Because some are afraid to spend their retirement money. They don't fully enjoy their years in retirement. They end up living their retirement worried about running out, but then end up having a lot left over.
@@kevink1214 I totally agree that tightening the belt to the detriment of your happiness when you could have lived more comfortably is not good. Just the way he phrased it in the video made it seem like he was saying _spend everything_ for its own sake lol
My plan is based on need, and not a set %. First 4 1/2 years before SS, I'll need about 6% a year. Once I collect SS, it drops to around 2%, which my dividend stocks will cover. Three years later, my wife will collect SS, and we will bring in more than needed.
It's a bit complicated...wouldn't it be nice to have a "plug and play" software or spreadsheet that would calculate annual withdrawal based on these parameters...
It is pretty complex. I think there are simpler strategies that yield similar results. I've created a spreadsheet that has columns for stocks, bonds, and cash (3-month treasuries) categories and their returns by quarter every year since the 1980s. I've then been laying in strategies such as this to see the outcome after 40 years if I put various percentages of my retirement portfolio in each category. I know it is a single scenario but it encompasses stock crashes, bond crashed, high interest rates, low interest rates, quite the gamut. And as opposed to monte carlo runs, it is guaranteed realistic because it actually happened! Anyway, I believe there are great ways to withdraw 4% per year and have your retirement nest egg grow so you end up with quadruple what you started with. Therefore, as Josh says, you could actually withdraw a greater percentage if you want to break the surly bonds of this earth with a zero balance.
G-K is my favorite withdrawal model I have seen yet. The aritcle Josh references also spells out a heirarchy on which assets to pull your money from. So from a practical matter, G-K merges the 4% rule with a psudo-bucket strategy and adds guardrails to your annual withdrawal amount to help prevent you from withdrawing to much or too little. No withdrawal strategy is perfect, but G-K is the best for us. I will start using it in 2024 when we begin withdrawing from our IRA. Professional money managers have a problem with it. They don't want to put 8% to 10% of your assets in cash or a cash equivalent (not even a T-Bill ladder) because they cant rationalize charging the management fees on invested cash. I think it has to do more with their pocketbook than yours.
Spot on Josh! I believe if you spend at the median income level of 50 to 70k per year you can draw down 6% a year if you've got approx 1.2 million. I think it will take you 25 to 30 years before running out.
Excellent breakdown. I plan on using the barbell and giving myself more cash up front in retirement while I can enjoy it. This is good validation of that theory. I will be prepared to use cash and/or cut spending if the buckets all get small holes, or one bucket gets a big one. Have to ensure that serious downturn doesn't bust 'the nut'. Thanks Josh!
You always stress KISS, and I agree. So why do you always say "pull from this", "pull from that"? Why not just figure your initial allocation and rebalance it every year? It has the same effect and it's easier than trying to figure where you are pulling money from. Thanks for your help over the years.
Josh, could you elaborate more on Widows and their benefits. We sure could use the help in understanding what accounts to use first. Should we use spouses SS until fra or even 70, even if our payout is more than what is offered to get the extra $. No one out there talks about this. It is so confusing. Once you retire, whats your tax percentage? What determines that number?
I took my dead wife’s SS, will delay my larger SS until 70, letting it grow by 24%. Her SS was high enough and I really didn’t need it so the math was simple. Like Josh said he has tons of vids on this subject. I was 63 so it was discounted. She only worked 20 years, I was amazed at how much I get from her SS. It was $700 less than mine at 66 and 8 months my FRA and I had full time employment for 41 years with the same company and always made more then her.
My wife and I have been on Medicare with supplement plans for about two years. Except when we triggered IRMAA, our out of pocket medical costs are very reasonable.
We plan to withdraw 3.6 percent a year at 59 1/2. $36,000 per million a year with no adjustment for inflation. Keep working and blow the money as the market lets us.
Agree that they WILL NOT reduce Social Security. They'll do NOTHING until the last minute, then throw up their hands, say there is nothing we can do, and raise social security taxes. They will likely raise taxes enough to give those beneficiaries on the lower end of the income spectrum MORE benefits! I see how government actually works.
It's extremely hard to spend your retirement savings when you lose $300,000.00 in fair market value in 2022. Risk taker got stung. Hasn't been the first time either. Remember Enron?
I remember watching Jeff Skilling on a business channel and thinking, this guy is one big crook. Little did I know that I would be proven right. I don't know what advice I have to give you for becoming perceptive.
Thanks Josh. What rate of returns are you using now in right capital for stocks, bonds and cash? My employer’s 401k only bond fund is Dodge and Cox. They do they the combination life path funds.
Why is dying with money a bad thing? So long as you spend enough to be happy and comfortable, leaving the rest for your heirs is cool
We plan to do just that. Pay it forward.
Because some are afraid to spend their retirement money. They don't fully enjoy their years in retirement. They end up living their retirement worried about running out, but then end up having a lot left over.
@@kevink1214 I totally agree that tightening the belt to the detriment of your happiness when you could have lived more comfortably is not good.
Just the way he phrased it in the video made it seem like he was saying _spend everything_ for its own sake lol
My plan is based on need, and not a set %. First 4 1/2 years before SS, I'll need about 6% a year. Once I collect SS, it drops to around 2%, which my dividend stocks will cover. Three years later, my wife will collect SS, and we will bring in more than needed.
Same here. 4% is more than enough since my pension covers monthly expenses. Once I hit 62 & collect early SS (if still available) it can go down to 2%
It's a bit complicated...wouldn't it be nice to have a "plug and play" software or spreadsheet that would calculate annual withdrawal based on these parameters...
