JP Morgan Retirement Study

[yakers]

Saw this on the Boglehead site and have been reading it, pretty wide ranging engagement with retirement planning and outcomes.

https://am.jpmorgan.com/content/dam...etirement-insights/guide-to-retirement-us.pdf

It even had a page on why people reported that they had reitred early with 32% for medical reasons and 38% because they could afford it. Also liked the dollar cost raviging term for periodic retirement withdrawals

 

[2017ish]

Very interesting.

Some points that stood out--the percentage of gross income needed in retirement was very high for high income retirees. (Page 18) 72% for those making 300K? That would seem to assume that you spend a LOT when working...

The discussion of the 4% "rule" assumes a 40/60 portfolio, rather than a 60/40, which I don't think I'd seen before.

Thanks for passing this along!

 

[ImThinkin2019]

Thank you for posting this. It made a lot of good points that I mostly agree on.

As a recent retiree who purchased healthcare a little before age 65, then started Medicare, I found their cost estimates very close to my experience.

I am interested in the idea of using HSA to avoid or reduce RMD's. Anyone have experience on this? Can I set up an HSA at a brokerage house? Right now ours are at a bank.

 

[DrRoy]

A good study. Interesting.

 

[target2019]

It's a well-done slide deck.

I usually start with A/A when talking to the kids, such as on page 52. Vanguard used to have an interactive version of this, where you could move a slider and increase or decrease the ratio, and see average returns over the time period.

 

[DektolMan]

Thank you for sharing this. Very interesting.

 

[Midpack]

Great stuff, thanks. I just looked at the first 15 pages or so, but I plan to read through it all. Thought this was a good illustration, spending declines as we age BUT may increase substantially approaching EOL - plan accordingly.

 

[Midpack]

Also eye opening!

 

[Markola]

Terrific. Thank you. I passed this along to some family members.

Slide 34 made me grateful that we’re using Vanguard’s own dynamic spending model.

 

[COcheesehead]

…option strategies to mitigate SORR…
First time I have seen that.

 

[Dash man]

Thank you for posting this. It made a lot of good points that I mostly agree on.

As a recent retiree who purchased healthcare a little before age 65, then started Medicare, I found their cost estimates very close to my experience.

I am interested in the idea of using HSA to avoid or reduce RMD's. Anyone have experience on this? Can I set up an HSA at a brokerage house? Right now ours are at a bank.

I don’t believe you can contribute to an HSA once you begin Medicare.

 

[Rianne]

Terrific. Thank you. I passed this along to some family members.

Slide 34 made me grateful that we’re using Vanguard’s own dynamic spending model.

Similar to Firecalc. but doesn't allow for portfolio deviations. The VG calculator takes all of 2022 into account.

 

[MarieIG]

…option strategies to mitigate SORR…
First time I have seen that.

We have some members that have been doing that.

Interestingly, JP Morgan has an income ETF wherein they use options to boost income. Both the income and share value vary, and IIRC it is high risk. I nibble at it once in a while, and I mean nibble, like a share at a time, in an IRA (because it would generate a high percentage of taxable income). I am not recommending it, I just find it worth watching - for now.

 

[TheWizard]

I guess I don't agree with slide 49 which shows retirees needing more emergency reserves than working people, since we retirees aren't going to lose our source of income in retirement.

But maybe that depends on how "FAT" a retiree's income is.
If a retiree just planned on enough income to cover "basic" expenses, then $1200 for a new set of tires for your pickup can seem like an emergency.

OTOH, I have excess retirement income almost every month now that I toss into my taxable investment account. I suppose that might look like a (continually growing) emergency fund to a forensic accountant, but I don't look at it that way...

 

[MarieIG]

I skimmed it briefly last night, but am pretty useless at night and couldn't see the foot notes. We're having company today, so I may not get around to reading it closely until Monday. I got a kick out of the SS map.

 

[Closet_Gamer]

Exceptionally well done. I learned a lot, particulary on the puts-and-takes of the government programs.

Thanks for sharing!

 

[audreyh1]

As a recent retiree who purchased healthcare a little before age 65, then started Medicare, I found their cost estimates very close to my experience.

I am interested in the idea of using HSA to avoid or reduce RMD's. Anyone have experience on this? Can I set up an HSA at a brokerage house? Right now ours are at a bank.

I don’t believe you can contribute to an HSA once you begin Medicare.

Right.

And I can’t imagine how an HSA would avoid or reduce RMDs anyway. Maybe someone can enlighten me. It might reduce how much you need to withdraw from an IRA to meet living expenses, but that wouldn’t reduce the RMD.

 

[MarieIG]

Right.

And I can’t imagine how an HSA would avoid or reduce RMDs anyway. Maybe someone can enlighten me. It might reduce how much you need to withdraw from an IRA to meet living expenses, but that wouldn’t reduce the RMD.

Maybe some people choose to use an HSA (to a certain extent) in lieu of an IRA? I don't see how it would reduce RMDs either.

 

[COcheesehead]

Right.

And I can’t imagine how an HSA would avoid or reduce RMDs anyway. Maybe someone can enlighten me. It might reduce how much you need to withdraw from an IRA to meet living expenses, but that wouldn’t reduce the RMD.

You can’t contribute to an HSA after 65 and RMDs don’t start until later so that’s a head scratcher for me too.

 

[Midpack]

Another cool graphic/decision tree.

 

[audreyh1]

Maybe some people choose to use an HSA (to a certain extent) in lieu of an IRA? I don't see how it would reduce RMDs either.

That also assumes they have limited saving ability such that they can’t do both.

 

[Al18]

I like many of the decision trees about SS and Medicare, and also the different retirement recommendations based on less than or greater than $100,000 income during your working years.

I did not like the retirement planning guides extending to age 100 near the beginning of the presentation. Statistics say most of us will pass away long before then. According to the CDC in their NVS report released on August 23, 2022 the average life expectancy at birth was reduced 1.8 years from 2019 to 2020. In this report, the average life expectancy at birth in the US is 77.0 years and at age 65, the life expectancy is 18.5 years. Link to the report https://www.cdc.gov/nchs/data/nvsr/nvsr71/nvsr71-02.pdf

 

[JackJester]

Thx. I sent this to some friends still working that are nervous about seeing their 401Ks drop the last year+. I like the slide 46 chart about "Impact of Being Out of the Market" and reasons not to panic and try and time the market. It says...for the S&P 500, "Seven of the 10 best days occurred within two weeks of the 10 worst days". If you missed those 10 days you missed out on 4.2% of earnings. Some might say, 'well, I was all-in on Bonds at that time so I earned 4.2%' (thus a wash). But as the chart further shows, if you missed the 20 best days, you missed out on 6.9% of earnings. Bonds aren't going to make up for that. Lesson: You just gotta find your long-term AA and then maintain discipline in these tough times and re-balance periodically to keep your AA.

 

[donheff]

Nice deck. I saved it to send a copy to my son and noticed I had one by them from 2018. I didn't open it to see how much they have changed.

 

[CRLLS]

One that caught my eye was that for a couple at age 65 today and in good health, they have a 19% chance of one living to age 100. That's one in five people. Amazing! Our planning only goes to age 100.

Another statistic that I saw was that a full 1 in 3 people retire earlier than expected due to downsizing. I have to admit that I was in that last group at age 55.