{"id":425935,"date":"2022-04-02T23:13:00","date_gmt":"2022-04-02T20:13:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/how-to-make-your-money-last-in-retirement\/"},"modified":"2022-04-02T23:13:00","modified_gmt":"2022-04-02T20:13:00","slug":"how-to-make-your-money-last-in-retirement","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/how-to-make-your-money-last-in-retirement\/","title":{"rendered":"#: How to make your money last in retirement"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a35a66570d44\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a35a66570d44\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/how-to-make-your-money-last-in-retirement\/#%E2%80%9C_How_to_make_your_money_last_in_retirement%E2%80%9D\" >&#8220;: How to make your money last in retirement&#8221;<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/how-to-make-your-money-last-in-retirement\/#Richard_Connor\" >Richard Connor<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"%E2%80%9C_How_to_make_your_money_last_in_retirement%E2%80%9D\"><\/span>&#8220;: How to make your money last in retirement&#8221;<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<h2 class=\"article__subhead\" itemprop=\"alternativeHeadline\">\n<\/h2>\n<p><\/p>\n<div class=\"column column--full article__content\">\n<div class=\"article__side\">\n<div class=\"container--sticky not-active\">\n<div id=\"cx-next\" data-nosnippet>\n              <\/div>\n<\/p><\/div>\n<\/p><\/div>\n<div id=\"js-article__body\" class=\"article__body article-wrap at16-col16 barrons-article-wrap\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0000741217\" role=\"document\">\n<div class=\"barrons-article-ad-wrapper\">\n<div data-track=\"barrons-article-ad-wrap\" class=\"barrons-article-ad sticky_item\">\n<div class=\"barrons-main-article-ad-target sticky_target body_ad\" aria-hidden=\"true\"><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<div data-layout=\"\n                inline\" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetArticleReader\n              \n              inline\n  article__inset\n          article__inset--type-InsetArticleReader\n              article__inset--inline\n  \"><\/p>\n<div class=\"media-object-article-reader\">\n<div class=\"audioplayer\" data-sbid=\"WP-MKTW-0000741217\" role=\"region\" aria-label=\"Listen to Article\" tabindex=\"-1\" id=\"articlereader\" data-show-title=\"false\" data-theme=\"wsj-article-reader\" data-show-header=\"false\" data-show-subscribe=\"false\" data-ads-enabled=\"true\" data-save-publication=\"false\">\n        <\/div>\n<\/p><\/div>\n<\/p><\/div>\n<p>       Lots of research has been done on the best way to generate retirement income. It\u2019s one of the most popular financial topics. I think this popularity is driven by two things: its obvious importance\u2014and the fact that there\u2019s no one right answer.<\/p>\n<p> By contrast, figuring out\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/humbledollar.com\/money-guide\/financial-calculators\/\" class=\"icon none\">how much<\/a>\u00a0we need to save for retirement is relatively easy. It isn\u2019t hard to pick a future retirement date, or at least a range of years during which we\u2019ll likely retire, and then figure out how much we ought to be saving. But when it comes to generating retirement income, none of us knows how long we will live, what markets will do or what our healthcare needs will be. There are also subjective questions, like how much do we want to leave to our heirs?<\/p>\n<div class=\"paywall\">\n       <strong>Read:<\/strong> Saving for retirement is easy enough \u2014 spending it is more complicated<\/p>\n<p>Last November, Morningstar released a\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.morningstar.com\/lp\/the-state-of-retirement-income\" class=\"icon none\">report<\/a>\u00a0analyzing a variety of methods to determine a retiree\u2019s safe portfolio withdrawal rate. At 59 pages, it\u2019s quite extensive, but well worth the read. It analyzes several withdrawal strategies, provides pros and cons for each, and ends with a process to develop an individual retirement income plan.