Instead of letting your lifespan, an unknowable, influence your withdraw rate, we might also consider a novel approach where you let your portfolio depletion event inform your end-of-life timing. This eliminates all risks and is a favorable strategy.
For a person who has their kids moved out (if they had them) and house paid off, which I'd hope someone would if they were looking at retiring, that seems pretty doable. Depends on where you live too, and definitely wouldn't be luxurious in most places, but doable in most places I'd assume.
I plan on using financial guardrails which adjust spending based on market returns along with having a cash buffer for down years. Couple that with a well diversified portfolio including value, blend, growth, reits and bonds and a 4-5% withdrawal rate for 40 years is doable. Then throw some part time work in and you are golden. Many different models show this is possible. Of course we cannot predict the future but don’t be afraid to spend money in retirement. Much more than 2.7%
No gold? I know it seems like a waste but it actually helps a lot in bringing up withdrawal rates by smoothing out the volatility of a portfolio and reducing drawdowns. Read up on PortfolioCharts "Three Secret Ingredients of the Most Efficient Portfolios"
Retire in a State with no income tax, property tax breaks for seniors, and great homestead protections for your house. Get a reverse mortgage, pay off the initial fees down to $150 on your line of credit. Pay the mortgage insurance and interest every year in full. Let your line of credit grow. Tap into it when needed in case of market downturns. Let your investments grow. Keep expenses down and reasonable. Gold is also good insurance and fun to hold. That’s my plan.
The two papers mentioned in the video, but not listed in the video description: Choi, James J. "Popular personal financial advice versus the professors." Journal of Economic Perspectives 36.4 (2022): 167-192. David Blanchett, C. F. P. "Exploring the retirement consumption puzzle." Journal of Financial Planning 27.5 (2014): 34.
I believe the retirement crisis will get even worse. Many struggle to save due to low wages, rising prices, and exorbitant rents. With homeownership becoming unattainable for middle-class Americans, they may not have a home to rely on for retirement either.
Consider buying stocks when the economy is not doing well, like during a recession. It could be a chance to buy them at a lower price and sell later when prices go up. Just keep in mind, this isn't financial advice, but sometimes it's better than keeping a lot of cash.
I’m closing in on retirement, too, and I have benefitted so much from using a financial advisor. I didn’t start early, so I knew the compound interest of index fund investing would not work for me. Funny how I pulled in more profit than some of my peers who had been investing for many years.
Annette Christine Conte is the licensed advisor I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
Thanks for sharing. I curiously searched for her full name and her website popped up immediately. I looked through her credentials and did my due diligence before contacting her.
Hi Ben, I just wanted to say that your videos are outstanding and you deserve more recognition. Your videos made a huge difference in my view on investing and I sincerely want to thank you for providing all this information. Wishing you the best!
This is a good example as to why rules in finance need to be analyzed, and considered in the present time, rather than blindly followed. Thank you Ben for your thorough analysis
For me, I believe retirees who struggle to meet their basic needs are the ones who could not accumulate enough money during their active years to meet their needs. Retirement choices determine a lot of things. My wife and I both spent same number of years in the civil service, she invested through a wealth manager and myself through the 401k. We both still earning after our retirement.........
This is true. I'm in my mid 50's now. My wife and I were following this same trajectory. Last two years, I pulled out my money and invested with her wealth manager. Not catching up with her profits over the years, but at least I earn more. I'm making money even before retiring, and my retirement fund has grown way more than it would have with just the 401(k). Haha.
@@LarryAnthony-ut8ok44Yup, just check your returns each year, 401k market index vs SP500. The returns of the 401k has been consistently 2-3% less than the market gains. Rollover your 401Ks as soon as you switch job. Someone is pocketing the gains for sure.
I think this is what Paul Merriman teaches, right? In bull years you could pull more, and in bear years you spend less and hunker down. Sounds good in theory, but I just wonder how many folks have the proper financial situation to be able to under spend in those down years.
@@builtbywalsh Good point. Take this year for example, markets are down but CPI is way up. I don't think most people would succeed in reducing spending this year by much.
Rebalancing portfolio based on asset allocation (say 60:40) shall achieve this automatically. Plus we only make equity withdraw to fund debt and debt withdraw to fund life.
Exactly! Ben spoke multiple times about the variable spending and it really seems like a smart thing to do. Too bad there is no video about it, I'd love to find out more. What I'm especially curious about is how it affects failure rate and how much less capital does one need comparing to constant spending.
Ben, I cannot thank you enough for the value your channel provides. My favorites videos are 'picking stocks' and 'bear markets'. Remind me of how I used not to unserstand the absolute basics :) You most probably saved my retirement, and definitely saved the present me a lot of doubts and time. Greetings from Poland, Merry Christmas!
Do what everybody else is doing if you are okay with only having what everybody else has.Information that will pay you everyday, you've got to stop saving all your money. Venture into investing some, if you really want financial stability. Choose to grow and elevate your mind by studying audios, videos, attending conferences that will give you the edge!
The assumptions on age are wrong for the elderly! I agree on the need to consider a slightly lower withdrawal rate to make it 30 years. BUT, he minimizes the fact that he is talking ONLY about the portfolio. There are other sources of income outside the portfolio primarily Social Security and hard assets such as your home. Planning for the 95th percentile of longevity is folly. 65 plus 30 is 95! For older folks be aware that life expectancy has been declining not increasing. I don’t know anybody that is 95 years old. When I was working in geriatrics till last year, meeting a 100 year old was as frequent as meeting a celebrity. I know lots of people in my circle dead by 75 and 80. How many homeless people do you know who are 90? They don’t exist. The reality is that for almost all couples one person will be dead by 85 which is a 20 year horizon, then spending drops a lot due to age and being single. Sure healthcare can rise at the end of life, but it does not need to be self funded, so it is often not relevant, in fact those without a surviving portfolio will receive care for “free” while those with a portfolio will be asked to self fund!. Most seniors live on only Social Security when they are old, so any portfolio balance is nice, but not necessary when very old. I’m not advocating for not having savings, just for keeping it real and not scaring people so that they die with large portfolios because they were too afraid to enjoy their money while they were alive! You don’t need a 100% chance of success. 80% is probably fine for most.
I just watched my first episode of the Rational Reminder podcast the other day and it made me want to watch several more immediately after. Thanks for putting out all this good RUclips content!
I love to get my dreams shattered. Nothing better than a good dose of reality check to finish off the day. Jokes aside, I really appreciate this. With the FIRE movement on fire these days (no pun intended) I hope this video gets the recognition you have been deserving for so many years. Nice hair!
