AVOID THESE 3 RETIREMENT WITHDRAWAL STRATEGY MISTAKES

foreign [Music] with an engineer and his spouse and they're getting ready to retire and their main question it could be boiled down to what do we need to know so that we don't make any mistakes we want to make sure that our portfolio lasts as long as we do and so I want to talk about that today because I'm sure that you have the same concerns as you plan for your retirement now you have to always start with the basics you have to know what your cash flow needs are going to be what do you plan to spend in retirement what income do you have that's going to come in from Social Security pensions other sources of income and what is that Gap that you need to cover with your assets what assets do you have that can create some income to cover that Gap and which asset should you use first second or third so when putting all of that together there are three things that I want to talk about that you want to avoid so that you don't make mistakes number one do not rely on the safe withdrawal rate now the safe withdrawal rate can be called the four percent rule and that came out of some analysis and research that was done in the 1960s and the research showed that if somebody had a portfolio that was 60 percent stocks and forty percent bonds that over the previous 30 years if they had taken four percent they would not have run out of money and it would have lasted a minimum of 30 years now we're in a different time period now we're in a different economic period but on top of that you may not want that exact level of risk in your portfolio you may not want the kind of bonds that they included in that portfolio you may want to be more conservative you may want to be more aggressive you may not want any Bonds in your portfolio I do have some clients that don't really want Bonds in their portfolio and so you've got to think about your personal situation and what is your safe withdrawal rate number two you want to think about your withdrawal strategy now traditionally we've said to defer taxes as long as possible and so the traditional withdrawal strategy that flowed out of that was to continue to defer taxes when you hit retirement and just wait until you got to required minimum distribution age before you started taking any money out of those tax deferred accounts what we know now is that that is not good advice you need to start taking some money out of those tax deferred accounts every year to fill up those low tax brackets so that you can get money out of those tax deferred Accounts at the lowest tax rates possible over your lifetime because that will save you significant tax over all of the years of your retirement and so you've got to develop your own personal withdrawal strategy you won't be taking the same amount out of your tax deferred each and every year it's going to be based on your income for that year your your cash flow for that year and what your brackets are for that year and so you want to develop that strategy and monitor it each and every year to ensure that you're paying the least amount in taxes over over retirement and then number three you don't want to rely on a set it and forget it portfolio you want to set up your portfolio to match your spending plan you know a 60 40 set it and forget it portfolio which is what the research was based on may not do what you needed to do we saw last year that stocks and bonds were both down significantly and we know from research that if someone retires and they have a 20 loss in that first year that it can cut a decade off of their portfolio longevity and you don't want that to happen to you so the way to avoid that and the way to protect your retirement portfolio and your retirement income is to design a portfolio that uses a bucket strategy where you are creating the specific income that you need setting aside the specific buckets of money to support the earlier spending so that when you need to spend that money it's there it's safe it's secure and then beyond that investing in Risk assets stocks and bonds that are for the long term that will then have that growth that you need to keep up with inflation over time but you know that you're not going to need those assets for at least 10 years and so they're going to be able to rebound from any of these Market fluctuations that we have so that in a nutshell are the things to think about don't rely on the safe withdrawal rate don't rely on the traditional withdrawal strategy and don't rely on a 60 40 set it and forget it portfolio you need a personalized plan a personalized withdrawal rate of personalized withdrawal strategy and a personalized retirement portfolio and when you do that your retirement plan will support your retirement very well so that it lasts longer than you do now if you found that helpful I did talk about this in even more detail on a recent podcast and so you can find that on Apple Spotify Google any of the popular podcast platforms and then you can also go to my website www.bestpathadvisors.com there's a link to the podcast on the website there's also links to a lot of helpful checklists that are totally free for you to download that you can use in your planning and with that I hope you found this helpful I am here to help you be on your best path for retirement foreign

Channel: Best Path Advisors

Views: 12,728

Keywords:

Id: luE24mPGUD4

Length: 6min 42sec (402 seconds)

Published: Sun Jun 25 2023