How MUCH Can You Really Spend in Retirement?
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- Опубликовано: 3 июн 2024
- Federal employees have some guaranteed income in retirement, but for most people it's not enough. Their TSP assets need to supplement their retirement, but how much can you safely pull out of your retirement accounts without the risk of running out of money? Thiago Glieger, federal employee financial advisor, discusses how you can figure out what to spend, and how to avoid some big mistakes to keep your retirement plan from failing.
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Хобби
I retired at my unpenalized pension date mid year during a bear market. So I waited a whole year into retirement before starting monthly installment withdrawals on my large TSP. I avoided withdrawing in a high tax bracket year when I had a half year's salary plus my sizeable leave conversion lump sum. Waiting allowed the TSP to recovery most of the way from the bear market drop so is now near its all time high. It also reduces the payout lifetime by a year. Staying in the C fund which averages 10-11% annual growth, I set the monthly installments to 6% of the current account total/12, so even if it makes a pessimistic 6% gain long term, it should still last 30 years. But since I waited a year, I only need 29 years, one year less than a 30 year theoretical payout. Unlike the 4% rule, I am not going to adjust for inflation each year because retirees tend to spend less as they age. Worst case scenario and we enter the Great Depression 2.0, I could easily afford to suspend TSP installments for a year or two, or even much longer. I have high risk tolerance due to my federal physician's salary full pension and cash safety net.
Glad to hear you're able to stop account distributions if needed, that's huge!
Helpful info. On the way!
Glad you enjoyed.
Thiago is the Best!!
We appreciate you!!
The 4% rule data started just before 1929, is this what you call good economic times?
Nope
I guess I learn something new with each video! You are using some software to help manage a clients portfolio with an emphasis on adjusting various withdrawal aspects as time rolls forward. It gives great insight. It makes my engineer brain tingle ha ha. So doing some searches it seems NewRetirement and MaxiFi are similar products. But they are not 'free' for good reason. Do you suggest using products like these? Worth spending the money?
I wouldn't say those are worth the money. I haven't used those personally, but of the various we've tried, there are only a few professional tools out there that are actually good and worth using, and they're priced accordingly. For the price of the necessary and appropriate software, you would pay less in hiring an advisory firm to do it all for you.
The biggest, and arguably most "expensive" challenge, is not using the software correctly. Generating reports is easy, understanding how to properly interpret and then make decisions from the results is the part that gets people in trouble--including some advisors. These software can give people a false sense of security as it's entirely manipulated by the entries, so a slightly incorrect entry/assumption will greatly skew the data.