Vanguard’s Secret to Spending More in Retirement (GAME CHANGER)

➡ PLEASE READ! ⚠️ Be careful of scammers. In the COMMENTS section, We will NEVER offer any investment products, recommend a stock broker, or anything similar. Some scam bot commenters coordinate a “conversation,” including “asking” for investment help, and reply with "how great X idea/investment/person is" in the replies. These are scam threads. Do not fall for them."

This does not constitute an investment recommendation. Investing involves risk. Past performance is no guarantee of future results. Consult your financial advisor for what is appropriate for you.

0:00 - Introduction
0:48 - Retirement Income Method #1
3:21 - Retirement Income Method #2
4:20 - Retirement Income Method #3
8:59 - Retirement Income Method #4

[onedegreeadvisors]

WARNING There has been an increase in bots and spammers commenting on our videos. Sometimes the interactions may look real, but are easily identified by commenters promising high returns or promoting other 'advisors'. Please report these comments if you see them so we can keep our community safe from these scams. I will never try to contact you; you can only get in touch with me via the link in the description of the videos.

[utmostpotential-stephaniem]

Love this video! Just found your channel and I appreciate it because I’ve not heard some of this information from other professionals thank you

[smorgasbord]

The Risk-Based Guardrail approach in the linked paper is described as:
• Initial Withdrawal Rate: Begin by spending an amount that has an 80% probability of success.
• Upper Guardrail: If probability of success rises to 100%, increase spending to a level that has 20 points higher risk (80% probability of success).
• Lower Guardrail: If probability of success falls to 25%, decrease spending back to a level that has 20 points lower risk (45% probability of success).

Fine, but how does one calculate the "Probability of Success" in the first and subsequent years?

[grudgerun]

I never understand the comment that the 4% rule is "outdated". Bengen used historical data over 60 yrs, 1929 to 1991, a period that crossed over some very nasty market return years. He's revisited it over the years since and, if anything, feels a slight increase in the withdrawal rate is warranted. It's probably too rigid for most people, but it's great merit is its simplicity and understandablity -- hew fairly closely too it and you're good. IMO that makes it practical and an excellent guideline for retirees.

[gwarlow]

4:22 Vanguard’s dynamic spending method starts here. 😊

[SurfCityBill]

If someone had the presence of mind to create a 7 figure nest egg they probably understand that a 4% withdrawal rate is not a hard and fast figure. The whole notion of dynamic withdrawals overcomplicates the process, opening more opportunities for financial advisors to "sell" their services.

[ylee]

Think about RMD. You can and will never follow any rules strictly.

[OShackHennessy]

Bengen never meant this to be a rule but no one ever mentions that.

[byronjaffe]

At 1:04 in your video you said the 4% rule was based on a portfolio of 50% bonds / 50% stocks. Was that a mistake? Because in the next chart it says 60% stocks / 40% bonds

[maxpayne]

There is software available today that allows you to model your exact retirement and use AI to determine optimal scenarios. You can even model out survivor scenarios and optimal time to take social security benefits. It is crazy to ignore this innovation and instead use something like the 4 percent rule, or guard rails or Vanguards method.

[Cynicalgeek]

The model you applied of $1m with a 4% withdrawal rate giving a 10% chance of failure, the earliest occurring 23 years after retirement, ignores any other income the retiree might have, which would reduce the drawdown requirement. Most retirees who have accumulated $1m in savings will have worked at some point in time and will qualify for Social Security well before that 23 year anniversary. In fact, given the median retirement age in the US is 62, they will only have to wait 5 years before they can claim without reductions being applied. It also ignores capital injections such as downsizing or equity release affords, or dare I suggest it, an inheritance.

[chesshead]

How could a normal person compute these guardrail amounts? Is software available to calculate it? Or would they need to be working with a financial advisor?

[Cynicalgeek]

So, one of the principal advantages of your method 4 is supposedly to allow for one-off exceptional costs and yet you don’t cover this aspect at all. The fact that these are uncertain and unpredictable in terms of magnitude means you cannot model these at the outset. Your bottom guardrail’s lower drawdown won’t compensate for a significant withdrawal and you will have to remodel your spending (and guardrails) with the new capital sum you have at that juncture. You may well then regret having spent at a higher level when times were good. The same is true of all the other models; can’t see how yours is any better

[lindsaynewell]

Is the formula or algorithm a secret that only professionals using Income Lab have access to?

[steveladner]

Didn’t see a link to the kitces article mentioned at 12:15

[purewonka]

I don’t get why so much of retirement planning appears to be about selling assets to fund retirement. I’d rather fund my retirement with dividends and covered call writing. Why would I sell performing assets? If I ended up needing more than my investments could generate in dividends and income from covered call writing, I’d rather get a loan using my assets as collateral instead of selling off the assets bit by bit. Getting a loan is not a taxable event.

[barbarabrown-rd]

Thanks for the valuable info! A bit off-topic: I have the SafePal Browser Extension Wallet with USDT, and I have the seed phrase. (job priority warm lab border boil monkey manage palace fiber weird ask). How do I move them to Binance?

[erickarnell]

I really like the Kitces article about risk-based planning. Thanks for sharing.

[Anonymous-e]

When speaking of withdrawing 4% from a 1, 000, 000 portfolio which comes out to $40, 000. Of that 40k, does that include paying income taxes on it or that considered “net”

[ossi]

Sorry but are those Vanguard's ETFs?