Kitces: Why most retirement accounts never run dry (move, social security, state)
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It sounds good in theory to spend my last dollar on my last day but I probably need to keep a good chunk of change to take care of whatever needs I might have in my last years. With no kids, there's not really gonna be much family to rely on.
I am newly retired and supplementing my SS with $815/mo. withdrawals from my Vanguard IRA. It's only been six months but I'm still $18K to the good at the moment. This is a dumb question but does this still mean I'm burning principal? I still may need to withdraw a bit more if some large expenses come up but I'm trying to keep it as low as possible.
I'm also considering a move that would necessitate doubling my withdrawals. Vanguard advisor says this puts me at a 65% chance of having my $ last til age 95. (They usually use age 100 but I told him no way am I living to 100!) I don't know what to do. I sure don't want to leave money on the table. I am single and saved in my 401K so that I didn't have to scrimp when I retired. (If we only had a crystal-ball that would tell us how long we are going to live.....)
S happens. I knew my house was going to need a new roof but I thought I had a few more years. I got a leak last week and there is no point trying to fix what needs to be replaced. Due to the number of additions and dormers, I am looking at over $18k. I am not canceling or postponing anything because of that or because investment returns have been poor for the past year or so.
There will be good years and bad years for my finances and for everything else. It is like being an investor. You don't panic when the market drops. You stay the course.
different situation , you already caught the up cycle since you retired . like i said once you catch the up cycle you are as they say running on house money . it is not the same thing getting hit day 1 for that same money in a flat or down market .
getting hit day 1 out of the gate is no different than a trader having a string of losing trades before he developed a cushion of gains to work off of . it is a very different condition than having down markets and spending after a run up . you are killing the origonal goose laying those golden eggs as they say .
Last edited by mathjak107; 08-26-2016 at 01:59 AM..
I am newly retired and supplementing my SS with $815/mo. withdrawals from my Vanguard IRA. It's only been six months but I'm still $18K to the good at the moment. This is a dumb question but does this still mean I'm burning principal? I still may need to withdraw a bit more if some large expenses come up but I'm trying to keep it as low as possible.
I'm also considering a move that would necessitate doubling my withdrawals. Vanguard advisor says this puts me at a 65% chance of having my $ last til age 95. (They usually use age 100 but I told him no way am I living to 100!) I don't know what to do. I sure don't want to leave money on the table. I am single and saved in my 401K so that I didn't have to scrimp when I retired. (If we only had a crystal-ball that would tell us how long we are going to live.....)
no one should try to live off a fixed rule , it is silly . why not take a raise if things go well. the rule of thumb is if you are above where you started retirement by 50% take a 10% raise on top of inflation adjusting . repeat every 3 years .
or just use a dynamic system like we do based on each years actual balance . real time adjustments are more like life . .
This is it in a nutshell. Principal depletion would make me very nervous. Although, I'm finding the longer I'm into retirement, the shorter my time horizon, so I'm not quite as anal about "not" spending as I had been seven years ago. To date, there's been no erosion of principal and that's after four years of about 4-5% withdrawals and a too conservative investment approach for a few years. I kind of would like to keep the principal intact and growing, if I could. Some things never change, I suppose.
That is the point of the article. Generally going to about 15 years into an estimated 30 year retirement living off interest is something those of us who have a nest egg of sorts do. It is a safe method that give people comfort.
Quote:
Originally Posted by Avalon08
I am newly retired and supplementing my SS with $815/mo. withdrawals from my Vanguard IRA. It's only been six months but I'm still $18K to the good at the moment. This is a dumb question but does this still mean I'm burning principal? I still may need to withdraw a bit more if some large expenses come up but I'm trying to keep it as low as possible.
I'm also considering a move that would necessitate doubling my withdrawals. Vanguard advisor says this puts me at a 65% chance of having my $ last til age 95. (They usually use age 100 but I told him no way am I living to 100!) I don't know what to do. I sure don't want to leave money on the table. I am single and saved in my 401K so that I didn't have to scrimp when I retired. (If we only had a crystal-ball that would tell us how long we are going to live.....)
So far you are not even touching principal. In fact it appears that your balance is growing so you have your spending and withdrawal rate under your maximum. Not knowing with certainty age and balance I think you are safe in increasing your withdrawals especially when you need it. That is what you saved for. You can adjust as needed and necessary.
this is why sequence is so critical . if the flat or down years are in the beginning you already burned principal that was supposed to generate more income for years .
if you are up first than you are good to go , spending the cushion in flat and down years .
same exact average returns have as much as a 15 year difference in out comes depending just on what happens first when you retire , whether you have losses or gains first and for how long .
we were up 1% last year but spent 3% year one . so far up almost 6% this year and spent 3.50% so we are still down on principal right out of the gate .
Last edited by mathjak107; 08-26-2016 at 05:27 AM..
I think it was you innate pessimism that caused the market to flatten out beginning exactly when you started retirement. I wish you wouldn't do things like that. It affects the rest of us, too.
tell me about it . the day after i retired the yuan was devalued and we just dropped from there .i was sure i was going to be the poster child for poor sequencing lol .
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