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68 Comments

  1. Thanks for sharing! While not an exact match, my plan tends to follow yours in some detail. I’m a little more risk happy, so I plan to have a higher percentage in stocks (probably 50% ) but I have already started shifting away from them, even 3+ years out.

    I think its great to have the chain, and I have read each of them with interest.

    [email protected]

    • Mr. Groovy

      Nice, Kevin. A 50/50 portfolio split is probably more prudent than our 40/60. Mrs. Groovy would have been perfectly happy with a 50/50 split. In fact, she would have been perfectly happy with a 60/40 split. But I’m definitely the wimp when it comes to investing. I just don’t see how we avoid another 2008-like market correction in the next couple of years, and I want to have plenty of money to buy stocks when there’s “blood in the streets.” Well, that’s what I tell myself, anyway. We’ll see what happens when the proverbial sh%t hits the fan. I may not be so tough when that time comes. Thanks for stopping by, Kevin. I really appreciate your thoughts. Cheers.

  2. Groovy,
    nice plan ! I have to admit, just thinking about the drawdown phase of my life makes me almost cry. Partly because of the work it took to accumulate the ‘pile’, and partly because of fear. I am not there yet but I aim to have income streams outside of the retirement nest egg. Dividends, rental income, & God willing, Social Security. As badly as I want to get to retirement, I am also afraid of it. Luckily for me, I hate work more than the fear of cutting the safety net. 🙂 Nice post, thanks for sharing.

    -Brian

    • Mr. Groovy

      I hear ya, my friend. Retirement is the big unknown. Will I be bored? Will I be able to afford healthcare? Will I outlive my nest egg? But as long as you plan for multiple income streams, maintain your good health, and have a substantial nest egg and a loving family, you should be all right. And don’t forget, if things really go downhill here, you can always move to an expat community overseas. Thanks for stopping by, Brian. I really appreciate what you had to say. Cheers.

  3. I appreciate that your strategy is to wait and get a strategy once you’ve figured out how retirement feels. Having four years of cash is mighty convenient.

    • Mr. Groovy

      Thank you, ZJ. We got the semblance of a plan. But we won’t really have a plan until we know the true costs and risks of retirement. Four years of cash definitely gives us ample time to figure things out.

      P.S. I was thinking about you this weekend. I know you weren’t exactly in the mood to celebrate, but I hope you had an enjoyable weekend nonetheless.

  4. I like how you guys have been disciplined in your expense tracking. I have admittedly haven’t been, and with a new baby, I’m probably in denial that I’m spending WAY MORE than I think I am.

    Sounds like you guys have good drawdown strategy. What I have learned after 5 years of not working is that you need about 30% less than you THINK you need!

    Sam

    • Mr. Groovy

      “What I have learned after 5 years of not working is that you need about 30% less than you THINK you need!”

      From your keypad to God’s eyes, my friend.

      I keep looking at our expenses and our income and portfolio and can’t help but think that Mrs. Groovy and I got this retirement thing. But healthcare does loom large.

      Why is it that a 50″ flat screen television cost more than $7K twenty years ago and today it costs less than $500? Do our best and brightest gravitate toward consumer electronics and not healthcare? What causes one sector to improve quality and lower costs while another sector wallows in mediocrity and ever-increasing costs?

      Sorry for the rant, but it’s so frustrating. I’d rather the success of my retirement not hinge on continued Obamacare/Trumpcare subsidies. Sigh.

      Hope all is well on your end, Sam. Thanks for stopping by.

  5. The numbers and discussion could have come from our planning sessions. A big lesson? Too many people treat the income stream as the only one subject to control. Or course the expense side of the equation has to be controlled. And the cost of healthcare and/or health insurance is a major variable that might even influence where you choose to live. (Costs and quality vary considerably across the country.) http://ccrclifecast.com/2017/01/25/sinking-fund-magic-retirement-income-budgeting/

  6. David

    Pension from the state, great, an earned benefit.

    Planned government (welfare), coverage, not good.

    Your welcome.

    US taxpayer

    • Mr. Groovy

      You are so right, David. And, believe me, I truly appreciate the gift taxpayers like yourself are providing me. I believe in welfare for the poor, not the middle class and rich. And I would implore my fellow Americans to reconsider the safety net. Make welfare for the poor again!

  7. It’s great to hear from someone from the other side of the retirement tracks.

    I love the simplicity of your strategy, and I hope to have a relatively simple plan myself when the time comes. Simple=more time to play and less chance of mistakes, in my opinion.

