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WHY?...Start giving it away NOW. They could probably us the money NOW. You may live another 20 years. Every year at Christmas time I give my children their Christmas money. They have college expenses, mortgages etc. they could use the money NOW! I have been doing this for the past 14 years.
THIS....slightly off-topic, but as I told my dad "you'll be 92 and I'll be 71 and I really won't care much at that point about what you leave me"......
BUT, this - of course - assumes that you and the spouse (if applicable) have more than enough or have steady income and a Nut that assures you more than enough.
My parents gave all of us a down payment on our first house. We did the same with our kids...and we continue to give them nice sized gifts because our children don't get corrupted by money. We wouldn't give it to them if it changed their personalities, occupation, etc.
It is very possible we may outlive one...or even two...of our children. There are so many things that can happen in this life.
However, the OP didn't mention children (maybe they did later) and even if they did, their nut is not large enough to allow for early giving IMHO.
I'm 63 and my wife is 62. We are planning to retire and would like to retire sooner versus later. My question to those of you who have already retired...how much is "enough" in savings?
I'm probably being overly cautious in planning. House is paid for...no bills other than ongoing expenses. Property taxes are low in the Phoenix area, where we live. We do not have pensions but our combined social security benefit at 65 will be about $4,500/month. I project that we will have about $900k in 401ks when we reach 65. We like to travel - four decent trips (cruises, etc) per year currently and would like to keep that up.
So retirees...when did you retire and how did your financial plans play out? Thanks!
If you have that 900k invested properly in solid dividend paying stocks you would be able to live very comfortably off the dividends alone and not touch the principal.
I would advise sticking with a variety of ETF's, many of which you can find pay monthly dividends instead of quarterly. I pay my mortgage on a rather large house at the beach with the dividends on just a 100k portfolio, and if I had a 900k portfolio, I would be set now, and already retired.
That portfolio is going to determine a lot, and I would advise a "fee based" only financial manager to analyze what your invested in and see what he or she suggests.
It does not matter what the dividend is ... what matters is the total return ,, the sequence of the gains and losses as they come in and the total percentage your draw is determines how long the money last ... safe withdrawal rates are based on total portfolio value so down years count very much if your total return including dividends is negative.
A mere 4% draw inflation adjusted which can be made up of dividends ,, capital appreciation or a combo is based on the fact that under worst case outcomes the balance has already gone to zero at times .... this thinking you never would spend principal can be flat out wrong if the sequencing and total returns are poor ..
Just to draw 4% , you need to maintain a 2% real return average as a minimum over the first 15 years of a 30 year retirement... if it is less 4% inflation adjusted will fail and run out of money regardless of how it is comprised .
WHY?...Start giving it away NOW. They could probably us the money NOW. You may live another 20 years. Every year at Christmas time I give my children their Christmas money. They have college expenses, mortgages etc. they could use the money NOW! I have been doing this for the past 14 years.
I'm a little too cautious for that. DS and DDIL are doing well- modestly, but the bills are paid and they have simple tastes. Occasionally I indulge the grandkids or the entire family- the Aquarium, the Sugar Plum Fairy Ball (youngest is too little to behave through a performance of The Nutcracker but this was a fun event that cost about $400 for 5 of us), taking the oldest on a trip to Chicago next month...also have $41K total in 529s for the 2-year old and the 5-year old.
I'm doing it the way my parents did- as far as I know, they haven't handed anyone money except maybe years ago to buy a first house. We're all doing well. Dad is widowed now and whatever he leaves will be split 5 ways; my share will go directly into the 529s. My top fiscal priority is not outliving my savings. The next is funding the grandkids' educations. If I leave a legacy it will help DS and DDIL enjoy a more secure retirement.
which means little in pracice ...61k in these parts qualifies you for living in a new york city low income project. in fact 69k does and few here would want to live in one ... i grew up in one and i spent my life making sure i would never end up raising my own family in one .
we all earn different amounts while working and we all choose different lifestyles and locations as our minimum standards we want.
people make ss alone work , so we all make what we have work on the minimum side ... the max has no limit ....
The point was...you don't have to be frugal to live on 90k.
Fair point, I don't know how people do it but your assumption on them burning through their savings in a SWR I didn't assume...I assumed they would want to keep it for a rainy day or to hand to their children one day, as I would.
You don't necessarily burn through your savings with a 4% withdrawal rate, though certainly it is possible.
You don't necessarily burn through your savings with a 4% withdrawal rate, though certainly it is possible.
It is based on the fact you may have a buck left at 30 years under the worst cases we already experienced
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