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most retirees have no choice but to do that naturally . we all tend in to back in to a life that fits what we have to work with .
that is why these how much do i need articles are a crock . it does not really work that way for most . once the pay check stops what you have is what you have to work within regardless .
0-percent is a "safe" withdrawal rate, but, to accomodate that, one must establish other forms of income: pension/s, SS, other. One must also secure pension income in the event one spouse dies -- with a sizable term-life policy that will carry both into their 80's. Healthcare is provided by Medicare and supplemental policies - and potential longer-term health needs are addressed with LTC policies.
Future inflation and RMD's are simultaneously addressed with a sizable, delayed guaranteed income annuity. The remaining, untouched balance of 401K/403B/IRA's is invested in relatively secure Vanguard funds and dividend stock portfolios. Emergency funds are carried in savings and brokerage accounts - along with an available, but, otherwise unused HELOC on a free and clear primary residence.
College funds for the grandkids are provided out of RMD's - which will also help the kids mitigate their own close proximity college/weddings/retirement situation. IRA's and property will eventually provide an inheritance/ legacy and/or personal safety net, if necessary.
This package provides a comfortable (six-figure) secure retirement income with sufficient funds for regular travel and whatever other needs arise. It also provides worry-free peace-of-mind, even in the face of roller-coaster stock markets, inflation and other unexpected obstacles. It can be accomplished with what, by today's standards, most would consider modest to moderate incomes ... and a little planning, but, no unusual financial acumen or other sources of income (ie; inheritances).
I’ve never done a whole lot of research into all these strategies, and for the most part am lost when you guys start talking about “safe withdrawals rates”. But I do put as much as I can away, into our retirement plan at work. My estimated SS and pension will be about 63% of my current gross income.
But, considering that I currently contribute 26% of my pay to my 457b and pension, it really is more like 85%. I think that’s a more realistic way to look at it. And it definitely makes me feel a bit better. I have estimated my expenses in retirement, as well as I could, and even if I spend what I did in 2018 (which admittedly was an unusual year - trip to Greece and lots of home repairs) I theoretically would not have to tap my savings.
I’ve always assumed that I would be in a lower tax bracket...as that is always what I have read in the many retirement articles, but I’m not sure that will be the case any more. I decided this year to start putting half of my contribution into a Roth as that is a new option for us. But now I’m wondering if that is really not worth the tax hit, as I plan to retire in 3 years at 66.
it really is not about comparing just your final working years tax brackets to what you think you will be in once you retire . people make this mistake all the time .
the real deal is comparing it to your career average which spans decades .
most of us ramp up for most of the years before getting to the higher levels . odds are your bracket in retirement will be higher then that average .
this is why roths done early on can have great value while conversions down the road at the end may not
I’ve always assumed that I would be in a lower tax bracket...as that is always what I have read in the many retirement articles, but I’m not sure that will be the case any more.
Yeah, welcome to reality.
We were all told that tax-deferred savings were such a good idea "because you'll be in a lower tax bracket after you retire." Like fun we will.
If you think about it, why would everyone be in a lower tax bracket after they retire? In some professions 50 to 65 are your peak earning years. I have a next-door neighbor now who retired at 72. He was a partner at Arthur Andersen. According to Glassdoor, partner salaries at Arthur Andersen can range from $478,950-$523,395.
I wish we had thought about this 20 years ago. We would have planned differently.
And now if you'll excuse me I've got to go prune the greenery. I'm trying to save the $400/month the landscaping guys want.
No withdrawal rate is absolutely "safe", and no strategy has 100% success. Even a 0% withdrawal rate isn't 100% successful, because of conceivable catastrophe of whatever sort. By way of example, ask German retirees in 1923, who started saving say in the 1870s, and had withdrawn exactly zero.
The practical reality is even worse. Who wants to die with less money than they had upon the first day of retirement? If life's objective is accumulation, then personal comfort in retirement will suffer, for sake of the portfolio's preservation. This isn't always possible, as indeed there's vastness of troubles that may cause us to rethink our priorities, however grandiloquently we insist on them while still comfortable.
Every strategy, whether in retirement or before it, is a mere weighing of probabilities. We'd do well, to admit that to ourselves.
You are right, of course. But you’ll never convince insatiable spenders of this. They want to believe they can have their cake and eat it too. You can’t.
i can't say i know any insatiable spenders who are retired , personally . if anything i know many who are afraid to open the purse strings and should allow themselves more spending then they do . .
I can see me doing this for sure, especially in the early days. Once you shut off that revenue stream you can't turn it back on. Once you withdraw a big chunk of savings for a big expense you won't be able to back fill it with paychecks. Scary indeed.
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