Finally! A realistic approach to the modeling scenarios. I’m so glad you posted this example. I’ve been screaming from the mountain top the Monte Carlo modeling does not simulate real life spending variances.
This is such a great, no, FANTASTIC video! Clear, easy to understand and such a fresh perspective to move away from the “single score” mentality to what you can tolerate within a range. I think the biggest takeaway is that with a single score mentality you feel like you have no control over what is happening or what to do, other than the extreme of pulling out of the market, whereas with the range you can take control of your spending to accommodate your lifestyle to fluctuate WITH the market. That control and sense of personal ownership does wonders!!
The ability to flex monthly spending is the secret sauce in a confident retirement. Having your home paid off and no car payments is a big piece of this. Avoid debt, live within your means, and in a temporary down market, reign in the travel and entertainment expenses for a year. Remember that the market always fluctuates up and down but ALWAYS comes back over time.
Good sales pitch for "Income Lab" software. By the way: in 2006 Ben Stein and Phil DeMuth published a book about retirement where they proposed a dynamic spending system not unlike the guard-rail system. They also showed that in the past their system would have coped with all of the market crashes. And best of all, there system is based on a 5.6% spending-rate. It as available for around 10 bucks. History keeps repeating itself...
Nice, but what's missing from the discussion of this approach is the factor of *when* you're setting your guardrail range. Setting it when the market is at an all time high, for example, would result in a range that is much different from one that happens to be set after a 10% market drop. There's probably some sweet spot for when to set it, such as when the market is at some percentage of the all time high as a 6-month moving average.
The cardinal rule is Never Panic Sell! If you have to withdraw in a downturn have your financial planner help you choose what to sell to reduce the impact on your portfolio and allow it to recover. I tried using free calculators and 4% rules of thumb and found them woefully inadequate for predicting our retirement cash flow. Ended up creating my own complex spreadsheet, forecast out 30 years, and built in inflation, some bear markets, big purchases like cars, etc. what I found is that YES you can adjust. When I modeled us retiring now instead of in two years, I found the money started to run out in our 90s (although we still had plenty in home equity.) Just a 5% annual spending reduction around age 78 righted the ship. I didn’t assume lower spending in retirement although most financial planners say you only need something like 60% of your pre-retirement income. Not sure how they come up with that when all our friends in their 70s still live in their same homes, own two cars and travel frequently.
One big reason why retirees shouldn't need as much income is because they are no longer needing to save for retirement. Other factors may be that, in their working years, they are still paying down their mortgage versus in retirement they (hopefully) have it paid off.
Prob closer to 80% of that income for lifestyle needs..Then you medical costs and maybe home health assistance/possible retirement home costs later in life.
Great video. I think this risk based guardrails approach is a true gamechanger. The fact that Income Lab uses historical data sets dating back to the 1800's to test the guardrails gives an incredible piece of mind and def should make it easier to sleep at night when the market heads south. Using Right Capital AND income lab is the perfect combo IMHO.
I really dont get all the hoopla surrounding this. Whether working or in retirement you need a certain level of assurance that your income will be available or maybe your employer is very sound & your job is in good shape. If your assets drop in retirement significantly or your employment situation begins to get a little dicey you change your spending habits to get thru. Whether in retirement or working you should never be maxed out on your spending "needs" vs cashflow. There should be some wiggle room, if there isnt any you screwed up & may suffer the consequences. So spend a little more when times are great, spend less when times are tougher. But always keep your spending under control. Nothing really fancy or complicated about this.
I think you are right. But then again you have watched this video and so you must have questions and concerns like the rest of us. It is extremely stressful living through turbulent times due to personal and/or world events. The severity and toll of this stress only gets worse as you get older.
People retiring with just a big 401k need more options. You need 1-2 years in cash so if the market drops you can still live and possibly buy stocks on sale. Then have some employment income, a couple side hustles, social security, and real estate income at least to age 70-75 you are good. Having no to low debt sure helps too. The more buckets the better. Not risking my entire future on the US Stock Market.
Useful video - guardrails and better interpretation of the success factor score helps. I in fact retired Jan 2022 and went through the 16+% drop in the 60/40 portfolio in my first year. Luckily had cash to shield the portfolio from sequence of returns risk and the portfolio is above the starting balance now 3 years later. To your point, the success factor on my plan went from 99% at retirement start, to 80s at the lows of 2022, and now is back to 99%.
I can't believe how much sense this makes. Why isn't everyone talking about this guard rail approach? It's like we've been brainwashed into thinking a certain way about retirement
For this example why not use the exact same time frame? We lost a bit of the Apples to Apples comparison because you changed the years and market performance.
My company paid a consultant to provide retirement classes when I was 24 and just started saving for retirement. The class was called "The Kids Table" and basically their advice was go with a target retirement fund that aligned with your 65th birthday. That was 20 years ago. It is the only thing I've ever invested in. How else can I grow my finance?
target date funds made me a multimillionaire but i also watched them drop 40% in a very short time and take a long time to recover. my best suggestion is that you seek the guidance of a seasoned advisor to avoid mistakes
I'm early retired and I keep about a year of cash and a couple years in short term bonds for that reason. It's a tiny fraction of my portfolio and it gives me all the safety I need.
@@ReesesPieces81 I am considering annuities. You can pull from that in downturns and live of the excess margins in your investment accounts during the good times. Interested to hear your thoughts.
Exactly! Mr Lum could have cut through all the modeling nonsense and recommended what you and other non-professionals here advocate. I will add that CD's and laddered UST's held to maturity avoid the pitfall of the bond funds, ie prices may fall in a market tumble. Best wishes and good luck!
@@ReesesPieces81I too keep 2-3 years of cash in a HYSA. I thought of a CD, but the cash aspect seemed better. I have the issue of recency bias as cash is around 4% now; and I should realize CDs lock the rate. But, locks the funds. Catch 22
So thankful for my pension. If the market goes down we can survive on our pensions and SS. When it's a good year draw enough for a year and eventually build a few years of expenses to help with the bad years.
I also retired at the same time as case 2. I just lived on my cash savings and pension. I was not worried because I knew it would eventually recover and I would be fine. I only retired early because I knew I could live on my pension and savings if I had to. The trips abroad would just wait until I recovered. I am very grateful for that pension. It gives me peace of mind.
Never sell at the bottom, I hope they caught the trip back up after the crash. I can understand that would be scary. Love the idea of a dynamic income range strategy, I haven't modeled that out myself yet, but I should. I have a probability based forecast at the moment, but I'm still 10 (early) to 20 years away from retirement and focused on capital appreciation.
good video. It seems to do roth conversions with 10 percent drops in the market instead of 20 percent, since the market only drops 20% once every 6 years. I read on bogleheads, a guy was saying "why wait for the market to drop 20 percent, if you wait four years, the market goes up 10 percent a year for 4 years, that's 40 percent gains, if it drops 20 percent, you did roth conversion with market gain of 20 percent, should have done the roth conversions four years ago instead, the sooner the better"
Exactly. I did my first Roth conversion in 2024 not because of the current market, but because I have a planned strategy to do annual Roth conversions between 2024 and RMD age... To reduce pretax money while income is lower, as a long term tax strategy.