    Thanks,
    Dr. C

    • Mr. Groovy

      “Simple=more time to play and less chance of mistakes…”

      Couldn’t have said it better, Dr. C. Simple isn’t glamorous, and no one’s impressed by a three asset class portfolio consisting of two total market funds and cash. How boring! But if it gets the job done, why complicate things? Thanks for stopping by, my friend. I really appreciate your insights.

  8. Wow that is beyond awesome how low your expenses are along with enough income to cover them each and every month. Plus with social security available in 10 years and Mrs. Groovy’s pension available in 7 years. You all don’t sound like you will be hurting for cash in the future. Awesome job and thanks for sharing!!!

    • Mr. Groovy

      Thanks, MSM. The real key is not having a mortgage. Once you own your home outright, it’s amazing how inexpensive life becomes. It also doesn’t hurt that we live in NC. When we left New York in 2006, property taxes on our one-bedroom condo (600 sf) were $5,400. Last year, property taxes on our 2,000 sf house were $2,100. Utilities and gas are significantly cheaper in NC too.

    • Mr. Groovy

      LOL! Groovy cat’s food bills are actually quite manageable. Overall, he costs us about $900 for the year (food, toys, vet, cat sitting, etc.). Pretty good bargain considering the joy he brings us.

  9. Argh!! Healthcare is always the crux. I really don’t see any way around it. I didn’t plan my drawdown strategy because I am counting on all my Cuz’s to do it for me, however, I have decided there is no need for me to leave my job until there is a solid healthcare option for retirees. You best figure something out in the next 5 years!! 😉

    • Mr. Groovy

      Agreed, Miss M. Healthcare is definitely the fly in the early retirement ointment. To paraphrase Patrick Henry, “Give me catastrophic insurance, price transparency, and Medi-stamps for the poor, or give me death.” I have much more faith in freedom than Leviathan. People who are free to compete and innovate figure things out. No need to hand control over to Washington.

    • Mr. Groovy

      Thank you, Mrs. BITA. For a while in my life, I had a penchant for preferring the complicated over the simple. I guess I had to justify my master’s degree. But the older I get, the more I cherish simplicity. Complication = a harried life. Simplicity = a tranquil life.

  10. Wait, I think you have made a small error. I didn’t see a “Montana” line item. Tickets here are like $400 a pop. Add $800 to your yearly budget and the rest looks great! =)

  11. Looks solid to me. I am a perma-bull so I would stay heavy in stocks but I might feel differently once my income is all but gone.

    I agree the healthcare is the big huge question mark right now. I am almost hoping health insurance becomes just catastrophic coverage and everything else is all cash. Not going to hold my breath on that.

    • Mr. Groovy

      Oh man, Grant. From your keyboard to God’s ears. Just give me price transparency and catastrophic coverage. I’ll take my chances with freedom over Leviathan any day.

  12. Great article, even us young whippersnappers enjoy reading these drawdown plans you have all come up with. Fantastic idea!

    I wish I was a 28 year old dinosaur with a pension! When I was an advisor the last big healthcare pension was being bought out and boy did all those shady advisors come out of the woodworks….

    We are still in our accumulation phase but since we took a look and really saw how some minor changes could lead us to FIRE we have been reading about all these topics. It will be interesting to see what healthcare will do since we are currently paying a small fortune for us and a 16 month old.

    Lastly I love seeing the simplicity in portfolios. Amazing dividend income off of index funds. So many people think they have to have exotic stock investments! Index funds are sexy too!

    • Mr. Groovy

      Hey, Cameron. When Mrs. Groovy and I first started investing we had around a dozen funds and a bevy of individual stocks. We thought we were being sophisticated, but all we were doing is chasing returns. If the healthcare sector did good one year, we put more money toward that. If small caps had a banner year, we’d throw more money toward small caps. It was a lot of work for little if any benefit. When I compared our overall return with a benchmark S&P 500 index (Vanguard’s Voo), the benchmark usually did better. Luckily, we eventually learned that there’s beauty in simplicity. Thanks for stopping by, Cameron. It’s always great hearing from whippersnappers who got their financial acts together.

    • Mr. Groovy

      That’s great, Mrs. MMM. It’s nice to know that there are still some young raptors roaming around the forest.

  13. Reading about other people’s finances is eye-opening. Makes me feel so small (I’m kidding!!)

    It’s actually very helpful to see how others are handling finances and how they’re dealing with long term goals. It really is eye opening, in the most positive of ways 🙂

    • Mr. Groovy

      LOL! I hear ya, Adriana. When I started my FI journey some 14 years ago, everything was so daunting, so out of reach. But as long as you stick to the basic tenets of personal finance, things eventually get easier. Habits are destiny. I’m just upset that I didn’t wake up financially until my early 40s. Meh. Thanks for stopping by, Adriana. Cheers.

