Striking balance in retirement

first_imgSo, how much is it safe to spend? While opinions vary widely on an exact number, there is a broad agreement among financial planners that if you don’t want to run out of money in retirement you’d better not take out a lot at first. Somehow this sensible warning has morphed into broad-brush rules of thumb that are thrown around indiscriminately, such as don’t withdraw more than 4 percent of the value of your portfolio the first year in retirement. With enough caveats, such a rule can make sense. The Schwab Center for Investment Research, a unit of the Charles Schwab brokerage firm, recommends a “4 percent solution” for “conservative-to-moderate investors” who want “a very high level of confidence” of maintaining their standard of living for a retirement lasting 30 years. That means withdrawing 4 percent of the portfolio value the first year, then increasing the amount each year to keep up with inflation. As a rule of thumb, that’s OK. Still, you have to consider many other factors, including whether you want to spend more the first few years while you are younger; any other sources of income you may have; your tax situation; and how much if anything you want to leave to your heirs or charity. That’s why, when our turn comes, we’ll evaluate our situation each year and modify our plan if needed. As a Schwab Center spokesman said, “The key is to strike a balance between not running out of money prematurely and maintaining a reliable standard of living.” (Humberto Cruz can be reached at [email protected] or c/o Tribune Media Services, 2225 Kenmore Ave., Buffalo, NY 14207. Personal replies are not possible.)160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set! In 10 years, when we will be in our 70s, we could use some of the money now invested in the stock funds to create another 10-year income stream while the rest continues to grow. Or we could buy an immediate annuity guaranteeing an income for life to cover basic expenses such as food and housing while making systematic withdrawals from the rest of our portfolio for discretionary expenses. Or we could simply start making systematic withdrawals from our portfolio to cover all expenses, confident we have enough to last a lifetime. We lean toward the latter approach. “You can change how much you withdraw each year, and you have the flexibility to make `big’ withdrawals for special needs,” explains “Strategies for Managing Retirement Income,” a workbook for financial professionals developed by NAVA (formerly the National Association for Variable Annuities) and the International Foundation for Retirement Education. You also can pass more of your money to heirs or to charity. On the other hand, if we are not careful, we could run out of money. “If you are a `spender,’ stay away from this (systematic withdrawal) option” and consider a lifetime annuity for at least part of your retirement income, the workbook advises. To generate lifetime income in retirement, my goal is to tap our savings and investments as needed without having to rely on insurance company guarantees. If it turns out my wife, Georgina, and I need those guarantees, or if insurance products such as lifetime income annuities become more attractive, we stand ready to change our plan. But for now we favor what financial planners call a “systematic withdrawal” strategy, one we intend to personalize rather than rely on rules of thumb. Last week I explained we use a variety of income sources during our semi-retirement. Our fixed-income investments, with the principal to be liquidated at maturity, will cover our anticipated expenses for about 10 years while another chunk of our portfolio, mostly in stock mutual funds, is left untouched. last_img


first_imgGoing back to the clink: LaffertyA NOTORIOUS Donegal burglar has been given an extra two months behind bars after making a death threat – in court!Matthew Lafferty has a string of previous convictions for breaking into homes and drugs offences. The 22-year-old is serving a five year sentence for an aggravated burglary at a home in Co Mayo in which he terrorised an elderly couple.That conviction followed his arrest her for terrorising a pensioner near Kilmacrennan.Letterkenny District Court heard that during a court appearance there on September 9 last year Garda Brendan McMahon had witnessed the threat.“It was at 10.45am and Mr Lafferty was seen holding his hand up and making a cut throat gesture in the direction of a Mr Dean Kelly. He could also be seen mouthing words ‘I’m going to kill you’.Lafferty, formerly of Ballykeeran Kilmacrennan and now with an address at Castlerea Prison, admitted one charge of threatening behavior in a public place.Defence solicitor Patsy Gallagher told Judge Paul Kelly: “Mr Lafferty is no stranger to the court and to yourself.“He is now 22 and he has spent a considerable period of his life in custody, mainly due to his savage drugs and drinks addiction.“He has committed numerous offences – one of them as we know even in this court.”Mr Gallagher said Lafferty had a “very short fuse” but was making progress in prison and was now drugs free.“There is no defence on this charge – it was done in full view of everybody. He has a substantial criminal record at this stage; and work is underway to prevent it getting any longer when he gets out. We are on the right track.”Judge Kelly jailed Lafferty for another two months.2 EXTRA MONTHS BEHIND BARS FOR BURGLAR WHO MADE DEATH THREATS IN COURT was last modified: June 17th, 2014 by John2Share this:Click to share on Facebook (Opens in new window)Click to share on Twitter (Opens in new window)Click to share on LinkedIn (Opens in new window)Click to share on Reddit (Opens in new window)Click to share on Pocket (Opens in new window)Click to share on Telegram (Opens in new window)Click to share on WhatsApp (Opens in new window)Click to share on Skype (Opens in new window)Click to print (Opens in new window) Tags:donegaljailejailedLetterkenny Circuit CourtMatthew Laffertylast_img read more