I think I agree with all of you. But. I think you can have it both ways. If you have a decent % of fixed income, much of that should be in pretax. So, we do Roth conversions and deal with tax as soon as we are ready each year. But, I sell fixed income in pretax and buy money market in the Roth. Collecting tax free interest from the first day. Then deploy that to stock on dips or drops. Soon after sell stock funds in the pre tax. We maintain our % stocks and get our conversions done. I think way tomany try to convert stock to stock on a given day. That may work just as well but I prefer to convert when I’m ready for that and buy equities when I’m ready for that.?
What planners dont tell you is how many are ripping off clients . Could i follow a retirement plan thst reduces taxes yes ,would i trust them investing my money....NO. 10s of thousands are scammed every year out of their life savings
After watching many videos like this, this one of many reasons why I think you should have some income oriented ETF's and ALWAYS set aside percentage even in retirement to reinvest. There is an aspect of reinvesting even in retirement that get seriously overlooked.
With massive government layoffs, massive tariffs, and large deportations I pulled a lot from equity market. I have never tried to predict markets before, but frankly has been a good move so far. Will be keeping a close eye on federal government over next months and years and move gradually back into equities if I can.
As someone who advised clients for 26 years and then wrote for advisor practices for 18 more, I would suggest that the out-of-control, reckless spending and necessary printing of money and steap increases in gas prices was much worse on the average American's savings than the incoming business-friendly administrat,ion that will cut government waste (our tax dollars) and bring renewed optimism to the capital markets and REAL jobs....not part-time jobs and job numbers inflated and announced on the news, only to be quietly revised downward a couple months later.
That is good info but it seemed like this was the best-worst case scenario like where the plane pulls out of the spin right before the crash. What would you have recommended if they went beyond the guardrail? Say the 2022 drawdown continued for 6 more months; are you recommending moving to cash or buying annuities or riding it out and cutting spending? Can you run the same scenario but have them retire in 2008 to show that extended drawdown? Are there guardrails to make sure the clients don't outlive their money? Great channel btw. I subscribed.
They’d just need to adjust spending. But we know what that level is before the drawdown ever starts. And we are able to model using real market data this big the spending adjustments would need to be in real worst case scenarios like 2008.
Good move, Kevin. So much of financial planning, in general, leans way too conservative. Guardrails clearly seem the way to go nowadays. Thanks for emphasizing this newer way of looking at things.
I imputed their numbers into firecalc for a $1.4M nest egg and the stated social security. I don’t come anywhere close to them being able to withdraw $9308 per month. What growth rates, inflation rates are you using? I do think the guardrails approach makes sense. Wish you offered a reasonable retirement planning service vs the AUM all in….been down that path and won’t go back. Many of us just want a yearly sanity check.
It’s a formula that also includes Social Security at some point and a 60/40 portfolio. So it’s front loading withdrawals on the portfolio and then putting the pressure on Social Security at 70. We offer one-time plans but I don’t think that’s what retirees need. In fact, for clients we hook the accounts we manage to this software so we can monitor a safe withdrawal rate in real-time.
When a person owns their home with no mortgage, the question is always “how much do they pay in property tax”? In addition, “how much does it cost to maintain that house; utilities, repairs, etc. I say this because, their monthly spending seemed high to me. But, this is personal. It’s like owning an asset that’s really a liability. You got to reduce your liabilities, to realize your assets. So much of your clients monthly is expenses? There should be some room for pleasure, like vacations or shopping.
This is why it helps to have some short term savings not exposed to stock/bond market risk that can be tapped during big market drops, especially for big and often sudden expenses like major home repairs. But the best strategy is to reduce spending out of investments when the market is down.
IMO its psychology of loss. Understanding how the market works will not shield you completely from panic selling. CFA expensive as they are (non fee base), one has the benefit of them telling you to not sell when the market tanks - provided your investment is on good companies. After you gained tolerance to market downside, ditch the CFA. Also keep 2-5 years of cash for spending to sleep at night if you can.
it doesn't appear that you included their monthly income withdrawls in your reflected beginning numbers and bottom numbers at 21% down. Not sure why you did that
In spite of the click-baity title, sound advice. Since the video assumes viewers know what a “Monte Carlo Simulation” is, could have titled something like “Are you sure you want to rely on the Monte Carlo score for your retirement plan?” or similar.
It's great software. Utilize it and it will serve you well. The warning in this video is apt though, that the probability of success is only really useful in initial planning, then you should ignore it and establish a really good withdrawal strategy that suits your needs and your emotional temperament. I happen to agree with the guardrails approach, but whatever works best for you and lets you sleep at night...
Seems like this (and similar) portfolios would do better to have some cash around. Given the statistics, it would make sense to pull out just a little more than you are spending (or save it if still getting income) so that your "dry powder" slowly grows. Next time there's a 10%+ drop, start converting a bit of that cash on the way down and the way up. If you like, sell a bit after some large profit, say 2x what you invested and add that back to your cash stash. No, you can't "time' the market but you can buy a bit when things are on-sale and save a bit extra for opportunities if you have the fortitude.
I have been watching your videos for a few weeks. We are about a years away from planned retirement. I have a list of questions for my financial person.
In these examples, why aren't people putting a year's worth of assets into something like a savings account BEFORE they officially retire? Markets crash but they always come back fairly quickly. It seems like the fatal flaw in planning is expecting to take out your retirement investments regularly on a monthly basis regardless of if the markets are up or down. If you don't have to take out money during a crash, your 401 will bounce back up again in a year or so and you don't really have to be worrying about short-term performance.
The important correlary to this is to maximize spending flexibility in your retirement. You can't execute a flexible spending approach unless your expenses are mostly flexible! Get rid of that mortgage, and all debt, before retirement. Your absolutely mandatory expenses (hopefully just food, taxes and utilities) should be a small fraction of your overall expected retirement spend.
Interesting content. I am 56 and started seriously planning for retirement way later than I should have. However, I’m debt free and have been hammering down on investing for my future. Maxing my Roth IRA every year, maxing my HSA every year and dumping as much as I can into my brokerage account. I’m single with no dependents. Plan to work until I’m at least 70. Based on my calculations, I should have approximately $2m by then depending on market performance. Enjoyed the video.
What is your thought on waiting to 70? Is it because you really don't have much money saved? As a single person you should retire much much sooner. You can always make more money but you can't make more time.
