No. of Recommendations: 0
The easiest way of analyzing the investment expense is to just include it as another planned expense in retirement. The retiree needs to pay for food and housing and gasoline and travel and many other expenses out of their withdrawals. If you're going to use a financial adviser that charges a fee, that fee has to be included in your planned expenses.

I don't see what difference using a 1% fee has vs. using a 0.1% fee or a 0.01% fee. They are all just an expense to be paid out of the withdrawals.

Naturally, a higher investment fee means less money is left to buy food and clothes and travel. But that is just one of the many spending tradeoffs a retiree must deal with.


Peter, I think the point is not whether you use 3% or 4%, but how quickly you'll use up your money over time. Pfau is saying that you'll use it up more quickly at a 4% withdrawal rate than at a 3% rate, which isn't exactly rocket science stuff. My beef is that Pfau used a 1% expense ratio, which would fully account for the difference between a 3% withdrawal rate and a 4% withdrawal rate. Personally, I would rather keep the money than give it to a financial advisor or fund manager. Just satying.
Print the post  

Announcements

The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement