! Determining Your Allocation at Retirement
Charles Rotblut, CFA is a vice president at AAII and editor of the AAII Journal. Follow him on Twitter at twitter.com/CharlesRAAII.


George from TX posted over 6 years ago:

Do the retirement withdrawal strategies that assume a 4% annual withdrawal assume taxes are paid before calculating the 4% amount, or do the taxes also need to be paid from the 4% annual allocation?

Richard from IL posted over 6 years ago:

Are dividends that you receive in cash counted as part of the 4% withdrawal rate, or is only the redemptions that you withdraw from funds/etfs/stocks count as part of the 4%?? In other words, is only the money taken from your capital( invasion of principal) counted towards the 4% withdrawal rate?

Tom from GA posted over 6 years ago:

Withdraw to me is the amount needed to live and enjoy minus current incomes ie. pension social security, interst and dividend income. If you planned correctly withdraw from your nest egg will only be needed in time of large purchase or income shortfall . my nest egg continues to grow as well as my savings even in retirement. and my yearly income is larger than my living expenses. I live very very well. I tell people to always live well under your means during your working life, so you can truly enjoy and live above your means during your retirement. Don't keep up with the Jones, most of the Jones will never retire.

John from CO posted over 6 years ago:

Whatever the required necessary income no. is, the overall total can include dividends, social security, pension, etc. It is my preference to use this as income rather than disturb the principal. The end result is you need 'X" number of dollars to live on. Whether you want to withdraw 4% plus dividends , etc. or withdraw a certain percentage, is just a matter of semantics.

Don from VA posted over 6 years ago:

I think a safe strategy is to withdraw a fraction of your principle each year. For example, if you plan to live another 30 years (and who doesn't) then withdraw 1/30th of the total asset value the first year. And then 1/29th the second year. And 1/28th the third year. And so on. This means you will run out of principal the 30th year which is when you plan to die. (Well you plan to die sometime don't you?) This means your withdrawals will be "adjusted" by performance and you will have to live within your means. Any surprises here?

Live good and donate to charity or relatives in the good years and cut back in the down years. The main advantage of this approach is to not worry about what the future brings. It adjusts your life style and spending to your situation. Just like you have done all your life. Simple but elegant.

Ken from CA posted over 6 years ago:

Can you direct me to an article on fixed annuities. I'm talking basic information.

Thank You

Donald Myers from AZ posted 9 months ago:

I don't have any explanation for it but it seems strange that all the comments are 5 years old.

We have been retired for more than twenty years and still maintain a 60-70%/30% mix of equities and bond funds. We are using RMD as a withdrawal strategy (although nearly half of our assets are in taxable or Roth accounts and essentially we are making no withdrawals from those so the bottom line is that neither of the two quoted authors are relevant to us)

I would guess it has changed over the years but in all the discussions I see no mention of what fraction of retirees are living on RMD (plus perhaps pension and Social Security). I would like to see more articles and discussions that are relevant to that group.

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