Increasing the Safe Withdrawal Rate, Part I
In my last post I discussed how the 4% recommended Safe Withdrawal Rate (SWR) can be increased, if you are willing to accept a higher probability that your financial portfolio will not last 30 years. In this post I will provide some thoughts on one of the ways that you can increase the SWR without significantly increasing your portfolio failure rate.
Can I Violate the 4% Rule?
In many of my past posts I have mentioned “the 4% rule.” The 4% rule is a reference to the recommended Safe Withdrawal Rate (SWR) for withdrawing retirement income from one’s financial portfolio. If you are not familiar with the 4% rule, you should read my previous post where I explain the concept. In this post I will discuss if it is possible to violate the 4% SWR in retirement.
The Third Bucket; Is 15 Years Long Enough?
I got an e-mail question in response to my last post on The Bucket Strategy. The question was in regard to the length of time a retiree should wait before dipping into the third bucket. I thought the e-mailer had a good question, given the poor equity markets returns since 2000, is 15 years an adequate time period for the equity assets in the third bucket to grow? In this post I will provide some data and my thoughts on this question.
The Buckets Strategy
My last post discussed why it is a good idea for most retirees or near-retirees to set up an income ladder to fund the first years of retirement. However, this income ladder is only the first step in an overall retirement income withdrawal strategy. Today I will discuss one particular strategy that is fast becoming the basis for the approach used by most financial advisors. This approach is called the “Buckets strategy.”
Withdrawing Funds in Retirement
Because I do not have an employer provided pension or health care benefits, and I will not be eligible for the Social Security or Medicare Programs for many years, 100% of my retirement income comes from assets invested in the real estate and financial markets. Consequently I cannot afford any big mistakes in my investments. Yet when the Dow Jones Industrial Average Index drops 900 points in one day, I do not lose a wink of sleep at night about my retirement income.
Tracking Living Expenses
In starting out a new year, another important activity for people nearing retirement to get in a habit of doing is tracking living expenses. Most people are aware that they should do this, but may need some tips on how to put this practice into action. In this post I will explain how I do this.
The Most Important Investment Concepts I Have Learned
As a follow up to my previous post on How a Bad Investment Experience Changed My Life, I will discuss in this post what I think are the most important investment concepts I have learned from my investing experience and research. I have talked about these concepts in previous posts but, to start off the New Year, I think they are worth calling attention to again.
How a Bad Investment Experience Changed My Life
Recently I had lunch with an old friend. My friend is about ten years younger than I am and is still working. He asked me a question that I had to think about. My friend wanted to know what are the most important investment lessons that I learned over my investing life. In this post I thought I would provide an answer to his question.
Are You Saving Enough for Retirement?
In recent years I have reviewed dozens of interactive online tools designed to help the user determine the appropriate savings rate to retire. After all my reviews, I think I have found the best “no cost” online tool for analyzing your retirement savings status.
Retirement Tax Diversification, Part II
In my previous post I discussed why you should pay some of your retirement taxes while working. Doing this will increase your tax diversification in retirement providing you with more control over your annual tax bill. Before I leave this subject there is one more important strategy to be aware of to optimize the current federal tax code during the early years of retirement. I believe this strategy is another way to reduce portfolio risk that could occur if we encounter higher tax rates in the future.