Every time I see a "successful" story of someone doing FIRE it's someone who had a really well paying job (something barely anyone can achieve) and later severly cut down expenses to a degree that's sometimes below middle class. I'm not sure what the point of struggling through life is just so you're "independant"
@@tomlxyz Define "really well paying". Something like a third of American households bring in six figures and a quarter of individuals do. I think most people believe a six figure income amounts to being pretty well paid.
@@tomlxyz of course not everyone can achieve retirement by 45 or something crazy. But the core aspects of the FIRE movement (be responsible, live frugally, save aggressively so you can spend less time working) can apply to a lot, if not the majority of working Americans.
As a soon retiree, keeping my 401k on course is my top priority. I have been reading of investors making up to 250k ROI in this current crashing market, any recommendations to scale up my ROI before retirement will be highly appreciated.
The current market might give opportunities to maximize profit within the short term but to execute such a strategy, you must be a skilled practitioner or be working with one.
@@NebiheVergara Inflation is gradually going to become part of us and due to that fact, any money you keep in cash or a low-interest account declines in value each year. Investing is the only way to make your money grow. Unless you have an exceptionally high income, investing is the only way most people will have enough money to retire.
@@TimothysScotts I'm interested in investing through an analyst. It sounds like the most sensible thing to do in the market. Could you please give me a pointer about who you work with?
@@DarnellsStevenses The beauty of MARGARET MOLLI ALVEY approach is her dual focus: while aggressively pursuing profit opportunities, she's equally tenacious about shielding investors from potential pitfalls. It's a balance few can achieve.
great video. flexibility is key. if youre pulling out 4-5% per year while the market is crashing then youre going to have problems. adjust spending in down markets, or go back to work.
These videos are high quality with many research data supported, which requiring a lot of time to prepare and to produce. It is one of the best learning sources for DIY investors, as the channel names it, Common Sense! Thank you
The problem with this is it only accounts for the success rate of the retirement spending plan and doesn't allow for flexibility in the withdrawal rate. If you have a paid for house and no consumer debt, you can live on relatively little. If markets are down, you scale back your lifestyle and draw from cash savings. When markets are back up you replenish these savings. This allows for a higher average withdrawal rate because you cut back on it when necessary, and are not needing to service a mortgage, car payments or consumer debt.
I listened to your whole rational reminder episode on this topic and really appreciate how you make these videos accessible so I can flip them to people who can't go down the rabbit hole. Am in Ottawa as well and will refer folks to PWL as long as you're there. Keep up the great work
Thank you. Just what I needed to watch. My hubby and I are directors of our farm business and own property, plus small pensions. I am nearly 62, hubby is 65. We have started to save to retire from the farm, and possibly live on rental income, I'd really appreciate you go LIVE and talk about how to earn passive income online and retire comfortably, let’s say $1M consider financial planning. It really isn’t about how much you save, it’s about how you manage your money. Whether you work to earn income or invest, it still boils down to income vs expenses, so yeah you may look into financial advisors for a strategy that suits your timing
Love our Canadian farmers! Thank you. Not easy. Agree not what you earn it’s what you keep. Wealth is also about good health. It can cost a lot as you get over 65 yo incl Canada (search longterm care costs) and w/o it you can’t enjoy life nor can those who love you and worry. Best of luck.
I am in my early 60s and retired at 53. Lots of people gave me pushback because they had difficulty grasping the concept of not working if you don’t have to. I looked at my life as stages. I earned everything I have now through a lot of hard work, but I owe it to myself to “stop and smell the roses” in my final stage of life. In my case I left the country after I retired and live in Latin America. It allowed me to get away from all the negative things happening in America while appreciating my new environment. I have yet to meet anyone who regrets retirement.
Nice way to retire. For me, I believe retirees who struggle to meet their basic needs are the ones who could not accumulate enough money during their active years to meet their needs. Retirement choices determine a lot of things. My wife and I both spent same number of years in the civil service, she invested through a wealth manager and myself through the 401k. We both still earning after our retirement.
It's unfortunate most people don't have such information. I don't really blame people who panic. Lack of information can be a big hurdle. I've been making more than $750k by just investing through an advisor, and I don't have to do much work. Doesn't matter if the economy is misbehaving; great wealth managers will always make returns.
I think this is something I should do, but I've been stalling for a long time now. I don't really know which firm to work with; I feel they are all the same but it seems you’ve got it all worked out with the firm you work with so i surely wouldn’t mind a recommendation.
I definitely share your sentiment about these firms. Finding financial advisors like ‘Iynne Marie Stella‘ who can assist you on things like investing, insurance, making sure retirement is well funded, going over tax benefits, ways to have a volatility buffer for investment risk would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
Marie has the appearance of being a great authority in her profession. I looked her up online and found her website, which I reviewed and went through to learn more about her credentials, academic background, and employment. She has a fiduciary duty to protect my best interests. I sent her an email outlining my objectives and also booked a session with her; thanks for sharing.
Retirement is now more difficult than it was in the past. I've been saving for a long time instead of investing, and right now I only have about $400K. considering all the inflation, i'm thinking of investing in stocks, i dont just have idea on market strategieS.
At a point like this, when the pressure is already on you to retire, its best recommended you seek the services of an advisor, as this allows you make smarter investing decisions.
It's unfortunate most people don't have such information. I don't really blame people who panic. Lack of information can be a big hurdle. I've been making more than $30k passively by just investing through an advisor, and I don't have to do much work. Doesn't matter if the economy is misbehaving; great wealth managers will always make returns.
At the moment here in the UK, Legal & General are offering a 6% annuity for 65yrs or older. Of course I do realise there are other factors that may make someone want to do a drawdown. But a 6% annuity sounds like a very good deal to me and you won't need to worry about investments, or stock markets anymore, sleep soundly
Product allocation is important to consider alongside asset allocation, for sure. You usually give up the possibility of leaving an estate when you buy an annuity, but it may be worth it for the security against longevity risk. Having a guaranteed lifetime income may also have psychological benefits, and having that income locked up in an insurance plan that is hard to exit is also, counterintuitively, a benefit because it forces you to slow down and think. You can panic sell an ETF. You can't so easily panic sell an insurance product.
In this case, I see many advantages of having a high dividend ETF (distributing). Every year you get whatever the distribution is while the principal remains always untouched.
There are risk mitigation strategies here, such as dynamic withdrawal rates and getting additional income. We also don't mention other asset classes and leverage. For early retirement you do potentially have the option of delaying/going back into work if there is an adverse event.
I’d rather not live in a state of fear of a dire scenario. 5-6% withdraw rate on mostly equities is fine. And if it isn’t, adjust your spending for a year or two or get a temp part time job. That sounds like a better option that working fulltime for an extra 10 years or whatever to save for a 2.7% withdraw rate.
