|
Retire at the Pie Shop
(Updated 1/10/12)
More I had completed the main article in 2005. But as that year has passed into the record books, I decided to continue tracking the “Retire at the Pie Shop” strategy. So the following chapters will be an annual progress report. Year 2005 has come and gone. Here’s how the Coffeehouse Portfolio fared:  Last year, we withdrew $46,371. And to keep pace with a 3% inflation rate, we will need to withdraw $47,762. First, we will gather the dividends.  Next, we take profits from the gaining funds. The profits were more than sufficient to meet our Year 2006 spending needs.  Year 2005 was another up year with no lagging funds. So this time, we will just rebalance.  We’re done with the sixth year of retirement. We’ve spent our sixth withdrawal of $46,371. And we have our seventh year’s withdrawal of $47,762 in the bank. So we’re prepared for another 12 months. Year 2006 has come and gone. Here’s how the Coffeehouse Portfolio fared:  Last year, we withdrew $47,762. And to keep pace with a 3% inflation rate, we will need to withdraw $49,195. First, we will gather the dividends.
However, I am making one minor change. In years past, I used 1% interest rate on cash. This year, I am raising that to 2% to reflect the fact that short-term rates have moved up.
 Next, we take profits from the gaining funds. The profits were more than sufficient to meet our Year 2007 spending needs.  Year 2006 was another up year with no lagging funds. So this time, we will just rebalance.  We’re done with the seventh year of retirement. We’ve spent our seventh withdrawal of $47,762. And we have our eighth year’s withdrawal of $49,195 in the bank. So we’re prepared for another 12 months. Year 2007 has come and gone. Here’s how the Coffeehouse Portfolio fared:  Last year, we withdrew $49,195. And to keep pace with a 3% inflation rate, we will need to withdraw $50,670. First, we will gather the dividends.
 Next, we take profits from the gaining funds. However, there were only two funds that had capital gains. And since the profits were not sufficient to meet our Year 2007 spending needs, the shortfall was drawn from cash.  Here is how our portfolio looks at the end of 2007:  We’re done with the eighth year of retirement. We’ve spent our eighth withdrawal of $49,195. And we have our ninth year’s withdrawal of $50,670 in the bank. So we’re prepared for another 12 months. Year 2008 has come and gone. Here’s how the Coffeehouse Portfolio fared:  Last year, we withdrew $50,670. And to keep pace with a 3% inflation rate, we will need to withdraw $52,190. First, we will gather the dividends. In recent years, I used 2% interest rate on cash. However this year, I am lowering that to 1% to reflect the fact that short-term rates have declined.
 Unfortunately, there are no gaining funds this year from which to take profits from. So instead, we will dip into cash to take what we need to meet our Year 2009 spending needs.  Here is how our portfolio looks at the end of 2008:  We’re done with the ninth year of retirement. We’ve spent our ninth withdrawal of $50,670. And we have our tenth year’s withdrawal of $52,190 in the bank. So we’re prepared for another 12 months. Year 2009 has come and gone. Here’s how the Coffeehouse Portfolio fared:  Last year, we withdrew $52,190. And to keep pace with a 3% inflation rate, we will need to withdraw $53,756. First, we will gather the dividends.
 Next, we take profits from the gaining funds. The profits were more than sufficient to meet our Year 2010 spending needs.  The remaining profits are then used to balance out the equity funds.  Here is how our portfolio looks at the end of 2009:  We’re done with the tenth year of retirement. We’ve spent our tenth withdrawal of $52,190. And we have our eleventh year’s withdrawal of $53,756 in the bank. So we’re prepared for another 12 months. Year 2010 has come and gone. Here’s how the Coffeehouse Portfolio fared:  Last year, we withdrew $53,756. And to keep pace with a 3% inflation rate, we will need to withdraw $55,369. First, we will gather the dividends.
 Next, we take profits from the gaining funds. The profits were more than sufficient to meet our Year 2010 spending needs.  The remaining profits are then used to balance out the equity funds and cash.  Here is how our portfolio looks at the end of 2010:  We’re done with the eleventh year of retirement. We’ve spent our eleventh withdrawal of $53,756. And we have our twelfth year’s withdrawal of $55,369 in the bank. So we’re prepared for another 12 months. Year 2011 has come and gone. Here’s how the Coffeehouse Portfolio fared:  Last year, we withdrew $55,369. And to keep pace with a 3% inflation rate, we will need to withdraw $57,030. First, we will gather the dividends. However, I am making one minor change. In years past, I used 4% interest rate for bonds. This year, I am lowering that to 2% to reflect the fact that rates have dropped.
 Next, we take profits from the gaining funds. However, there was only one fund that had capital gains. And since the profits were not sufficient to meet our Year 2011 spending needs, the shortfall was drawn from cash.  Here is how our portfolio looks at the end of 2011:  We’re done with the twelveth year of retirement. We’ve spent our twelveth withdrawal of $55,369. And we have our thirteenth year’s withdrawal of $57,030 in the bank. So we’re prepared for another 12 months. |
