Becky and her spouse are approaching semi-retirement. However, the conventional four percent withdrawal rule doesn’t apply to them. Are there alternative financial strategies they should consider?
Kris is optimistic about a potential increase in local real estate values with the upcoming World Cup. Will this have any notable effects on his property?
Peyton feels pressured by her parents to purchase a home, but she fears it might hinder her early retirement plans. Should she be worried?
Former financial planner Joe Saul-Sehy and I address these queries in today's episode.
Enjoy!
P.S. Have a question? Leave it here.
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Becky inquires (at 02:15 minutes): How do you evaluate retirement and drawing strategies when the typical four percent rule isn’t applicable?
My husband retired last year after 30 years in law enforcement, and we relocated from the West Coast to southwest Florida for a new beginning. He is 55, I am 50, and we are taking a break before deciding our next work options.
His pension, which includes survivorship benefits, covers 70 percent of our expenses, along with a substantial travel budget. I’m scheduled to receive a smaller pension in 2029 when our expenses will be fully accounted for.
Even considering a reduced Social Security, we might never need to access our savings; however, we have mixed feelings about that. We’d like to follow some principles from Die Broke, such as assisting our 18-year-old son with buying a home in the future.
We have $1.3 million in retirement savings, divided between a traditional 457 plan (which we can access at any time) and a Vanguard IRA. Thanks to our cash savings covering our sabbatical, we won’t need to withdraw any funds in 2024.
From 2025 to 2029, we would only need to withdraw 1-3 percent annually from our portfolio—likely less, as we plan to generate some income.
Our other significant goals include:
- Paying off our mortgage by 2029, if not earlier. We owe $200,000 on a $1.4 million home with an adjustable-rate mortgage currently at 2.75 percent, resetting in March 2029 with a maximum of 7.75 percent. Paying this off would free up $12,000 annually.
- Purchasing a boat, which would range from $75,000 to $100,000, including the lift.
Given our irregular withdrawal needs, how should we handle larger one-time expenses like these? I’m hesitant to withdraw more than four percent in a given year, but that guideline doesn’t feel suitable for our situation.
Should we withdraw lump sums as necessary, like for buying a boat and paying off the mortgage in 2029? How can we stress-test different scenarios? Or would it be better to take a consistent four percent annually and use the extra to reduce the mortgage?
We would appreciate some creative suggestions to enjoy our money while maintaining financial security.
Kris asks (at 23:33 minutes): I’d love your insight on the influence of major sporting events on commercial and residential real estate values. In Dallas, we have both the Soccer World Cup and the Olympics on the horizon.
Can we anticipate a significant rise in real estate values due to these events, or will the impact be more fleeting?
Peyton asks (at 43:23 minutes): I’m listening to the March 4, 2025 episode where you discuss the considerations of buying versus renting a home, and I’d like to understand that framework better.
I reside in Salt Lake City, where renting is somewhat more favorable, and I intend to retire early. Because of this, I’m focusing on tax-advantaged retirement savings and am hesitant to allocate funds for a down payment.
The argument for buying that resonates with me is the ability to lock in housing costs. After experiencing a 23 percent rent increase in two years due to the pandemic, that kind of volatility complicates budgeting for retirement as housing costs continue to rise.
Nevertheless, I’m reluctant to withdraw $60,000 from my $140,000 net worth — most of which is in tax-advantaged accounts. Some funds are in a brokerage account, making them more accessible, but I still question whether reallocating those funds is worthwhile.
I believe this topic would spark a great discussion, whether for my situation or generally — the notion that renting isn’t simply “throwing money away.”
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Becky and her husband are nearing semi-retirement. However, the four percent rule for retirement withdrawals isn’t suitable for them. Should they consider different financial strategies?