I recently had a discussion with a friend about financial advisors. He knows that I don't have one.
A comment: He loves having a FA, because he can just forget about money, and feel like his FA is taking care of everything. He also feels the FA will more than make up for his fees with improved gains in his investments.
I believe he may have mentioned me to his advisor, and he relayed the following comment from him: Anyone can accumulate the necessary money to be FI, it is much more difficult to devise a successful withdrawal strategy in retirement. The obvious conclusion from this statement is that it is too complex for the average person (me), and a FA is needed.
Here is a summary of my planned withdrawal strategies. Possibly too simplistic, but I think I have the basics covered. I would very much appreciate your comments and recommended changes to my plans.
Starting point:
- No pensions.
- No debt.
- Paid off home.
- We tend to have a LBYM lifestyle, but we also plan on doing some extra travel and splurging.
- Planning on FIRE at 58.
Retirement withdrawal strategy:
- Keep 2-3 years worth of planned annual 401K/IRA withdrawals in a money market account. This is the money we will live on, and hopefully it will allow us to ride out a market correction without selling a bunch of funds at low levels.
- Keep the remainder in a 60/40 allocation in low cost Vanguard mutual funds.
- Live on 4% of the invested amount, plus SS. Note: We may go up to 5% during the first four years of retirement, prior to receiving SS.
A comment: A 4% withdrawal rate plus our SS will give us more monthly income than we live on right now factoring in taxes.
- I wasn't planning on an annuity. Possibly something to consider moving forward.
- I might do some 401K to Roth conversions if our income is lower than 72K for that year.
- I'm going to let the market decide if I collect SS at 62. If it is a good year prior to this, I will use those gains to delay SS for another year. If the market is way down, I'm going to take SS at 62. Possibly a silly SS plan, but I kind of like it for some reason.
Thanks in advance for your comments.
JP
A comment: He loves having a FA, because he can just forget about money, and feel like his FA is taking care of everything. He also feels the FA will more than make up for his fees with improved gains in his investments.
I believe he may have mentioned me to his advisor, and he relayed the following comment from him: Anyone can accumulate the necessary money to be FI, it is much more difficult to devise a successful withdrawal strategy in retirement. The obvious conclusion from this statement is that it is too complex for the average person (me), and a FA is needed.
Here is a summary of my planned withdrawal strategies. Possibly too simplistic, but I think I have the basics covered. I would very much appreciate your comments and recommended changes to my plans.
Starting point:
- No pensions.
- No debt.
- Paid off home.
- We tend to have a LBYM lifestyle, but we also plan on doing some extra travel and splurging.
- Planning on FIRE at 58.
Retirement withdrawal strategy:
- Keep 2-3 years worth of planned annual 401K/IRA withdrawals in a money market account. This is the money we will live on, and hopefully it will allow us to ride out a market correction without selling a bunch of funds at low levels.
- Keep the remainder in a 60/40 allocation in low cost Vanguard mutual funds.
- Live on 4% of the invested amount, plus SS. Note: We may go up to 5% during the first four years of retirement, prior to receiving SS.
A comment: A 4% withdrawal rate plus our SS will give us more monthly income than we live on right now factoring in taxes.
- I wasn't planning on an annuity. Possibly something to consider moving forward.
- I might do some 401K to Roth conversions if our income is lower than 72K for that year.
- I'm going to let the market decide if I collect SS at 62. If it is a good year prior to this, I will use those gains to delay SS for another year. If the market is way down, I'm going to take SS at 62. Possibly a silly SS plan, but I kind of like it for some reason.
Thanks in advance for your comments.
JP