Q&A: Spend $500k at a 4% Rate (And Much More) Example
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Published 2024-05-06
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We’ll address that question, and more importantly, fiddle around with some numbers to illustrate some essential concepts for retirement income planning.
We’ll look at how earnings on your retirement savings can help stretch your assets. Plus, we’ll see how inflation, market crashes, and adjustments to your spending might look in a simplified model.
The amount you withdraw from savings can supplement income from Social Security and other sources. But it’s important for that money to last for the rest of your life. The amount you spend affects how long your money will last, but investment returns and inflation are also important.
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CHAPTERS:
0:38 Question on Spending 4% of $500,000
1:56 Add Some Earnings
4:28 Market Losses and Spending Adjustments
7:04 Spending Patterns (Go-Go, Slow-Go, No-Go & Spending Smile)
Justin Pritchard, CFP® is a fee-only fiduciary advisor who can work with clients in Colorado and most other states.
IMPORTANT:
It's impossible to cover everything you need to know in a video like this. The only thing that's certain is that you need more information than this. Always consult with a CPA before making decisions or filing a tax return. This is general information and entertainment, and is not created with any knowledge of your circumstances. As a result, you need to speak with your own tax, legal, and financial professional who is familiar with your details. This video is not a substitute for individualized, personal advice. Please verify with your plan administrator when employer plans are involved. This information may have errors or omissions, may be outdated, or may not be applicable to your situation. Investments are not bank guaranteed and may lose money. Opinions expressed are as of the date of the recording and are subject to change. “Likes” should not be considered a positive reflection of the investment advisory services offered by Approach Financial, Inc. The Comments section contains opinions that are not the opinions of Approach Financial, Inc., and you should view all comments with skepticism. Approach Financial, Inc. is registered as an investment adviser in the state of Colorado and is licensed to do business in any state where registered or otherwise exempt from registrat
All Comments (21)
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Want me to look over your numbers? You've got options. Check out the website for more information: www.approachfp.com/ Note: I do not discuss offerings, pricing, etc. in these comments. Please proceed to the website, where you can find a substantial amount of detail.
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Excellent demonstration. Time to pull out the spreadsheet and make something similar. Looks like a fun way to predict potential outcomes. Thank you.
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As always, clear, concise and relatable content. Thank you Justin for the time and effort in making these videos. Sincerely, A Grateful Viewer
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Outstanding vid, Justin; thank you!
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Very clear explanations - Thanks!
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Thanks as always for your content.
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Thank you valuable information
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Really good financial teaching !! Thanks!
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love love love your videos
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Great Job, Justin! Thank you for using Average Joe amounts!
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Now I understand . Thank You
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My 401k stands at 500k this week. Very intuitive explanation. It shows factors to be considered easily.
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i'm in my mid 50s - retired at 44, I don't plan on living another 30 years. living until mid 80s isn't realistic for most people. from what i've seen over the last 20 years, I have seen most people die either in their mid 60s or late 70s. I know what statistics say and all, but the reality is that most die well before 80.
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Wonder how many folks are on the 'pile under the mattress' plan , not earning any interest or gains anywhere . i heard someone ask that if their tokens were 'in cold storage if would stay at that price , right?' . thanks for doing 500k while most vids are talking 7 digits which is scary far away
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How can I get my hands on that excel spreadsheet?
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I want to keep my money where there is zero risk and is immediately available.
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Wait a minute. My understanding of the 4% rule is totally different. I thought the idea was to NOT to take a fixed amount based on 4% in year one, but rather to take 4% of the principle, whatever that is, each year. When the market is up, you take more, when it's down, you take less.
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What software do you use which allows you to test future tax returns?
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$20k a year and 3% inflation??
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at 5% return on $500,000 wouldnt you get $25,000 return not $24,000 the first year?