  14. Pretty nice setup with expenses covered solely by dividends and pension distributions!

    A big TBD on the healthcare front, but I’m thinking you’ll be ok when the dust settles. It seems the healthcare bill is more “form” than “function”.

    I have my drawdown strategy ready to go for my tomorrow morning post! I look forward to joining the fun.

    • Mr. Groovy

      Agreed, JW. I don’t think Obamacare subsidies will completely disappear under Trumpcare. There are just too many people dependent on them. If anything, the subsidies will be nibbled away at the margin. Looking forward to reading about your drawdown strategy tomorrow. The Swan mind is a thing of beauty. Thanks for stopping by, my friend. Cheers.

  15. Lila

    You don’t seem like spenders to me. You guys seem to be the types that spend within reason so I think it will be fine.

    I don’t blame you about not returning to work, my mom isn’t returning to work either. She LOVES being retired.

    She’s only like a few years older, maybe 5 years older than you guys, something like that. She owned her own business and she was so happy to sell it and move on with her life.

    These days it doesn’t matter if you work a blue-collar or white-collar job. Companies are so unappreciative of their workers and a lot of jobs even desk jobs seem so thankless.

    Who wants to go back to that?!!!

    • Mr. Groovy

      Hey, Lila. It’s funny. I really liked my last job. My co-workers were great and work was intellectually stimulating. But since I left work in October of 2016, I haven’t thought about the job at all. And I really have no desire to work a real job ever again. Like you said, Lila, companies today care little for their workers. Workers are just widgets. And if a company could get overseas widgets at a cheaper rate–goodbye American widgets. Thanks for stopping by, Lila. And thanks for letting us know about your mom. I’m happy to hear she’s enjoying retirement.

    • Mr. Groovy

      Agreed, Amanda. I sort of have a plan. But this de-accumulation phase is so new, I don’t have a lot of confidence in my plan. That’s why I’m so happy PoF and Fritz got this conversation going. It’s so great seeing what other people of doing. And I can’t wait to see what Team Centsiblyrich come up with. Thanks for stopping by, Amanda. Cheers.

  16. “Currently, because Mrs. Groovy and I are income poor, 95% of our healthcare premiums are picked up by Mr. and Mrs. Taxpayer.” You’re welcome. 🙂

    As I mentioned over on Fritz’s site, we have a virtually non-existent drawdown strategy. Well, I know what we’ll be doing this weekend. 🙂

      • Mr. Groovy

        Definitely need Laurie in The Chain. Not only will it elevate the IQ of our merry bunch, it will certainly elevate the visual appeal.

    • Mr. Groovy

      Hey, Laurie. Get this. Just read over at Real Clear Education that New York spends more per pupil than any other state. And this is what it gets for its investment.

      New York: spending per pupil – $21,206; average SAT score – 1070
      North Carolina: spending per pupil – $8,898; average SAT score – 1090

      I keep telling people that more government spending isn’t the answer. But most people think I’m nuts. They’re convinced that “we have to invest in our children,” and “healthcare’s a right.” So we waste a lot money on education and we give healthcare subsidies to the well-off. Sigh.

      Believe me, Laurie, I’m very grateful to the taxpayers for the $23K gift they’re giving me. Hopefully, Trumpcare will reduce or eliminate such subsidies for people like me. Thanks for stopping by, Laurie. It’s always a pleasure hearing from you.

  17. Ditto on what Mr. Grumby said …

    Plus – *love* the e-book idea!

    And I agree with Mr. PIE that maybe Groovy Cat could take care of the healthcare business if you send him (or her?) on a mission to Washington. MEOW!

    Thanks for putting your plan out there. It’s solid, simple, and logical – and great food for thought for those of us who are in the home stretch.

    • Mr. Groovy

      Haha! We can always count on Mr. PIE for flawless wisdom. Groovy Cat would make a great lobbyist. His persistent meows for attention surely wear me down. I’m sure they’d have the same affect on our politicians. Thanks for stopping by, Mrs. G. It’s always great day when you hear from both members of Team Grumby. Cheers.

  18. steveark

    That is a solid plan, it is something I’ve puzzled over since I decided to retire early a couple of years ago but haven’t had to begin yet. In our case I started up four little side gigs the day I left my career job. I mostly did it because I enjoy them but also because I knew I could use them to stay mentally challenged and to keep my brand alive. I was pleasantly surprised that by working a couple of days a week I am generating enough income to cover 100% of our expenses. I’m getting killed with self employment taxes and health care since I don’t qualify for any help there but to complain about that would be like complaining my clients pay me too much! Anyway, my draw down plan, for as long as I enjoy the work, is to work part time at fun stuff and not draw down at all.

