How Much Can I Safely Spend in Retirement?

Ready For Retirement

James Conole, CFP®

Investment Planning, Bonds, Education, Stocks, Cash, Business, Dividend Investing, Retirement Planning, Retirement, Investing, Tax Planning

5 • 706 Ratings

🗓️ 6 October 2020

⏱️ 24 minutes

🔗️ Recording | iTunes | RSS

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Summary

Our topic on this episode of the Ready for Retirement podcast is the question “How much can I spend in retirement?” Most people are concerned that they won’t have enough money and they worry that they will outlive their money, but James outlines the traditional and newer thought processes on withdrawals amounts during this episode. While the traditional rule of thumb has been to withdraw 4% of your portfolio amount in the first year and then increase your withdrawals every year based on...

Transcript

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0:00.0	Discover the tips and strategies that will help you achieve your retirement goals.
0:09.3	I'm your host, James Canole, and this is the podcast dedicated to helping you retire well.
0:14.6	It all starts right here on Ready for Retirement. for retirement.
0:28.9	Hi, everyone, and welcome back to another episode of Ready for Retirement.
0:30.2	I'm your host, James Cannell.
0:34.7	And today on the podcast, we have a topic that's probably commonly listed as people's number one concern going into retirement.
0:37.3	And that's, am I going to And that's am I going to be
0:38.7	okay? Am I going to be okay? Meaning am I going to have enough income to last me for the rest of my life?
0:44.1	If I'm going to retire and potentially have a two to three decade long retirement, I know I need
0:48.2	my assets and my income to last for potentially a very long time. And as we look at this,
0:52.9	you're going to have different things in retirement. You're going to have some things like social security or a pension. Where they come in one
0:57.9	month, you spend it and you have the same exact paycheck the next. So it doesn't necessarily have to be
1:03.1	managed or even rental income or other income sources like that. Where you receive income,
1:07.1	you spend it, and you can count on there being a check the next month. Your portfolio is a
1:11.7	different story. You can take a number from your portfolio, or you can take an amount from your
1:15.8	portfolio, but you need to be careful with how much you take, especially in those first few years
1:19.5	of retirement, because if you take too much upfront, that portfolio may not have enough
1:24.4	longevity in it to sustain you all the way throughout retirement.
1:31.1	So the question is, and what we're going to be exploring today is what is that sustainable spending amount? How much can you safely take from your portfolio to both meet living
1:35.2	expenses today, but also be mindful of living expenses in the future? Living expenses will actually
1:40.4	be higher as inflation continues to go up. So historically, most people probably know the rule of thumb is about a 4% withdrawal rate.
1:48.4	This was made popular from a study done by a guy named William Bagan, who's an MIT graduate
	...

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