wow... they have super high expenses. We live off of 80k after taxes and are super comfortable. With 22% or 24% fed tax we pull 110k and that covers everything. What we look at is what our average growth rate is over 25 yrs. It's been over 19% average per year. Our 2.2m is growing at 19.3%. That's over 400k now per year. We aren't retired but aren't contributing anymore-don't need to. We are taking big trips and doing things while we still can in our 50s. We won't need to start pulling for another 10 yrs. I'm expecting to have about 7-10m by then and SS coming in-hopefully. We can retire now but would be super bored. We aren't big incomers either. we both make about 70k/yr. I worked 2 full time jobs from 22-40. One job I paid my everyday bills. The other was strictly for investments. It sure has paid off. Most Americans are lazy. That's what I have learned. Take Trump for example... super duper lazy butt dude.
A 7% return seems to be a little pie in the sky. I think you should show a more conservative return in the first five years maybe a 5% or 4% because you didn’t discuss how the portfolio is allocated is it 50-50 #40 60? How do you get that 7% return because that’s more important than anything they need to get the Social Security
This is probably going to come across other than I intend but I continue to NOT understand why every advisor assumes that folks want to retire and die with the same amount in their portfolio (or more) when they die? This focus on the 4% rule from Bill Bengen as the be all and end all without any consideration of the limitations of the same is crazy. It results in people retiring much later than they could. I wish more advisors would focus on one question. How much income can a $2 million portfolio generate, under what circumstances, and for how long. I don't care about all of these made-up scenarios that aren't in any way close to our own circumstances. I like the guard rails approach, but I don't think we have enough history even though there has been back testing built into tools like Income lab.
There are a couple charts in the following article that will show you the full range of historical withdrawal rates: www.fa-mag.com/news/choosing-the-highest--safe--withdrawal-rate-at-retirement-57731.html?print. You'll find the safe withdrawal rate varied between 4.5%-13.6% historically. So in benign circumstances (low starting stock market valuations, low future inflation) a portfolio can actually support fairly high withdrawal rates. Of course, the issue is that a withdrawal rate of 7%+ fails about half the time, meaning a retiree runs out of money early and in some cases quite early.
Given the cost of housing, cars, real estate and property taxes, and food prices, $2M likely won't be sufficient unless you invest wisely to keep growing funds to stay ahead of inflation 🤦
Your content is very good, thank you!
wow... they have super high expenses. We live off of 80k after taxes and are super comfortable. With 22% or 24% fed tax we pull 110k and that covers everything. What we look at is what our average growth rate is over 25 yrs. It's been over 19% average per year. Our 2.2m is growing at 19.3%. That's over 400k now per year. We aren't retired but aren't contributing anymore-don't need to. We are taking big trips and doing things while we still can in our 50s. We won't need to start pulling for another 10 yrs. I'm expecting to have about 7-10m by then and SS coming in-hopefully.
We can retire now but would be super bored. We aren't big incomers either. we both make about 70k/yr. I worked 2 full time jobs from 22-40. One job I paid my everyday bills. The other was strictly for investments. It sure has paid off. Most Americans are lazy. That's what I have learned. Take Trump for example... super duper lazy butt dude.
A 7% return seems to be a little pie in the sky. I think you should show a more conservative return in the first five years maybe a 5% or 4% because you didn’t discuss how the portfolio is allocated is it 50-50 #40 60? How do you get that 7% return because that’s more important than anything they need to get the Social Security
Since 1950 the market has averaged like 10% so 7% is good
I get 7% with both eyes shut. Actually, better than that.
This is probably going to come across other than I intend but I continue to NOT understand why every advisor assumes that folks want to retire and die with the same amount in their portfolio (or more) when they die? This focus on the 4% rule from Bill Bengen as the be all and end all without any consideration of the limitations of the same is crazy. It results in people retiring much later than they could. I wish more advisors would focus on one question. How much income can a $2 million portfolio generate, under what circumstances, and for how long. I don't care about all of these made-up scenarios that aren't in any way close to our own circumstances. I like the guard rails approach, but I don't think we have enough history even though there has been back testing built into tools like Income lab.
There are a couple charts in the following article that will show you the full range of historical withdrawal rates: www.fa-mag.com/news/choosing-the-highest--safe--withdrawal-rate-at-retirement-57731.html?print. You'll find the safe withdrawal rate varied between 4.5%-13.6% historically. So in benign circumstances (low starting stock market valuations, low future inflation) a portfolio can actually support fairly high withdrawal rates. Of course, the issue is that a withdrawal rate of 7%+ fails about half the time, meaning a retiree runs out of money early and in some cases quite early.
Given the cost of housing, cars, real estate and property taxes, and food prices, $2M likely won't be sufficient unless you invest wisely to keep growing funds to stay ahead of inflation 🤦