“How To Make Your Retirement Money Last” by Jane Bryant Quinn

I listen to a lot of financial gurus. I need to be honest. I don’t understand what most of them are saying. Especially the men. For some strange reason, I understand perfectly what female advisors spew. I don’t know what it is. Men, I think IMHO, speak a financial language that only other men can understand. Women, I think IMHO, speak to other women and that’s probably why I understand more what women advise than men. But it’s just a theory of mine.

book coverI watched an episode of Wealth Track, hosted by Consuelo Mack (a woman, of course) where she recently interviewed Jane Bryant Quinn (again) regarding retirement and how to make your money last for your entire retirement. You can catch this particular episode on YouTube by clicking here. (I’ll post the whole episode at the end of this post anyway) I understood every single word she said. I borrowed Quinn’s book out of the library this past weekend; I read it; I understood every single printed word also.

What we retirees have to understand, me included, is that our investing lives don’t end when we turn 65 and start collecting Social Security. We have a good twenty to thirty more years to live, while in retirement and we need to learn and understand how we are going to make our money last that long. I think we can all agree that we all are equally worried (unless we’re gazillionaires) that we could possibly run out of money in retirement if we live too long. I know my own father was very sacred about running out of money in his retirement, despite him having $8,000,000 (eight million dollars) in the bank! He used to make my sister withdraw over $50,000 cash at times and he used to spread it all out over the dining room table. It’s not funny nor is it sad. It’s a real, honest-to-goodness fear for the elderly. And I am no exception. I am starting to worry about it also as my husband’s work days are finally winding down.

Quinn offers a system, called a Three Bucket Investing System that sort of makes sense to me (as in: I can understand this method!) when your weekly paycheck stops and your retirement life starts. I am NOT a professional nor am I qualified to give out financial advice. I can only write and discuss what I would do or am doing. What works for me may not work for you. I do, however, recommend that you read Quinn’s new book and watch her interview with Ms. Mack.

Most of us are old enough to know that the stock market rises and falls. We have good times. We have bad times. We have recessions. We have euphoria. We have inflation. We have stagnation. What Jane Bryant Quinn stresses, more than anything AND what all financial investors stress is” The message is that average prices for the leading stock-market index have always recovered and usually within a reasonable period of time. Individual stocks, however, do NOT necessarily recover. That’s why it is too risky to buy them.”

Your first bucket, should be made up of cash. Figure out how much cash you need to sustain you for five years (less social security, pensions and other guaranteed sources of income). This bucket is your go-to place as the stock market dips, rises, falls, whatever.

Your second bucket is for fixed income and should consist of bond funds. The bonds can be a mix of short and intermediate funds.

Your third bucket should be growth stock funds, which is very risky but needed nonetheless. Seek out a financial advisor if you must, but invest in both bond and stock funds that are low cost. You also need to set up a ratio of what percentage of your money should be invested in bonds and the remaining percentage in stocks. me personally, at my age (68) I would put 70% of my remaining money after I set up a cash account, into bonds and the remaining 30% into stock funds.

PLEASE BE ADVISED THAT I HAVE NOT DONE ANY OF THE ABOVE. EVER.

What I have done, however, unbeknownst to me, is follow Quinn’s Two Bucket Investing System for the super duper conservative investor. One bucket holds my three-year cash reserves. The other bucket holds ALL the rest of my money in super-safe investments such as CDs and Treasury Bills. My lifestyle, because of this method, is modest but secure. I blame our low risk tolerance on myself because I’ve gone bust twice in my lifetime. I just can’t take any risk because the third time I go broke will NOT be a charm. We really can NOT afford much risk anymore.

If I were to take, say $200,000 and follow the two scenarios up above, Quinn’s way and MY way, here is how it would work out. With Quinn’s way, I would have $50,000 in my first bucket, earning 1.57% in a Money Market netting me $63.33 per month. In the second bucket I would have $105,000 invested in  corporate bond fund, 5 star rated by Morningstar @$11.90 a share, giving me 8823.52 shares paying a monthly dividend of .033770885 netting me $297.97 per month. The remaining $45,000 would go in to the third bucket of the top 500 Index fund @103.92 per share, giving me 317.55 shares with a monthly dividend of .48 per share netting me $297.85. My total monthly income would be $444.41.

The second scenario, which is my two bucket system, would have me putting $50,000 in the first bucket, as listed above netting me $63.33 per month. The remaining $150,000 would go into a second bucket, super safe, FDIC CD earning (at current interest rates) 2.7% netting me 337.50 per month. My total monthly income would be $400.83. That’s $43.58 less a month doing it my way vs Quinn’s way.

