Article Assignment 2
For the second article, I chose “How Has the 4% Rule Held up Since the Tech Bubble and the 2008 Financial Crisis” by Michael Kitches. The 4% rule is a withdrawal strategy in retirement where you withdrawal 4% of your portfolio a year. The underlying assumption of the rule is that on average your portfolio returns will be greater than 4%. The 4% withdrawal rate was chosen as a conservative rate at which a retiree in any year would not run out of money. According to historical market return analysis, even if you retired during a year with a stock market crash, 1929,1937,1965 or 1966, there is a slim chance of you running out of money. Since the 4% withdrawal rate is so conservative, over two thirds of retires with end the …show more content…
If you plan to end retirement with nothing and spend all your accumulated wealth, good financial planning will allow an individual to accomplish that. If the goal in retirement is to build generational wealth, a proper withdrawal strategy will allow you to maximize returns and maintain a high standard of living. Proper financial planning allows for the accumulation of a large amount of money, and while money doesn’t buy happiness, it does buy options. When you have a good retirement strategy, it allows for two things, the ability to purchase wanted items now and have the ability to meet all needs in the future. Having a well maintain budget, with considerations in retirement lets an individual know exactly how much they have available to spend on discretionary items, without sacrificing their future financial health. A well funded retirement account will give the retiree the option to pursue any interest in retirement that financial or time barriers prevented. This allows for personal fulfillment as you can pursue hobbies or interests without constraint, provide charitable contributions in large enough donations to have a material difference or leave enough money to improve the quality of life of all your descendants. There is a large problem of individuals spending irresponsibly during retirement and as a result living on social security with an extremely low quality of life. This puts a
For the second article, I chose “How Has the 4% Rule Held up Since the Tech Bubble and the 2008 Financial Crisis” by Michael Kitches. The 4% rule is a withdrawal strategy in retirement where you withdrawal 4% of your portfolio a year. The underlying assumption of the rule is that on average your portfolio returns will be greater than 4%. The 4% withdrawal rate was chosen as a conservative rate at which a retiree in any year would not run out of money. According to historical market return analysis, even if you retired during a year with a stock market crash, 1929,1937,1965 or 1966, there is a slim chance of you running out of money. Since the 4% withdrawal rate is so conservative, over two thirds of retires with end the …show more content…
If you plan to end retirement with nothing and spend all your accumulated wealth, good financial planning will allow an individual to accomplish that. If the goal in retirement is to build generational wealth, a proper withdrawal strategy will allow you to maximize returns and maintain a high standard of living. Proper financial planning allows for the accumulation of a large amount of money, and while money doesn’t buy happiness, it does buy options. When you have a good retirement strategy, it allows for two things, the ability to purchase wanted items now and have the ability to meet all needs in the future. Having a well maintain budget, with considerations in retirement lets an individual know exactly how much they have available to spend on discretionary items, without sacrificing their future financial health. A well funded retirement account will give the retiree the option to pursue any interest in retirement that financial or time barriers prevented. This allows for personal fulfillment as you can pursue hobbies or interests without constraint, provide charitable contributions in large enough donations to have a material difference or leave enough money to improve the quality of life of all your descendants. There is a large problem of individuals spending irresponsibly during retirement and as a result living on social security with an extremely low quality of life. This puts a