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Have been retirement for some 5 years. Have no intentions of withdrawing monies from any of my retirement/investment accounts. The said will be set aside for my 2 children and grandson.
In another 6 years, I'll collect my SS benefits at the age of 62. Those funds will be reinvested.
Have been retirement for some 5 years. Have no intentions of withdrawing monies from any of my retirement/investment accounts. The said will be set aside for my 2 children and grandson.
In another 6 years, I'll collect my SS benefits at the age of 62. Those funds will be reinvested.
.
You will hav to by age 70 and a half. RMDs kick in
Can someone on this board please tell my parents that they should not be taking an inflation adjusted 5-6% out of their retirement accounts each year. I tell them they should only take 3% if they don't want their money to run out. They say they can't afford to live a decent living at 3%, and instead take 5-6% instead.
They are in their early sixties and are both collecting Social Security and have about a million in their account.
Take my poll.
Withdrawal from a tax deferred account at that rate is fine. Your parents might be depositing and making conversions to Roth while they can enjoy their lowest tax rates and before RMDs.
yeah there are a few like blanchette and pfau that are in the 3-3.50% camp but the fact is according to michael kitces whom i respect as an academic even more did a paper showing 2000 and 2008 could not make 4% fail because it is so conservative and in fact gave us guideline so mathematically we can monitor our own results going forward in real time .
all you need to do is make sure over the first 15 years of a 30 year retirement period that you are averaging at least a 2% real return . if 7 to 10 years in you still are not then a cut in draw is needed .
on the flip side if you are up 50% from where you started take another 10% increase in addition to that inflation adjustment .
if 3 years later you are still up by 50% more than you started take another 10% .
no one should or likely would just pull a fixed static amount like a robot .
since 2000 a 50/50 mix averaged about a 2.90% real return so the y2k retiree is still on track . although they are on track comparatively to the 1929 retiree . they will likely be okay but not have lots left over like 90% of the other time frames. the 2008 retiree is right on par with every other average time frame .
so going forward either monitor your performance as you go and adjust or use some form of variable withdrawal method based on each years balance of which there are many .
Interest rates in the 4.5% + catagory could often times carry many a retiree through bad times. Today, interest rates are barely 1%. Dividends are also at an all time low. Current evaluations are such that we are told not to expect much in the way of growth over the next 10 years. Even discounting corrections or another melt down, this means people will be drawing more from principal than ever before.
Almost everyone involved and knowledgeable in the financial market states that the market according to real numbers (profits vs cost) says the market is overvalued. Does that mean, it could never go up. Of course not. We have been there before. It's called a financial bubble. Whatever drives the market up irrationally (without earnings), will always come down in due time. So why are evaluations so high now?
Many believe it is because of the low interest rate conditions. Nowhere else to run. (besides real estate)
When someone has sufficient income flow, whether through bonds, cd's, dividends, social security or pension to weather the storm, they usually will recover in due time. But for people who require this income from the stock/bond market to help carry them through, may not be so fortunate.
I am just saying for the benefit of the OP, that perhaps this is not the time for their parents to take such risks. They are only in their early 60's. Now if we were told they were in their mid 70's instead, then that may be a horse of a different color. You know it's the same philosophy we hear talked about when arguing saving for retirement. Some people adhere more to the living for the moment, while others chose a more cautionary approach to spending with the future in mind. Who's right can depend largely on when you die.
You will hav to by age 70 and a half. RMDs kick in
That was a little shocker for us when we went to a financial advisor. We were living off SS and pensions. I once found a chart on line that tells how much is mandatory to be taken each year. Our people just send my husband the minimum they can withdraw. I plan to start doing the same next year. The minimum percentage goes up each year but it is possible to get less money if the investments do not do well.
He does his RMD, and pulls money out as needed.
(After his 2 pensions, and SS he get every month).
If he has a Good month in the stock market, he pulls out less, if he has a major expense he will pull out more. Bad Month He will pull out more.
I still don't understand why I'm paying for his cell phone bill... ($12/month) on my sisters family plan... I should ask over Christmas, Why I'm paying for it...
Because if he had his own cell plan it might cost him $40 or $60 per month. I am on my son's family plan as is his mother-in-law. Much cheaper. I buy more than enough stuff for my grandkids that more than covers the cell bill. He pays phone, I buy clothes for kids. It works out.
Perhaps the OP knows that if his parents run out of money before they die he will be on the hook for supporting them. Some families share a lot of financial info about each other, while some families share nothing.
It's easy to say "My parents made their bed, now let them lie in it" but when push comes to shove if our parents are destitute there is an emotional pull to assist them (at least in many cases). Who among us could stand by while our parents become homeless? That would be heart-breaking unless the parents were mean and abusive and one hates them.
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