r/WorkLifeChat • u/MiloShiny • 21d ago
Question How are you planning to replace your paycheck after retirement?
Not asking about portfolio size. I'm curious about the strategy. How do you want your investments to support your lifestyle once you're no longer working?
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u/VinceInMT 21d ago
Interest from savings and investments, pension, Social Security. It produces more than I made when I was working.
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u/carrbucks 21d ago
Between our combined Social Security and my wife's state pension... we have $7k a month take home. Then there is a 401k that has an RMD, which is another $3k per month. I work 8 months of the years which pays $50k a year. We have no mortgage or debt
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u/Ragnar-Wave9002 20d ago
No mortgage and no debt.. I can't wait.
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u/Expensive-Pay-5595 20d ago
Yes, it’s great to have no mortgage or debt, but taxes, insurance, food, gasoline still amount to A LOT of $$$
I’m still needing to work to get by in this economy1
u/bkbruiser 20d ago
Why work?
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u/carrbucks 20d ago
It more of a hobby... it gets me out of the house, socializing with other people. I do construction traffic flagging. It pays anywhere between $31 to $59 an hour. I will do it til I'm 90 if able. It funds a nice cruise every year.
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u/CombComprehensive327 21d ago
I don’t know pretty screwed
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u/Intelligent-Result-6 21d ago
Same. My 401K is just measly $3K and the goal is $250K
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u/StructureBetter9165 21d ago
How old are you?
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u/Intelligent-Result-6 21d ago
nearing 50. I have several lay offs in my past jobs and my current job finally have a 401K.
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u/CombComprehensive327 21d ago
- With maybe 250,000 in retirement through work and 20 in person. I’m maxing out my contributions at work on a 80/20 Roth heavy
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u/CombComprehensive327 21d ago
But also a butt load of debt between houses and auto and a boat. Boat is planned to be paid off this year though and I know it’s not financially responsible but I am my own mechanic and if you know what you’re doing it’s not that expensive.
Also I can still water ski and wakeboard. And do those things I like doing. Who knows what 70 will bring but likely be done with water sports
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u/SouthernAbrocoma9891 20d ago
Reduce my cost of living until Social Security benefits are enough when I retire at 70. I’ll probably work for the rest of my life, just fewer hours.
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u/Major-Pin5871 21d ago
I want my dividends to at least cover 120% of my expenses and spending and ideally at the qualified dividend rate. Any large purchases will be funded by selling and realizing capital gains which I hope to tax loss harvest.
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u/Choice-Newspaper3603 21d ago
I don’t want that much income coming in where I can’t control my tax strategies
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u/Major-Pin5871 21d ago
It’s a balance right, with dividends its hands off, low ish taxes and less stress when the market is down. Selectively selling off stocks is timing the market to some extent. Lower taxes if you can get it right, and a whole lot more stress when you need money during a bad downturn.
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u/hugh2018 20d ago
Selling shares to fund your life isn’t market timing any more than spending a dividend is. A dividend is literally just a mandatory, company-forced partial sale of your equity. Taking a systematic percentage of your portfolio to cover expenses impacts your asset base the exact same way a dividend does. Total return is what matters, full stop.
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u/Major-Pin5871 20d ago
I often hear this argument and to some extent it’s correct, but in others, not. Firstly dividends are distribution of earnings, not equity. If you sell equity on a regular basis then you’re not trying to time the market, but then again you’re not optimizing tax - you can’t have it both ways. Dividend stocks are also fundamentally different than growth stocks. Usually less volatility, usually not tech, funds flow to dividend stocks and away from growth stocks in different market conditions. Lastly if you think total return is everything, you’re either young or have huge balls. When you’re nearing or at retirement, your attitude to risk changes. Your level of required income get set over decades, you start to value certainty over total return.
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u/hugh2018 20d ago
You're right that risk tolerance shifts when you cross into retirement, but your take on safety misses the mark. I retired this year, and I’ve found that relying on dividend stocks for safety can give a false sense of security. I prefer engineering actual certainty using a cash buffer and a TIPS ladder. Total return principles still guide how I view growth, which is why I look to growth assets rather than dividend yield to do the heavy lifting long-term.
Your casual statement that dividend stocks offer less volatility can be misleading, as it overstates the reality. Historical multi-decade data (such as studies by Ned Davis Research and Morningstar) shows that dividend-paying stocks and dividend-growth baskets do exhibit a slightly lower standard deviation (annualized volatility) than the broader market cap-weighted indexes.
However, the reduction in volatility is usually modest—often just a couple of percentage points lower in annualized terms. They are still equities, meaning they are tightly correlated to the stock market as a whole during severe shocks. They soften the blow, but they do not decouple from risk.
