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URL:  http://boards.fool.com/one-site-i-can-highly-recommend-is-the-retire-11514030.aspx

Subject:  Re: Retiree Seeks Foolish Investment Info Date:  11/12/1999  3:17 PM
Author:  BluesH Number:  15329 of 74759

One site I can highly recommend is the Retire Early Home Page at http://home.earthlink.net/~intercst/reindex.html

Although it's primarily for those planning to retire early, it's got lots of valuable information for all retirees. Of particular interest is his study of safe withdrawal rates.

If your mother is indeed approaching 80, then her investment horizon is probably closer to 10 years than 20, 30, or 40 that the rest of us are looking at. According to intercst's studies, with a 10 year horizon, your mother's optimal mix is only 44% stocks. However, she can safely withdraw up to 7.56% of assets each year. For comparison, with a 20 year horizon, those numbers are 66% stocks and a withdrawal rate of 4.75%.

Of course, these are the type of one-size-fits-all numbers that you're trying to improve on. In reality, you and your mother need to make decisions based on a host of factors that no one else is privy to. How much income does she need? How many assets does she have? What's her current asset mix? What is her risk tolerance? How's her health, and how long a time horizon is reasonable? Does she have adequate insurance for medical and long-term assisted living?

Only she and you can look at these factors and come up with a plan. The most important are those leading to the withdrawal rate from her assets. That in turn tells you how much risk she needs to take to achieve those results.

Bob H, aka Blues

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