If a greater than 20% chance of going broke is your idea of "fine." Sure. Working 10 more years doesn't have to be the change, a more frugal lifestyle in retirement may also allow one to drop to a 2.7% withdrawal rate, or as you said, adding a part time job, etc.
@@zvxcvxcz markets up 25% 2023! I'm ok with a 20% chance of failure as its 80% likely to succeed! And if it gets ugly for several years I'll juts go to work for a 6 months. That sounds better to me than working fulltime to a 2.7 WR
So weird to see you with so much hair😄! Great stuff though. love your channel and your takes are some of the takes I currently hold in the highest esteem on financial matters. Keep it up, please!
Ben thank you for the informative video, I'd love to hear more on variable spending rules, I know you mentioned them during past videos but a deep dive would be great
Please analyse the risk of dementia, which shortens life but increases expenses dramatically. Is it a reason to avoid annuities or pensions and instead keep assets more accessible?
Mister Felix, what did they use for bonds? Just a total US bond market? I'm curious if you ever want to do a video on different bonds strategies for investing for retirement like global bonds or tips!
I can't help but think these retirement calculations are completely backwards, especially the aspect of putting a specific age for retirement for everybody. To me, you should work less and less as you save more and more, with no specific date for retirement, the specific date being whenever you're ready given the circumstances of your life. Don't ask me to be more specific, because it's very hazy in my mind, but I don't think this philosophy of "retire at 65 and withdraw x% every year" is what people should strive for.
Factoring japan into investment decisions always strikes me as sanitizing expectations a bit too much. When the PE ratios were like in the 60's, yeah that's gonna take a good few decades to straighten out. And the chances of the U.S. being invaded is so much lower than a lot of other countries east of it. I think that's a solid reason why the US stock market has performed so well.
In my opinion, there is another major factor that decreases the safe withdrawal rate. By definition, the probability of retiring increases with the asset price and, consequently, is at its highest just at the top of the bubbles. Computing statistics looking at at historical data starting on a sample of equally weighted years ignores the inherent bias of asset prices on retirement probability, thus increasing the estimated safe withdrawal rate.
Wow.... that's a lot of analysis. I think the last few minutes bring some greater clarity. I'm not sure what inference can be drawn from data from 1890.......although I agree that future expectations should be based on past data.
Would be interesting to do more of pwr as it takes out the question of when to retire. Then also compare to practice at endowments. This is much more relevant to people that have higher absolute spending and can easily adjust annual spending by just reducing eg travel. Then also compare to buying direct inflation-adjusted annuities in the market. Thanks
I decided early on withdrawal rate investing for retirement wasn’t going to work for me exclusively. I started investing in my forties shortly before I became a U.S. federal government employee. I get a pension and have a 401k. To supplement meant that, I have invested with the goal of living off dividends. Also, a few other investments.
Great video, as usual. I do find the inclusion of the Cuban Missile Crisis a bit bizarre, however. If things had gone wrong, it wouldn't have just been a catastrophic outcome like the other example you used, but the whole world would have been destroyed. So, it's not like you would gain anything from not taking on the risk. Either your assets appreciate in value if the crisis is averted or you and everyone else is dead anyway. Asset allocation choices don't matter when it comes to the end of the world.
I always enjoy these objective analyses. I'm glad you mentioned SWR is theoretical and probably irrelevant to most people. In the real world, let's face it - the vast majority of people don't save remotely "enough" by any measure - and yet are somehow fine.
@@NickVetter Yes, there’s a great sample bias here with a self selected group of financially literate people. I guess more than 90% of us will retire comfortably.
Does the 2.7% include "dividends". I.e if im in vt or s and p 500. And get the 2-3% annual dividend should that be included in the 2.7% safe withdrawl rate or no. It was confusing thanks
Sounds like an investment company trying to keep large amounts of money under management. For early retirees yes a lower rate makes sense. However retiring at 67 means you can pull out that amount for 25 years. Yes you still need to make enough to cover inflation. Hmm I wonder if treasury tips would do that.
I wonder about the potential of a 100% stock portfolio from which the retiree has a flexible withdrawal policy to contend with volatility. Surely the returns would be better with 100% stocks if one could avoid the disproportionately destructive effect of withdrawal during periods of low stock prices.
Actually it works just fine as long as you don't fall prey to sequence of return risk during early retirement AND you can stomach it when you're portfolio drops 40% or more and stick with it.
I have been lucky in that I live in Japan and the Yen has been dropping like a rock against the US Dollar. Thanks to that, I am withdrawing at the annual rate of 2.3%. I am also delaying taking my social security. If worse comes to worst, I'm hoping social security will still be around to make up any shortfall.
Bringing up the world wars and cuban missile crisis to say the outperformance of US stocks was luck is a baseless argument. Even now, the US stock market consistently outperforms other markets. Feel free to compare the MSCI ACWI ex U.S. index to the performance of the S&P 500. I ran the backtest on the ETFs based on the indices which goes back to April 2008 (before the crash). The average annual return of the international ETF was 1.95% vs 10.12% for the USA ETF. That is so outlandishly different, it's ridiculous. Not only were the returns lower, but the volatility (standard deviation) and largest crash (maximum drawdown) were higher. You love to advocate for value and small-cap stocks because of their historical outperformance and yet, value stocks and small-cap stocks have yielded lower return for some time now. Why is that not a historical fluke? US stocks are still leading the way. Additionally, a market-cap weighted ETF for developed countries' returns would barely be different from a USA only counterpart since the vast majority of all the large companies in the developed world are American. The 17th largest company in the world is the largest company from a developed country that isn't the USA, Louis Vuitton. Lastly, your idea is dumb because the US is the dominant force in the world. Whenever the US economy takes a dives, the whole world takes a dive. Some countries get hit even harder than the US even if the crash was caused primarily due to a problem limited to the US (*cough cough* 2008). On the other hand, when a random country takes a dive, the US doesn't. The 2nd largest economy in the world, China, is almost back to the lowest point it was at after 2008. No developed country is as much of a force as the US. The US is the centre of innovation of the world. There are zero to only a couple of solid companies each in other countries, depending on the country, that you should consider investing in.
I lost my job 2020 (apparently COVID) at the age of 52, leaving me with X2 pensions of 30k and a mortgage of 80k. I have radically changed career and become a delivery driver with no employer pension, also asked some folks if I can perhaps put together my pensions but was told it wasn't worth it.. I know this is a pretty low amount, but what are my options?