@ What would I do with myself? I’d be bored stiff. Working keeps me socialized. I’d prefer to work to 75 if my company will allow me. I already get bored and lonely on the weekends. Don’t need more time for that. Financially, I’ll be fine. It’s merely the social aspect.
I got ya. But you work for someone else now. Work for yourself and figure out what you like to do and go have fun. There are more people out there in the world then who work with you now.
Great video Kevin. I'm wondering if there is software like income labs for regular people rather than financial planners. Most that I can find only fun Monte Carlo scenario and none incorporate the financial guard rails and dynamic spending method. Do you know of one for regular folks?
my question is, why buy bonds when they can fall as much or more than the stock market? I know that this was an anomaly in the past but is it going forward?
When you remove inflation from the real annual returns, then bonds are terrible. Then again, you want to have some lower risk than stock so bonds would be it. Its still has risk as you pointed out. I don't think they are worth the trouble except if you feared the stock market.
Very insightful . Terrible time to start retiring in a pandemic imo. However, the points you make about a “ dynamic spending retirement plan” makes sense. I would need guard rails. lol. I would like to talk with you and possibly work with you. Please do me for a follow up call.
Is this about half full vs. half empty as at the end, you have the same amount of money? And why would keep running success score every month or even ever again after the initial acceptable score?
Can’t you just adjust your spending down in the software until the success rate returns to 80% to see how much you temporarily need to reduce spending?
It's a really big change mentally to give up that paycheck and start spending out of your retirement account. That's where having a plan is crucial. During my last working years I socked away a lot of cash not exposed to stock and bond risk, so that even if the market crashed I'd be fine.
Don't retire until you can take Social Security. That way, the income doesn't stop. It can drop, but you can reduce your expenditures. Also, seriously consider investments that generate income rather than having to rely on capital gains for your living expenses.
It calculates Social Security into it - it’s not simply portfolio income. But yes, it often front loads withdraws at a a higher withdraw rate and then more emphasis on Social Security.
If you are retiring at 65 your life expectancy is probably upper 80s or low 90s. If you are financially doing ok why wouldn’t you keep your one to two year expense account in an index fund. Statistically you would more than likely make up any loss over time in an early down market and if it was a down market later in your retirement than you would more than likely have made enough on your returns to offset any loss. Please point out my flaw in logic?
IMO: The problem in both plans is with the people. In both cases they retire at 62. You don't plan on dying in 5 years, so why are you making emotional choices with your retirement account over such a short period of time? It is almost like people want to daytrade on the account when I think you should be thinking longer term. Again, just my opinion.
Hi, Great video. 1st time watcher and subbed. After reading some comments I wonder if missed something or I'm projecting some assumptions. I think I just answered my own question, but will ask it anyway... With this guardrail model, are the ranges dynamic or static? Meaning when the value drops below the lower threshold, will a new range be established automatically, adjusting for remaing time, or will the entire plan need to be revamped?
The one problem with this strategy is that market crashes aren't obvious until we are deep into them or viewing retrospectively. The better strategy is to spend wisely and live below your means.... and then once your assets far outweigh the burn-rate, you can then enjoy splurges on the luxury items/experiences you've patiently earned!
With this model you clearing know your trigger point(s). All you need do is track your portfolio, when a trigger condition is met, then you adjust accordingly. Pretty simple approach.
Very informative.....I am also a CFP like yourself. Would you share with me what kind of software you use for doing Monte Carlo simulation??? thank you!!!
I use both. I primarily use IL for creating a safe spending rate and RC for broader planning. Although, as IL gets more robust I tend to use RC less and less.
Why do people hire a planner and then disregard their advice? I’ve watched this hundreds of times and in every single case, it’s regretted later! If you’re emotional about money, turn it over to a professional and leave it in their hands.
My best friend had a few hundred thousand invested with a big name financial institution and it would go up or down 50k but he saw nothing beyond that and 10 years later it’s almost the same…during this current BULL market! I’m sure they made their money on them. Told them it’s how it works. Acted like they had bigger vlidnts to manage and with him complaining they didn’t give him much attention. He left them a year ago and finally made a profit.
My story starts back in 2007 and ends in 2014. The Obama years. I had a Roth IRA (not a 401k). One year I lost over half of my money. Most years I lost money but different amounts during this time. The financial firm I used were making changes to the portfolio and charging us for this. It didn’t help. It lost money still. Finally to help save my business I had to cash it in and I was sooo heavily penalized I probably lost another 1/3 of it. It didn’t matter. A bad Bear market with bad management doomed it. If you are currently making money hand over fist in Biden’s current Bull market well then good for you! Sometimes you lose 65% of your investment in a very short time. I started a Roth 401k a year ago and made 10%. I could have made more but I went conservative because of my past experiences. My new financial advisor talks as if you can only make money in the financial business. She’s not young either. Sorry, but it’s a gamble/financial advisors can make mistakes or get greedy. And there advice may be only positive because all they know is this current Bull market. Good luck!
Because a lot of people suck. Most people, not all, that become planners are losers and some are criminals. Why would you roll the dice and become a statistic?
I am surprised to know from your example that the effect of a market downturn only translates to a few hundred dollars of monthly spending for a short time or no cut at all (assuming not bailing out at the bottom of market and eventually portfolios recovered). May you model 2008 or other period of time that market recovered slowly? Or prolonged downturn? Do people just need to spend less 0:01 for a few years and everything will be the same?
Great question. We’re able to go back 100 years and see very clearly how much you’d have to cut in spending in various downturns - including 2008. The model takes real market data and your real spending needs and then models what would happen to spending and how many cuts you’d need to make during that drawdown.
Year 2008: My retirement funds were invested in Large cap fund like S&P 500 and small cap funds, lost about 40% but small cap recovered the very next year in one year and large cap in one and a half years. And my balance was back to pre crash level plus what I invested in that year at a much smaller cost. But mass muni funds with fidelity took 4 years to recover which I completely moved to savings account in 2012 as I needed money to buy a house.
I think some sort of guardrails are the way to go, but this example is apples and oranges. Why not pick the same period of time to show the example??? Also, probability of success the first time you run it takes into account the worst case scenarios in the Monte Carlo probability I don't think it's honest or valid to show that by running it over and over again you're going to fail. Also, that lower guard rail in the example is huge. I think folks are probably willing to cut down on spending a little and have closer guard rails.
Personally they should have had min of 1 yr expenses in cash or equivalent. I will say 2-3 yrs to be safe. Then don't look and crunch numbers every week. Adjust your spending. Maybe they were not prepared to retired or didn't listen to what their advisor was telling them.
I do not understand the meaning of "market is 10% down x% of the time." Down from what. Are you counting years; does it mean down from the prior year-end close? Do you mean down from an all-time high?
