How much chicken money is needed if penison and social security cover all your bills
You have defined chicken money, as money that you cannot afford to lose. I am now semi-retired, and was worried that I had too much money the stock market and not enough chicken money, then I started second guessing myself, that in my unique situation, I might already have enough chicken money
Here is why I do not think I need as much.
First, I have no debt, my house is paid off, my 2024 car is paid off and I have no credit card debt. My only monthly expenses are, home and auto insurance, utilities (including TV and internet) and property tax.
Next, for income, I have a pension and medical coverage from the military. I have stock in a small farmer’s bank founded by my great grandfather that pays about $10K a year in dividends. I turned 62 last March am not drawing social security yet and plan to wait at least until I turn 65 (when my $25 a month military medical changes over to >$400 a month Medicare). My military pension and stock dividends alone do not fully cover my monthly bills, but once I start drawing social security that additional income would cover all my bills.
Finally, for holdings/investments. I have another small pension that I could start drawing on or take a $50K lump sum from. It is making 5% interest, so I have not touched it (I consider this chicken money) I have $30K in my savings account (again chicken money). I have $747K in one 401K S&P 500 fund and $202K in a second 401K in a Retirement Balanced Fund which has 60% bonds and 40% stocks designed for retired investors. (quasi-Chicken money).
While I could easily see both of my 401K’s losing money, I feel both are conservative enough that they would eventually come back if I had money to wait them out. So, I think that I just need enough chicken money for an extended bear market. Does that fact that my Pension and Social security payments would be enough to cover all my expenses during any extended bear market mean that I do not need much more chicken money?
Thanks
Terry Says
Well, two things come into play here. There is an intellectual, mathematical analysis. And there is the emotional side.
From a formulaic basis, I don’t know whether you are married or have other responsibilities or potential obligations/costs. You could live another 30 years, so you definitely need exposure to stocks, which outperform inflation over the long run (20 year periods).
The emotional x
Side asks if you would stick to your equity exposure once stocks start falling more than 20%. And that WILL happen sometime in your retirement. So the advice is to “sell down to the sleeping point” — even through a nightmare scenario! That is different for each person.
Let me add one more thing. I highly suggest you run the calculator at www.maximizemysocialsecurity.com to get your best SS claiming strategy. You will be subject to the GPO offset. Don’t want you to be surprised.
