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Mathjak, thanks for this table. I think it helps to quantify some issues. First, it appears that a 4% withdrawal rate is likely to be sustainable whereas increasing the withdrawals to 5% becomes more risky. Second, relatively small changes in inflation rates and/or return rates can have a huge impact. It can be more useful to try different scenarios with calculators that allow those parameters to be varied. Third, the table does show rather large differences between stock:bond investment ratios. I think this table helps to reaffirm my belief that if you are planning for decades in retirement it is best not to be too conservative at the start.
Most retirement calculators that I have used tend to be very conservative and basically push for withdrawal rates of 4% or less. I suspect that is because these calculators are usually made available from financial institutions who are trying to stimulate investments.
There is another side to this issue. Strongly consider not being excessively conservative and do not avoid spending and enjoying your money. On the issue of inheritance, I lean more towards the idea of helping your kids and/or grandkids when they need that help. That help is usually most important earlier in their lives and that early help can be much more important than a windfall inheritance later on.
When it comes to considering how much to spend in retirement, it might be a good idea to look at your life expectancy. You can make some predictions based on health and risk factors but those are not much more reliable than the standard tables. In any case, consider that you really may not need to plan for 30 or more years of retirement. If you retire in your mid 60's, you have a life expectancy of about 15 years for a male or 20 years for a female. That means you could easily spend down your retirement funds at the rate of 5 or even 6%. That could be a major change in lifestyle compared with the more conservative 4% amount. Also realize that you may not be spending a lot of money if you live substantially longer. Health issues usually take their toll and let's face it living moves to a slow pace of life.
There is another factor to think about not indicated in the retirement income planners. If you do reach a very old age, it is unlikely that you will be able to afford the costs of nursing and long term care. Eventually you will run through all of your resources and will be dependent on Medicare.
So I say spend your money and enjoy your life. You don't need to plan for the worst or for 30 or more years of retirement living.
you can try to predict life expectancy but the financial issues for being wrong and living longer can be far worse than being wrong and dying earlier .
my mom died at 55, my dad at 62 and my first cousin in their 50's.
i am 61 and in very good health so far. so much for predicting your own life expectancy.
No, I would agree there is no way to predict how long you will live and therefore exactly how much you can spend. One of the points I did try to make is that most retirement calculators are way too conservative. I can see no reason to skimp and save in order to have the same inflation adjusted income at age 90. Enjoy your money while you can and plan on living a simpler lifestyle later on.
I am glad to hear you have good health. With luck you will continue that way for many years. Healthy or not you will slow down as you age. Look at older people you know. Many are extremely active in their 60's or 70's. By 80, 85 or older even "healthy" individuals will have a much slower lifestyle. And, of course, the "average" individual will not even survive to that age.
u dont need much to retire if you have a strong hold on expenses. having said that.
i think that people under prepare for retirement. money income is not the only factor. expenses count too it is the primary barrier to retirement. if you are over 50, if you are taking care of adult children and even grandchildren this may have a huge delay on your retirement.
No, I would agree there is no way to predict how long you will live and therefore exactly how much you can spend. One of the points I did try to make is that most retirement calculators are way too conservative. I can see no reason to skimp and save in order to have the same inflation adjusted income at age 90. Enjoy your money while you can and plan on living a simpler lifestyle later on.
I am glad to hear you have good health. With luck you will continue that way for many years. Healthy or not you will slow down as you age. Look at older people you know. Many are extremely active in their 60's or 70's. By 80, 85 or older even "healthy" individuals will have a much slower lifestyle. And, of course, the "average" individual will not even survive to that age.
slightly off topic, but I found this a while ago that I took as serious motivation to start exercising more. Staying active throughout your life does a lot to increase your health in old age
I saw a billboard near Long Beach on the 405. It was from an insurance company. It read; "The first person to live to be 150 has allready been born." Or something like that. My plan is to be that person or one of those people. I won't retire with less than $5million. I also don't want to retire ever. I plan for it but don't want to do it. I can see myself working till I am in my 90's.
My plan is to take care of my body. I do that. I walk 4 to 5 miles a day. I eat well, no sugar, flour, milk products. Stretch all the time. It is a lifestyle choice that will help myself and others live a long life.
I saw a billboard near Long Beach on the 405. It was from an insurance company. It read; "The first person to live to be 150 has allready been born." Or something like that. My plan is to be that person or one of those people. I won't retire with less than $5million. I also don't want to retire ever. I plan for it but don't want to do it. I can see myself working till I am in my 90's.
My plan is to take care of my body. I do that. I walk 4 to 5 miles a day. I eat well, no sugar, flour, milk products. Stretch all the time. It is a lifestyle choice that will help myself and others live a long life.
Be careful what you wish for, or you might receive it. Your lifestyle choices are excellent (and everyone should be doing the same, more or less) but they are no guarantee of anything; they just make the odds better. Science may keep our bodies alive, but will it also be able to keep our brains working correctly? Frankly, I don't think so. I would not want to live to 150, or even to 100 for that matter.
Be careful what you wish for, or you might receive it. Your lifestyle choices are excellent (and everyone should be doing the same, more or less) but they are no guarantee of anything; they just make the odds better. Science may keep our bodies alive, but will it also be able to keep our brains working correctly? Frankly, I don't think so. I would not want to live to 150, or even to 100 for that matter.
i always kind of hoped it was my mind that went first ha ha ha
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