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Four Percent Rule

Money Guide

BY THE LATE 1990s, with almost two decades of robust investment returns under their belts, investors would talk about 6%, 8% and even 10% as a reasonable rate at which to draw down a retirement portfolio. But researchers begged to disagree—and the financial markets provided brutal confirmation, hitting stock investors with back-to-back bear markets in 2000–02 and 2007–09.
Today, 4% is considered a safe withdrawal rate (though even that number has been called into question).

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The 80% Rule

Money Guide

ONE RULE OF THUMB suggests that, to retire in comfort, you need 80% of your preretirement income. Why the 20% drop? You are no longer saving 10% or so every year toward retirement and you’re no longer making an employee’s 7.65% payroll-tax contribution to Social Security and Medicare. In addition, you won’t have to buy work clothes or pay commuting costs. Your income tax bill should also go down, in part because a portion of your retirement income will likely come from Social Security benefits,

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Rule of 72

Money Guide

HOW LONG WILL IT take to double your money, given a particular rate of return? You can get a rough answer by dividing 72 by the annual return. For instance, if you expect to earn 7% a year, it would take just over 10 years to double your money. But at a 3% annual return, the compounding process is much slower, with your money doubling every 24 years.
Obviously, the higher the return you earn,

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31 Rules of the Road

31 Rules of the Road
Below is a modestly revised version of the Jonathan Clements Money Guide 2015‘s final chapter. 
Looking to improve your money management? Here are 31 rules for the financial road ahead:
1.      Check your retirement progress by taking your nest egg and applying a 4 percent annual portfolio withdrawal rate, equal to $4,000 a year for every $100,000 saved. Will you have enough retirement income—or should you be saving more?

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Ruled by Rules

Article by Jonathan Clements  |  May 10, 2015

MOST OF US STRUGGLE with self-control. We eat too much, exercise too little and spend excessively. One solution: Adopt rigid rules of behavior.
For instance, I make it a rule to exercise every morning for at least 40 minutes, always buy whole wheat bread, avoid caffeine after 9 a.m. and eat fruit as a midmorning snack. I’ve followed these rules for so long that they’re no longer rules, but rather ingrained, unquestioned habits.
Not surprisingly,

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Looking Different

Article by Jonathan Clements  |  Jul 6, 2024

I’VE ALWAYS ASSUMED my financial life wasn’t so different from that of others—and that made writing personal-finance articles a whole lot easier. I, too, wanted to own a home, buy the right insurance, pay for the kids’ college, and amass enough for a long and comfortable retirement.
On top of that, I wasn’t some financial minority—a highly paid executive, or a successful business owner, or the recipient of a hefty inheritance. Instead, I was like most everybody else,

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Pluses and Minuses

Article by Richard Quinn  |  Jul 5, 2024

IS A 55-PLUS community for you? Do you want to spend your later years surrounded by folks just like yourself—mostly crotchety, demanding old people?
I’m joking, of course. But am I exaggerating?

My wife Connie and I made the move from our New Jersey single-family home to a nearby 55-plus community six years ago. Like the idea of a 55-plus community? Here are some factors to consider.

First, a 55-plus community requires defining. There are several types and sizes,

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Four Mantras

Forum by Jonathan Clements | Jul 1, 2024

I’m not big on aphorisms—at least when talking to others. But there are certain things I say to myself all the time. Like what? Here are four mantras that I repeat to myself on an almost daily basis:
“First, do what you have to do, then do what you want to do.” This is my vegetables-first approach to the day. I have an ongoing to-do list that I typically revise each evening. When I look at that list in the morning,

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Reallocating QQQ

Forum by Dan Malone | Jun 22, 2024

First a question and then the backstory.
Mid-60’s and nearing retirement with 80% domestic allocation of stocks (60% domestic/40% international) in tech heavy QQQ. Sold 20% of my shares yesterday, and now have $200k+ to reinvest. Tax basis is 13% of the current market price. Long term capital gain rate of 15% applies, plus 3.8% NIIT. Gain is $192.5k.
How would you reinvest the sales proceeds to slowly sell off this concentrated QQQ position in a taxable account?

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Go Big Early

Article by Jeffrey K. Actor  |  Jun 20, 2024

I VIVIDLY REMEMBER my father explaining how small sums of money could grow exponentially. Using the example of a penny that doubled every day for a month, he showed how it could grow to more than $10 million. Indeed, as Albert Einstein didn’t say, “The most powerful force in the universe is compound interest.”
Many authors tout the benefits of saving beginning at a young age. Radio personality Dave Ramsey and his daughter Rachel Cruze,

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Paid in Full

Article by David Gartland  |  Jun 17, 2024

SPENDING ISN’T something I like to do. It doesn’t bring me lasting joy. I prefer just to buy what I need.
For many folks, spending involves borrowing. If spending is your thing, incurring interest charges on credit card debt and car loans probably isn’t a big deal. But to me, borrowing to buy something means I’m overspending. If I can’t afford to pay cash, I shouldn’t buy it.
Borrowing has been the downfall of many.

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Confusing Ourselves

Article by Richard Quinn  |  Jun 7, 2024

I’VE OFTEN BEEN TOLD that I’m too direct. To me, “direct” means to focus on the facts, get to the point, eliminate the fluff, keep matters as simple as possible.

Guilty as charged.

Think of all the time wasted by fluff. After making something more complicated than necessary, somebody is ready to provide a solution to what may or may not be a problem. Fluff thrives on confusion. It can scare folks unnecessarily. Most Americans don’t know how to deal with financial fluff.

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What percentage of your salary do you need for a comfortable retirement?

Forum by Jonathan Clements | Jun 5, 2024

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Buying Freedom

Article by Jonathan Clements  |  Jun 1, 2024

IF 20-SOMETHINGS ASK me for financial advice, I suggest getting a job right out of college and saving like crazy, so they quickly get themselves on the fast track to financial freedom.
If 60-somethings ask me for advice, I advocate a phased retirement, seeking part-time work in their initial retirement years and, if they enjoy it, perhaps keeping it up into their 70s.
Yeah, I know, I sound like a real killjoy. My advice raises an obvious question: Is there ever a time when we should cut ourselves some slack and not have a job?

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Me and the Dow

Article by Ben Rodriguez  |  May 31, 2024

WHEN I WROTE ABOUT the Dow Jones Industrial Average reaching 35,000 in 2021, it’ll surprise few to hear that I—like the stock market—was euphoric. I’ll confess that in 2022, as stocks plunged, I felt silly for having written the article.
But here I am again, writing about the latest milestone for our old friend. After flirting with the number in mid-March, the Dow hit an intraday high topping 40,000 on May 16 for the first time in its history.

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