I certainly don’t want to dissuade you in case you happen to be the next Warren Buffett.

But, in my experience, I wasted nearly 10 of my investing years proving to myself that I could not beat the index. Since then, I’ve stuck to the index through thick and thin over the last 15 years… my only regret is that I wish I’d done it sooner.

 

[hwmook]

Just a note on stock picking vs. indexing… if anyone thinks they can consistently beat the index by stock picking, there is an easy way to prove it - just buy & hold half your portfolio in the index and pick your own stocks in the other half - if you add new money, split it 50/50, as long as you add the same amount at the same time, it’s fair. See which half ends up larger in the end.

An interesting fact to note is that nearly 90% of professional fund managers are unable to beat the index year after year, despite their training and doing it full time. I certainly don’t want to dissuade you in case you happen to be the next Warren Buffett.

But, in my experience, I wasted nearly 10 of my investing years proving to myself that I could not beat the index. Since then, I’ve stuck to the index through thick and thin over the last 15 years… my only regret is that I wish I’d done it sooner.

I have managed to pick stocks and beat the index consistently for 12 years. These funds always have some kind of theme thus they only invest in specific theme thus resulting in them underperforming, nothing surprising. As a retail investor, I do not have bounds and you should have a 50% chance of beating the index since its a fair game.

 

[chrisloh65]

I have managed to pick stocks and beat the index consistently for 12 years. These funds always have some kind of theme thus they only invest in specific theme thus resulting in them underperforming, nothing surprising. As a retail investor, I do not have bounds and you should have a 50% chance of beating the index since its a fair game.

Good to hear that!
At least, what you mentioned just got to prove that some others are just lousy themselves and incapable and so keep claiming almost nobody could outperform the index and those professional fund managers! They are just sour grapes towards those who could pick stocks and beat the index consistently and keep refusing they themselves are just lousy and incapable and not that others cannot perform much better than them in stock-picking and beating the index!

 

[celtosaxon]

I have managed to pick stocks and beat the index consistently for 12 years. These funds always have some kind of theme thus they only invest in specific theme thus resulting in them underperforming, nothing surprising. As a retail investor, I do not have bounds and you should have a 50% chance of beating the index since its a fair game.

Good for you! Glad you’ve been able to consistently achieve alpha. The challenge that many investors who self-manage their own portfolio often have is market timing. They often end up with cash idling and that puts an additional drag on returns versus fully invested in the index.

 

[highsulphur]

I have a similar question along the line of the original question of this thread.
If during the retirement I need the money from my stock portfolio, which stock should I sell and what are the considerations?

Should I sell the stock that the price goes up because it is similar to buy low sell high?
Or should I sell the stock that have paper loss because it is similar to cut loss since the company is not really as good as when we bought it?
Other considerations?

Thank you.

I am trying to streamline my portfolio into 100% equity and bond etfs so i just need to sell either when the time comes.

 

[highsulphur]

Good for you! Glad you’ve been able to consistently achieve alpha. The challenge that many investors who self-manage their own portfolio often have is market timing. They often end up with cash idling and that puts an additional drag on returns versus fully invested in the index.

I agree. With index investing, i have the confidence of deploying almost everything i have. A 5% gain of 100% of my networth is the same as a 10% gain of 50%.