The Ten Commandments of Financial Happiness by Jean Chatzky

Author:Jean Chatzky
Language: eng
Format: epub
Publisher: Penguin Publishing Group

Making Sure Your Money Lasts

So you learn these lessons. You accumulate; your money grows. And then you retire. You stop earning and have to make whatever you’ve stockpiled last another thirty years or so. That final piece of the money management puzzle is often forgotten or ignored. Using what you’ve accumulated simply isn’t as exciting as accumulating it in the first place. But it’s just as important, if not more so, and just as challenging.

We have long known that there are two keys to making retirement assets last as long as you do: asset allocation and managing your stream of withdrawals. New research from T. Rowe Price shows that managing withdrawals is more important.

Take a person with $600,000 in savings and a life expectancy of 25 years at retirement. If she limits her annual withdrawals to 4 percent of her portfolio ($2,000 a month to start), whether she puts 60 percent or 80 percent of her money in equities, she still has an 80 percent chance of meeting her retirement goals. But if she were to withdraw 5 percent a year ($2,500 a month to start), she’d have only a 50 percent chance of meeting those goals even if she put 90 percent of her money in equities. With more conservative investments, her chances would drop below 50 percent, and clearly that’s nowhere near safe enough.

How can you increase your own chances of retirement success?

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.