AltaRed wrote:SQRT wrote:I think carrying on till death just spending portfolio income doesn't make much sense.
Assuming a person has the resources to live off only pensions and investment income, I think an individual's view of actually doing this likely changes as retirement years progress.
Speaking only to how my views have changed on the subject, pre-retirement and perhaps even in the early years of retirement, the idealism/concept of living only off pensions and investment income feels good, i.e. confidence in not out-living money, bragging rights, accomplishment of a goal, thoughts of a legacy, etc.
After awhile, perhaps 10 years into retirement, it starts to look more and more like WTF? Why have a portfolio continue to (capital) appreciate over a long term average just to die under the weight of prosperity? We do not get any younger and we are likely to want to spend less and less as our physical and/or mental capacity/desire deteriorates.
Really good observations. The spending of capital is a real challenge for myself, and I suspect many others. I happen to be in the position that my indexed (pension + CPP) covers all my spending needs, and the investment income is just gravy that I often lavish on gifts to my kids and grand-kids, and yet I remain very conservative with my portfolio.
I would like to increase the equity portion of my portfolio beyond its present 30%, and have indeed inched up over the last few years to reach that 30% with much trepidation, but I just don't feel comfortable exposing myself to large capital loses'. My large FI asset allocation helps with that.
Perhaps as you say, that once you reach an advanced age, and you realize that you will indeed
"die under the weight of prosperity", it will be time to turn on the tap, I don't know. If you spend a lifetime preserving capital, it is very difficult to simply undo all that programming. How can you watch every penny one minute and then the next throw it all away? Perhaps you'll require some wacky medical procedure that costs a fortune. Darn, if I only hadn't wasted all that capital on goofy stuff, I'd have the means to get repaired.
ltr