A few years ago we had a little party at our house following my son’s baptism. After the wonderful service at the church we invited everyone over to have lunch at our house and visit a little longer.
We were planning for this so we cooked up a bunch of meat and beans and the other fixin’s to have a burrito and taco bar. It was delicious and everyone was raving about my wife’s cooking.
The thing that we didn’t plan for was for people to come back for seconds…and maybe even thirds.
By the time the last family got to our home we felt unprepared because there was no more meat and even the beans were scarce. As their 4 year old son looked around he whimpered “where’s my burrito” and declared it obviously very hungry.
We felt horrible and ended up scrounging something up for them to eat, so they could stay and visit with us for a while.
When we create our cash flow models for our clients we strive to help them be prepared so they never “run out of burritos”, ha ha. It is a terrible feeling to know that you had the opportunity to be prepared but then squander your time and resources and not have enough to serve those that you love.
In the retirement world there is something called the 4% rule. Basically it is the withdrawal rate that you can pull money from your nest egg each year without the probability of outliving your money.
So just to illustrate that if you have $1,000,000 in your savings/retirement account this chart is saying you can only withdraw 3-4% per year safely ($30,000 to $40,000/yr) without the probability of running out of money.
Even if you just change your withdrawal rate to 6% you only have a 20% chance of not running out of money.
And now with low interest rates and bond returns the 4% rule is being challenged that it should be more like 2.8%. This is very frustrating. I go more into that in this video.
This is a huge problem for most Americans, but not for my clients. We can totally avoid this and scrap the 4% rule altogether if we prepare.
As we commemorate this day, September 11th, we honor those that we lost 19 years ago. When our freedoms, family’s safety and financial security are challenged we have shown that we rise up.
Give your family an extra hug today and look them in the eyes and tell them how much you love them, it will change your day…and theirs.
Remember — It’s Your Time…