@@foundryfinancial I watched that video last week, and had the same confusion. I watched it again now. It looks like a frequency of negative calendar year returns based on a graph shown in the video.
Income Lab Looks very good. And very not available to individuals; only to planners who can then give access to their clients. Even for advisors, it's ~$160/month after a trial period. For an advisor, that makes fiscal sense; for a non-advisor, it's way too much. Bummer
They "retire in March" but the the market then falls in FEBUARY of the same year...surely it as already happend then??? And what retiree starts clicking on software a month after retirement to start looking at outcomes for their pensions? Whoever pointed them in the direction of said software should be sacked for deriliction of duty for not advising them to have at least a two year cash buffer at all times when riding the stockmarket in retirement.
A 'probability' (of success) does not provide a decision point/ change (positive or negative) relative to a dynamic withdraw approach. I would be concerned with an estimated 8.3% withdraw rate. There significant SORR risk present given the combination of asset level, allocation, and location.
Ugh i hate when i have to actually pay attention to your videos and cant just have them on in the background! Jk, great content, i wish boldin had guardrails as an option. I know ficalc does and ill check that periodically, but it doesn’t allow to break the totla down for roth, 401k, brokerage like boldin does.
Good video, but i expected something different, not abide by the guardrails..which could be subject to change. Seriously, everytime the market drops you login to income lab software and be more anxious??? How about getting your license to spend by covering your essential needs with guaranteed income - SS, Pensions, and Annuities and play with the stock market for discretionary expenses?
This video is not fair. Take the same bear market and compare the two approaches. You can't pick 2020 for one and 2022 for the other. Bias is flashing in bright neon lights.. -:)
This is why I started investing in dividend paying stocks after 2008-2009. I wanted guaranteed income regardless of market fluctuations. Some dividends may be cut or suspended but most keep coming in and increasing. Today I have about $250k I dividends. Retiring soon
Phil and Claire are unrelatable to most viewers. You live in California where everything is screwed from the national identity of retirees. The typical couple of your viewers is aged 63 to 65, with 401(k) savings ranging from $400K to $700K. Our expenses are lower, but our concerns are the same, we do not want to run out of money. Phil and Claire give us the impression that they are quite wealthy and affluent individuals.
If Phil and Claire had stayed the course they would be doing great, especially as their spending would have dropped during covid. Basing a thirty year retirement plan on a snapshot of the market and then panicking is not wise.
Great video. Loved it. In fact I did retired on January 2020, but I was able to navigate through it since my strategy was bond, stocks and cash "cushion". Only challenge I still have is related to what you mentioned about bond funds. You said only in a lifetime you saw bond funds going down with SP500, but it is still the same way as of today, In fact BND has been losing money forever since the trade date. I have never recovery my loses on Bond funds, not even using DRIP. This is the only part I have been thinking about changing, meaning take a loss and invest in real bonds.
@@andreal2625 I can afford it, it's just not something I want to pay for. I'd rather just support content providers who don't inundate their viewers with more than a couple of ads. I can do without. Probably stop watching RUclips all together once all the content is like this...
Six years? Have you forgotten what the Japanese market did? It peaked in 1989 and just fully recovered last year. Will that happen here? Probably not. Could that happen here? Absolutely, it could.
4% rule still works, high yield etfs nowadays make this easy. The asset mix has changed. If you have to have every penny in the market, your living above your means.
Boldin provides consumer subscriptions to their financial planning engine. I’ve been using it a few months now and am pretty impressed, although I impress easily…😂
These videos blow me away, if i had a million dollars i could invest it myself and make the same amount i'm making now . i don't who these people are but evidently not me or my people.
Finally! A realistic approach to the modeling scenarios. I’m so glad you posted this example. I’ve been screaming from the mountain top the Monte Carlo modeling does not simulate real life spending variances.
This is such a great, no, FANTASTIC video! Clear, easy to understand and such a fresh perspective to move away from the “single score” mentality to what you can tolerate within a range. I think the biggest takeaway is that with a single score mentality you feel like you have no control over what is happening or what to do, other than the extreme of pulling out of the market, whereas with the range you can take control of your spending to accommodate your lifestyle to fluctuate WITH the market. That control and sense of personal ownership does wonders!!
The ability to flex monthly spending is the secret sauce in a confident retirement. Having your home paid off and no car payments is a big piece of this. Avoid debt, live within your means, and in a temporary down market, reign in the travel and entertainment expenses for a year. Remember that the market always fluctuates up and down but ALWAYS comes back over time.
Good sales pitch for "Income Lab" software. By the way: in 2006 Ben Stein and Phil DeMuth published a book about retirement where they proposed a dynamic spending system not unlike the guard-rail system. They also showed that in the past their system would have coped with all of the market crashes. And best of all, there system is based on a 5.6% spending-rate. It as available for around 10 bucks. History keeps repeating itself...
Any differences you noticed?
I looked this up on Amazon, I assume it's "Yes, you can still retire comfortably"? If so, it's disappointing it can't be bought on Kindle.
Nice, but what's missing from the discussion of this approach is the factor of *when* you're setting your guardrail range. Setting it when the market is at an all time high, for example, would result in a range that is much different from one that happens to be set after a 10% market drop. There's probably some sweet spot for when to set it, such as when the market is at some percentage of the all time high as a 6-month moving average.
Great points man!
The cardinal rule is Never Panic Sell! If you have to withdraw in a downturn have your financial planner help you choose what to sell to reduce the impact on your portfolio and allow it to recover. I tried using free calculators and 4% rules of thumb and found them woefully inadequate for predicting our retirement cash flow. Ended up creating my own complex spreadsheet, forecast out 30 years, and built in inflation, some bear markets, big purchases like cars, etc. what I found is that YES you can adjust. When I modeled us retiring now instead of in two years, I found the money started to run out in our 90s (although we still had plenty in home equity.) Just a 5% annual spending reduction around age 78 righted the ship. I didn’t assume lower spending in retirement although most financial planners say you only need something like 60% of your pre-retirement income. Not sure how they come up with that when all our friends in their 70s still live in their same homes, own two cars and travel frequently.
One big reason why retirees shouldn't need as much income is because they are no longer needing to save for retirement. Other factors may be that, in their working years, they are still paying down their mortgage versus in retirement they (hopefully) have it paid off.
Prob closer to 80% of that income for lifestyle needs..Then you medical costs and maybe home health assistance/possible retirement home costs later in life.
@brianstone3972 cost of raising kids is also behind you.
Great video. I think this risk based guardrails approach is a true gamechanger. The fact that Income Lab uses historical data sets dating back to the 1800's to test the guardrails gives an incredible piece of mind and def should make it easier to sleep at night when the market heads south. Using Right Capital AND income lab is the perfect combo IMHO.