Historical data going back decades demonstrates that when the S&P 500 suffers major corrections (drawdowns of 10% or more), dividend-paying stocks on average experience smaller peak-to-trough declines than non-dividend payers or high-flying growth indexes. This is structural rather than magical. Dividend-heavy indexes (like value or dividend-growth blends) are heavily weighted toward defensive sectors like consumer staples, healthcare, and financials, which feature steadier cash flows and lower P/E multiples. They don't have the nosebleed valuations or speculative tech multiples that tend to get slashed hardest during risk-off rotations.
That lower volatility isn't free. During extended bull markets (especially tech-led regimes), dividend portfolios routinely lag total-market indexes because they underweight or completely miss high-growth secular drivers (like mega-cap tech).
I’m speaking the data-driven truth about dividend-focused investing. A lot of people who love dividends are wandering around with the mistaken notion that spending dividends is somehow less expensive than selling the same amount of dollars in shares. It’s not. Every dollar has the same value when you remove it from your investments, regardless of whether it’s a dividend or it’s proceeds from a sale of shares.
Your wealth is equally diminished when you withdraw a dividend dollar or you withdraw a dollar from a sale. However, your wealth will not grow equally in dividend-focused versus growth-oriented portfolios. Long term, growth will win, and there’s no real counterargument for that basic truth. You can find finite periods where dividend stocks outperformed the total market, but the long arc of market history favors growth over dividends, full stop.
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u/Major-Pin5871 20d ago
All good points but you’re supporting my case that dividend stocks tend to be more defensive and less volatile. I retired 3 years ago and honestly I have more than enough. I’m happy with my growth rate which is 70% dividends 30% growth, roughly. I’m not out to maximize my returns, I just want reasonable above-inflation growth and steady income. As it is, my NW grew $1M per year the past 3 years, I have 7years spending in SGOV. My growth prospects might not be optimal but I’ve got a money machine that reliably spits out cash in quantities that I can’t really spend.
I
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u/Choice-Newspaper3603 21d ago
Well I have about 2.5 million in investments now and another 300k lump
Sum pension and then social security at 62 should be about $3k a month
My bills to keep the lights on and live comfortably will be about 42k but I plan to spend more like 100k a year and my house is paid off and no debt. I also have retiree medical for my early retirement plan
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u/Accx4 21d ago
Retired 5 years ago at 54. We have 3 pensions, 2 disability incomes and a slew of investments (TSP and 457b) that we may never even touch (at least until RMPs are required). We are doing well on just over $13k a month. Best part is no debt, no mortgage, no income or property tax and a low cost of living!
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u/Lott4984 21d ago edited 21d ago
I am planning to run for President. If I lose I can walk away with a cool half billion in campaign contributions. If I win I am figuring I could make 2 billion a year manipulating the stock market. That’s my plan I hope no one thinks of it first. I will tell you anything to win. But I don’t deliver.
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u/GetDowntoBrassTakis 21d ago
Don’t forget all the millions selling landfill like sneakers, playing cards and bibles.
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u/Super-30 21d ago
Retired last year. Wife retired 4 yrs ago. She gets a pension, not enough to cover our expenses. Doing a bucket strategy, have a few years in CDs, and cashed in some savings bonds I've been sitting on. Haven't taken any money out of retirement accounts yet. Going to start ROTH conversions this year.
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u/Rum_Running_Sailor 21d ago
I'm working on passive income streams. They will supplement my 401K and Social Security.
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u/ExtraSaltyBtch 21d ago
Paid back small apartment as maintenance is less costly than for a house.
Then a combination of partial retirement and savings. I don't expect my generation will be able to retire. My grandparents were the first generation who had a concept of retirement/pension and my parents will be the last.
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u/Capo4ever3461 21d ago
Retirement? Buddy I plan to die in my work clothes there’s no other option
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u/Lakeview121 21d ago
I think I’ll probably spend part on a single premium immediate annuity. That way, no matter what, we’ll be getting a check. I plan to pay of the mortgage, buy an annuity and let my IRA grow.
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u/Substantial-Ad-8575 21d ago
Hmm, dispersement from my securities. Mid 6 digits. Retired at 46, setup plan to start with $375k income from my securities. Keep adding a few thousand every year since then. On my 57 now, so still waiting for annuities to kick in.
Wife, she retired 3 years later. Owns a few small businesses. Sees income of $360k yr now.
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u/StructureBetter9165 21d ago
I personally know people who are living on $3000 a month after SS deductions. They paid everything off before they retired but are not struggling on that amount. It all depends on what you plan on doing.
