Don't know if you have read them, but we have had some discussion here of pensions and Social Security = bonds.
I decided a while back what money I HAD TO HAVE to be completely positive the wife and I get through the six years from when she retires until we are eligible for SS. It is in six laddered CDs. I can't count how many times I have been tempted to do something else with it, but then I always remember its purpose.
Current average yield of 3.34 sucks, but the NAV isn't going to change. It will probably continue to drop, but I do have the ones for 2013 and 2014 at 4.41%.
They make up about 22% of our overall holdings. Starting next year, we could spend it all by the time we are 62. That would leave us with nothing but stocks, but in actuality, our income will be replaced by the wifes pension and SS.
Even though we have no bonds, we will essentially be living off of what I consider bond income. With our current SS estimates and her pension, figuring a 5% return ( payout ) would have us having over 1 million in bonds. I don't know why I would need more.
In settling for low current "bond" income, I should be able to reinvest my dividends at a minimum until age 62, and hopefully for a long time thereafter.
If one of us dies before SS age, they can take the dividend income, replacing the others Social Security if needed.
I also think bonds are in a bubble. So I think it comes down to your comfort level. Would not having a bond portion affect your life or sleep quotient? |