When I discussed this with my husband, he saw things a bit differently. That’s why it is always good to speak to your Significant Other or some other confidant about money management. Doing the investing in the two bucket system, relieves us from any stress the vibrations of the stock market may cause. At the end of the day, we still have our core money. Earning a mere $43.58 a month (maybe, if the market didn’t shift, but it always does anyway!) was not enough money to make the risk tolerable. Doing it the Quinn way, the core money can go up or down. When it’s down, we have to go into our first bucket and withdraw money out of it just to pay our bills. We also have to know how to rebalance the whole darn thing. When interest rates go down, bonds go up. If interest rates go up (which they won’t for now) I could lose the whole kit and caboodle bond fund if I didn’t rebalance soon and fast enough. (rebalance means selling bond funds and buying stock funds and vice versa).

My husband’s advice was to stay the course. He still has 2.5 more years to go until he officially retires, collects Social Security and Medicare. When we have more guaranteed income that can comfortably pay all our bills (provided we don’t do the lifestyle inflation thing) then and only then should we invest our futures with Wall Street.

If it were just me, I would follow Quinn’s advice. I’d take the chance. I’d go with the risk. But then again, maybe that’s why I went bust twice. Hubby had to bail me out both times and he told me, in no uncertain terms, he won’t and can’t bail me out again. I’m going to have to learn to tow the line, in retirement. Follow our budget. Follow our plan and heed a man’s advice.

Oh well.

 

 

13 comments

    • Hi Cindy. Two excellent choices! If you get a chance, loan out these ladies newer books. The times they are a changing and both Suze and Jane have done an excellent job keeping up with the sweeping financial changes we all must meet. 🙂

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  1. Most of us are trapped by money experiences from our past. Your failing twice and your youthful memories are dictating so much of your financial decisions now. IMHO, It doesn’t matter how many books you read because you are only seeking affirmation of ultra conservative methods and thus choosing small bits and pieces of their total content. Thus. Avoiding investments that could increase your passive income stream. I could easily suggest a split for $200,000 that would garner more then $1,000 a month instead of a corporate bond fund that probably has a high expense ratio. An extra $550 would go a long way for the fun things you seem to regret sacrificing eating out, grandkids fun, and pricey shows in your life. I agree a mortgage free retirement is best but I also think in your sixties you need to take some risk to increase your savings.
    Chase who holds my .9% auto loan sent me a $600 rewards offer to open savings and checking account that equates to 5% interest for the six months the required money needs to be with them. With this I am on target to get about $4800 in reward and rebate money for 2019. You should do a blog article on collecting rewards to supplement your passive streams.
    Sincerely, Lara

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    • Lara, I got the same offer from Chase. I have the offer still on my desk. I need to look it over again.
      I admit I am on the fence about taking risk but it isn’t all about me anymore. I’ve got another person to consider about taking on risk. We both have come to the conclusion that it’s time to come out of the cubbard and get back in the game and take on life. The next unanswered question is ‘when?’ We’re working on it. We still have till the end of the month to make a decision on which way we are going to go. BTW, the expense ratios are very, very low. I gave the net results. Not the gross. I took off for the expenses.
      I am going to look at our collective rewards, which now are a few. I forgot all about them! Thanks for that tip!

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    • HI Lara. I woke up this morning to discover my own bank is offering the same incentive that Chase is! But for new customers only. So, I’m going to open up an account under my daughter! so happy I don’t have to leave my bank myself!
      I’ve been tracking the corporate bond fund as if I had purchased it. In two days it earned $1423 on a supposed $77,000 investment. I’m still on the fence of what I am going to do. I have to wait till the end of the month when my CD money is released. I’ll keep you posted. In reality, I’m really GOOD at this stuff. I just don’t give myself credit. My own fears hold me back, you’re right on that. But I am really good at picking winners, as I did with Apple Inc.
      Thanks for your comment.

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    • So yesterday was a blood bath and I was wondering how did your corporate bond fund fare? My portfolio dropped .8 % giving back half of my gains from July. I added to my positions, otherwise didn’t panic because dividends and interest will give me this money back. Lara

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      • Hi Lara. I had 77% of my money in a corporate bond and it earned a profit of $1553. The remaining 33% was in the S&P 500 and lost $1588. So, in total I had a net loss of $35. Good thing it’s an imaginary portfolio. As I said, and as I predicted, as soon as I ever invest in the stock market, the very next day it tanks. My bad luck is still true to form. At least this time no real money was involved.
        Go figure.

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  2. I requested this book from the library, thanks for the recommendation. Enjoying the interview so far, too. Just turned 50 and our strategy so far has been save save save but we haven’t really defined what retirement looks like

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    • Hi Jen. For us, we really didn’t fully understand what retirement was and what it involved until we actually retired. Not getting that steady paycheck was a real eye opener and one that caused shudders up and down our spine. Extremely scary.
      I’m following the Jane Bryant Quinn retirement strategy of having at least 3 to 4 baskets/buckets of savings/investments. You’ll understand more of what I am saying as you read her book. I rented her book out of the library but now that I am following her plan, I intend to buy the book outright soon and keep it by my side for reference.
      Best of luck!
      Thanks for your comment.

      Liked by 1 person

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