The 3 Legged Stool

[TheRootedNomad]

It use to be that for retirement a prtfolio that resembled a 3 legged stool was recommended. The stool legs would signify where you got money from.

leg 1 - pension
leg 2 - social security
leg 3 - investments (stocks/bonds)

I've posted a few different times about how that stool is not a very viable stool for me to look foward to and what the legs for my stool might be. As I learn more about money management my view on what my stool legs should/could be shift.

Currently I think that a good idea for my stool may be:

leg - 1 investments (stocks/bonds such as independently bought and our work retirement plans)
leg 2 - a few different streams of passive income other than intrest
leg 3 - "stuff" that can be sold and generally increases in value. I think this is considered commodities. I am calssifing "stuff" as things such as property, gold, silver, art, and so on. (Although I probably won't be buying any art since I am not knowledgable enough in that area) The real estate will probably be the main area since it could be simply held long term for resale and/or rental properties could be included.

If social security holds out than maybe I'll have a nice sturdy chair instead of a stool , but I don't want to count on it.

What are your plans for diversifing your retirement income???

[Thevail]

I sometimes wonder how sturdy some of those legs really are myself.

I know a lot of people whose "stools" just lost a couple legs within a year or two of retiring.

Their investments are way down and their pensions (which tend to be investments) are also taking a real hit.

I'm trying to create a sturdy comfy chair for retirement.

1) No debt.
2) Social security (hopefully)
3) low risk investments (I-bonds, municiple bonds, CDs)
4) high risk investments (but only in companies/comodities I have a lot of faith in..Coca-cola, Hydro-power utilities, oil, food comodities)

I think the scariest thing about retirement planning is inflation. My grandma was thrilled her whole life because she had a pension plan. But by the time she retired $720/month wasn't exactly the huge amount she thought it was in the 1950s.

[forHISglory]

We are retired, and our stool is slightly different. We went into retirement with no debt (and actually had been debt free for several years).

Leg 1: Hubby's pension. It's a state pension, which used to be considered very stable. Now there's talk of low funds in the state and that pensions may have to be cut. His pension will continue with me if something happens to him.

Leg 2: Social Security. Hubby is not allowed to get SS since he gets a state pension. That's the rule here. I will be able to draw SS in a couple of years, or can wait for a larger payout when I am older.

Leg 3: Investments: I had no defined benefit plan where I worked. Everything went into a 403b plan. I put every cent in that was allowed and got the matching funds. It did well for me, but lost value in past months. So far we have not had to touch it. This is made of stocks for the most part.

Leg 4: Other Savings. We have purchased CDs and savings bonds for years. We have IRAs. We have property and have purchased some good quality antiques. Again, we have not touched any of this.

Leg 5: We continue to work part time jobs, and we use the money from that to pay health insurance and purchase CDs.

Saving and planning for retirement was a lengthy process, where we just had to keep plugging along. It eventually adds up!