Fear Of Running Out (FORO) may be a financial challenge that we face should we reach our 90s.  By then, we will be retired at least 41 years which is longer than we have worked.  Unlike our parent and their siblings, neither of us have a pension on which we can depend.   Unfortunately, by 90 we probably won't have the wherewithal to solve the problem of running out funds.  So I am working on it right now.

The strategy I am developing is to create a reliable sustainable stream of income:  a pension like payment, without a pension.   Our approach is a three pronged approach:

  • Real Estate -  We own part of a commercial real estate property.   As disclosure, we are accidental landlords, since I inherited ownership from my parents.  However, I have learned the benefits for being a landlord.    The property is paid off and fully rented with multi-year leases.   In addition, the partnership pays a management company to manage the property.   Currently this yields about 25% of our annual expenses.

    I like the idea of rental real estate.  However, I have no interest in acquiring other properties, given the hands on involvement that is needed.  So we are increasing our real estate exposure through the purchase of REITs.  Hopefully, we can boost the yield to cover 33% of our annual expenses.
  • Dividend and Interest -   At one time, I was planning to have dividends and interest cover 50% of our expenses.   Based on where we are currently, I expect a 33% coverage of expenses is more likely.  My plan to get closer to the target is to execute an NUA this year of my company stock, which pays a 3% dividend.    We will purchase other dividend stock or CDs to cover the balance.
  • Annuity -  We will depend on principal or Social Security to cover the remaining 33%.   In order to do so, we will need to wait until I am 70 to qualify for maximum Social Security payments.
  • Bonus - Since we are invested in the stock market, there is a chance that we will get capital gains from our investments.  However, we are not counting on this, and if it happens, we will consider it a bonus.
So that's our plan.  Of course, there are no guarantees that it will work.   As Dwight Eisenhower once said, "Plans are useless, but planning is indispensable."   And so we will proceed with our plan, until circumstances require us to adjust.

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This is not financial or retirement  advice. Please consult a professional advisor.

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