<\/p>\n<div data-layout=\"inline\n                \" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetDynamic\n            inline\n    scope-web|mobileapps\n  article__inset\n          article__inset--type-InsetDynamic\n            article__inset--inline\n  \"><\/p>\n<div class=\"dynamic-inset-container article__inset__dynamic\">\n<style>\n    .wsj-interactive.generic-iframe-embed[name=\"myiFrame\"] {\n        height: 445px;\n        margin-bottom: 5px;\n    }\n    .at16units .bleed .wsj-interactive.generic-iframe-embed[name=\"myiFrame\"] {\n        height: 445px;\n    }\n    body.at12units .bleed .wsj-interactive.generic-iframe-embed[name=\"myiFrame\"] {\n        height: 445px;\n    }\n    body .inline .wsj-interactive.generic-iframe-embed[name=\"myiFrame\"],\n    body .offset .wsj-interactive.generic-iframe-embed[name=\"myiFrame\"],\n    body .header .wsj-interactive.generic-iframe-embed[name=\"myiFrame\"],\n    body.at8units .bleed .wsj-interactive.generic-iframe-embed[name=\"myiFrame\"] {\n        height: 445px;\n    }\n    body.at4units .inline .wsj-interactive.generic-iframe-embed[name=\"myiFrame\"],\n    body.at4units .offset .wsj-interactive.generic-iframe-embed[name=\"myiFrame\"],\n    body.at4units .header .wsj-interactive.generic-iframe-embed[name=\"myiFrame\"] {\n        height: 445px;\n    }\n<\/style>\n<p><iframe class=\"wsj-interactive generic-iframe-embed\" name=\"myiFrame\" width=\"100%\" scrolling=\"no\" frameborder=\"no\" src=\"https:\/\/www.newretirement.com\/retirement\/carousel-5-tiles\/\"><\/iframe><\/p>\n<div class=\"wsj-article-caption\" itemprop=\"caption\">\n<\/div><\/div>\n<\/p><\/div>\n<p>       One of the options it considered is the so-called RMD withdrawal strategy. Under this plan, annual withdrawals are based on your portfolio\u2019s previous year-end balance. You withdraw a percentage of your portfolio consistent with the\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/humbledollar.com\/money-guide\/required-minimum-distributions\/\" class=\"icon none\">required<\/a>\u00a0minimum distribution (RMD) guidelines provided by the IRS life expectancy tables. Under this scheme, your income would rise or fall as your portfolio\u2019s value changes.<\/p>\n<p>The online financial planning magazine\u00a0<em>ThinkAdvisor<\/em>\u00a0recently asked three retirement planning experts for\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.thinkadvisor.com\/2022\/02\/09\/do-rmds-work-better-than-the-4-rule-3-experts-weigh-in\/?kw=Do%20RMDs%20Work%20Better%20Than%20the%204%25%20Rule?%203%20Experts%20Weigh%20In&amp;utm_source=email&amp;utm_medium=enl&amp;utm_campaign=earlywire&amp;utm_content=20220210&amp;utm_term=tadv\" class=\"icon none\">their views<\/a>\u00a0of the RMD withdrawal strategy versus the better-known\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/humbledollar.com\/money-guide\/four-percent-withdrawal-rate\/\" class=\"icon none\">4% rule<\/a>. Under the 4% rule, you withdraw 4% of your portfolio in year one, and then increase that amount by inflation in year two and subsequent years. The 4% rule has been\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/humbledollar.com\/2020\/08\/about-that-4\/\" class=\"icon none\">criticized<\/a>\u00a0for a host of reasons. Some say 4% is too high given today\u2019s low bond yields and high stock valuations. Others say the strategy is too robotic in the face of plunging financial markets.<\/p>\n<p>Michael Finke, a professor at the American College of Financial Services, doesn\u2019t like the possible income shock of the RMD <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>roach. If a retiree is heavily invested in stocks, a serious down year could slash her income the following year.<\/p>\n<p>\u201cA better retirement plan evaluates how much of the budget is flexible and how much is inflexible,\u201d Finke said. \u201cThen build an investment plan that doesn\u2019t expose inflexible spending to either market or longevity risk.\u201d Finke said his experience shows that about two-thirds of retirees\u2019 expenses are\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/humbledollar.com\/money-guide\/fixed-vs-discretionary-expenses\/\" class=\"icon none\">fixed<\/a>. The RMD strategy might work for just the subset of the portfolio devoted to flexible spending, because the strategy tends to deliver fluctuating amounts of income, Finke argued.<\/p>\n<p>By contrast, David Blanchett, former head of retirement research at Morningstar, likes the RMD approach because it ties withdrawals to a retiree\u2019s age. He recommends that retirees get a realistic estimate of their\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/humbledollar.com\/money-guide\/life-expectancy\/\" class=\"icon none\">longevity<\/a>, however, rather than just relying on the IRS tables.