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Author: 5464 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76079  
Subject: Re: Fixed Monthly Withdrawals Date: 10/27/2000 1:53 AM
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strial asks,

The early retirement fairy came early for my wife and me. She is 50 and I am 51. Our combined total lumpsum payout will be approximately $1.3m. While
it is a possibility that I will supplement our retirement with $30-$50K consulting income, this may not happen. The entire lumpsum will be placed in
rollover IRA(s) with one being set up to provide monthly withdrawals. If I want to have monthly withdrawals of $8,500, what are some investment
options to consider in order to minimize the funding for this particular account.


intercst responds,

You may want to investigate how much you can safely withdraw from a retirement portfolio and still have the money last for 40 or 50 years while keeping up with
inflation. Most of the research on the subject says you should limit your inflation-adjusted withdrawal to no more than 4% to 5% of assets. A 5% withdrawal from a
$1.3 million portfolio is only $65,000 per year. A withdrawal of $8,500 month ($102,000 per year) unfortunately gives you a good chance of running out of money and eating "Little Friskies" before you reach age 80.



I agree with intercst. Around 5% is the figure my research has shown as the max safest withdrawl rate. Any 'professionals' I have talked to have quoted withdrawl rates as high as 8% but they want 1-2%. Also, I'm not sure you can withdraw more than about 8% without the 10% penalty.

Your and my situation are very similar - age 51, wife 42 with lump sums equal about $1.2-1.3m. We are planning to pull about $5000 per month initially.

If you need the $8500 per month ...! You definitely run the risk of running out of $$$$$. Good luck!
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