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Managing Money in Retirement IV: A Simple Withdrawal Strategy Works Best
This is the fourth of a series of posts on retirement withdrawal strategies. If you haven’t read Managing Money in Retirement I, II and III, you may want to read them first. In previous posts, we reviewed the sustainable withdrawal rate (SWR) and safety first schools of retirement planning, one focusing on portfolio withdrawals that will work through thick and thin, the other on establishing reliable income for essential needs. We worked our way through the options for building a fail-safe source of lifetime income – perhaps the floor of a floor-and-upside retirement strategy. Delayed social security and pensions fit the bill, other mechanisms have their pluses and minuses. Is…
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Managing Money in Retirement III: One Annuity You Should Buy
This is the third of a series of posts on retirement withdrawal strategies. If you haven’t read Managing Money in Retirement I and II, please read them first! In the last post, we explored the options for generating a lifetime income, something most retirees would find desirable and reassuring. Social security fits the bill, but may not be sufficient to cover essential expenses. Most people today don’t receive pensions, and the other options – bond ladders and annuities – have significant disadvantages (as well as some attractive features). But there is one source of lifetime income that stands out from the pack. An annuity that is a good deal Most…
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Managing Money in Retirement II: Income for a Lifetime
This is the second of a series of posts on retirement withdrawal strategies. If you haven’t read Managing Money in Retirement I, please read it first! Most of us would feel more comfortable having a reliable source of income in retirement — at least enough to cover our essential needs – rather than being completely at the mercy of uncertain investments in stocks, bonds, real estate or more exotic things. As a practical matter, though, how can we go about building the floor of a floor-and-upside strategy? First, let’s define what we’d like in the ideal world. The best source of income would be an inflation-indexed payment, lasting for…
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Managing Money in Retirement I: How Much Can I Withdraw?
Welcome back, and Happy New Year! My first posts covered how much to save for retirement. In the next several posts, I explore how to manage savings and withdrawals once you’re in retirement. OK, so you’ve made the break, attended your last office party, and are no longer punching a clock. How should you handle your savings? How much can you withdraw and spend every year? Wait a minute, you say – didn’t the last couple of blogs already answer that question? Why not withdraw 4% of your savings in the first year, then increase that with inflation each year to keep the purchasing power the same? Well, you would…