I think Dave says to take 8% of the portfolio balance each year, not 8% adjusted for inflation each year. So a $1M portfolio that goes down 50% the first year, your initial withdrawal is $80k, but your second is only $40k. The difference would be made up from that emergency fund he preaches. I'd like to see the numbers run this way.
That's what I think as well, but given that he doesn't clarify this make me think he doesn't actually know that what is typically recommended is to take 4% of the starting balance at retirement and then simply adjust that amount by inflation each year. Either way his lack of knowledge on this topic is scary.
I agree with you. But Dave either doesn't take the time to draw out those differences on his show. Or he doesn't understand them. As formulated, the 4% rule is pretty silly. No one is going to keep taking out the 4% if the market drops like a rock. There is a lot of room for criticism.
I think DR isn’t giving a plan to fit everyone, just the caller asking based on his/her assessments and plan. The caller wants to know if it’s feasible to withdraw 8%. Also there is the time factor for the video. What he says is never all-inclusive. It gives us a starting point. Regardless of his titles, DR does know what he’s talking about. Listen to this particular show before turning it upside down.
@@judygoshy7843 Dave has used this 8% rule in many conversations and even blew up on his guy when he used a more reasonable 4% withdraw. End of the day, Dave is not an investment manager and it's a vast oversimplification of the withdraw strategy, and borderline dangerous for people who think they can take that much
Knowing how much my wife and I spend, I need 7 - 8% for the next 3 1/2 years until I start collecting SS. At that point, I need about 2%. Three years later, when migh wife collects SS, I won't NEED anything. SS and an annuity I have will cover everything! My investments will continue to grow, and be there for extras, like major medical costs, larger purchases like a new car, big vacation, or major home repair / upgrade! So, RMD's will dictate my withdrawl rate, and will be invested into something else. It's more important to know how much you NEED, rather than how much you CAN pull out! Also, I have no problem leaving money to the kids!
Hey @jdgolf499, thank you for sharing your plan and insights! It sounds like you have a well-thought-out strategy for managing your withdrawals and SS benefits. Your point about knowing how much you need versus how much you can withdraw is crucial and often overlooked. It's great to hear that you have contingencies for major expenses and are planning to reinvest RMDs. We hope you enjoy your retirement!
We are in a similar situation where we will use our investments until SS. Until SS we are time-segmenting our income and performing Roth conversions to make RMDs manageable. It’s going to be tough on me going from saver to spender, but I remind myself that money is only a tool to do the things that are important.
I really loved this video. Your speaking style was clear, conversational, and easy to follow. And your explanations were very easy to follow. I really enjoyed it and found it extremely informative
Always great advice and not interested in dogging the other GUY like a lot of people these days. Always a class act and I appreciate that. Just trying to provide the best information possible. Great job Troy!
Cool video-so if you need to withdraw 100% from your inherited IRA within 10 years-you have to just monitor the market and maybe take most of it out prior to 10 years just in case there is a bear market and there is a big loss at the end of the 10 years?
Possibly. We would also need to consider your tax situation when looking at taking required minimum distributions (RMDs). This way you can both improve investment profits during bull markets and possibly reduce future tax liabilities. There are many other considerations as well. Feel free to give us a call so we can discuss your specific situation. Thanks for commenting and keep watching for new content!
What is the standard deviation you used for MC simulation? I have not used MC for this application, although I have used it for many other applications, so I am curious what I will find out. I want to use your parameters. Thank you.
The standard deviation you use should reflect the actual percentage you allocate to stocks and bonds. I recommend googling historical standard deviation for stocks and bonds based on your current allocation e.g. 70/30, 60/40. You’ll have to do some legwork based on your portfolio, but that is the only way to have any semblance of accuracy. Step 1 of our RSP process identifies your willingness to take risk, then your ability to take risk given your income need and time frame. From there, we build the allocation that is most congruent to someone’s personal situation and adjust as needed moving forward.
@@OakHarvestFinancialGroup With all due respect, that was not what I was asking for. I wanted to know what the standard deviation you used in your Monte Carlo Analysis.
I think Dave says to take 8% of the portfolio balance each year, not 8% adjusted for inflation each year. So a $1M portfolio that goes down 50% the first year, your initial withdrawal is $80k, but your second is only $40k. The difference would be made up from that emergency fund he preaches. I'd like to see the numbers run this way.
That's what I think as well, but given that he doesn't clarify this make me think he doesn't actually know that what is typically recommended is to take 4% of the starting balance at retirement and then simply adjust that amount by inflation each year. Either way his lack of knowledge on this topic is scary.
I agree with you. But Dave either doesn't take the time to draw out those differences on his show. Or he doesn't understand them.
As formulated, the 4% rule is pretty silly. No one is going to keep taking out the 4% if the market drops like a rock. There is a lot of room for criticism.
I think DR isn’t giving a plan to fit everyone, just the caller asking based on his/her assessments and plan. The caller wants to know if it’s feasible to withdraw 8%. Also there is the time factor for the video. What he says is never all-inclusive. It gives us a starting point. Regardless of his titles, DR does know what he’s talking about. Listen to this particular show before turning it upside down.
