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Retirement withdrawal rate with $1 million?
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- Опубліковано 15 лис 2020
- We've all heard of the safe withdrawal rate of 4% in retirement but is that really the case for everyone? Today we review a retirement plan of a client that wants to retire next year and see how much the can withdrawal and still meed their retirement income needs for the rest of their life.
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Good stuff here, man. Enjoy these segments. Interesting to see all the knobs and levers you can pull to optimize the accounts. Keep up the good work!
Thanks Dustin love the case studies learn alot from them
Thanks Justin! Love this scenario! I’m 56 in January and will retire at 60 . Great videos. I may be contacting you then or sooner. What about social security or pension?
Keep doing these scenario studies. They are fantastic.
4:55 Withdraw from taxable accounts first, then from tax-advantaged accounts
7:23 Defer filing for Social Security benefits as long as possible
7:57 Account for lower spending later in retirement
9:00 Stress test
11:11 Roth conversions before RMD
Thanks
Best time to do Roth conversions in my mid 60s. Was going to convert when our combined income was at a lower tax rate. Hopefully a dip too. And if I do a conversion, can my wife and I contribute the full amount to our Roth without increasing our income. Got to stay in the lower tax bracket. Possible increase in RMD taxes scares the hell out of me .
As someone who has made almost 200% returns in a little over a year with very little diversification, I’d have to disagree!
Diversification protects wealth but if you have such a high conviction in a single stock, Retirement withdrawal rate with $1 million. Just search her name Kyle Holt Karens online and check out her website for information concerning her retirement services, you can get her mail on there
i totally agree with you. I have a lump sum right now doing next to nothing in a savings account. I have honestly not looked into making serious moves about it but would like to put it to good use. what do you invest in?
I have been trading stock and there has been some good times and equally some bad times. The day I started working with her, it was the end of my misfortune and now I earn more than £75,000 monthly.
Nothing feels better than predicting stocks to trade on and it turns out right, I began to see the benefit of trading with a watchlist, a trading strategy and a well programmed indicator, my earnings began to skyrocket
When it comes to investments, diversification is key. I’m partially into real estate, but more into trading now. Although I'm new to trading, I have made significant amount of profit in just a few months of trading.
there are actually no particular sectors i focus on. I have been copying trades from Kyle Holt Karens since last year my portfolio has grown at a tremendous pace. unlike i can say for my IRA which has been trudging along. my portfolio just mirrors what she trades and not just some particular industries of my choosing
Lol, Charlie apparently doesn’t need insurance or medical costs...
Also, if his retirement budget is 4200 per month, why is he withdrawing 80k?
What site is this?
the 4% rule is by far the minimum you can withdraw. Between dividend paying stocks and on average stock market appreciation in the past 40 years you could safely withdraw 8%-12% and you portfolio will continue to grow. Adjusting also for down markets where as they say you can tighten your belt a little is something no one is talking about either. Years in a down market you can just use your dividends and not withdraw any capital. You need to be flexible.
Question: why are his future expenses bouncing around from 80k one year to 66k the next, to 72k--shouldn't this be steady when you evaluate a plan?
How can we have access to this software?
We have 4 Rental Houses (paid for) as Income to go along with my Wife’s 401K! We go aggressive on the Investments since we have the Real Estate as a chief Income!
10.9 percent this year, your the 🐐.
I like the speed of your VDO. Just a comment: It doesn't make sense to end up with 2 mil at 90 years old, does it?
if you want to leave to heirs it may.
2M eaten away by inflation created by the new American mentality might be enough for 1 week in an assisted living facility
What is that retirement draw down app? Nest egg? Where do I find that?
Same question...
If he tells you he will be out of business lol
His $5500 per month will drop when he goes on to MediCare.
How does it look like in real life? Ok, my wife and I have been lucky(?). In the past 5 retired years, we have withdrawn 3.5% of our saved money per year and not seen a decrease in our life style or our investments. (yes there have been ups and downs but so far it has recovered and then increased) Our income has remained near 88% post retirement amounts, as we were saving, decreasing debt with the other 12% of the pre-retirement income.
why use taxable first, that keeps coming again and again. instead keep taxable 60bonds 40stocks and use it as 6-12months buffer. use tax deferred first than use taxable than roth. if tax deferred goes down by 30% that is an opportunity to roll over tax deferred to roth Ira. no escape in paying tax on tax deferred!
Not one mention of RMDs on those tax deferred plans. All that 4% withdraw rate that people plan for goes bad real fast when the government forces you to withdraw far more than that.