Glad to see you are back.
I really dont get all the hoopla surrounding this. Whether working or in retirement you need a certain level of assurance that your income will be available or maybe your employer is very sound & your job is in good shape. If your assets drop in retirement significantly or your employment situation begins to get a little dicey you change your spending habits to get thru. Whether in retirement or working you should never be maxed out on your spending "needs" vs cashflow. There should be some wiggle room, if there isnt any you screwed up & may suffer the consequences. So spend a little more when times are great, spend less when times are tougher. But always keep your spending under control. Nothing really fancy or complicated about this.
I agree with you.
Agreed, but a lot of people aren't interested in the details ... they just want black&white answers to (gray) financial questions.
I think you are right. But then again you have watched this video and so you must have questions and concerns like the rest of us. It is extremely stressful living through turbulent times due to personal and/or world events. The severity and toll of this stress only gets worse as you get older.
IMO: 8000/ month is a lot of money if you have a paid off house unless you live in a very expensive part of the country..
People retiring with just a big 401k need more options. You need 1-2 years in cash so if the market drops you can still live and possibly buy stocks on sale. Then have some employment income, a couple side hustles, social security, and real estate income at least to age 70-75 you are good. Having no to low debt sure helps too. The more buckets the better. Not risking my entire future on the US Stock Market.
Great video! Thank you for sharing.
Useful video - guardrails and better interpretation of the success factor score helps. I in fact retired Jan 2022 and went through the 16+% drop in the 60/40 portfolio in my first year. Luckily had cash to shield the portfolio from sequence of returns risk and the portfolio is above the starting balance now 3 years later. To your point, the success factor on my plan went from 99% at retirement start, to 80s at the lows of 2022, and now is back to 99%.
I can't believe how much sense this makes. Why isn't everyone talking about this guard rail approach? It's like we've been brainwashed into thinking a certain way about retirement
For this example why not use the exact same time frame? We lost a bit of the Apples to Apples comparison because you changed the years and market performance.
It’s nearly identical. I wanted to show this happened multiple times in a short time frame. Everything within a few dollars was exactly the same.
My company paid a consultant to provide retirement classes when I was 24 and just started saving for retirement. The class was called "The Kids Table" and basically their advice was go with a target retirement fund that aligned with your 65th birthday. That was 20 years ago. It is the only thing I've ever invested in. How else can I grow my finance?
target date funds made me a multimillionaire but i also watched them drop 40% in a very short time and take a long time to recover. my best suggestion is that you seek the guidance of a seasoned advisor to avoid mistakes
Just check what's happening when they start to deleverage and speak to an advisor then. Now no need to do anything
Allocate 1 or 2 years expenses and invest in ladder CDs in case market goes down.
I'm early retired and I keep about a year of cash and a couple years in short term bonds for that reason. It's a tiny fraction of my portfolio and it gives me all the safety I need.
@@ReesesPieces81 I am considering annuities. You can pull from that in downturns and live of the excess margins in your investment accounts during the good times. Interested to hear your thoughts.
Exactly! Mr Lum could have cut through all the modeling nonsense and recommended what you and other non-professionals here advocate. I will add that CD's and laddered UST's held to maturity avoid the pitfall of the bond funds, ie prices may fall in a market tumble. Best wishes and good luck!
@@ReesesPieces81I too keep 2-3 years of cash in a HYSA. I thought of a CD, but the cash aspect seemed better. I have the issue of recency bias as cash is around 4% now; and I should realize CDs lock the rate. But, locks the funds. Catch 22
A market peak to trough and back to previous peak can take as long as 6 years. So plan accordingly.
Good perspective. Thanks.
So thankful for my pension. If the market goes down we can survive on our pensions and SS. When it's a good year draw enough for a year and eventually build a few years of expenses to help with the bad years.
I also retired at the same time as case 2. I just lived on my cash savings and pension. I was not worried because I knew it would eventually recover and I would be fine. I only retired early because I knew I could live on my pension and savings if I had to. The trips abroad would just wait until I recovered. I am very grateful for that pension. It gives me peace of mind.
When you have a pension, don’t think of it as retirement but as a pay cut with more time off😅
Never sell at the bottom, I hope they caught the trip back up after the crash. I can understand that would be scary. Love the idea of a dynamic income range strategy, I haven't modeled that out myself yet, but I should. I have a probability based forecast at the moment, but I'm still 10 (early) to 20 years away from retirement and focused on capital appreciation.
good video. It seems to do roth conversions with 10 percent drops in the market instead of 20 percent, since the market only drops 20% once every 6 years. I read on bogleheads, a guy was saying "why wait for the market to drop 20 percent, if you wait four years, the market goes up 10 percent a year for 4 years, that's 40 percent gains, if it drops 20 percent, you did roth conversion with market gain of 20 percent, should have done the roth conversions four years ago instead, the sooner the better"
Exactly. I did my first Roth conversion in 2024 not because of the current market, but because I have a planned strategy to do annual Roth conversions between 2024 and RMD age... To reduce pretax money while income is lower, as a long term tax strategy.
Yes, no reason to wait.
I think I agree with all of you. But. I think you can have it both ways. If you have a decent % of fixed income, much of that should be in pretax. So, we do Roth conversions and deal with tax as soon as we are ready each year. But, I sell fixed income in pretax and buy money market in the Roth. Collecting tax free interest from the first day. Then deploy that to stock on dips or drops. Soon after sell stock funds in the pre tax. We maintain our % stocks and get our conversions done.
I think way tomany try to convert stock to stock on a given day. That may work just as well but I prefer to convert when I’m ready for that and buy equities when I’m ready for that.?
People misunderstand the probability of failure; it doesn't mean that you will run out of money. It means that you will need to make adjustments.
What planners dont tell you is how many are ripping off clients . Could i follow a retirement plan thst reduces taxes yes ,would i trust them investing my money....NO. 10s of thousands are scammed every year out of their life savings
After watching many videos like this, this one of many reasons why I think you should have some income oriented ETF's and ALWAYS set aside percentage even in retirement to reinvest. There is an aspect of reinvesting even in retirement that get seriously overlooked.
With massive government layoffs, massive tariffs, and large deportations I pulled a lot from equity market. I have never tried to predict markets before, but frankly has been a good move so far. Will be keeping a close eye on federal government over next months and years and move gradually back into equities if I can.
As someone who advised clients for 26 years and then wrote for advisor practices for 18 more, I would suggest that the out-of-control, reckless spending and necessary printing of money and steap increases in gas prices was much worse on the average American's savings than the incoming business-friendly administrat,ion that will cut government waste (our tax dollars) and bring renewed optimism to the capital markets and REAL jobs....not part-time jobs and job numbers inflated and announced on the news, only to be quietly revised downward a couple months later.
none have yet come true yet,, you sound like a bleeding heart liberal, come back in a year, and see where your money is then..