Bengen's 4% rule included WORST case scenarios. That included the market crash of 1929 and the crazy inflation and flat market of 1968-1980. I know, I know, past perforrmance is no guarantee of future success, but reality is the vast majority of retirees aren't going to make it 30 years. A couple years back Bengen changed the safe withdrawal rate to 4.8%
He also doesn't acknowledge that the average lifespan of a couple doesn't mean both will live 25 ish years, it means one will. So if I retire at 65 and my wife is 65, odds are one will live to 90, but the odds of both are low. When one goes into the solo years, they will spend less.
@@knep24 Spend less? Not by much, generally speaking, because most of the big expenses don’t depend on the number of people. That’s why couples have a much higher standard of living than they could have separately, quite apart from the vastly more favorable tax treatment you get now if you’re married (which is why retirement tax videos always give numbers for married filing jointly instead of single, they’re just that much more impressive).
I found the thinking interesting about why older data is surprisingly just as useful given modern technology, but maybe could be simplified to the musing that technology doesn't make any given investment more valuable than any other since all investors are basically competing with the same edge (better information). e.g. Biff's future stock price book was only useful in the past - if everyone'd had it, then not so much
The study has some practical issues because it ran Simulations in all developed contry Stock Markets. So all WW2 defeted counties had withrawal rates of as Low as 0.2%. Forcan international Portfolio the rate was 3.5%
I will retire six weeks from now at 63.5 yo. I need to purchase COBRA for 1.5 years that will cost $1550/mo for me and wife. I am fortunate to have a pension that will cover all of my base expenses for now (it is not inflation indexed). I plan to turn on SS just before 67 yo. The Baby Boom generation is very lucky to have both a 401K and a pension. My parents did not have a 401K. The new generation does not have a pension. My 401K is available to spend at will and can postpone withdraws if the market conditions are not good. My father just turned 100 yo so I need to plan for the worst case and assuming a 40 year retirement.
But the baby boomers didn't have the Roth IRA until the end of their career. Current working individuals have all sorts of investment options i.e. Roth/Traditional/Sep IRA, 401k, HSA. Pensions are awesome however there are still some great options out there.
Yes indeedy. The new VPLA (Variable Payment Life Annuity) tontine based annuities look all the more attractive too. GuardPath funds range from 6.5 - 8% and Longevity Pension fund is around there as well. We're going to have to harvest longevity credits from others in order to retire.
Although I understand your reasoning of past performance doesn’t indicate future performance, I will not invest in any other countries simply because they are not as developed and stable, also I will not invest in bonds. I don’t get how their studies don’t indicate a higher withdrawal rate for 100% stock allocation. Well expected returns, but actual returns from stocks are much higher.
What about new "disruptors" like cryptos and the meme stocks like what gamestop did which surprised even wallstreet...those were non-existent in the "old" data?
At 2:33, I don't see how this explanation explains anything. The World Wars and Cuban missile crisis happened a long time ago now, and investors are (I hope) fully aware that these things happened. Shouldn't this just be priced into US stocks? Maybe in like the 50's and 60's there would be new information about the effects of these events entering the market, but still now? Not to mention that e.g. India and Pakistan have also thus far avoided nuclear war with each other despite border disputes/skirmishes. Why don't their stock markets overperform in recognition of that? Is there any analysis actually comparing stock market performance with countries' experiences with WW2?
![I.N "HALLUCINATION" | [Stray Kids : SKZ-PLAYER]](http://i.ytimg.com/vi/n5B5q1Hwt_U/mqdefault.jpg)
Instead of letting your lifespan, an unknowable, influence your withdraw rate, we might also consider a novel approach where you let your portfolio depletion event inform your end-of-life timing. This eliminates all risks and is a favorable strategy.
Love this! 😂
@cat..
So when you run out of money you just commit suicide!
Yes. Just spend your retirement as you did your life! Make money decisions based on what you have, how much you've been spending and what's coming in.
Ah, it appears I have found my GF's yt acc
Ah, it appears my retirement account has reached $0! Time to end-of-life event
Thank you Ben for making me fearful of my own longevity risk
I'm immediately taking up smoking to reduce that risk!
@@DavidYoung81 Same... and edibles.
Wait, when you said smoking you meant... nevermind. :P
@@DavidYoung81 McDonald’s would help with that too.
@@Andrew21882 Excellent idea, I'll look into that as well! 😜
Thankfully in Canada you can get euthanasia easily.
Thanks, ive adjusted my calculations and now retire comfortably at 106 👍
But this information makes me angry, so it must be wrong.
As an aspiring Pl. Fin. , your videos and investing philosophy are THE most helpful on RUclips
I just wrote the final exam for that. It was tough. I hope I passed!
@@BenFelixCSI PL.Fin in Quebec ;) congrats to you both
@@vonb2792
Quebec? Congrats! You must be fluent in French w/new language laws.
"Wow, you're a millionaire? You are rich!"
"Yes, I'm off to enjoy my 27k a year"
Great family and support system is what makes you rich
For a person who has their kids moved out (if they had them) and house paid off, which I'd hope someone would if they were looking at retiring, that seems pretty doable. Depends on where you live too, and definitely wouldn't be luxurious in most places, but doable in most places I'd assume.
@Novak D who cares if longevity comes with senility…
@novakd1530 There is always the option to mitigate that risk...
Wouldn't it be a bummer if you snuffed it well before time, just think how much you could have spent. Ah well c'est la vie.
I plan on using financial guardrails which adjust spending based on market returns along with having a cash buffer for down years. Couple that with a well diversified portfolio including value, blend, growth, reits and bonds and a 4-5% withdrawal rate for 40 years is doable. Then throw some part time work in and you are golden. Many different models show this is possible. Of course we cannot predict the future but don’t be afraid to spend money in retirement. Much more than 2.7%
No gold? I know it seems like a waste but it actually helps a lot in bringing up withdrawal rates by smoothing out the volatility of a portfolio and reducing drawdowns. Read up on PortfolioCharts "Three Secret Ingredients of the Most Efficient Portfolios"
Sounds good, barring war and political theft.
Retire in a State with no income tax, property tax breaks for seniors, and great homestead protections for your house. Get a reverse mortgage, pay off the initial fees down to $150 on your line of credit. Pay the mortgage insurance and interest every year in full. Let your line of credit grow. Tap into it when needed in case of market downturns. Let your investments grow. Keep expenses down and reasonable. Gold is also good insurance and fun to hold. That’s my plan.
The two papers mentioned in the video, but not listed in the video description:
Choi, James J. "Popular personal financial advice versus the professors." Journal of Economic Perspectives 36.4 (2022): 167-192.
David Blanchett, C. F. P. "Exploring the retirement consumption puzzle." Journal of Financial Planning 27.5 (2014): 34.
I believe the retirement crisis will get even worse. Many struggle to save due to low wages, rising prices, and exorbitant rents. With homeownership becoming unattainable for middle-class Americans, they may not have a home to rely on for retirement either.
