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Best If Shared

I KEPT THE LANDLINE number that my mother had when she was alive. I thought there might be friends I wasn’t aware of who would try to phone her. Indeed, I received calls from people like Helen who lives in Arizona, Cheryl in Colorado and Jan from Michigan. Eventually, however, the phone went silent, except for those annoying sales calls.
But I still kept the phone number. I just couldn’t give it up. It was costing me an extra $50 a month,

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Old Arguments

THERE ARE TWO GREAT debates in retirement planning: whether the famous 4% rule is valid—and how much income folks need, relative to their final salary, to retire in comfort.
I find both subjects frustrating, in part because there’s so little consensus. I also find much of the advice way too complicated for the average American.
I participate in NewRetirement’s Facebook group and occasionally give my views on both topics. I recently expressed the opinion that the goal in retirement should be to replace 100% of the base income you earned immediately before retirement.

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Rate Debate

THE 4% RULE HAS almost mythic status in the financial planning world. Originally suggested by Bill Bengen in a 1994 article, the rule provides a simple way for retirees to figure out how much they can withdraw from their portfolio without running out of money. In a recent article, Bengen updated his rule.
The rule defines the maximum amount retirees should withdraw from their portfolio in the first year of retirement. Got a $500,000 nest egg?

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Sweat the Big Stuff

I’D LIKE TO DESCRIBE—and recommend to you—what I’ll call the John Cleese approach to financial planning. It is, in my view, the simplest and most effective way to think about saving for retirement or any other goal.
John Cleese, the English actor and comedian, is largely retired. But in an interview, he described his approach to getting work done. When he had a weekly TV show, Cleese said, he didn’t worry about being unproductive some days.

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My Retirement

AS I PLAN MY retirement, I have the advantage of a strong background in finance. I worked for 35 years in the investment field, primarily managing mutual funds. Early on, I obtained the Chartered Financial Analyst designation, which helped immensely.
Six years ago, when I was age 55, I embarked on a journey to comprehend the myriad rules and strategies surrounding retirement. I studied to become an RICP—a Retirement Income Certified Professional. While the CFA was useful for investment management,

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In Withdrawal

RETIREMENT ISN’T JUST about reaching some magic savings number. You also need a strategy for turning that pile of savings into a reliable stream of retirement income that’ll last for the rest of your life.
In academic lingo, it’s about changing from accumulation to decumulation—and it’s a topic that my husband Jim and I grapple with, as we figure out how best to cover our retirement expenses. There are three common strategies:
Systematic withdrawals.

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50 Shades of Risk

WHAT’S THE BIGGEST financial risk we face? Today, many folks would point to the possibility of a recession, a stock market plunge and perhaps both. Indeed, those are perennial perils—but perhaps they shouldn’t be our biggest worries. Looking to lose sleep? Here are 50 other dangers we face:

Really, really long-term care.
Your financial advisor turns out to be a crook.
Your spouse leaves.
Double-digit inflation.
Your new neighbor specializes in personal-injury lawsuits.
Your son just got his driver’s license.

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Leaves Me Cold

ALTHOUGH IT’S ONLY been a few months since I first heard the term, I’m already tired of all the chatter about the financial independence/retire early (FIRE) movement. This so-called movement is so irrelevant that I don’t know why anybody, including me, writes about it—and yet my curmudgeonly instincts compel me to do so.
Don’t characterize me as a movement hater. To each his own. But consider a recent story in MarketWatch about a couple—he’s age 44,

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Making It Work

I’M ONE OF THE LUCKY Americans with a pension. I know firsthand the sense of financial security that comes with steady monthly income.
Others don’t have it so easy. I worry a great deal about the majority of Americans—including my four children—who have no pension, and instead will rely on Social Security and their investments for their retirement income. My fear: Even if these folks are saving regularly, they don’t really understand how to invest or how to manage their nest egg once retired.

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What Withdrawal Rate?

AS BOND YIELDS HAVE fallen in recent decades and stock market valuations have climbed, some experts have suggested that the standard 4% portfolio withdrawal rate may be too high—and that retirees who spend that much risk running out of money.
A refresher: The 4% rule assumes retirees withdraw that portion of their nest egg’s value in the first year of retirement. Any dividends and interest payments that are spent count toward the 4%. After the first year,

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Grab the Roadmap

FINANCIAL SECURITY is within your reach. Don’t believe me? Here’s a roadmap that demonstrates it’s possible for most Americans.
Sam is a 22-year-old college graduate. He begins working right after college, earning $50,000 a year. He saves 20% of his income the first year, equal to $10,000. Each year, he gets a 2% raise. This raise is over and above inflation, which we’ll assume is zero to keep things simple. In addition to saving $10,000 a year,

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Stress Test

IN THE FIELD of epidemiology, researchers have long used the term “tipping point” to describe how epidemics occur. At first, an ordinary disease moves slowly, not gaining much attention. But then, seemingly overnight, it snowballs into something far larger.
Within the world of public health, this concept is well understood. But about 20 years ago, the author Malcolm Gladwell took a closer look and pointed out that tipping points can be found in a whole host of other situations far beyond epidemiology.

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Winning the Game

BY ALL ACCOUNTS, I’ve won the game. I know the income my family needs to live our desired lifestyle. I have an inflation-adjusted Navy pension in my future. I have two children and two GI Bills, one for each child. My house is paid off and I’m debt-free. Combine all of this with the 4% rule, and it seems I have enough to produce our desired income for the rest of my life. I have “won the game.”
William Bernstein. 

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A Morbid Game

THERE ARE MANY WHO claim to speak with authority on Social Security.  I am not one of them. But I’m nothing if not curious. I recently set about testing some notions I have heard with regard to Social Security retirement benefits. A family member had asked for help understanding her Social Security statement, so I had some real numbers to work with. The statement predicted that her monthly benefits would be as follows, depending on when she begins benefits:

$1,907 at age 62.

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Playing the Spread

HOW LONG WILL YOU live? A recent study from Boston College’s Center for Retirement Research noted that, “A healthy 65-year old man in an employer pension plan has a 25% chance of dying by age 78, or of living to age 91 or beyond.”
Think about the dilemma this creates if you’re retiring at age 65. Even if you are in the middle 50% of the male population—neither among the 25% who die early in retirement nor among the 25% who live well into their 90s—your retirement could last just 13 years or it could be double that,

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