5 Wrong Assumptions People Make About Retirement
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- čas přidán 20. 07. 2024
- In this episode of Ready for Retirement, James discusses 5 assumptions that you shouldn't make in retirement.
Questions Answered:
What are the best practices when making assumptions in retirement?
What are the best strategies to create income in retirement?
How can your overall retirement strategy be improved?
Timestamps:
00:00 - Introduction
4:22 - Example of an Investor
6:28 - Short-Term v. Long-Term
12:15 - Retirement Income (Reality)
16:15 - Aligning Your Financial Goals (Cash Flow)
19:30 - Portfolio Income Creation
20:45 - Summary of Assumptions
Learn the tips & strategies to get the most out of life with your money.
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My biggest wrong assumption was I overestimated Federal taxes in retirement. Looks to be much less than I expected. Sometimes in life it is nice to be wrong. 🙂
In my state, local taxes are only on earned income - that’ll be a big difference for me.
@@dforrest4503 State tax for me should be really low. I haven't calculated it yet. But seems that way.
I think many people are making that mistake and putting too high percentage in Roth accounts
@@johngill2853 I hadn't thought of that. I should have saved more in Roth, but too many bumps in life. :-)
I agree with these points. Especially the primary home as part of your net worth-I never include my home in my net worth calculations. If I end up selling it, awesome, but better to not include bc it’s not generating income
True, but it is saving you from having a mortgage and paying rent. In that way, it’s not providing a bad return.
Hey James super helpful. Really enjoyed the content as usual!
You always have very useful information. Thank you! In your discussion of stock market investments you might want to mention the management fees. They can add up.
Great content as always, James!
Much appreciated!
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A primery home is an asset. You will have to live somewhere and I doubt living under a over pass is all that desirable. if you rented out your home or sold it you would have to spend money on living somewhere else.
If you rented it out you don't know if the tenet might stay there for six months that it can take to have them evicted by the court and that is six months that you will never see any rent. Then a tenet could totally trash the place costing tens of thousands to fix it with the months that you can't rent it as the repairs are being done. Tenets who are evicted by the court a great deal of times will trash the place to get even I their minds for you evecting them. So you can be looking at one year of no rent on top of tens of thousands in damages. By the way doing a airbnb they can clame residence as they legally occupied the property and it can take you six months to legally evict them.
Now selling your house well you will be losing 8% of the value of the house to the real-estate agent and closing costs right off the top.
Then after you rent out your house or sell it you will have to pay more in rent than just staying in your home in the first place.
So #4 is a crock of a domestic male bovine drippings. It's an asset as its a place for you to live at a lower cost than other possible alternatives.
As far as the stock market being the most risky thing in your retirement that depends on your actions.
If you're 100% in one individual stock it just may be the most risky thing in your retirement but if you're diversified and have a reasonable withdrawal plan then it probably isn't
Agreed
Are those timestamps right for this podcast?
Generally I find your videos and podcasts good and helpful, and here comes the “but”
This time a couple issues.
First you talk about not assuming your home will help provide wealth in retirement, yet you don’t even mention the very real option of a reverse mortgage. These are not for everyone , but they can be a way to access home equity with minimal to no risk. We have one that is strictly a growing line of credit with no balance. It should easily add the option of $500,000 of spending late in retirement should we need it(we are mid 60’s)
That then flows into my second point which has to do with psychology and reality. The problem for people who don’t have huge wealth where they can easily survive a 50% market crash, is that it is hard to bet on the past when looking at the future which may only last another 10-20 years. So sure it is correct that the stock market has never lost over 20 years, but it has repeatedly lost over shorter periods, and there is no guarantee that it will gain over the next 30. So I tell my 26yo daughter to invest in stocks with DCA methods and don’t bother looking till she is a lot older. But, those are different assumptions than we have with maybe only a 20 year horizon, while in a distribution phase, rather than in accumulation.
I assume you have read some of the work by researchers like Wade Pfau PhD and Michael Kitces, who address the issues of retirement planning beyond just portfolio management. They recommend other potential options that could be considered, like Reverse Mortgages, Annuities, Life Insurance, and different Social Security claiming strategies. Where these can be used to change risk, taxes, and outcomes. Obviously all in an effort to minimize the chance of running out of money, while allowing comfortable spending with less worry.
It is fear and worry about money that will lead to a less than happy retirement, more than anything except the loss of loved ones.
wrong assumptions. Retired in 2022 at 60. Been looking at using a 3 t0 4 % drawdown from my accounts. Retired and now i see many are suggesting that a 2.3 to 2.7 % drawdown is more realistic. That is a big change. Not sure my numbers work at 2.3 to 2.7 % drawdown.
I'm hoping to retire at 60 in 2023! I think the 3 to 4% drawdown rate got thrown off track temporarily. 2022 was historically challenging to retire with stocks, bonds and interest rates all down. can at least find t bills and such paying > 4% now
If you are retired in 2022 or will be in '23 at around 60 a 3-4% drawdown shouldn't be that bad, at least assuming that you will be getting SS sometime between 2-10 years out, once you start collecting SS your drawdown percentage should be lower. I am just turning 60, drawing down at about a 5% rate for the next couple of years, but once I claim SS my drawdown will drop to less than 2%.
I wish I could listen to this on a usb stick driving! I don't know why I can't seem to find a way to download it like other podcasts! Why bother posting an audio clip here? 🤔 Or make the podcast downloadable from here.
You can download it under the Ready For Retirement podcast wherever you listen to podcasts.
Your home provides imputed income if there is no mortgage in retirement. Otherwise you would have rent.
That depends on the house. We have some large older houses in my area and the expenses to keep up them houses are extreme. All homes are not created equal or at least aged equal
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