Thanks for making these videos. I learn something from each one.
My pleasure.
That is good info but it seemed like this was the best-worst case scenario like where the plane pulls out of the spin right before the crash.
What would you have recommended if they went beyond the guardrail? Say the 2022 drawdown continued for 6 more months; are you recommending moving to cash or buying annuities or riding it out and cutting spending?
Can you run the same scenario but have them retire in 2008 to show that extended drawdown?
Are there guardrails to make sure the clients don't outlive their money?
Great channel btw. I subscribed.
They’d just need to adjust spending. But we know what that level is before the drawdown ever starts. And we are able to model using real market data this big the spending adjustments would need to be in real worst case scenarios like 2008.
You can also find dynamic spending calculators at FI calc
I’ll check it out! Thanks.
@@foundryfinancial you have great content. Some of the best on RUclips
Good move, Kevin. So much of financial planning, in general, leans way too conservative. Guardrails clearly seem the way to go nowadays. Thanks for emphasizing this newer way of looking at things.
Great points in this video. Thank you presenting these scenarios.
My pleasure!
Always helpful and interesting! Thank you
My pleasure!
In light of the current economic conditions and escalating living costs, can you share your insights on how to sustain profitability🇨🇦?
I imputed their numbers into firecalc for a $1.4M nest egg and the stated social security. I don’t come anywhere close to them being able to withdraw $9308 per month. What growth rates, inflation rates are you using? I do think the guardrails approach makes sense. Wish you offered a reasonable retirement planning service vs the AUM all in….been down that path and won’t go back. Many of us just want a yearly sanity check.
It’s a formula that also includes Social Security at some point and a 60/40 portfolio. So it’s front loading withdrawals on the portfolio and then putting the pressure on Social Security at 70.
We offer one-time plans but I don’t think that’s what retirees need. In fact, for clients we hook the accounts we manage to this software so we can monitor a safe withdrawal rate in real-time.
When a person owns their home with no mortgage, the question is always “how much do they pay in property tax”? In addition, “how much does it cost to maintain that house; utilities, repairs, etc. I say this because, their monthly spending seemed high to me. But, this is personal. It’s like owning an asset that’s really a liability. You got to reduce your liabilities, to realize your assets. So much of your clients monthly is expenses? There should be some room for pleasure, like vacations or shopping.
Just read Vanguard’s Dynamic Spending Strategy article and it was very enlightening as well.
Better way to show it, is with the same parameters, why did you let them retire in different market down times
It actually would have had basically an identical outcome - but I liked illustrating two back to back drawdowns and showing this happens a lot.
FYI both stocks and bonds were down similar to 2022 were 1931 & 1969
This is why it helps to have some short term savings not exposed to stock/bond market risk that can be tapped during big market drops, especially for big and often sudden expenses like major home repairs. But the best strategy is to reduce spending out of investments when the market is down.
Very interesting, thanks.
Does the Boldin app use guardrails?
I’m not sure, but I don’t believe so.
IMO its psychology of loss. Understanding how the market works will not shield you completely from panic selling. CFA expensive as they are (non fee base), one has the benefit of them telling you to not sell when the market tanks - provided your investment is on good companies. After you gained tolerance to market downside, ditch the CFA. Also keep 2-5 years of cash for spending to sleep at night if you can.
it doesn't appear that you included their monthly income withdrawls in your reflected beginning numbers and bottom numbers at 21% down. Not sure why you did that
In spite of the click-baity title, sound advice. Since the video assumes viewers know what a “Monte Carlo Simulation” is, could have titled something like “Are you sure you want to rely on the Monte Carlo score for your retirement plan?” or similar.
I just purchased Right Capitol. I have an advisor, but I wanted to track it as well. Does anyone have opinion on Right Capitol?
It's great software. Utilize it and it will serve you well.
The warning in this video is apt though, that the probability of success is only really useful in initial planning, then you should ignore it and establish a really good withdrawal strategy that suits your needs and your emotional temperament. I happen to agree with the guardrails approach, but whatever works best for you and lets you sleep at night...
Seems like this (and similar) portfolios would do better to have some cash around. Given the statistics, it would make sense to pull out just a little more than you are spending (or save it if still getting income) so that your "dry powder" slowly grows. Next time there's a 10%+ drop, start converting a bit of that cash on the way down and the way up. If you like, sell a bit after some large profit, say 2x what you invested and add that back to your cash stash. No, you can't "time' the market but you can buy a bit when things are on-sale and save a bit extra for opportunities if you have the fortitude.
I have been watching your videos for a few weeks. We are about a years away from planned retirement. I have a list of questions for my financial person.
In these examples, why aren't people putting a year's worth of assets into something like a savings account BEFORE they officially retire? Markets crash but they always come back fairly quickly. It seems like the fatal flaw in planning is expecting to take out your retirement investments regularly on a monthly basis regardless of if the markets are up or down. If you don't have to take out money during a crash, your 401 will bounce back up again in a year or so and you don't really have to be worrying about short-term performance.
Study a little more market history. The market doesn't ALWAYS come back quickly.
The important correlary to this is to maximize spending flexibility in your retirement. You can't execute a flexible spending approach unless your expenses are mostly flexible!
Get rid of that mortgage, and all debt, before retirement. Your absolutely mandatory expenses (hopefully just food, taxes and utilities) should be a small fraction of your overall expected retirement spend.
How about Kotlikoff's MaxiFi financial S/W? Quite detailed and looks at many scenarios ...
Unsure, I'll look into it.
Interesting content. I am 56 and started seriously planning for retirement way later than I should have. However, I’m debt free and have been hammering down on investing for my future. Maxing my Roth IRA every year, maxing my HSA every year and dumping as much as I can into my brokerage account. I’m single with no dependents. Plan to work until I’m at least 70. Based on my calculations, I should have approximately $2m by then depending on market performance. Enjoyed the video.
What is your thought on waiting to 70? Is it because you really don't have much money saved? As a single person you should retire much much sooner. You can always make more money but you can't make more time.
@ What would I do with myself? I’d be bored stiff. Working keeps me socialized. I’d prefer to work to 75 if my company will allow me. I already get bored and lonely on the weekends. Don’t need more time for that. Financially, I’ll be fine. It’s merely the social aspect.
I got ya. But you work for someone else now. Work for yourself and figure out what you like to do and go have fun. There are more people out there in the world then who work with you now.
@@7Eggbert I don’t mean this in an insulting way at all, but I am curious as to why you’re concerned with how I choose to live my life.
Great video Kevin. I'm wondering if there is software like income labs for regular people rather than financial planners. Most that I can find only fun Monte Carlo scenario and none incorporate the financial guard rails and dynamic spending method. Do you know of one for regular folks?
