Glad I ran across this video. It’s like it was tailored for me. I’m 52, single,and hoping to retire next year at 53. Currently have $3.1mil and my advisor and I have always run numbers based on a $10k/month spending. I barely spend $5k a month now so it’s a big jump!
Accumulation phase never ends. I am 70, 12 years retired, and I remain in 100% Stock ETF (vanguard vti). Do not fear volatility, take advantage of it. Stay the course, capital gains and dividend re-investment is the real engine of growth. Social security is an annuity, you do not need another.
I'm single with $3M net worth. I'm transitioning from buying annuities back to investing in the stock market again (post-retirement). So this particular case study was very helpful. Thank you!
You could sell 100 cash secured puts on NVDA with the 1.2 million in the brokerage account, get 11K in premium for this week coming up, minus whatever in taxes that is, put the 401k in the SPY and your golden. Or do that with AAPL, less volatile, get $5,100 in premium for next week.
Very interesting, and I like that it's focused on a single person. For me personally, the ~80% equity is too much for my risk tolerance, but I would also retire with much lower monthly spending.
Totally get that! I’ve got a client who’s at around 40% equity-low spending, solid plan/savings, and most importantly, they sleep like a baby and truly enjoy retirement. Sounds like you’re on a similar track!
I think about fixed income percentage in terms of spending per year. A 20% of $3M is $600K. That may or may not be enough for 10 years of spending during a long market downturn. Historically, I think 10-12 years is safe estimate for a bad case scenario. Personally, I would increase it to 30% in this scenario. But with a bigger portfolio you would be limiting its growth with 30+% invested in fixed income.
This is 90% my situation. I’m 55, single, $3m in investable assets/cash, and I want to have $10K/month of after-tax income. That being said, I plan to work a couple more years and hope to have close to $4m when I retire. It seems to me that retiring early with $3m is dancing a bit close to the edge for me.
I like the idea of a dynamic withdrawal strategy and guardrails but in the Great Depression scenario the spending is reduced before reaching the first lower guardrail in July 1932. I thought the income was kept constant (adjusted for inflation) until an upper or lower guardrail is reached. Also since there is only one red line and one green line (upper guardrail) shouldn't there only be a total of two adjustments to spending over that period?
What looks like a downward income adjustment during the Great Depression isn't actually a "reduction" but looks that way as a result of deflation, which increased purchasing power even as nominal income stayed the same. Guardrails only trigger adjustments when a balance change exceeds a certain threshold, which is why they may appear to "run away" during periods of extreme deflation. The red and green lines represent the only adjustments made, as those were the only times the required threshold was met. A guardrail can't be "hit" until the change that would be triggered would be at least an X% change. Lots that goes into this, but I hope that helps.
Perhaps I didn’t 0:03 catch this in the video but as I understand the person has $3 million and wants $10k per month after tax. How much are you calculating for tax each year. Because using the 4% withdrawal it’s $120k per year pre tax at 5% it’s 150k pre tax. I don’t see how you left room to pay tax and what your assumptions are there.
Here's more on the original guardrails research: www.financialplanningassociation.org/sites/default/files/2020-05/6%20Decision%20Rules%20and%20Portfolio%20management%20for%20Retirees%20Is%20Safe%20Initial%20Withdrawal%20Rate%20Too%20Safe.pdf
@@MCalcagno How is this rule used in real life? Does one use this rule on a monthly basis just to be safe? I mean if the market is starting to fall into a severe down market and you make an adjustment more quickly doesn't that help you too not make a bad situation worse? Or do people just do this on an annual basis?
More on the Risk Based Guardrails 👉 ua-cam.com/video/syzZqrmrsy4/v-deo.htmlsi=l4zODSaKwZcNgTQ7
Glad I ran across this video. It’s like it was tailored for me. I’m 52, single,and hoping to retire next year at 53. Currently have $3.1mil and my advisor and I have always run numbers based on a $10k/month spending. I barely spend $5k a month now so it’s a big jump!
@@cheetahb5 just don’t short change yourself! Spend and enjoy it!