Consider buying stocks when the economy is not doing well, like during a recession. It could be a chance to buy them at a lower price and sell later when prices go up. Just keep in mind, this isn't financial advice, but sometimes it's better than keeping a lot of cash.
I’m closing in on retirement, too, and I have benefitted so much from using a financial advisor. I didn’t start early, so I knew the compound interest of index fund investing would not work for me. Funny how I pulled in more profit than some of my peers who had been investing for many years.
How can I reach this adviser of yours? because I'm seeking for a more effective investment approach on my savings
Annette Christine Conte is the licensed advisor I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment.
Thanks for sharing. I curiously searched for her full name and her website popped up immediately. I looked through her credentials and did my due diligence before contacting her.
Hi Ben, I just wanted to say that your videos are outstanding and you deserve more recognition. Your videos made a huge difference in my view on investing and I sincerely want to thank you for providing all this information. Wishing you the best!
This is a good example as to why rules in finance need to be analyzed, and considered in the present time, rather than blindly followed. Thank you Ben for your thorough analysis
They should be labeled as Guidelines, not Rules.
Agreed. Also always DYOR, critically/ independently and do what’s best and right for you. Be a student not a follower esp a blind one. Cheers
10:30 Love the bullet-riddled bomber pop-up on survivorship bias.
For me, I believe retirees who struggle to meet their basic needs are the ones who could not accumulate enough money during their active years to meet their needs. Retirement choices determine a lot of things. My wife and I both spent same number of years in the civil service, she invested through a wealth manager and myself through the 401k. We both still earning after our retirement.........
This is true. I'm in my mid 50's now. My wife and I were following this same trajectory. Last two years, I pulled out my money and invested with her wealth manager. Not catching up with her profits over the years, but at least I earn more. I'm making money even before retiring, and my retirement fund has grown way more than it would have with just the 401(k). Haha.
SCAM
@@LarryAnthony-ut8ok44Yup, just check your returns each year, 401k market index vs SP500. The returns of the 401k has been consistently 2-3% less than the market gains. Rollover your 401Ks as soon as you switch job. Someone is pocketing the gains for sure.
A video about the superior variable spending rules would be great 😇
That video about intl diversification would be good too.
I think this is what Paul Merriman teaches, right? In bull years you could pull more, and in bear years you spend less and hunker down. Sounds good in theory, but I just wonder how many folks have the proper financial situation to be able to under spend in those down years.
@@builtbywalsh Good point. Take this year for example, markets are down but CPI is way up. I don't think most people would succeed in reducing spending this year by much.
Rebalancing portfolio based on asset allocation (say 60:40) shall achieve this automatically. Plus we only make equity withdraw to fund debt and debt withdraw to fund life.
Exactly! Ben spoke multiple times about the variable spending and it really seems like a smart thing to do. Too bad there is no video about it, I'd love to find out more. What I'm especially curious about is how it affects failure rate and how much less capital does one need comparing to constant spending.
Ben, I cannot thank you enough for the value your channel provides. My favorites videos are 'picking stocks' and 'bear markets'. Remind me of how I used not to unserstand the absolute basics :) You most probably saved my retirement, and definitely saved the present me a lot of doubts and time. Greetings from Poland, Merry Christmas!
Do what everybody else is doing if you are okay with only having what everybody else has.Information that will pay you everyday, you've got to stop saving all your money.
Venture into investing some, if you really want financial stability.
Choose to grow and elevate your mind by studying audios, videos, attending conferences that will give you the edge!
The assumptions on age are wrong for the elderly! I agree on the need to consider a slightly lower withdrawal rate to make it 30 years. BUT, he minimizes the fact that he is talking ONLY about the portfolio. There are other sources of income outside the portfolio primarily Social Security and hard assets such as your home.
Planning for the 95th percentile of longevity is folly. 65 plus 30 is 95! For older folks be aware that life expectancy has been declining not increasing. I don’t know anybody that is 95 years old. When I was working in geriatrics till last year, meeting a 100 year old was as frequent as meeting a celebrity. I know lots of people in my circle dead by 75 and 80. How many homeless people do you know who are 90? They don’t exist.
The reality is that for almost all couples one person will be dead by 85 which is a 20 year horizon, then spending drops a lot due to age and being single. Sure healthcare can rise at the end of life, but it does not need to be self funded, so it is often not relevant, in fact those without a surviving portfolio will receive care for “free” while those with a portfolio will be asked to self fund!. Most seniors live on only Social Security when they are old, so any portfolio balance is nice, but not necessary when very old.
I’m not advocating for not having savings, just for keeping it real and not scaring people so that they die with large portfolios because they were too afraid to enjoy their money while they were alive! You don’t need a 100% chance of success. 80% is probably fine for most.
80% is probably fucked for 20%
NAILED it. Thank you!
How did I just now find out you have a podcast... 200+ episodes for me to catch up on at work. Hell yeah!
I just watched my first episode of the Rational Reminder podcast the other day and it made me want to watch several more immediately after. Thanks for putting out all this good RUclips content!
I love to get my dreams shattered. Nothing better than a good dose of reality check to finish off the day.
Jokes aside, I really appreciate this. With the FIRE movement on fire these days (no pun intended) I hope this video gets the recognition you have been deserving for so many years.
Nice hair!
Every time I see a "successful" story of someone doing FIRE it's someone who had a really well paying job (something barely anyone can achieve) and later severly cut down expenses to a degree that's sometimes below middle class.
I'm not sure what the point of struggling through life is just so you're "independant"
@@tomlxyz Define "really well paying". Something like a third of American households bring in six figures and a quarter of individuals do. I think most people believe a six figure income amounts to being pretty well paid.
@@tomlxyz of course not everyone can achieve retirement by 45 or something crazy. But the core aspects of the FIRE movement (be responsible, live frugally, save aggressively so you can spend less time working) can apply to a lot, if not the majority of working Americans.
is there a Hair Growth ETF - looks promising
As a soon retiree, keeping my 401k on course is my top priority. I have been reading of investors making up to 250k ROI in this current crashing market, any recommendations to scale up my ROI before retirement will be highly appreciated.
The current market might give opportunities to maximize profit within the short term but to execute such a strategy, you must be a skilled practitioner or be working with one.
@@NebiheVergara Inflation is gradually going to become part of us and due to that fact, any money you keep in cash or a low-interest account declines in value each year. Investing is the only way to make your money grow. Unless you have an exceptionally high income, investing is the only way most people will have enough money to retire.
@@TimothysScotts I'm interested in investing through an analyst. It sounds like the most sensible thing to do in the market. Could you please give me a pointer about who you work with?
