Questions answered: Is it likely that you will outlive your money in retirement? What should you consider when planning your retirement expenses? How can you ensure you don’t run out of money?
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Key Takeaways:
- Based on past studies, with a 4% withdrawal rate, it would be unlikely that you would run out of money in retirement.
- The 4% rule is based on worst-case scenario.
- How can you maximize the certainty of being okay?
- Understand your true expenses.
- A small increase in retirement expenses can drastically impact your withdrawal rate.
- Run some what-if scenarios.
- Have a withdrawal strategy that’s tied to your investment strategy.
- This mitigates your chances of running out of money and maximizes what you can do with your money.
- Have contingency plans.
- You have to look at what happens if life doesn’t go as planned.
- These could look like insurance policies,
- Understand your true expenses.
- Taxes.
- Taxes can be a big-expense item, but doesn’t typically result in you running out of money.
- It’s an expense that lessens or goes away as your portfolio balance declines.
Episode Timeline:
[02:13] Looking at a study.
[09:43] Get an accurate sense of your retirement expenses.
[14:16] Have a withdrawal strategy that’s tied to your investment strategy.
[18:21] Have contingency plans.
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