Accumulation phase never ends. I am 70, 12 years retired, and I remain in 100% Stock ETF (vanguard vti). Do not fear volatility, take advantage of it. Stay the course, capital gains and dividend re-investment is the real engine of growth. Social security is an annuity, you do not need another.
I'm single with $3M net worth. I'm transitioning from buying annuities back to investing in the stock market again (post-retirement). So this particular case study was very helpful. Thank you!
Thanks for watching Patrick!
You could sell 100 cash secured puts on NVDA with the 1.2 million in the brokerage account, get 11K in premium for this week coming up, minus whatever in taxes that is, put the 401k in the SPY and your golden. Or do that with AAPL, less volatile, get $5,100 in premium for next week.
Very interesting, and I like that it's focused on a single person. For me personally, the ~80% equity is too much for my risk tolerance, but I would also retire with much lower monthly spending.
Totally get that! I’ve got a client who’s at around 40% equity-low spending, solid plan/savings, and most importantly, they sleep like a baby and truly enjoy retirement. Sounds like you’re on a similar track!
I think about fixed income percentage in terms of spending per year. A 20% of $3M is $600K. That may or may not be enough for 10 years of spending during a long market downturn. Historically, I think 10-12 years is safe estimate for a bad case scenario. Personally, I would increase it to 30% in this scenario. But with a bigger portfolio you would be limiting its growth with 30+% invested in fixed income.
If you have a 3 - 6 year cash bucket to ride out inevitable market corrections plus an emergency fund, 80% equities is very appropriate.
This is 90% my situation. I’m 55, single, $3m in investable assets/cash, and I want to have $10K/month of after-tax income. That being said, I plan to work a couple more years and hope to have close to $4m when I retire. It seems to me that retiring early with $3m is dancing a bit close to the edge for me.
Me too, 3 more years and retire before 62, about the same. Vast majority of mine is pretax. Happy to wait on SS until 67ish.
I am leaning towards hybrid growth and various high yield income etfs
I like the idea of a dynamic withdrawal strategy and guardrails but in the Great Depression scenario the spending is reduced before reaching the first lower guardrail in July 1932. I thought the income was kept constant (adjusted for inflation) until an upper or lower guardrail is reached. Also since there is only one red line and one green line (upper guardrail) shouldn't there only be a total of two adjustments to spending over that period?
What looks like a downward income adjustment during the Great Depression isn't actually a "reduction" but looks that way as a result of deflation, which increased purchasing power even as nominal income stayed the same. Guardrails only trigger adjustments when a balance change exceeds a certain threshold, which is why they may appear to "run away" during periods of extreme deflation. The red and green lines represent the only adjustments made, as those were the only times the required threshold was met. A guardrail can't be "hit" until the change that would be triggered would be at least an X% change. Lots that goes into this, but I hope that helps.
Doesn't Vanguard Total Stock include small caps already? Does Total international Stock Index include Emerging Mkts?
Both have limited small and emerging exposure
Perhaps I didn’t 0:03 catch this in the video but as I understand the person has $3 million and wants $10k per month after tax. How much are you calculating for tax each year. Because using the 4% withdrawal it’s $120k per year pre tax at 5% it’s 150k pre tax. I don’t see how you left room to pay tax and what your assumptions are there.
Good question. Recommend watching this! ua-cam.com/video/q339pyBjlfw/v-deo.htmlsi=W8tvXcFLlXAlvN08
10K after tax/month likely means 14k per month.
How do we determine at what levels to place the upper and lower guardrails? Do we use a fixed percentage?
Here's more on the original guardrails research: www.financialplanningassociation.org/sites/default/files/2020-05/6%20Decision%20Rules%20and%20Portfolio%20management%20for%20Retirees%20Is%20Safe%20Initial%20Withdrawal%20Rate%20Too%20Safe.pdf
@@MCalcagno How is this rule used in real life? Does one use this rule on a monthly basis just to be safe? I mean if the market is starting to fall into a severe down market and you make an adjustment more quickly doesn't that help you too not make a bad situation worse? Or do people just do this on an annual basis?
We review monthly for adjustments based on our research