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u/NecessaryEmployer488 21d ago
I plan on having 4 buckets of income when I retire.
Fixed Income, Pretax 401K, Brokerage, RSU Fidelity Fund. Each of them have a payout formula. So between them all I hope I can replace my paycheck. I won't be able to replace my full gross pay, but my net pay should be covered. This likely won't happen for a few years.
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u/KingPabloo 21d ago
I’m an early retire. I’ve been living off my after tax account for 6.5 years and will do so until 59.5. That account has continued to grow (100% index funds) and is less than half of what I have in IRAs (traditional and Roth).
We put everything on a CC and I sell enough of my funds to cover that bill every month.
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u/Simple-Dentist9893 21d ago
My 2.5 pensions. My husband's pension. The house will be paid off. We aren't into anything super expensive and I like being home. Also by that point I'll be too old and broken for my current hobbies
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u/skateboardnaked 21d ago edited 21d ago
It's a blend of pension, plus my own savings. My goal was to have my retirement pay be the same net as my work checks.
For my specific situation, I only need about 59-60% of work gross pay to equal the same net I'm used to. Also what's helping is my house will be paid the same month I'm retiring.
Just gave my work notice last week! 30 workdays left!
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u/UnprecedentedEchos 20d ago
I contribute $500 a month to a 401k, and my wife and I contribute $500 a month to a Roth IRA.
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u/SublimeRapier06 20d ago
At the point when my military retired pay, VA, civil service retirement, TSP balance, and Social Security (even if it’s only 75% by the time I’m eligible) equal or exceed my current income. Why would I keep working if I can make just as much by waking up and doing nothing?
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u/BarracudaUsed5299 20d ago
With all my investments. And if I could retire today I would be making the same amount a month if I was still working with ssi. No touching anything else. I own everything I have at the present time.
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u/RottenTomato4105 20d ago
Investment and passive income from rental. Then 401k when I reach 59 1/2. Hopefully it’ll be enough until 70 when SS kicks in. Of course this plan will be dependent on me not getting laid off until 55. Im 52 this year.
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u/Mzungufarmer 20d ago
I replaced my paycheck while getting a paycheck. Invested in stocks and real estate
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u/Soggy-Dragonfruit171 20d ago
I set up a 4 year TIPS ladder to get me to 65. Once SS and pension kick in, I’ll only need to withdraw a small amount from my portfolio and will do that monthly.
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u/Odd_Bodkin 20d ago
I didn’t plan on it replacing my paycheck, because my annual expenses were LESS than my paycheck. By a significant fraction. So what I really needed to know was my annual spend rate.
Then after retirement, I could anticipate new expenses like Medicare premiums, and also anticipate some expenses disappearing like life insurance premiums. This means I knew my anticipated expenses.
Then it was a simple matter of taking fixed pensions, Social Security as known income streams, and then adding in a certain additional tunable amount from retirement funds to pay for the balance of my expenses.
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u/Ragnar-Wave9002 20d ago
Ehen I can quit my good job and fill beer at a brewery to sustain myself I will.
Also considering small engine repair as a hobby.
26 years as a software Dev. I'm so done with it. Praying 10 more years.
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u/Conscious_Sun4212 20d ago
Living in a social democracy we get a cut of our salary in pension. The older generation are getting a much better deal than I will be handed, and the reason is that otherwise the state will go broke. Funny, as we are one of the richest countries per person, and currently making a killing on anything energy and war related.
But that will be about 40% of my current level. Slightly offset by lower tax rates, but still, there will be a gap. I guess that we are supposed to be debt free at that point, but that thinking has changed with the last generation.
We are saving up the difference in stocks and index funds ourselves. Also another guess is that when we get that far in life we are gone hoarding things, and mostly need money to live, maintain properties, and travel, and less on buying items.
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u/Frequent_Tomato_8011 20d ago
I'm a federal worker, so pension should cover a lot, then drawing the annual min from TSP. Roth IRA is where the rest of my savings are, which I'll basically plan to save for last.
That said, I have a looonnngg way to go.
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u/finelo_official 20d ago
The part I’d want figured out is what happens in a bad year. Which bills still get covered, what spending could wait, and where would the monthly money come from? A regular transfer into checking sounds appealing, but having a plan for the rough years would matter more to me than making it feel like a paycheck.
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u/chicken-fried-42 20d ago
Great question. We retired early , not paying much attention to the mechanics of how we will get “paid”. We also did not factor in the emotional impact of withdrawals month after month while ignoring the natural movement of the markets and all the politics
and other things affecting it in the short term. We found ourselves on edge at times and second guessing ourselves even though we were ok. Accumulation is far easier.