Nothing that I know of. I think there’s a hole in the market.
Ficalc is the only thing kind of close that I've seen but it has some other serious flaws.
It is a bit obvious that the retirees can choose to 1. Go back to work or 2. Trim spending until markets recover
Good discussion though
my question is, why buy bonds when they can fall as much or more than the stock market? I know that this was an anomaly in the past but is it going forward?
When you remove inflation from the real annual returns, then bonds are terrible. Then again, you want to have some lower risk than stock so bonds would be it. Its still has risk as you pointed out. I don't think they are worth the trouble except if you feared the stock market.
I recommend ibonds. They cannot lose principal
Very interesting. Thank you.
Very insightful . Terrible time to start retiring in a pandemic imo. However, the points you make about a “ dynamic spending retirement plan” makes sense. I would need guard rails. lol. I would like to talk with you and possibly work with you. Please do me for a follow up call.
Well sure, but you often start making plans to retire before the world falls apart and often have already given notice…or the retirement was forced.
Is this about half full vs. half empty as at the end, you have the same amount of money? And why would keep running success score every month or even ever again after the initial acceptable score?
Can’t you just adjust your spending down in the software until the success rate returns to 80% to see how much you temporarily need to reduce spending?
With inflation and market volatility, I'm worried it might not be enough to sustain me in retirement.
It looks like Income Lab doesn’t offer a retail product. Any recommendations for a retail product for DIYers?
Not that I know off…but there might be.
Biggest fear for me, and I think most, is when the income stops, there’s nothing but spending happening.
It's a really big change mentally to give up that paycheck and start spending out of your retirement account. That's where having a plan is crucial. During my last working years I socked away a lot of cash not exposed to stock and bond risk, so that even if the market crashed I'd be fine.
I’m several working years (hopefully) away and plan on doing the same; nothing like cash reserves.
This is a huge mindset shift and often causes people to make emotional decisions.
Don't retire until you can take Social Security. That way, the income doesn't stop. It can drop, but you can reduce your expenditures. Also, seriously consider investments that generate income rather than having to rely on capital gains for your living expenses.
The guardrail concept is interesting but why didn’t you use the same time period in both examples?
I just wanted to wanted to illustrate two back to back drawdowns. The outcome would have been identical.
In one of the examples the scenario was coming down to a (annualized) withdrawal rate of about 8% of assets. That seems pretty high?
It calculates Social Security into it - it’s not simply portfolio income. But yes, it often front loads withdraws at a a higher withdraw rate and then more emphasis on Social Security.
If you are retiring at 65 your life expectancy is probably upper 80s or low 90s. If you are financially doing ok why wouldn’t you keep your one to two year expense account in an index fund. Statistically you would more than likely make up any loss over time in an early down market and if it was a down market later in your retirement than you would more than likely have made enough on your returns to offset any loss. Please point out my flaw in logic?
Sequence of returns risk.
IMO: The problem in both plans is with the people. In both cases they retire at 62. You don't plan on dying in 5 years, so why are you making emotional choices with your retirement account over such a short period of time? It is almost like people want to daytrade on the account when I think you should be thinking longer term. Again, just my opinion.
what is the purpose of an upper income guardrail?
You can spend more! 😊
Hi, Great video. 1st time watcher and subbed. After reading some comments I wonder if missed something or I'm projecting some assumptions.
I think I just answered my own question, but will ask it anyway... With this guardrail model, are the ranges dynamic or static? Meaning when the value drops below the lower threshold, will a new range be established automatically, adjusting for remaing time, or will the entire plan need to be revamped?
Thank you! A new range would be established. I didn’t go into, but we can see what the cuts would have looked like in past prolonged downturns.
Basically, just the software change. Knowing what we know now, that the market always recover, there was never need to adjust anything 😊
Brilliant. Thank You.
Per these calculations:
If the market crashes 28% I will have to decrease my spending by 5%… that’s fuzzy math.
The one problem with this strategy is that market crashes aren't obvious until we are deep into them or viewing retrospectively. The better strategy is to spend wisely and live below your means.... and then once your assets far outweigh the burn-rate, you can then enjoy splurges on the luxury items/experiences you've patiently earned!
With this model you clearing know your trigger point(s). All you need do is track your portfolio, when a trigger condition is met, then you adjust accordingly. Pretty simple approach.
Very informative.....I am also a CFP like yourself. Would you share with me what kind of software you use for doing Monte Carlo simulation??? thank you!!!
Right Capital.
Where's is the calculator for guard rail strategy? Thx
It’s only available to advisors.
Hey Kevin do you feel you need Right Capital if you use Income Lab? Fellow advisor here.
I use both. I primarily use IL for creating a safe spending rate and RC for broader planning. Although, as IL gets more robust I tend to use RC less and less.
@ thanks I appreciate your content.
Why do people hire a planner and then disregard their advice? I’ve watched this hundreds of times and in every single case, it’s regretted later! If you’re emotional about money, turn it over to a professional and leave it in their hands.
People are afraid of being swindled. Of losing or signing a contract and losing everything. Trust
My best friend had a few hundred thousand invested with a big name financial institution and it would go up or down 50k but he saw nothing beyond that and 10 years later it’s almost the same…during this current BULL market! I’m sure they made their money on them. Told them it’s how it works. Acted like they had bigger vlidnts to manage and with him complaining they didn’t give him much attention. He left them a year ago and finally made a profit.
My story starts back in 2007 and ends in 2014. The Obama years. I had a Roth IRA (not a 401k). One year I lost over half of my money. Most years I lost money but different amounts during this time. The financial firm I used were making changes to the portfolio and charging us for this. It didn’t help. It lost money still. Finally to help save my business I had to cash it in and I was sooo heavily penalized I probably lost another 1/3 of it. It didn’t matter. A bad Bear market with bad management doomed it. If you are currently making money hand over fist in Biden’s current Bull market well then good for you! Sometimes you lose 65% of your investment in a very short time. I started a Roth 401k a year ago and made 10%. I could have made more but I went conservative because of my past experiences. My new financial advisor talks as if you can only make money in the financial business. She’s not young either. Sorry, but it’s a gamble/financial advisors can make mistakes or get greedy. And there advice may be only positive because all they know is this current Bull market. Good luck!
Because a lot of people suck. Most people, not all, that become planners are losers and some are criminals. Why would you roll the dice and become a statistic?
The problem is finding a good professional. Some financial planners have the ethics of a car salesman...
I am surprised to know from your example that the effect of a market downturn only translates to a few hundred dollars of monthly spending for a short time or no cut at all (assuming not bailing out at the bottom of market and eventually portfolios recovered).
