At What Age Do You EXPECT Your Nest Egg $ To Peak?

[Retired Expat]

^^^^ It’s fun and human nature to want a growing nest egg but the actual, better goal should be having enough money for life.

Have looked at this a lot in the past couple of years, which saw a new house, expanded travel and a general improvement in lifestyle (Business class planes, etc). Have stopped contributing to retirement funds or savings. But we aren’t spending our savings or doing RMD’s yet or collecting SS.

So unless we change our lifestyle, move to a HCOL area and become “Spenders”. I don’t see or Nest Egg or NW going down. If anything our Investments and Real Estate are appreciating quite well.

In the next 10-15 years real estate investments s which bring income now will be sold off and become Nest Egg contributions. So NE will go up while NW may stay the same.

Just one man’s plan….

 

[Lewis Clark]

According to Karsten at EarlyRetirementNow.com, the failsafe initial withdrawal rate for a 60/40 portfolio is 3.25% assuming:
* Inflation-adjusted withdrawals, as with the 4% guideline
* A 60-year time horizon, which might apply for very early retirees
* Full capital preservation. His model for capital preservation means that the inflation-adjusted ending value is greater than or equal to the beginning value.

Neither my wife nor I are likely to be alive anywhere near 60 more years. Our current withdrawal rate is at or below 3.25% and we have not yet claimed social security. But we are self-insuring for long term care.

Based on this, I expect our portfolio to reach its peak whenever the first one of us starts needing significant long term care, or we move into a facility of some type.

 

[Badger]

If I give us 15 more years (optimistically) and there is no long term nursing care involved then I figure our nest egg will not peak. We don't deny ourselves anything but we are still frugal. It is just that there is nothing of major expense that we need/want. The only thing we would like to do more of is travel but I am not as spry as before. If my wife wants to go hiking or horseback riding out west with her daughter or some friends then she makes the arrangements and enjoys a week or so while I hold down the fort.

Cheers!

 

[Andre1969]

Sorry, but have we yet talked about the effects of inflation? IOW if we all adjusted our nest eggs back to their buying power, would that change our results? I don't have enough info right now, but I'm guessing the past two years of inflation has exceeded my nominal growth. With that in mind, I guess that would be a peak - though I hope it's only a brief valley. I guess we will see. YMMV

I peaked out in late 2021/(very) early 2022, at a bit over $2.5M in invested assets. I managed to get back to around that point a few times in late July/early August of this year, although that included additional investments, some of which were quite substantial as I'd sold a house. I think I calculated that when I account for the additional investments, I'd need to be around $2.7M to truly be "made whole" again, and exceed that late 2021 peak for real.

But, throw inflation into the mix, I imagine I might need to be closer to $3M, in real dollars if I want to get to what I'd consider a new true high. Getting another $500K+ in appreciation might take awhile.

So, I guess there actually is a chance that late 2021/early 2022 might have been my peak? Time will tell.

 

[Koolau]

I think that for many of us here, we planned our saving and investing as if there were no other sources of income in our futures. IOW we built our stash as if there were no such thing as SS and (maybe) pension. I certainly did that. As it happens, in a pinch, I could live on SS and pension (I wouldn't want to do that in Hawaii, but I could.)

Based on that, I don't think many of us will see a peak - barring things like long term care. YMMV

 

[Idnar7]

No one has really talked about RMD's. Unless you all have converted a lot, I would think RMD's would eventually eclipse growth. I remember many years ago when I read Bogleheads, Jim (with an intial I can't recall) tracked his "nest egg" and claimed his peaked at age 80. As RMD's go up every year I wonder if this was considered. The whole pupose of RMD's was to leave you with zero at age 1XX.

 

[MissMolly]

No one has really talked about RMD's. Unless you all have converted a lot, I would think RMD's would eventually eclipse growth. I remember many years ago when I read Bogleheads, Jim (with an intial I can't recall) tracked his "nest egg" and claimed his peaked at age 80. As RMD's go up every year I wonder if this was considered. The whole pupose of RMD's was to leave you with zero at age 1XX.

Just because you withdraw an RMD doesn’t mean you have to spend it. I just move mine over to my taxable account after paying taxes.

 

[ERD50]

No one has really talked about RMD's. Unless you all have converted a lot, I would think RMD's would eventually eclipse growth. I remember many years ago when I read Bogleheads, Jim (with an intial I can't recall) tracked his "nest egg" and claimed his peaked at age 80. As RMD's go up every year I wonder if this was considered. The whole pupose of RMD's was to leave you with zero at age 1XX.

Because RMDs have ZERO to do with it, that's why!

The RMD is your money, whether it is in your IRA or distributed. The difference is you have less after it is taxed, but one view is it should have been discounted by that tax while it was in your IRA. No free lunch.

The whole purpose of RMD's was to leave you with zero at age 1XX.

