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info:wsj_bulletproof_nest_egg_june_14_2008

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info:wsj_bulletproof_nest_egg_june_14_2008 [2008/06/14 20:20] – tomgeeinfo:wsj_bulletproof_nest_egg_june_14_2008 [2008/06/14 20:23] (current) – tomgee
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 Increasingly, financial planners and researchers are warning clients that the timing of retirement -- in other words, the luck of the draw -- will largely determine how a nest egg will fare in the future. If you're fortunate enough to retire at the beginning of a strong bull market, such as the early 1990s, your savings might easily last for three decades. If you're unlucky enough to retire at the start of a bear market or recession -- say, early 2000 or late 2007 -- you could find yourself struggling financially for years to come. Increasingly, financial planners and researchers are warning clients that the timing of retirement -- in other words, the luck of the draw -- will largely determine how a nest egg will fare in the future. If you're fortunate enough to retire at the beginning of a strong bull market, such as the early 1990s, your savings might easily last for three decades. If you're unlucky enough to retire at the start of a bear market or recession -- say, early 2000 or late 2007 -- you could find yourself struggling financially for years to come.
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 To find out how people approaching retirement, and those already retired, can safeguard their savings from tough economic times, we surveyed strategists throughout the financial-planning community. While there's no single best way to tap your nest egg in later life, the following techniques can help minimize any damage to your investments -- regardless of when you retire. To find out how people approaching retirement, and those already retired, can safeguard their savings from tough economic times, we surveyed strategists throughout the financial-planning community. While there's no single best way to tap your nest egg in later life, the following techniques can help minimize any damage to your investments -- regardless of when you retire.
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 First, the probability of depletion: Is your portfolio's value higher on the fourth anniversary of your retirement than when you stopped working? Match your answer with your initial withdrawal rate to see your chance of running out of money within 20 years. First, the probability of depletion: Is your portfolio's value higher on the fourth anniversary of your retirement than when you stopped working? Match your answer with your initial withdrawal rate to see your chance of running out of money within 20 years.
-INITIAL WITHDRAWAL RATE YES NO +|INITIAL WITHDRAWAL RATE |YES|  NO| 
-5% 0% 7% +|5% |0%|  7%| 
-6 2 38 +|6 |2 |38| 
-8 6 72+|8 |6 |72|
  
 Next, Mr. Otar compares a person's chosen withdrawal rate with what he calls "sustainable withdrawal rates" -- those rates that, based on his research, give a nest egg a 90% probability of survival. Here are some examples: Next, Mr. Otar compares a person's chosen withdrawal rate with what he calls "sustainable withdrawal rates" -- those rates that, based on his research, give a nest egg a 90% probability of survival. Here are some examples:
info/wsj_bulletproof_nest_egg_june_14_2008.1213489225.txt.gz · Last modified: 2008/06/14 20:20 by tomgee