@@DarnellsStevenses The beauty of MARGARET MOLLI ALVEY approach is her dual focus: while aggressively pursuing profit opportunities, she's equally tenacious about shielding investors from potential pitfalls. It's a balance few can achieve.
@@TimothysScotts Thank you for the lead. I searched for her, and I have sent her an email. I hope she gets back to me soon.
great video. flexibility is key. if youre pulling out 4-5% per year while the market is crashing then youre going to have problems. adjust spending in down markets, or go back to work.
I love the term “longevity risk” :)
These videos are high quality with many research data supported, which requiring a lot of time to prepare and to produce. It is one of the best learning sources for DIY investors, as the channel names it, Common Sense! Thank you
I think if you use some guardrails, your withdrawal rate could be about double that. Use it during the “go-go” years when you can enjoy it!
Always perfect content with more references than we can ever want! One of the few channels one can trust nowadays! Thanks so much Ben 👏
The problem with this is it only accounts for the success rate of the retirement spending plan and doesn't allow for flexibility in the withdrawal rate. If you have a paid for house and no consumer debt, you can live on relatively little. If markets are down, you scale back your lifestyle and draw from cash savings. When markets are back up you replenish these savings. This allows for a higher average withdrawal rate because you cut back on it when necessary, and are not needing to service a mortgage, car payments or consumer debt.
That channel is amazing. Best one by far.
I listened to your whole rational reminder episode on this topic and really appreciate how you make these videos accessible so I can flip them to people who can't go down the rabbit hole. Am in Ottawa as well and will refer folks to PWL as long as you're there. Keep up the great work
Ben.. with hair? I'm shook. 😱 It looks so good though!
Thank you!
That's not Ben. Clearly... That's his evil hairy twin who comes to crush our Safe Withdrawal Rate dreams!
Hair plugs? Surgical?
Just my hair when I stop shaving it!
A video on variable withdrawal rates would be greatly appreciated.
Thank you. Just what I needed to watch. My hubby and I are directors of our farm business and own property, plus small pensions. I am nearly 62, hubby is 65. We have started to save to retire from the farm, and possibly live on rental income, I'd really appreciate you go LIVE and talk about how to earn passive income online and retire comfortably, let’s say $1M consider financial planning.
It really isn’t about how much you save, it’s about how you manage your money. Whether you work to earn income or invest, it still boils down to income vs expenses, so yeah you may look into financial advisors for a strategy that suits your timing
Love our Canadian farmers! Thank you. Not easy. Agree not what you earn it’s what you keep. Wealth is also about good health. It can cost a lot as you get over 65 yo incl Canada (search longterm care costs) and w/o it you can’t enjoy life nor can those who love you and worry. Best of luck.
Holy hair growth 💇💇🙆🙅
6.8% hair growth to keep pace with inflation.
He has since returned to primarily investing in hair value.
@@wcg66😂😂
I am in my early 60s and retired at 53. Lots of people gave me pushback because they had difficulty grasping the concept of not working if you don’t have to. I looked at my life as stages. I earned everything I have now through a lot of hard work, but I owe it to myself to “stop and smell the roses” in my final stage of life. In my case I left the country after I retired and live in Latin America. It allowed me to get away from all the negative things happening in America while appreciating my new environment. I have yet to meet anyone who regrets retirement.
Nice way to retire. For me, I believe retirees who struggle to meet their basic needs are the ones who could not accumulate enough money during their active years to meet their needs. Retirement choices determine a lot of things. My wife and I both spent same number of years in the civil service, she invested through a wealth manager and myself through the 401k. We both still earning after our retirement.
It's unfortunate most people don't have such information. I don't really blame people who panic. Lack of information can be a big hurdle. I've been making more than $750k by just investing through an advisor, and I don't have to do much work. Doesn't matter if the economy is misbehaving; great wealth managers will always make returns.
I think this is something I should do, but I've been stalling for a long time now. I don't really know which firm to work with; I feel they are all the same but it seems you’ve got it all worked out with the firm you work with so i surely wouldn’t mind a recommendation.
I definitely share your sentiment about these firms. Finding financial advisors like ‘Iynne Marie Stella‘ who can assist you on things like investing, insurance, making sure retirement is well funded, going over tax benefits, ways to have a volatility buffer for investment risk would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
Marie has the appearance of being a great authority in her profession. I looked her up online and found her website, which I reviewed and went through to learn more about her credentials, academic background, and employment. She has a fiduciary duty to protect my best interests. I sent her an email outlining my objectives and also booked a session with her; thanks for sharing.
Retirement is now more difficult than it was in the past. I've been saving for a long time instead of investing, and right now I only have about $400K. considering all the inflation, i'm thinking of investing in stocks, i dont just have idea on market strategieS.
At a point like this, when the pressure is already on you to retire, its best recommended you seek the services of an advisor, as this allows you make smarter investing decisions.
It's unfortunate most people don't have such information. I don't really blame people who panic. Lack of information can be a big hurdle. I've been making more than $30k passively by just investing through an advisor, and I don't have to do much work. Doesn't matter if the economy is misbehaving; great wealth managers will always make returns.
Your advisor appears skilled. How can I contact them? I've recently sold property and aim to invest in stocks, seeking guidance.
*Jennifer Leigh Hickman* is the licensed advisor I use. Just search the name. You’d find necessary details to work with to set up an appointment.
Holding those $400K in cash is a mistake. Higher inflation than normal or not. Get an advisor.
At the moment here in the UK, Legal & General are offering a 6% annuity for 65yrs or older. Of course I do realise there are other factors that may make someone want to do a drawdown. But a 6% annuity sounds like a very good deal to me and you won't need to worry about investments, or stock markets anymore, sleep soundly
I bet the most frequent comment down here won't be about personal finance..
As you pointed out in passing, annuities are a solution, or a partial solution, to this problem.
Product allocation is important to consider alongside asset allocation, for sure. You usually give up the possibility of leaving an estate when you buy an annuity, but it may be worth it for the security against longevity risk.
Having a guaranteed lifetime income may also have psychological benefits, and having that income locked up in an insurance plan that is hard to exit is also, counterintuitively, a benefit because it forces you to slow down and think. You can panic sell an ETF. You can't so easily panic sell an insurance product.
In this case, I see many advantages of having a high dividend ETF (distributing). Every year you get whatever the distribution is while the principal remains always untouched.
Not necessarily.
There are risk mitigation strategies here, such as dynamic withdrawal rates and getting additional income. We also don't mention other asset classes and leverage. For early retirement you do potentially have the option of delaying/going back into work if there is an adverse event.
