Hmmm ... how bout when you make $38k a year? I plan to work part-time after retirement, but I'm pretty sure I will still be below the poverty level. Depressing to think about. I hope to have about $100k in my IRA's so, any suggestions?
Hey James. So a few some months ago I was ready to retire based on 4 percent rule. I know it is a general guide. Today though after the market dropped, my chances are reduced based on the same rule. So 6 months ago I was ready to retire, but today less so. How would a person handle such a situation ?
Don't retire until your savings balance is 30% over your planned retirement savings balance. This way, you're protected from 'sequence of return' risk (if there's a stock crash shortly after retiring).
Over the last 6 months the market has dropped 10%. You had to know this was going to happen. If you Google stock market corrections, they happen on average every two years. 4% plus inflation withdrawals are the worst case scenario in almost every scenario you end up with more money than you started with While this isn't the best scenario you could dream of it's extremely common. You may want to think about working with a fee only advisor to help you through these and all the future turbulent times
@@larryjones9773 Maybe if you're in the FIRE movement. I would tell Johny JSL to look a alternatives other than the 4% rule. James has a good video at ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-gS42j3u37AY.html.
I don't get the adjust for inflation. Depending on what withdrawal method you use I guess it could make a difference. But using 4% plus inflation you simply increase your portfolio every year by whatever inflation is. You have to assume that your portfolio will keep up with inflation. Historically using 4% plus inflation has worked, of course there are no guarantees and I suggest you have a little flexibility in case things go south. The best way to fight inflation is to be as heavy in stocks as you can stomach.
You figure out your tax liability and add that to your budget. You should be doing this at least 10 years or more before retirement You need to know your tax liability in retirement so you can make a decision on Roth and traditional retirement accounts. You want to take advantage of the standard deduction and lower tax brackets and retirement of traditional and then put the rest in a Roth If you mean how do you pay it you simply have the fund company withhold the money or you file quarterly tax payment.
One more important thing. This analysis is to determine if you can retire with the same kind of lifestyle or standard of living as pre-retirement. Assume your calculations show you can't. You have to make sure you're not going to live in poverty so project into the future what the poverty line will be to ensure you're above the low water mark. If you're somewhere in between poverty and your current lifestyle, you're safe but have to make adjustments.
If your current lifestyle includes travel and vacation, then it won't be that much more in retirement if you're going to travel and vacation the same way. So you won't need to add that much. But health insurance premiums for Americans will increase for seniors.
But you'll no longer have to pay social security tax or save for retirement. There are many expenses you won't have in retirement that you did working. That being said you need to figure out your budget and leave some wiggle room for health insurance premiums to rise along with everything else
Opps. $40,000 sustainable income makes you what a 2 - 5%er in retirement not sure but when you consider the number of Americans and 50 and above whom have less than $25,000 you see why Walmart is so successful and Nieman Marcus is not.
Only $20,000? That is an effective tax rate of about 17%, which is actually pretty high for that income. Remember, if that's a married couple filing a joint return, the first $24,000 is tax free!