No, it was to leave nothing IN THE IRA (so it eventually all gets taxed). It is still your money (just outside the IRA)!


-ERD50

 

[Andre1969]

No one has really talked about RMD's. Unless you all have converted a lot, I would think RMD's would eventually eclipse growth. I remember many years ago when I read Bogleheads, Jim (with an intial I can't recall) tracked his "nest egg" and claimed his peaked at age 80. As RMD's go up every year I wonder if this was considered. The whole pupose of RMD's was to leave you with zero at age 1XX.

I guess, if it's a really large amount, it might trigger enough taxes in later years to start dragging your net worth down. But otherwise, there's nothing that says you HAVE to spend the RMDs. You have to take them, but you can always invest in something else.

As for the amount you have to take out, it looks like you only have to take out about 3.65% the first year, age 72. The divisor for that year is 27.4. So, if you had $1M, you'd have to withdraw $27.4K, and pay taxes on it. That might not be too big of a bite.

However, at the age of 120, the divisor is 2. So, if you still have $1M left at that point, you have to withdraw $500K. That could be a pretty big tax bite!

I'd imagine most people die before their RMDs get to be too serious, though. For instance, even at the age of 90, the divisor is only 12.2.

 

[street]

Just did some numbers I peaked in Nov. or Dec. of 2021. The best run I had in a 12-month period was April 2020 to April 2021. However, in the last 30 days since I retired (7 years ago) I have reached the highest amount in my investment portfolio, not NW. I hope that made sense.

So, I would say my peak hasn't come yet but can't say that for certain.

 

[dheb]

My long term plan has me spending less annually than my investments should generate (on average). I know there will be down yearts, but the longer I live, the more it should grow. I expect that if things go well, at some point I'll look at the total and say to myself, I clearly have more than enough, and I'll pick some ammount to skim off and have stupid fun with. I also hope to get my act together and set up a will that would leave an endowment to a good cause, so I can continue doing something positive after I'm gone.

 

[NW-Bound]

I dunno. Perhaps the value of my stash already peaked. On March 29, 2022 to be exact.

On that date, the S&P was at 4632, and my stash also set a new high. I have not seen these numbers again, although they came close a month ago.

I need to recover to that, before I can talk of setting new highs. WR since the last peak: 1.35% of the peak. That's 1.4 years ago.

 

[Winemaker]

Have no idea. Our nest egg has been growing faster than we’ve been spending it, and has even kept up with inflation over 23 years. So frankly I haven’t expected a peak.

And we’re one of those without a residual goal. I guess we’ll keep increasing our gifting as we age.

We're in the same boat. June investment statements indicate $120,000 for this year's divvies and interest. No capital gains included. We'll only pull $30,000 of that this year, it's just crazy that things worked out that way. We are so blessed.

 

[Koolau]

Well, if megacorp stock keeps going, I just don't know. A quick calculation suggests that stock is now 15% of my NW! Yikes. I think when I retired it was more like 2 or 3%. I'm sure there is a pull-back in my future. That could be my peak, I guess.

 

[FIRE-Traveler]

After reading, and becoming a convert to a lot of the ideas in the book Die With Zero, I've realized that I need to completely adjust my lifelong goal of getting my net-worth and/or nest-egg "up and to the right".

It's a really hard perception and behavioral change to chart-out a point where I max-out... which means I pretty much have to force myself to spend more money (which is SUPER hard for me to do)... but I think that's a discussion for other threads

 

[TheWizard]

No one has really talked about RMD's. Unless you all have converted a lot, I would think RMD's would eventually eclipse growth. I remember many years ago when I read Bogleheads, Jim (with an intial I can't recall) tracked his "nest egg" and claimed his peaked at age 80. As RMD's go up every year I wonder if this was considered. The whole pupose of RMD's was to leave you with zero at age 1XX.

RMD dollar amounts do NOT go up every year; my RMD for this year is less than last year's, due to Mr. Market.
Only the RMD percentage increases each year; your 12/31 balance can decrease...

 

[Exchme]

I haven't seen anyone adjusting their recent results for the recent bout of inflation. It's depressing. We "peaked" November 2021, and are still 12% underwater on nominal basis, plus inflation has been a total of 10% since then. So inflation-adjusted, we are still 20% below the late 2021 peak.

This despite doing enough part-time work to have zero withdrawal.

 

[TheWizard]

I haven't seen anyone adjusting their recent results for the recent bout of inflation. It's depressing. We "peaked" November 2021, and are still 12% underwater on nominal basis, plus inflation has been a total of 10% since then. So inflation-adjusted, we are still 20% below the late 2021 peak.

This despite doing enough part-time work to have zero withdrawal.

It's easier to report nominal account balances and adjust the target number up for inflation.
So if $1M was your target back then, now it's $1.75M to account for inflation over the past xx years...