<\/p>\n<p>Blanchett gave this example: If you estimate your life expectancy as 20 years, you could start with a 5% withdrawal rate. If you have 25 years left, then a 4% withdrawal rate is more appropriate. What if you\u2019d previously been withdrawing 8%? The RMD strategy delivers a wake-up call that you need to cut back.<\/p>\n<div id=\"cx-membership-tile\"><\/div>\n<p>Christine Benz, director of personal finance at Morningstar, said the RMD method is efficient at \u201chelping to ensure that a retiree spends most of his or her money.\u201d But she said the method is \u201cnot very livable\u201d because it can deliver extreme fluctuations in income to retirees with higher stock allocations.<\/p>\n<p>Another concern Benz raised: The RMD life expectancy tables are based on average life expectancies. Retirees with longer-than-average lifespans run the risk of running out of money. Also, their balance might dwindle when they\u2019re elderly\u2014just when they may face huge expenses for medical or custodial care.<\/p>\n<p>In short, three of the leading voices in retirement planning gave three different assessments of the RMD strategy. I find this same kind of disparity among my friends, family and colleagues. We each look at the retirement income question through our own lens.<\/p>\n<p>For example, some might take modest withdrawals so they have plenty left to meet high medical costs late in life. Others might hope for the best and spend more freely. Yet others choose to live frugally throughout retirement, in hopes of leaving the maximum amount to their kids.<\/p>\n<p>Each of us must answer questions like these for ourselves and plan accordingly. Figuring out what\u2019s most important to you and your spouse is essential. Many people\u2019s views are based on their experiences with their parents and family. This is useful and should be a part of the analysis. But we should also be open to new ideas. Retirement income planning is such a complex subject that we can all benefit from hearing what others think.<\/p>\n<p><em>This column first appeared on <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/humbledollar.com\/\" class=\"icon none\">Humble Dollar<\/a> and was republished with permission<\/em>.<\/p>\n<p><em>Richard Connor is\u00a0a semiretired aerospace engineer with a keen interest in finance. Follow Rick on <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">Twitter<\/a>\u00a0<\/em><a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/rconnor609\" class=\"icon none\">@RConnor609<\/a><em>\u00a0and check out his earlier\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/humbledollar.com\/author\/richard-connor\/\" class=\"icon none\">articles<\/a>.<\/em><\/p><\/div>\n<\/div><\/div>\n<p><\/p>\n<div class=\"byline article__byline\">\n<p>    <span>By<\/span><\/p>\n<div class=\"author  hasMenu\" data-scrim='{\"type\":\"author\",\"header\":\"Richard Connor\",\"subhead\":\"The Wall Street Journal\",\"list\":[]}' itemscope itemprop=\"author\" itemtype=\"http:\/\/schema.org\/Person\">\n<h4 itemprop=\"name\"><span class=\"ez-toc-section\" id=\"Richard_Connor\"><\/span>Richard Connor<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/p><\/div>\n<\/div>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/news\/\" target=\"_blank\" rel=\"noopener\">News category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"http:\/\/www.marketwatch.com\/news\/story.asp?guid=%7B20C05575-04D4-B545-7B4F-61A02388D41C%7D&#038;siteid=rss&#038;rss=1\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;: How to make your money last in retirement&#8221; Lots of research has been done on the best way to generate retirement income. It\u2019s one of the most popular financial topics. I think this popularity is driven by two things: its obvious importance\u2014and the fact that there\u2019s no one right answer. By contrast, figuring out\u00a0how&#8230;<\/p>\n","protected":false},"author":1,"featured_media":425936,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.mktw.net\/im-452093\/social","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[],"class_list":["post-425935","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/425935","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=425935"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/425935\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/425936"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=425935"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=425935"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=425935"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}