Thank you Ben! We appreciate your channel. Happy holidays sir.
you're such a good presenter! great speaking voice too
I’d rather not live in a state of fear of a dire scenario. 5-6% withdraw rate on mostly equities is fine. And if it isn’t, adjust your spending for a year or two or get a temp part time job. That sounds like a better option that working fulltime for an extra 10 years or whatever to save for a 2.7% withdraw rate.
If a greater than 20% chance of going broke is your idea of "fine." Sure. Working 10 more years doesn't have to be the change, a more frugal lifestyle in retirement may also allow one to drop to a 2.7% withdrawal rate, or as you said, adding a part time job, etc.
@@zvxcvxcz markets up 25% 2023! I'm ok with a 20% chance of failure as its 80% likely to succeed! And if it gets ugly for several years I'll juts go to work for a 6 months. That sounds better to me than working fulltime to a 2.7 WR
So weird to see you with so much hair😄! Great stuff though. love your channel and your takes are some of the takes I currently hold in the highest esteem on financial matters. Keep it up, please!
Thank you for being Canadian and including a Canadian view to your analysis!
"account for the risk of living a long life"
This really spoke to the millennial in me.
Yet another amazing video, Ben!
Ben thank you for the informative video, I'd love to hear more on variable spending rules, I know you mentioned them during past videos but a deep dive would be great
Please analyse the risk of dementia, which shortens life but increases expenses dramatically. Is it a reason to avoid annuities or pensions and instead keep assets more accessible?
Mister Felix, what did they use for bonds? Just a total US bond market? I'm curious if you ever want to do a video on different bonds strategies for investing for retirement like global bonds or tips!
I can't help but think these retirement calculations are completely backwards, especially the aspect of putting a specific age for retirement for everybody. To me, you should work less and less as you save more and more, with no specific date for retirement, the specific date being whenever you're ready given the circumstances of your life. Don't ask me to be more specific, because it's very hazy in my mind, but I don't think this philosophy of "retire at 65 and withdraw x% every year" is what people should strive for.
Why not have a portfolio with yield ( not s and p index with 1.5 yield) and live off cash flow?
Factoring japan into investment decisions always strikes me as sanitizing expectations a bit too much. When the PE ratios were like in the 60's, yeah that's gonna take a good few decades to straighten out.
And the chances of the U.S. being invaded is so much lower than a lot of other countries east of it. I think that's a solid reason why the US stock market has performed so well.
In my opinion, there is another major factor that decreases the safe withdrawal rate.
By definition, the probability of retiring increases with the asset price and, consequently, is at its highest just at the top of the bubbles.
Computing statistics looking at at historical data starting on a sample of equally weighted years ignores the inherent bias of asset prices on retirement probability, thus increasing the estimated safe withdrawal rate.
Always such great research, references, and unbiased info. Your vidoes are extremely informative and I really enjoy the content! Merry Christmas!!!
This wig looks so natural. Where to get one??
Wow.... that's a lot of analysis. I think the last few minutes bring some greater clarity.
I'm not sure what inference can be drawn from data from 1890.......although I agree that future expectations should be based on past data.
Would be interesting to do more of pwr as it takes out the question of when to retire. Then also compare to practice at endowments. This is much more relevant to people that have higher absolute spending and can easily adjust annual spending by just reducing eg travel. Then also compare to buying direct inflation-adjusted annuities in the market. Thanks
I decided early on withdrawal rate investing for retirement wasn’t going to work for me exclusively. I started investing in my forties shortly before I became a U.S. federal government employee. I get a pension and have a 401k. To supplement meant that, I have invested with the goal of living off dividends. Also, a few other investments.
Great video, as usual. I do find the inclusion of the Cuban Missile Crisis a bit bizarre, however. If things had gone wrong, it wouldn't have just been a catastrophic outcome like the other example you used, but the whole world would have been destroyed. So, it's not like you would gain anything from not taking on the risk. Either your assets appreciate in value if the crisis is averted or you and everyone else is dead anyway. Asset allocation choices don't matter when it comes to the end of the world.
you're assuming that if things had gone worse, it would have led to all-out nuclear war, which is just an assumption.
My husband was on the ground there during the Cuban Missile Crises, straight out of Marine Corp Paris Island Boot Camp….
I always enjoy these objective analyses. I'm glad you mentioned SWR is theoretical and probably irrelevant to most people. In the real world, let's face it - the vast majority of people don't save remotely "enough" by any measure - and yet are somehow fine.
Depends upon your definition of fine. Having to work as a greeter at Wal mart when you are 85 isn't my idea of fine.
Ben you're the best. I could pull that trigger right now (and still work pt). I'm scared to though!!
Great video, glad your back!!
Easily one of the most important videos on this channel. Thank you!
2.7% of everyone reading this will actually get to retire.
Great!
The number should be much higher for people who watch these videos.
Yup
@@NickVetter Yes, there’s a great sample bias here with a self selected group of financially literate people. I guess more than 90% of us will retire comfortably.
@@TheSteinbitt Ah, just the confirmation bias I was looking for! Thanks
Excellent video, glad to have found your channel
Does the 2.7% include "dividends".
I.e if im in vt or s and p 500. And get the 2-3% annual dividend should that be included in the 2.7% safe withdrawl rate or no.
It was confusing thanks
Yes, and I read that etf total costs and buying commission should also be included in withdrawal rate
I just finished the CIFP Retirement planning course and I loved learning about the assumptions used and not what I keep hearing online LOL
Another great video! Thanks Ben.
Sounds like the yield of a large cap dividend stock portfolio. All that research and we've come full circle.
Sounds like an investment company trying to keep large amounts of money under management. For early retirees yes a lower rate makes sense. However retiring at 67 means you can pull out that amount for 25 years. Yes you still need to make enough to cover inflation. Hmm I wonder if treasury tips would do that.
I wonder about the potential of a 100% stock portfolio from which the retiree has a flexible withdrawal policy to contend with volatility. Surely the returns would be better with 100% stocks if one could avoid the disproportionately destructive effect of withdrawal during periods of low stock prices.
Actually it works just fine as long as you don't fall prey to sequence of return risk during early retirement AND you can stomach it when you're portfolio drops 40% or more and stick with it.
When withdrawal rates drop so much that you can only afford yearly haircuts...
I have been lucky in that I live in Japan and the Yen has been dropping like a rock against the US Dollar. Thanks to that, I am withdrawing at the annual rate of 2.3%. I am also delaying taking my social security. If worse comes to worst, I'm hoping social security will still be around to make up any shortfall.
