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whether you're 20 years from retirement
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20 months or even just 20 days from
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retirement one of the most important
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decisions all of us have to make is how
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much do we want to spend in retirement
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if you're about to enter retirement
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obviously this is critically important
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but even if you're 20 years away it's
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going to impact your goals and how much
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that you're trying to save along the
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path so in today's video I'm going to
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share how should we think about how much
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we want to spend in retirement because
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candidly there's as many withdrawal
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strategies strategies that talk about
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how much we can spend in retirement
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there's as many of those strategies as I
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have cousins and I grew out up outside
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of Cleveland Ohio in an ethnic community
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and I have a lot a lot of cousins so so
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let's jump in and and why is it
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important first we don't want to
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underspend when we're in retirement and
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frankly I think this is a bigger risk
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than what many people think in my
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experience as a financial adviser for
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over 20 years probably 80% of my clients
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left to their own would have underspent
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they would have worked hard and saved
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and sacrificed and not gotten to enjoy
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that so I don't want you to underspend
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and sacrifice
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unnecessarily I also don't want you to
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overspend
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and put your financial future at risk so
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so finding that happy ground is really
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important and then finally the third one
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is as big as our national debt is I
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don't want you to have to pay more in
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taxes than you need to and that's why
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these strategies are important so let's
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jump in let's talk about some of the
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more common withdrawal strategies and
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then talk about I'm going to share with
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you some of my favorite and why they're
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favorites and when they might make sense
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and when they might not make sense so so
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let's jump in some of the common
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strategies are what I call a smile
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strategy which talks about it's called a
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smile because you start off spending
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more then in you know as when we first
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retire we're excited about retirement we
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have all these things we want to do we
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spend more money then we've kind of been
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there done that and it kind of goes down
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and then at end of life none of us know
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what kind of health care costs that
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we're going to have to have
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unfortunately so that's why it's called
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the smile the next one is super famous
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the next withdrawal strategy it's called
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the 4% row and it was made famous by
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William bengan who was really looking
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for what's the most that you can take
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out of your account without ever having
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to worry about running out of money
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because of a a stock market collapse so
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he looked at historical data and found
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that if people took 4 perent out even if
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the worst situation happened they'd
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probably be okay the challenge with that
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is you probably I don't want to plan for
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the absolute worst situation so many
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times that's overly conservative and
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again people end up un not spending they
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end up sacrificing in hindsight
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unnecessarily they could have spent more
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money okay the next one which frankly is
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probably the most common withdrawal is
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just withdrawing a fixed amount you look
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at you look at your account you look at
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your life and you say okay I have this
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amount of money I think I can spend this
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amount of money each year and not run
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out of money and often times that's just
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kind of a guesstimate I don't want you
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to guess I want you to have
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knowledge um but the challenge with this
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is you know you can look at those
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numbers initially and say okay let me
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just toss out a number we're going to
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spend $60,000 a year $5,000
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a month and and often times people will
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not revisit that and that could put you
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in a higher
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withdrawal area a higher percentage of
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withdrawal than what would make sense
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for you it could put you at risk
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unfortunately of maybe running out of
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money later in life when when you're
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least when you're the most vulnerable
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and you're least able to accept a risk
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like that so fixed income amount can the
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appeal is it's simple but the risk is
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maybe it's too simple okay the next
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strategy is a bucket strategy a bucket
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strategy would say you've got some money
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set aside that you're going to spend
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maybe for the the next three years so
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that money you don't take any Market
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risk in it you've got other money that's
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going to be three to let I'm just making
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up things three to seven years of money
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and there you can have a mix of stocks
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and bonds and then you have that third
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bucket which is is designed for
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long-term growth because in theory you
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won't need to touch that money for seven
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years um that can be a good strategy
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I've seen people with 8 nine 10 12
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different buckets that can get really
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complicated really quickly um I there
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are some YouTubers uh that I have
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respect for that personally use the
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bucket strategy and are using it well
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but it it tends to be on the more
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simplistic side which is part of its
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power but it can also have you spending
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less than you otherwise could have okay
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the next one is an endowment strategy
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kind of like what the big universities
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use the wealthy University Yale Harvard
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Stanford universities like that they
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have hundreds of millions of dollars in
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their endowment and they take out a
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certain percent every year to support
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their operational goals you know and
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that can be great but but two things
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with with the endowment strategy one is
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when we retire for most of us we no
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longer have new money coming in the
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endowments at universities constantly
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have new alums going out there starting
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companies some of them having big
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successes and donating back so they
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still have money coming in and frankly
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as a as endowments with hundreds of
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Millions of dollars they have access to
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in quality investment tools that you and
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I might not have access to and some of
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those are tools that if you can get in
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the top 10% of the providers of those
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tools they might make sense but the
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other 90% of the providers of those
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tools they might not make sense right
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things like private Equity or Venture
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Capital where the top managers the top
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10% of managers are the ones delivering
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all the returns for for that asset class
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for that category and then other people
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launch uh look alike funds in the same
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space but may or may not have those top
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tier
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results okay and and then my favorite I
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say tongue and cheek remember the the
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smile where we start off spending a lot
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we we flatten out and then unfortunately
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we may have to spend more later the
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opposite of that is what I call the
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frown strategy which is where you you're
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as Frugal as possible each and every day
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of your retirement and frankly I see way
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too much of that right the frown
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strategy for people not working with
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advisors yeah I think I think half half
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think of your friends that might be
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retired think of um a relative that
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might be retired and you know they're
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they're always going out for the the
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early bird special and there's nothing
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wrong with that literally just last
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night I did that um but if you're always
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being as Frugal as possible you're
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probably stealing Joy your from yourself
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and your spouse if you're married you're
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probably sacrificing
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unnecessarily so I don't want you to be
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too exuberant but I certainly don't want
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you to have the frown and then I want to
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share with you a newer strategy that has
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come out really and has gained in
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popularity in the advisory Community
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which is now has a name I think a lot of
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financial advisers including uh The Firm
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I was at we did this which it now has a
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name it's it's let me make sure I get it
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it right risk based guard rails where
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you look at how much you're spending but
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you can adjust it every year you know if
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the market does something you know Black
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Swan event the start of Co was a black
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span event the great financial crisis
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top to bottom the uh standarded in pores
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S&P 500 was down 60%
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60% top to bottom that's a black a bad
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Black Swan event likewise uh the last
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two years as I record this has been a
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positive kind of Black Swan event the
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market is up
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60% over the last two years as I record
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this so we're at an all-time high so
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these are the strategies those
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risk-based guard rails are now a name to
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what many financial advisers are have
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been doing with their clients which is
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using these rules but but also using the
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wisdom that comes with working with
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their clients for for decades helping
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hundreds of people transition into
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retirement it's about making good
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decisions and not only is it a good
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decision with how much money you spend
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but when you retire and that's why I
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made this video up here why waiting the
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65 to retire might be a big mistake
