How to Maximize Retirement Income | Implement and Do Better Than the 4% Rule
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- čas přidán 20. 07. 2024
- Planning for a comfortable retirement requires careful consideration of various factors, and one commonly discussed approach is the 4% rule. It’s essential to understand the nuances of the 4% rule and explore additional strategies to make the most out of your retirement savings. Some key considerations to keep in mind are:
1. Adjusting Withdrawals:
2. Exploring Different Withdrawal Rates:
3. Diversifying Your Portfolio:
4. Implementing Dynamic Adjustments:
5. Setting Guardrails for Withdrawals:
The 4% rule can be a good starting point, but you should recognize its limitations and adapt it to your specific situation. By considering factors such as withdrawal adjustments, diversification, dynamic adjustments, and guardrails for withdrawals, you can enhance your financial outlook and ensure a secure and fulfilling retirement.
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⏱ Timestamps ⏱
0:00 Intro
1:07 Overview
2:11 Important things to note
3:43 What’s the highest we can take?
4:29 More things to note
6:11 Example 1
7:30 2 Takeaways
8:49 Example 2
9:57 Understand this
11:01 Outro
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Move to Slab City in CA and you can make the social register. Actually you should follow the 04% rule even when you have exhausted your retirement savings. 04% of zero is zero.
Timing is everything.
Great video again! Always clear and understandable but also you raise up questions and issues others don’t address! Keep them coming!
Really appreciate the in-depth video. 4% is the starting point.
Excellent technical explanation. I'm 56 and a federal government accountant retiring in December on a $57K pension. Because of your videos and other research I determined that can safely withdraw about 9% from my TSP (401k) until I'm 67 when I start to draw social security then simultaneously reduce my withdrawals to 5% based on my 401k balance. Also great videos on converting taxed deferred 401k to roth ira. Keep making great videos.
Back testing that what does a 1966 or year 2000 outcome look like
@@johngill2853 I have not back tested the outcome as I will perform yearly conversions to a roth ira starting this year until my 401k balance down to about $400k.
Always solid. Thank you.
Most don't realize just how robotic the math for the 4% rule is. It was done that way for simplicity, since the Trinity study had to keep things simple because so much data was being analyzed and they didnt have the computer tools we have today. The reality is that by having more money in stocks, taking out smaller withdrawals throughout the year and being flexible with our spending depending on market conditions only increases the success rate of the rule. The 4% rule also doesnt take into account that most people end up making money after retirement, people tend to spend less as they age and nobody spends the exact same amount of money every year adjusted for inflation. Long story short, the 4% rule is extremely conservative and if you follow it you will likely leave a TON of money behind for your heirs.
...who shouldn't need it, if they're saving now.
Thank you for this clarity. I appreciate it.
Glad it was helpful!
Im currently living off my dividends that my portfolio generates each year. I dont have any intentions of selling my positions unless I need a hugh amount of capital. Otherwise, I don't sell the chicken that lays the eggs. I keep eating the eggs.
I agree. If my dividends pay 4% I would never touch the balance.
This is a good clip. If I might add that we apply the minimum 4% rules as most follow, with the current high interests rate, should we invest a good portion of our nest egg, 30-50% in tax free muni bond with 4%+ returns which isn't too far fetch. With this thinking (may be I'm missing something), you will at least have a good chunk (30-50%)of your principal at the end, or cash small chunk out along the way? I understand the bond price may fluctuate, but the value shouldn't be too far below from the par. While you have the rest (70-50%) in whatever kind of investment as from the traditional method. What would be the flaw here?
James, I have truly appreciated all your advice that you offer in your videos, incredibly helpful and educational. However, today I can't stop staring at those BIG GUNS! ROFL.
😂 glad you like the advice!
too much wack-a-doodle if you ask me, just saying
Great explanation of the 4% Rule James. It seems simple enough as a guideline, but it's a lot more complicated once you look into it.
Agreed! Glad it was helpful.
Another banger video, James. One of the best explanations of the Bengen research I’ve seen. Not sure if you’ve done this already, but I’d love to see how the actual drawdown process works-how frequent is optimal? How does one decide which securities to sell, etc.? Thanks for sharing your insights!
Are RMD's greater or less than 4%. How do you know where to take 4% from? From the accounts that are doing great?
Great video don't forget your cash buffer
Cash buffer is important. Thanks for watching.
The problem with telling people there is something better than the 4% rule is that there is no 4% rule. It was a study on historical safe withdrawals from a portfolio. This information wasn't available before the study.
Yes these rules are based on back tested data. The problem is nothing can be guaranteed going forward so you need something to base your withdrawal on but then understand that I needs to be monitored going forward.
I take 4% on a monthly basis. What I've learned is that I seldom if ever end up spending that percentage. Much of it stacks-up in a crappy earning savings account. You should do a segment on what to do if you are not spending your scheduled takeout. Should you reduce your %? Should you reinvest it in something else? Go ham and just spend it? Some of it I put into Robinhood and do some impulse stocks on my own.
The first thing I think of is spending more if that would increase your quality of life. If not then it wouldn’t hurt to decrease your withdrawal rate.
that crappy online svgs acct is paying 4.5-5% interest. LOL
30 years is a long time frame. The average 65 year old is only going to make it to 85ish.
Hi James and fellow followers, can someone share a formula or talk about "using up all the portfolio as much as possible" for singles or those who do not wish to leave anything behind for anyone :) I know it's tough to predict how long we will need the portfolio, but the 4% rule and ALL other retirement strategies are all "too safe" and aim for protecting the portfolio and leaving a lump sum for someone else. Appreciate it ~ THANKS ~
Theres not really a formula since we don't know how long we will live or what the markets will do in the future. I would suggest that you do more of a dynamic withdrawal rate, where you steadily increase the withdrawals as you age.
James there is no video to click at the end!
If you can get $50k/yr in retirement you're doing as good as the average worker. Anything income beyond that just helps you sleep better not spending it
Interesting statistics! I wish that your audio only YT video's were saved for download to listen to elsewhere such as in the car driving. I don't know many people who want to watch a still image to listen to what is likely very good content! No offence.
He didn’t account for fees though?
What would the safe withdrawal rate be if the retirement time frame was 20 years instead of 30 years? Assume you are retiring at 70 and living to 90.
Most rich people stay rich by spending like the poor and investing without stopping then most poor stay poor by spending like the rich yet Not investing like the rich but impressing them
There is no link to the video outlining your rules when the popup happens. Good video otherwise :)
Thanks for letting me know! It should be there now.