Bringing up the world wars and cuban missile crisis to say the outperformance of US stocks was luck is a baseless argument. Even now, the US stock market consistently outperforms other markets. Feel free to compare the MSCI ACWI ex U.S. index to the performance of the S&P 500. I ran the backtest on the ETFs based on the indices which goes back to April 2008 (before the crash). The average annual return of the international ETF was 1.95% vs 10.12% for the USA ETF. That is so outlandishly different, it's ridiculous. Not only were the returns lower, but the volatility (standard deviation) and largest crash (maximum drawdown) were higher.
You love to advocate for value and small-cap stocks because of their historical outperformance and yet, value stocks and small-cap stocks have yielded lower return for some time now. Why is that not a historical fluke? US stocks are still leading the way. Additionally, a market-cap weighted ETF for developed countries' returns would barely be different from a USA only counterpart since the vast majority of all the large companies in the developed world are American. The 17th largest company in the world is the largest company from a developed country that isn't the USA, Louis Vuitton.
Lastly, your idea is dumb because the US is the dominant force in the world. Whenever the US economy takes a dives, the whole world takes a dive. Some countries get hit even harder than the US even if the crash was caused primarily due to a problem limited to the US (*cough cough* 2008). On the other hand, when a random country takes a dive, the US doesn't. The 2nd largest economy in the world, China, is almost back to the lowest point it was at after 2008. No developed country is as much of a force as the US. The US is the centre of innovation of the world. There are zero to only a couple of solid companies each in other countries, depending on the country, that you should consider investing in.
Yes can you do a video on international diversification? Thanks, very informative video.👍😊
Does the Trinity study have the same biases as the Bengen study?
What everyone seems to be ignoring is the significant INVERSE CORRELATION between the S&P 500 price and the amount of hair on Ben Felix.....
So if Ben shaves his head, my portfolio go back in the green?
I lost my job 2020 (apparently COVID) at the age of 52, leaving me with X2 pensions of 30k and a mortgage of 80k. I have radically changed career and become a delivery driver with no employer pension, also asked some folks if I can perhaps put together my pensions but was told it wasn't worth it.. I know this is a pretty low amount, but what are my options?
try your hands on the stock market
Bengen's 4% rule included WORST case scenarios. That included the market crash of 1929 and the crazy inflation and flat market of 1968-1980. I know, I know, past perforrmance is no guarantee of future success, but reality is the vast majority of retirees aren't going to make it 30 years. A couple years back Bengen changed the safe withdrawal rate to 4.8%
Add some small cap stocks and you can make it 7-8%
He also doesn't acknowledge that the average lifespan of a couple doesn't mean both will live 25 ish years, it means one will. So if I retire at 65 and my wife is 65, odds are one will live to 90, but the odds of both are low. When one goes into the solo years, they will spend less.
Worst case scenario would be stock market ceasing to exist
@@knep24 Spend less? Not by much, generally speaking, because most of the big expenses don’t depend on the number of people. That’s why couples have a much higher standard of living than they could have separately, quite apart from the vastly more favorable tax treatment you get now if you’re married (which is why retirement tax videos always give numbers for married filing jointly instead of single, they’re just that much more impressive).
👆misinformation 👆
How about a retirement on dividends? There’s no need to deplete a portfolio when living off the divs.
How do I buy nuclear winter options?
Why is Dave Ramsey’s withdrawal rate at 10%?
Can you do one on perpetual spending rates please?
Did Professor Scott say in your interview that his data on the 30/70 domestic/foreign equity asset allocation indicated 3.4%?
I found the thinking interesting about why older data is surprisingly just as useful given modern technology, but maybe could be simplified to the musing that technology doesn't make any given investment more valuable than any other since all investors are basically competing with the same edge (better information). e.g. Biff's future stock price book was only useful in the past - if everyone'd had it, then not so much
What about early retirees? 40 or 50 year timespans.
Good Job Ben. Besides using life expectancy is also flawed as 50% will outlived pass that age. Inflation is also a killer.
The study has some practical issues because it ran Simulations in all developed contry Stock Markets. So all WW2 defeted counties had withrawal rates of as Low as 0.2%. Forcan international Portfolio the rate was 3.5%
Ben, your content is excellent as always.
You also look like a different person with the change in hair.
Looks good man!
Subscribed! Thank you, Ben!
Please make a video on stock options. I’ve often heard selling put contracts on the market has outperformed the market
I will retire six weeks from now at 63.5 yo. I need to purchase COBRA for 1.5 years that will cost $1550/mo for me and wife. I am fortunate to have a pension that will cover all of my base expenses for now (it is not inflation indexed). I plan to turn on SS just before 67 yo. The Baby Boom generation is very lucky to have both a 401K and a pension. My parents did not have a 401K. The new generation does not have a pension. My 401K is available to spend at will and can postpone withdraws if the market conditions are not good. My father just turned 100 yo so I need to plan for the worst case and assuming a 40 year retirement.
But the baby boomers didn't have the Roth IRA until the end of their career. Current working individuals have all sorts of investment options i.e. Roth/Traditional/Sep IRA, 401k, HSA.
Pensions are awesome however there are still some great options out there.
Ben when are you making a video on “investing in art”, have seen adds for it everywhere and I can only roll my eyes
If he's correct, then some of these annuities with four and five percent guaranteed withdrawal rates start to look really attractive
Yes indeedy. The new VPLA (Variable Payment Life Annuity) tontine based annuities look all the more attractive too. GuardPath funds range from 6.5 - 8% and Longevity Pension fund is around there as well. We're going to have to harvest longevity credits from others in order to retire.
These are often not adjusted for inflation
@@Basu117 True. Growing into an old miser helps to negate that to a point.
@@Basu117 it just depends on the contract. A lot of contracts allow you to choose
@@Basu117 Don’t worry. Your spending goes way down as you age.
Interesting, thank you.
Question - does your analysis include the RMD? 2.7% + the RMD can quickly get you to 6+%
Although I understand your reasoning of past performance doesn’t indicate future performance, I will not invest in any other countries simply because they are not as developed and stable, also I will not invest in bonds. I don’t get how their studies don’t indicate a higher withdrawal rate for 100% stock allocation. Well expected returns, but actual returns from stocks are much higher.
What about new "disruptors" like cryptos and the meme stocks like what gamestop did which surprised even wallstreet...those were non-existent in the "old" data?
At 2:33, I don't see how this explanation explains anything. The World Wars and Cuban missile crisis happened a long time ago now, and investors are (I hope) fully aware that these things happened. Shouldn't this just be priced into US stocks? Maybe in like the 50's and 60's there would be new information about the effects of these events entering the market, but still now? Not to mention that e.g. India and Pakistan have also thus far avoided nuclear war with each other despite border disputes/skirmishes. Why don't their stock markets overperform in recognition of that? Is there any analysis actually comparing stock market performance with countries' experiences with WW2?