If most of your retirement balances is in an account subject to an RMD (401k/roth401k, IRAs etc) you have to account for Government mandated distributions which START at 4% and increase annually. So for a lot of people who are good savers, but in the wrong types of retirement accounts, they end up having to withdraw MORE than they need just to satisfy the tax man. Then the issue can lead to how do they figure out how to save or invest that extra withdraw amount (assuming it wasn’t eaten up by taxes to begin with).
Too complicated. I want to give two relatives $3,000 a month till they die. They are 63 & 72. How much do I need to put in an account to cover them?
3,000 * 12 * 25
Is paying off the mortgage accounted for?
Doesn’t look like it. Or property taxes.
How does he spend $5K plus on health care per month? How is that possible? Maybe he should consider either moving to a country with cheaper but still good private health care or a country with free health care?
Why not invest whole mil in dividend growth stocks with 5% ave yield; that's around 4k/mo without worrying about withdrawal rate?
Exactly. It's easy to hit 4%. Can even be a monthly dividend/interest payment. This is the silliest most irrelevant idea ever in investing.
In bad times companies cut dividends or reduce them. Could be a 10 yr drought coming up.
@@tumbleweedking5668 10yrs of dividend cuts? Highly unlikely. Stock prices tend to follow the dividend. If dividends keep getting less and less for an index or stock, then I'd be surprised if the price isn't moving lower as well for that duration. And if the market moves lower for 10 years, good luck withdrawing 4% at lower and lower prices.
Don’t buy oil company dividend stocks.
5%? SERIOUSLY? I get 12% on my DEPOSITS. More on my growth assets, which ALSO (on top of appreciating) get me 8% in interest (from a company that lends them out).
Did anyone gather how Dustin got an 8% withdrawal rate from $4200 of monthly retirement expenses? How did the annual withdrawal jump to $88,800? $4,200 a month would equate to $50,400. Doesn't make sense... $88K would mean about $7,400 of monthly expenses.
Lower in the input fields it says his current annual salary is $88,000. Maybe that was the mistake?
I'm not seeing where his mortgage is paid in his "retirement expenses" or the effect of it going away in a few years either. There's a lot going on in this planning software and it isn't very apparent or easy to understand.
He's also not withdrawing 8% of his $1M investment because you're allowing social security to kick in on top of his savings/investments. That skews the math considerably. The actual withdrawal rate on his $1M is equivalent to whatever his monthly expenses are minus any social security benefits. For a portfolio of $1M and monthly expenses of $5000, getting social security payments of $2000 would reduce his actual withdrawal rate from 5% to 3% not including any tax considerations. Much safer.
He is starting with 1 million. 4% of that is 40,000 dollars/year. Unless he has another 40,000 dollars coming in from other sources, he cannot afford to take more than that out, and have his money last. It’s not rocket science.
Sanjosemike (no longer in CA)
Yes he can. Go re-read the Trinity study. 4% was the worst case scenario or how to be “successful” 95+% of the time. Very possible to have a 5-10% safe withdrawal rate depending on what the market does.
Charlie better never need assisted living.
Yeah, that was too fast. I would benefit from that being done again a little better. There was no reason for the video to be short it could have been longer.
If the average return is 7% how cant you have a withdrawal rate of 10% and not run out of money?
Justin, thanks for the modal. appreciate if you can modal something for FIRE community. 1.2M in assets 30% non retirement accounts. retire at 53. 60k / year expenses
That was too fast to see how the Roth conversions and taxes on the qualified accounts that get converted. I did not see how much he was converting each year. Is he in the 24% tax bracket during his conversion years for 6 years. Before age 70. Spend more time on this example showing him converting to Roth before RMDs or the best mix of conversions with some rmds and that effects his Medicare. ERMA will be expensive with conversions and the rmds. Means testing will have a big effect on his expenses so will future tax hikes on Rmd’s and his exposure to taxes on his social security if he takes it while doing conversions or suffering from RMDs.
I got very little out of this example because it was to brief.
How timely - valuable walkthrough. Was able to follow your pace - keeps my attention :)
You made an important statement/question near the end - "hopefully that helps you there". Unfortunately no. What I'd really like to know is what my withdrawal rate should be if I have a million dollars, which coincidentally, is the title of your video. Fast talkers who direct and redirect constantly don't help anyone. Most people watching this know the answer is not going to fit everyone perfectly, but shoot for 75% and the rest will figure it out. Sit down, get off your UA-cam stage, and just be yourself.
