We've all heard of the safe withdrawal rate of 4% in retirement but is that really the case for everyone? Today we review a retirement plan of a client that wants to retire next year and see how much the can withdrawal and still meed their retirement income needs for the rest of their life.
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Keep doing these scenario studies. They are fantastic.
Justin, thanks for the modal. appreciate if you can modal something for FIRE community. 1.2M in assets 30% non retirement accounts. retire at 53. 60k / year expenses
Thanks Justin! Love this scenario! I’m 56 in January and will retire at 60 . Great videos. I may be contacting you then or sooner. What about social security or pension?
Good stuff here, man. Enjoy these segments. Interesting to see all the knobs and levers you can pull to optimize the accounts. Keep up the good work!
4:55 Withdraw from taxable accounts first, then from tax-advantaged accounts
7:23 Defer filing for Social Security benefits as long as possible
7:57 Account for lower spending later in retirement
9:00 Stress test
11:11 Roth conversions before RMD
Thanks
His initial plan of having 770k at age 90. 770k Should be good unless the world ends!
Thanks Dustin love the case studies learn alot from them
Not one mention of RMDs on those tax deferred plans. All that 4% withdraw rate that people plan for goes bad real fast when the government forces you to withdraw far more than that.
If most of your retirement balances is in an account subject to an RMD (401k/roth401k, IRAs etc) you have to account for Government mandated distributions which START at 4% and increase annually. So for a lot of people who are good savers, but in the wrong types of retirement accounts, they end up having to withdraw MORE than they need just to satisfy the tax man. Then the issue can lead to how do they figure out how to save or invest that extra withdraw amount (assuming it wasn’t eaten up by taxes to begin with).
How does it look like in real life? Ok, my wife and I have been lucky(?). In the past 5 retired years, we have withdrawn 3.5% of our saved money per year and not seen a decrease in our life style or our investments. (yes there have been ups and downs but so far it has recovered and then increased) Our income has remained near 88% post retirement amounts, as we were saving, decreasing debt with the other 12% of the pre-retirement income.
why use taxable first, that keeps coming again and again. instead keep taxable 60bonds 40stocks and use it as 6-12months buffer. use tax deferred first than use taxable than roth. if tax deferred goes down by 30% that is an opportunity to roll over tax deferred to roth Ira. no escape in paying tax on tax deferred!
Lol, Charlie apparently doesn’t need insurance or medical costs…
I have this goal of retiring a millionaire, I saw a guy on a webinar that retired at 44 with over $6million, so it is possible and I’d love further investing tips and ideas that can facilitate early retirement.
To retire with this figures, you need to be consistent in your investments.
@Harvey Davis Maybe you should take online courses and also It depends on the field you are currently operating on, the stock /forex/ crypto markets are booming right now, if you are not investing yet, then you should!
@Carrie Anderson wow! amazing profits 🔥
@John Stanley Hi, do you mind introducing your broker to me?
You’ll spend less as you get older and can’t do as much as you can now. I learned something else when my mom went into assisted living. If you have a million in the bank, or are flat broke, you get the exact same care. My sister and I were paying $1000 a week. Her neighbors were right across the hall and it didn’t cost them a dime…:)
Agree…I will go for a swim in a icy river before I let assisted living care suck my life saving and wipe out an inheritance for my kids.
Best time to do Roth conversions in my mid 60s. Was going to convert when our combined income was at a lower tax rate. Hopefully a dip too. And if I do a conversion, can my wife and I contribute the full amount to our Roth without increasing our income. Got to stay in the lower tax bracket. Possible increase in RMD taxes scares the hell out of me .
Question: why are his future expenses bouncing around from 80k one year to 66k the next, to 72k–shouldn’t this be steady when you evaluate a plan?
Also, if his retirement budget is 4200 per month, why is he withdrawing 80k?
the 4% rule is by far the minimum you can withdraw. Between dividend paying stocks and on average stock market appreciation in the past 40 years you could safely withdraw 8%-12% and you portfolio will continue to grow. Adjusting also for down markets where as they say you can tighten your belt a little is something no one is talking about either. Years in a down market you can just use your dividends and not withdraw any capital. You need to be flexible.
I really want my portfolio to be up to $100,000,000 before a year, I guess it can be possible 😀
Why not it will really depend on your investment method and the broker you are investing with just have to invest wisely
You should know it’s easy and hard to make that much profit. I say EASY because it’s very possible to make that much, and Hard because you’ll need professional assistance to do it, I’d suggest you get assisted by a market advisor
@whtsap+➊➍➏➒➏➊➋➏➑➋➒ “That is totally true, but how well does a financial advisor improve your profit? What is the experience like using an advisor?
@Ray White This is impressive how could someone go about getting investment guidance from a coach like that, would you mind sharing your coach info?
10.9 percent this year, your the 🐐.