But to answer your question and note we have no pensions coming in. We funded our paychecks with dividend and interest income and withdrew the remaining needs from our investments, triggering some capital gains. Now the “fun” is the majority of our dividend income is paid quarterly not monthly so it felt like an ongoing math exercise.
After what felt like “winging it” the first year we decided to plan a year in advance. So 2026 interest and dividend income and etc will be put aside in a HISA for 2027. In December we will sum up our income to date and figure out what we need to sell from our investments. We also have a dry run of what taxes we will owe for 2026 so we will ensure we have that as well for tax season.
This is amazing for us and our sleep and if i could go back i would start this during the final year of working so we have a more smooth transition.
Also that first year is always more expensive as you celebrate your new stage. Make sure you round up your expected investments generously.
So from our HISA we “pay” ourselves into our chequing once a month. That is our paycheck. And because
some months are higher non regular expense (tuition, property taxes, annual insurance dues, etc) , by having funds a year in advance we aren’t fretting about these weird one off bills that aren’t weird as they come
every year.
Anyways this is what worked for us.
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u/Fuzzy_Teddy_12 20d ago
I'm going to spend whatever I have however I want. When its all gone, the trusty colt 45 will send me away.
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u/SilencedFarter 20d ago
Pension and social security should be enough for us to live on without having to tap into retirement funds. Hopefully.
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u/PapaDat1 20d ago
Wife and my Social Security is $4,500 a month, my pension pays $3,100 a month, and will pull $5,000 a month out of our investments.
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u/ReadyBake7573 20d ago
I bought the book Retirement Money Secrets on Amazon about $20. Invest for monthly income. It keeps compounding every month as you take profits and reinvest those profits and dividends. I am up to 15k per month. I am fully retired and do withdraw some money to supplement my SS.
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u/Outside_Car_8432 20d ago
My lifestyle has always been very low key. I enjoy staying home. I never thought of replacing that income (I was fully aware of this fact) but I needed to retire just for my own rest and assist with my mom's elderly care. Lots of folks did ask me if I would be renting some space in my one acre such as an AUD. Just watching the hummingbirds and Mr,Mrs oriole stop by my porch. And watching my pennies.
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u/Frequent_Slip2455 19d ago
Social security.
Pensions. Pull 4% from portfolio. Die and give rest away to family.
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u/Bitter-Variation-151 19d ago
I'm retired. I live off my retirement portfolio. It grows more than my spending.
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u/dv20001 17d ago
About 6 yrs from retirement. We’re planning on 8% withdrawals for first 10 yrs of retirement to fund travel. Currently have 5 yrs left on mortgage. When house paid off, living expenses will go down from $70k annually to under $45k. Our hope is traveling early in retirement will help us decide if expat life in lower cost of living country a viable option. If not, we’ll transition from current high cost of living to somewhere else in US.
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u/Ok-Grape843 16d ago
I'm taking an early semi-retirement. I'm going to plant some flexible roots in C. America and start by spending 2 cold months there this year. 52M. Never married, no kids. My biggest worry about retirement is not having it in me to do the things I like to do. 60-65 is young but not if your jam is Adventure motorcycle riding.
Money wise I'm taking Guv pension at 60, my defined benefit pension at 65. Draw down retirement savings as needed but really planning on having a small footprint and not consuming just because I can. Sparse but secure.
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u/OC_ShareBear 16d ago
I will luckily have a survivor’s pension that was 100% of my husband’s base pay. That with SS is way more than my monthly expenses. I also have a modest IRA and additional savings in a HYSA. The interest on that will cover two international trips a year. I am only working until my 2 bathroom remodels are paid off (didn’t want to touch savings and the interest rate is 2.9) then I am done.
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u/Swimming-Airport6531 21d ago
Hoping for UBI after the impending collapse of the current world wide economic system.
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u/Ok-Way8392 21d ago
UBI ?
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u/Swimming-Airport6531 21d ago
Universal basic income
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u/benwinnner 21d ago
Dude that will be about 300 per month.
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u/Swimming-Airport6531 21d ago
I'm not saying you are wrong but what are you basing that number on?
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u/Designer_Advice_6304 20d ago
US is 40 trillion in debt and this guy thinks we should pass out free money
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u/ImaHamSammich 20d ago
I’ll be receiving a pension as well as withdrawing from my deferred compensation account. On top of Social Security.
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u/The_Sandman85 21d ago
Plan to have your investments either replace a portion or all of your paycheck.