E-mail | 407.644.9411
Social Security Goes RED
View Comments(3) :: Add Comment
David Witter says:
Posted February, 25 2010
David, thank you for the question. The safe withdrawal rate of 4% (from a mix of equities and bonds) assumes increased $ withdrawals in future years due to inflation. But, since you need $100k after taxes from a 401k, you must take out ~$150k pretax to net the $100k needed.
What’s more important is how you have your $2.2 million invested… If it does not have exposure to equities, 4% is most likely NOT a safe withdrawal rate over 30 years because fixed income (CDs, bonds, MM, stable value) historically do not beat inflation, meaning you run out of money. Secondly, employing passive investment philosophies with a three-factor model strategy captures equity market premiums efficiently while defining risk and often reducing turnover, tax and management costs.
What’s more important is how you have your $2.2 million invested… If it does not have exposure to equities, 4% is most likely NOT a safe withdrawal rate over 30 years because fixed income (CDs, bonds, MM, stable value) historically do not beat inflation, meaning you run out of money. Secondly, employing passive investment philosophies with a three-factor model strategy captures equity market premiums efficiently while defining risk and often reducing turnover, tax and management costs.
Mark Matson says:
Posted February, 25 2010
Great point about the myth of a Social Security "trust fund." It is the biggest Ponzi Scheme of all and as you pointed out investors better not depend on it for the future. Thanks Dave.
David U says:
Posted February, 23 2010
David, if I need 100K after taxes out of my 401K and have 2.2M in my 401K, how short am I from my goal to live 30 years?
I assume you will adjust this for inflation and growth on the 401K. Thank you Sir. :-)
I assume you will adjust this for inflation and growth on the 401K. Thank you Sir. :-)