It is pretty complex. I think there are simpler strategies that yield similar results. I've created a spreadsheet that has columns for stocks, bonds, and cash (3-month treasuries) categories and their returns by quarter every year since the 1980s. I've then been laying in strategies such as this to see the outcome after 40 years if I put various percentages of my retirement portfolio in each category. I know it is a single scenario but it encompasses stock crashes, bond crashed, high interest rates, low interest rates, quite the gamut. And as opposed to monte carlo runs, it is guaranteed realistic because it actually happened! Anyway, I believe there are great ways to withdraw 4% per year and have your retirement nest egg grow so you end up with quadruple what you started with. Therefore, as Josh says, you could actually withdraw a greater percentage if you want to break the surly bonds of this earth with a zero balance.
I found this article a few months ago and have been studying it. I'm not retired yet but plan on using something close to this.
G-K is my favorite withdrawal model I have seen yet. The aritcle Josh references also spells out a heirarchy on which assets to pull your money from. So from a practical matter, G-K merges the 4% rule with a psudo-bucket strategy and adds guardrails to your annual withdrawal amount to help prevent you from withdrawing to much or too little. No withdrawal strategy is perfect, but G-K is the best for us. I will start using it in 2024 when we begin withdrawing from our IRA. Professional money managers have a problem with it. They don't want to put 8% to 10% of your assets in cash or a cash equivalent (not even a T-Bill ladder) because they cant rationalize charging the management fees on invested cash. I think it has to do more with their pocketbook than yours.
Spot on Josh! I believe if you spend at the median income level of 50 to 70k per year you can draw down 6% a year if you've got approx 1.2 million. I think it will take you 25 to 30 years before running out.
Excellent breakdown. I plan on using the barbell and giving myself more cash up front in retirement while I can enjoy it. This is good validation of that theory. I will be prepared to use cash and/or cut spending if the buckets all get small holes, or one bucket gets a big one. Have to ensure that serious downturn doesn't bust 'the nut'. Thanks Josh!
I just took my money and divided by 20, still have the expensive ass house to sell then its divide by 10. Crap, I’m gaining money.
😂 love your channel, very educational and entertaining!
Great video, Josh! Very good stuff, keep doing them.
You always stress KISS, and I agree. So why do you always say "pull from this", "pull from that"? Why not just figure your initial allocation and rebalance it every year? It has the same effect and it's easier than trying to figure where you are pulling money from. Thanks for your help over the years.
I have always felt a good model will have you taking more in good market years and less or even none in down markets
Way too complicated for my future retired self. Just send me my stimmy check and stay off my lawn.
SSSHHHHHHHHHHhhhhhhhhhhhhhhhhhhhhhhhhhhh. Everyone is gonna retire now! Come on Josh!
Josh, could you elaborate more on Widows and their benefits. We sure could use the help in understanding what accounts to use first. Should we use spouses SS until fra or even 70, even if our payout is more than what is offered to get the extra $. No one out there talks about this. It is so confusing. Once you retire, whats your tax percentage? What determines that number?
Apparently someone hasn’t watched all of my videos! 🤣
I took my dead wife’s SS, will delay my larger SS until 70, letting it grow by 24%. Her SS was high enough and I really didn’t need it so the math was simple. Like Josh said he has tons of vids on this subject. I was 63 so it was discounted. She only worked 20 years, I was amazed at how much I get from her SS. It was $700 less than mine at 66 and 8 months my FRA and I had full time employment for 41 years with the same company and always made more then her.
What if you have only 30-35% in equities?
My wife and I have been on Medicare with supplement plans for about two years. Except when we triggered IRMAA, our out of pocket medical costs are very reasonable.
We plan to withdraw 3.6 percent a year at 59 1/2. $36,000 per million a year with no adjustment for inflation. Keep working and blow the money as the market lets us.
Agree that they WILL NOT reduce Social Security. They'll do NOTHING until the last minute, then throw up their hands, say there is nothing we can do, and raise social security taxes. They will likely raise taxes enough to give those beneficiaries on the lower end of the income spectrum MORE benefits! I see how government actually works.
The system can never break because they will just keep raising the age requirements until the math works.
"evidence is overwhelming" "not debatable anymore"..... Where have we heard those things before... lol
Oh yeah. Love it!
It's extremely hard to spend your retirement savings when you lose $300,000.00 in fair market value in 2022. Risk taker got stung. Hasn't been the first time either. Remember Enron?
I was thinking the same thing. I didn’t sell at all and made it all back though
In 2022 You would have to have over 1.7 mill invested in the SP500 to lose 300k.
As the saying goes
"Pigs Get Fat And Hogs Get Slaughtered"
I remember watching Jeff Skilling on a business channel and thinking, this guy is one big crook. Little did I know that I would be proven right. I don't know what advice I have to give you for becoming perceptive.
@@sergiosantana4658 You are correct. S&P500 heavy.
Market has already recovered from 2022..
My financial planning guy told me to withdraw the entire IRA balance, go to the nearest casino and double my money. I fired that guy.
The odds of hitting either red or black in American roulette are 47.4%. Not too bad. Go for it!😀
😂
Tooooo complicated.
Thanks Josh. What rate of returns are you using now in right capital for stocks, bonds and cash?
My employer’s 401k only bond fund is Dodge and Cox. They do they the combination life path funds.
You had me until you called Critical Race Theory racist. 🤬
Well, it is racist so there’s that.
It’s absolutely racist
It Absolutely is! Sometimes I wonder if people really understand the meaning of the word racist.