May you model 2008 or other period of time that market recovered slowly? Or prolonged downturn? Do people just need to spend less 0:01 for a few years and everything will be the same?
Great question. We’re able to go back 100 years and see very clearly how much you’d have to cut in spending in various downturns - including 2008. The model takes real market data and your real spending needs and then models what would happen to spending and how many cuts you’d need to make during that drawdown.
Year 2008: My retirement funds were invested in Large cap fund like S&P 500 and small cap funds, lost about 40% but small cap recovered the very next year in one year and large cap in one and a half years. And my balance was back to pre crash level plus what I invested in that year at a much smaller cost. But mass muni funds with fidelity took 4 years to recover which I completely moved to savings account in 2012 as I needed money to buy a house.
I think some sort of guardrails are the way to go, but this example is apples and oranges. Why not pick the same period of time to show the example??? Also, probability of success the first time you run it takes into account the worst case scenarios in the Monte Carlo probability I don't think it's honest or valid to show that by running it over and over again you're going to fail. Also, that lower guard rail in the example is huge. I think folks are probably willing to cut down on spending a little and have closer guard rails.
Personally they should have had min of 1 yr expenses in cash or equivalent. I will say 2-3 yrs to be safe. Then don't look and crunch numbers every week. Adjust your spending. Maybe they were not prepared to retired or didn't listen to what their advisor was telling them.
Nerves take over. I’ve seen it over and over.
I do not understand the meaning of "market is 10% down x% of the time." Down from what. Are you counting years; does it mean down from the prior year-end close? Do you mean down from an all-time high?
Lasts week video went deep into that.
@@foundryfinancial I watched that video last week, and had the same confusion. I watched it again now. It looks like a frequency of negative calendar year returns based on a graph shown in the video.
Income Lab Looks very good. And very not available to individuals; only to planners who can then give access to their clients. Even for advisors, it's ~$160/month after a trial period. For an advisor, that makes fiscal sense; for a non-advisor, it's way too much. Bummer
They "retire in March" but the the market then falls in FEBUARY of the same year...surely it as already happend then???
And what retiree starts clicking on software a month after retirement to start looking at outcomes for their pensions?
Whoever pointed them in the direction of said software should be sacked for deriliction of duty for not advising them to have at least a two year cash buffer at all times when riding the stockmarket in retirement.
A 'probability' (of success) does not provide a decision point/ change (positive or negative) relative to a dynamic withdraw approach. I would be concerned with an estimated 8.3% withdraw rate. There significant SORR risk present given the combination of asset level, allocation, and location.
The whole point of the software is avoiding the SORR.
Ugh i hate when i have to actually pay attention to your videos and cant just have them on in the background! Jk, great content, i wish boldin had guardrails as an option. I know ficalc does and ill check that periodically, but it doesn’t allow to break the totla down for roth, 401k, brokerage like boldin does.
*total
Hard to believe that they considered themselves Bogelheads if they are selling after the market crashed
Fear does crazy things to people. Although to be fair I didn’t see their Bogglehead membership card.
Love it
Good video, but i expected something different, not abide by the guardrails..which could be subject to change. Seriously, everytime the market drops you login to income lab software and be more anxious??? How about getting your license to spend by covering your essential needs with guaranteed income - SS, Pensions, and Annuities and play with the stock market for discretionary expenses?
I mean not only is there a lot of room before you have to adjust you know what that number is.
.
This video is not fair. Take the same bear market and compare the two approaches. You can't pick 2020 for one and 2022 for the other. Bias is flashing in bright neon lights.. -:)
This is why I started investing in dividend paying stocks after 2008-2009. I wanted guaranteed income regardless of market fluctuations. Some dividends may be cut or suspended but most keep coming in and increasing. Today I have about $250k I dividends. Retiring soon
Sold everything after a tiny short term market pull back? Good grief… self inflicted wound.
It happens more than you think. It’s less about the pullback and more about the emotions.
Phil and Claire are unrelatable to most viewers. You live in California where everything is screwed from the national identity of retirees. The typical couple of your viewers is aged 63 to 65, with 401(k) savings ranging from $400K to $700K. Our expenses are lower, but our concerns are the same, we do not want to run out of money. Phil and Claire give us the impression that they are quite wealthy and affluent individuals.
Thanks!
Keep cash n hand and don’t sell when the markets crash
dont freak out, stay calm, you are 62 and retired
If Phil and Claire had stayed the course they would be doing great, especially as their spending would have dropped during covid.
Basing a thirty year retirement plan on a snapshot of the market and then panicking is not wise.
Oh of course they would, but they would think they failed. That’s the whole point of a better way to illustrate actual success or failure.
But eventually the market comes back and moves higher. Why panic?
If you have to withdraw for your day to day living when market is down, then even when the market goes up, you won't benefit from the upside.
Great video. Loved it. In fact I did retired on January 2020, but I was able to navigate through it since my strategy was bond, stocks and cash "cushion". Only challenge I still have is related to what you mentioned about bond funds. You said only in a lifetime you saw bond funds going down with SP500, but it is still the same way as of today, In fact BND has been losing money forever since the trade date. I have never recovery my loses on Bond funds, not even using DRIP. This is the only part I have been thinking about changing, meaning take a loss and invest in real bonds.
Couldn't make it through your video.
Way too many ads.
I'm taking you off my watch list.
If you can afford it, get a monthly RUclips subscription and avoid the ads😊
@@andreal2625 I can afford it, it's just not something I want to pay for.
I'd rather just support content providers who don't inundate their viewers with more than a couple of ads.
I can do without.
Probably stop watching RUclips all together once all the content is like this...
A market draw down from peak to trough and back to previous peak can take as long as 6 years. Plan accordingly.
Six years? Have you forgotten what the Japanese market did? It peaked in 1989 and just fully recovered last year. Will that happen here? Probably not. Could that happen here? Absolutely, it could.
@ probably not. Japanese market was spectacularly overvalued and the Japanese did not write down their overvalued assets.
Very good comparison and clearly shows that Monte Carlo score is about as useful as the 4% “rule”. I wish Income Lab was available to consumers.
Why isn't "Income Lab" available to the Public Consumer? Why does the company only sell their Income Lab software to Financial Advisors?
4% rule still works, high yield etfs nowadays make this easy. The asset mix has changed. If you have to have every penny in the market, your living above your means.
@@gg80108 4% was never intended to be a “rule” for consumers to follow. It was an academic study.
Boldin provides consumer subscriptions to their financial planning engine. I’ve been using it a few months now and am pretty impressed, although I impress easily…😂
I would think Kevin Lum would know the answer to this??? Does he respond to Comments?
These videos blow me away, if i had a million dollars i could invest it myself and make the same amount i'm making now . i don't who these people are but evidently not me or my people.
Consumption of beets up a whopping 37 %. ->. Roland Hedley