    • Mr. Groovy

      I love it, steveark. If you can do something you enjoy, and it covers most of your expenses while demanding a modest amount of your time, then why the heck “retire”? Anyone who can pull that off may not be technically retired, but they won the retirement game in my book. Best of luck, steveark. And thanks for stopping by.

  19. Groovy folks, you need to get your cat doing some work and swatting paws at those pesky healthcare flies. Maybe even send the cat on a mission to Washington to meow loudly at the administration to get some blood clarity around this whole mess. OK, enough ranting, it’s only 7.10 out here on the west coast and I have busy work (ugh!) to do today.

    Keeping that SWR low is the key. You cannot fail if you do that. With you 100%. And I love your simplistic approach and succint summary of your plan. Our’s was a bazillion words too long…..

    After that healthcare/dental work in Mexico, I’ll be the guy supporting your recovery by selling chilled margaritas on the beach to dull any lingering pain. See, I just can’t stop working. Eh, strike that last sentence from the record…….. :>)

    • Mr. Groovy

      Haha! Already penciling in our rendezvous. June 1, 2027: knee replacement in Culiacari. June 2, 2027: chilled margaritas with Mr. PIE.

  20. Thanks for sharing your draw down strategy. How often do you rebalance? Overall, I like your strategy. It’s simple and easy to understand. KISS, right?
    I’ll head over to the other sites and check those out too.
    We don’t have a draw down strategy yet. Our active income still exceed our expense and we hope to keep it that way for a while. If we can keep our hands off the retirement fund for the next 10 years, we’d be set for life.

    • Mr. Groovy

      Good question, Joe. Our game plan is to rebalance once a year, probably around my birthday in October. If we do see a correction, though, of say 20 percent at any point in the year, we’ll want to jump on that. This is all uncharted territory for us. It was easier to rebalance during the accumulation phase. Money was going into our retirement accounts every month. But, now, with nothing going in, rebalancing isn’t nearly as straightforward. Thanks for stopping by, Joe. Having an active income that exceeds your expenses is definitely a blessing. My guess is that you’ll be able to leave for retirement fund alone for at least 10 years. Good luck.

  21. I haven’t looked at PoF’s or Fritz’s strategies yet, but the simplicity of your plan resonates with me. Our retirement date is less than a year away and we need to move away from our 70/25/misc allocations into something more heavily weighted in bonds and cash.

    Healthcare will be impacted, but whatever changes are made will take a couple of years at least, so we feel that gives us time to plan. I think your low annual spending rate will allow you to be groovy without working for the man ever again! That’s our approach as well.
    Thanks for more Groovy expertise!

    • Mr. Groovy

      Hey, Mr. G. Agreed. Our low annual spending does give us a lot of wiggle room. And hopefully it will get even lower when we relocate to the Wake Forest area next year. We want to downsize from our current 2,000 sf house to a 1,000-1,200 sf house. And I hope between our low expenses and large cash holdings, we’ll be able to have a simple drawdown plan for years to come. Got my fingers crossed, anyway. Thanks for stopping by, my friend.

    • Mr. Groovy

      Thank you, Tonya. Mrs. G and I are very fortunate. Our basic expenses (housing, transportation, utilities, taxes, food, insurance, etc.) run about $24K a year. That leaves us with roughly $12K a year of fun money. And this is based on a $3,000/month budget. Our portfolio could easily handle a $4,000/month budget. Scary.

  22. Did you just call me a laggard? Great plan, Groovies! Interesting that our asset allocations are almost identical. Thanks for joining “The Chain Gang”, you’re new official name is “Link #4”!

    Great strategy. Look forward to talking about it when we meet (for the FIRST TIME!!) in 3 days!

    • Mr. Groovy

      Haha! I knew my “laggard” slight would get you fired up. Happy to be part of the “Chain Gang.” You and the good doctor have done something really worthwhile. This series is going to help me and a lot of other retirees better manage our cash flow in retirement. Bravo, my friend.

  23. That fly in the retirement ointment might raise your monthly expenses, but it seems unlikely to force you to know the sting of mandatory work. With the pensions, Social Security, and sizable portfolio kicking out dividends, I’m guessing you can up the withdrawal rate quite a lot before your groove is disrupted.

    Cheers!
    -PoF

    • Mr. Groovy

      Hey, PoF. My sentiments exactly. Even with the great unknown of healthcare, I don’t see how Mrs. Groovy and I can screw this up. Besides, if healthcare reform really goes off the rails, we’re perfectly prepared to go outside the country for major care. BTW, do you know any good doctors in Mexico? Doesn’t hurt to plan ahead. Thanks for stopping by, PoF. And thanks for getting this conversation going. The FI community needed a kindly nudge.