# Not a sugar coated reply to slowpoke 19 questions



## Knight (Dec 16, 2017)

1.When we retire should we tap into our retirement accounts first?

You need to know how the retirement accounts work. Do you set the amount or does the plan force you to draw the accounts down in 15 years? Life span of 30 years using only the $225,000.00 equals $7,500.00 a year plus what ever you both may get at 62 if available at 62. If the plan forces 15 years naturally that will be $15,000.00 a year.


2.use our personal savings for living expenses? 


Using the $100,000.00 in CD's since you seem not to be good with risk, a choice only you can make. 




3.Should we start drawing our SS right away? 


Looking at what you have to live on if retiring at 62 depends on so many unknowns. Your health, your life style, taxes, utility expense, food and everything a steady paycheck pays for now. Depending on Soc. Sec. to keep you in your home may be your only option. 


BUT


The elephant in the room. Will that $225,000.00 be drawn down in 15 years leaving you with zero in your retirement accounts when you are 77 with 15 more years to go. The unknown or potential of a 23% cut in Soc. Sec. 17 years from now, with everything used up makes having a home, eating, & living as you hoped for looking forward doubtful.


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## mathjak107 (Dec 16, 2017)

a safe withdrawal rate for a 225,000 dollar portfolio using fixed income only is just 6500.00 a year .

*FIRECalc Results*

Your spending in every year after the first year will be adjusted for inflation, so the spending power is preserved. 
FIRECalc looked at the 117 possible 30 year periods in the available data, starting with a portfolio of $225,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 117cycles. The lowest and highest portfolio balance at the end of your retirement was $-24,722to $691,518, with an average at the end of$147,992. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)
For our purposes, failure means the portfolio was depleted before the end of the 30 years.FIRECalc found that 7 cycles failed, for a success rate of 94.0%.

the problem is trying to draw 7500 inflation adjusted is it failed to many times to last already .

*FIRECalc Results*

Your spending in every year after the first year will be adjusted for inflation, so the spending power is preserved. 
FIRECalc looked at the 117 possible 30 year periods in the available data, starting with a portfolio of $225,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 117cycles. The lowest and highest portfolio balance at the end of your retirement was $-61,413to $626,373, with an average at the end of$105,714. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)
For our purposes, failure means the portfolio was depleted before the end of the 30 years.FIRECalc found that 17 cycles failed, for a success rate of 85.5%.


if you use a 50/50 mix it can support 9000 a year .


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## mathjak107 (Dec 17, 2017)

in the above stress testing just the 117 30 year time frames we have had to date  , demonstrate  how using  fixed income only is the riskiest  way to go and for all their volatility equities end up smoothing out and become very predictable . a mix of equities and bonds work best .

don't fall for any of this you need lots of cash for down markets either . it will not be stocks you would be selling off to rebalance and raise cash in a severe down market . while it sounds good   ,like it will do something positive for you , in reality it is a situation that likely will not be . it will always be the bonds sold off and if anything, very likely stocks will have to be bought in a downturn to rebalance back up .


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## Knight (Dec 17, 2017)

Considering the input of slowpoke19 risk is not tolerated well. The amounts set aside for retirement whether $7500.00 or a safe $6500.00 going from whatever their combined income is now to a combined Soc. Sec. & either of those isn't going to be easy. If once they begin their 403b's are drawn down in 15 years, their standard of living will decrease even more. 

The $100,000.00 in CD's doesn't translate to much over a 30 year period. I guess it all depends on what  slowpoke19 and his wife are used to and what they will have to adapt to once they walk away from  steady paychecks.


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## mathjak107 (Dec 17, 2017)

Knight said:


> Considering the input of slowpoke19 risk is not tolerated well. The amounts set aside for retirement whether $7500.00 or a safe $6500.00 going from whatever their combined income is now to a combined Soc. Sec. & either of those isn't going to be easy. If once they begin their 403b's are drawn down in 15 years, their standard of living will decrease even more.
> 
> The $100,000.00 in CD's doesn't translate to much over a 30 year period. I guess it all depends on what  slowpoke19 and his wife are used to and what they will have to adapt to once they walk away from  steady paychecks.


it is impossible to say what others need .  i can only say what we need  and the lifestyle we want in our last down of life .

could we live on that ? sure .... would we want to ? not on your life


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## Knight (Dec 17, 2017)

mathjak107 said:


> it is impossible to say what others need .  i can only say what we need  and the lifestyle we want in our last down of life .
> 
> could we live on that ? sure .... would we want to ? not on your life


 I think we agree we our responsible for our own well being. Retirement if planned for not only meets needs but can include "wants". My hope is anyone in their 50's that reads what we've been posting will take a hard look at where they are and where they want to be when for whatever the reason they no longer draw a steady wage will not depend heavily on Gov. to have shelter & food.


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## mathjak107 (Dec 17, 2017)

that is why these forums and discussions are good . to many look at the lump sum and go wow ,we have a lot of money. but they fail to understand not only is that pile only worth the safe income it  can generate but it has to be based on the worst outcomes .

many  also don't get the fact the the riskiest choice is all fixed income . the safest a balanced portfolio


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