@@judygoshy7843 Dave has used this 8% rule in many conversations and even blew up on his guy when he used a more reasonable 4% withdraw. End of the day, Dave is not an investment manager and it's a vast oversimplification of the withdraw strategy, and borderline dangerous for people who think they can take that much
DR is fine for 80% of the population as most are in debt and living paycheck to paycheck. I like Brian Preston for the remaining 20%.
Knowing how much my wife and I spend, I need 7 - 8% for the next 3 1/2 years until I start collecting SS. At that point, I need about 2%. Three years later, when migh wife collects SS, I won't NEED anything. SS and an annuity I have will cover everything! My investments will continue to grow, and be there for extras, like major medical costs, larger purchases like a new car, big vacation, or major home repair / upgrade! So, RMD's will dictate my withdrawl rate, and will be invested into something else. It's more important to know how much you NEED, rather than how much you CAN pull out! Also, I have no problem leaving money to the kids!
Hey @jdgolf499, thank you for sharing your plan and insights! It sounds like you have a well-thought-out strategy for managing your withdrawals and SS benefits. Your point about knowing how much you need versus how much you can withdraw is crucial and often overlooked. It's great to hear that you have contingencies for major expenses and are planning to reinvest RMDs. We hope you enjoy your retirement!
Have you taken the possibility of SS benefits being cut by 23%? Although, from your comments, it looks like you are well covered.
We are in a similar situation where we will use our investments until SS. Until SS we are time-segmenting our income and performing Roth conversions to make RMDs manageable.
It’s going to be tough on me going from saver to spender, but I remind myself that money is only a tool to do the things that are important.
I really loved this video. Your speaking style was clear, conversational, and easy to follow. And your explanations were very easy to follow. I really enjoyed it and found it extremely informative
Thank you for that feedback, @xporkrind - we are really happy you enjoyed it!
The advisor in my head says to just withdraw what you need for the month. So far so good
Hey John! Thanks for watching and sharing your strategy!
He was talking about taking 8% of your gains not 8% of your investment
Great video from Oak Harvest as usual!
Thanks @bluecollarbudgets! We love consistently seeing you around our channel!
@9:52 "The software would only let me bump it up to 11.7% per year"🤭
Lol, thanks for watching @thepatientguitarist1739!
Very informative and professionally presented. Thanks.
Thanks Steven! We're glad you enjoyed it.
I think Dave is saying it is OK to take your annual gains minus inflation without impacting your principal.
Maybe if you have a sizable DB pension and SS.
Thanks for watching @BRuane-pw6xq!
Always great advice and not interested in dogging the other GUY like a lot of people these days. Always a class act and I appreciate that. Just trying to provide the best information possible. Great job Troy!
Thanks so much Cindy! We really appreciate that.
Cool video-so if you need to withdraw 100% from your inherited IRA within 10 years-you have to just monitor the market and maybe take most of it out prior to 10 years just in case there is a bear market and there is a big loss at the end of the 10 years?
Possibly. We would also need to consider your tax situation when looking at taking required minimum distributions (RMDs). This way you can both improve investment profits during bull markets and possibly reduce future tax liabilities. There are many other considerations as well. Feel free to give us a call so we can discuss your specific situation. Thanks for commenting and keep watching for new content!
I plan on making 8% on average(before fees) and withdrawing zero until RMD age and then only the minimum required.
Thanks for watching and sharing your plan, @edhcb9359!
In not at 100% but 75-80% invested in aggressive. I do understand it can have down years but overall it should do better.
Hey Mike, thanks for watching and sharing your strategy with us.
What is the standard deviation you used for MC simulation? I have not used MC for this application, although I have used it for many other applications, so I am curious what I will find out. I want to use your parameters. Thank you.
The standard deviation you use should reflect the actual percentage you allocate to stocks and bonds. I recommend googling historical standard deviation for stocks and bonds based on your current allocation e.g. 70/30, 60/40. You’ll have to do some legwork based on your portfolio, but that is the only way to have any semblance of accuracy.
Step 1 of our RSP process identifies your willingness to take risk, then your ability to take risk given your income need and time frame. From there, we build the allocation that is most congruent to someone’s personal situation and adjust as needed moving forward.
@@OakHarvestFinancialGroup With all due respect, that was not what I was asking for. I wanted to know what the standard deviation you used in your Monte Carlo Analysis.
I like 5%, as a generalization.
Me too. I calculate 10% first because that is easy math and then take half of that.
I like the guard rail approach. Start at 5%, cut spending if it reaches 6%, give yourself a raise at 4%.
Thanks for watching and sharing your ideas @ItsEverythingElse and @swright5690!
Adjust your spending to what the goose is crapping out don't shoot the goose
That's a very interesting analogy 😂 Thanks for watching!
Another great video explaining things. Thank you!
Thanks @timeformore! We're glad you enjoyed it!
Nice mention on retirement end of bear vs bull 👍
Thanks for watching Sam!
Splendid video, great explanation
Thank you @mrcee5727!
8% adjusted yearly based on assets?
Yes, withdrawal of 8% of the balance is what Ramsey is talking about.