4-6%. There. Happy?
$5500/month for health care? Is that really what it costs?!?
Health insurance for two, dental, vision, long term care insurance, life insurance $$$
I would rather just keep the 5500 in my account! Long term care facilities don’t cost much more than that and I can make more money of that now rather than giving it to some company with zero return!
You'll spend less as you get older and can't do as much as you can now. I learned something else when my mom went into assisted living. If you have a million in the bank, or are flat broke, you get the exact same care. My sister and I were paying $1000 a week. Her neighbors were right across the hall and it didn't cost them a dime...:)
Agree...I will go for a swim in a icy river before I let assisted living care suck my life saving and wipe out an inheritance for my kids.
His initial plan of having 770k at age 90. 770k Should be good unless the world ends!
1 Million. And this is relevant to what percentage of the people? 2 percent....5 percent? How about the majority of people who may have the three legged stool... ie, pension, investment, social security but one leg is very weak as in investment. Maybe someone only has $270,000 put away and are not sitting on a million dollars?
This is then the time to be looking at how you can plan to save more depending on your goals. Retiring on $250k is unlikely to occur. Look into the FIRE strategy and start to figure out how you can save enough to get to a point where your investments can safely take over from there. It's not hard to create a million in wealth, it just takes discipline and clear goals.
My plan is to not withdraw, but live on dividends and interest.
After I die a few years of economic collapse and hyper inflation will take care of the value. Inflation and high taxes is how governments steal wealth from investors and savers.
Back off on the caffeine dude. All over the place.
Yep, too fast. What I hear from slower speakers is that your ongoing balance will always be roughly the same as your starting balance if you withdraw no more than 5% annually.
Slow it down for us dumb dumbs lol
pause , process , continue. rewind.. repeat
Don't like fast talking salesmen...
Why do most of these wealth managers sound like used car sales men using smoke-n-mirror software to sell their services.
Cause something bad must have happened to you where it makes you hear it that way.
I really want my portfolio to be up to $100,000,000 before a year, I guess it can be possible 😀
Why not it will really depend on your investment method and the broker you are investing with just have to invest wisely
@Rebecca Morgan "That is totally true, but how well does a financial advisor improve your profit? What is the experience like using an advisor?
@@jamespollard9523 I can't disclose too much, but yea I've been using a coach called Mr Steven Jeffrey' 'and through his guidance, I've been able to make approx. $24,000 in dividends on a monthly basis, it is pretty straightforward, not as complicated as it used to be.
@@raywhite6326 This is impressive how could someone go about getting investment guidance from a coach like that, would you mind sharing your coach info?
@@jamespollard9523 Text him directly via what's App tell him I referred you so he replies your message
Way too fast.
You know UA-cam allows you to control the speed of the video in the settings? :)
Millionaires are watching UA-cam videos?
Yep
You bet. Watch a bunch of 'em.
It's in part how they got to be millionaires, the DIYers who continue to learn in every way possible, including UA-cam.
Yes, we are.
This is a "Cluster", assumptions are stupid, $600 a month charitable? $850 for partying money? An idiot put the assumptions in and then you run with the ball. Makes no sense at all. You actually have his expenses rising when he turns 70? WTF He deferred SS, get a huge monthly payout by waiting and your software has his withdrawal going up. Buyer beware with this planning. You know what they say right junk in, junk out and your a professional going on You tube with this.
Other faults of the software:
Withdrawal rate should be inflation adjusted.
Different acceptable risk levels should apply to each $1000 tier of withdrawal. For example if you withdraw $5000/mo, the first $1000 is a lot more important to safeguard than the last. Somebody with a high social security income can take a lot more risk . Let’s say you come from Mexico with no social security at all, the best thing you can do is buy treasury bills, hard assets like real estate and gold and forget stock market altogether. The software is seriously and fundamentally flawed.
1 million nest egg at retiremeny may be too low. Suzir Orman recommends 5 million.
She is an out of touch idiot.
If you are living her life style. Most of us live on $50-100k income before retirement. Once you retire you need 70-80% of of that income to maintain same life style. That 5 million nest egg is absurd and unrealistic for most Americans.
@@MartyMeyerdierks Yeah it's different for everyone. For us ,we will need 25 to30 % of our working income in retirement. We currently live on 1/4 our salary, sooooo all is good.
$5m is a start
na bro, at least 20 mil
Why not increase your chances by trading cryptocurrencies?
Too risky for most.