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Subject:  Puzzled Date:  4/11/2000  2:49 PM
Author:  hharri Number:  21115 of 100111

I am considering retiring at my present age of 59, and like so many others I am considering the problem of what I can withdraw from my portfolio to finance my retirement. As I read the discussions on what percentage of one's portfolio can be "safely" withdrawn, I am struck by how many people seem to be planning their retirement strategies based on the assumption (or fear)that they may live to be 85, 90 or more. And having assumed that, they then crunch inflation rates, market returns and a host of other things, all aimed at insuring that they will not, under any circumstances, run out of money before they die at the ripe old age which has been assumed.

Now I will grant you that if you are in reasonably good health and retire at a relatively young age, you may have to live off of your assets for 30 or even 40 years. And you may be as physically and mentally fit at 85 as you were at 65. However, that is only one scenario, and as I read the discussions I am equally struck by how little consideration seems to be given to the other scenario, which is that you die in your sixties or seventies. Or, ten years down the road you cannot do the things you can do now, for whatever reason.

I am, as I said, 59, and I have a portfolio of $1,000,000, a nice house on the Chesapeake Bay, some toys and no debt. That makes it feasible that I could retire, but my portfolio is not so great that it becomes a shoo-in. I am, as far as I know, in reasonably good health; however, I need only look at the obituaries and consider friends of mine who are already gone to realize that I may have only 10-15 years to live (or less). Or, I may have only 10-15 "good" years, meaning years in which I can do what I do now. Some would say that I should hang in there for a few more years to increase my nest egg, to insure that I shall have enough to make it comfortably to 90. Others would say under no circumstances withdraw more than 5%, or you might run out of money before you die. However, I have to wonder what sense it makes to put such emphasis on the possibility of living to 85 or 90 when it is also quite possible that I shall die or be disabled before 75. Put slightly differently, it makes more sense to me to focus on my life for the next 10-15 years than it does to orient everything around the years after that, even if I do wind up eating cat food.

So I am puzzled. I do not propose to simply blow it all on the assumption that I may die in 5 years, but I am puzzled by the apparent tendency to assume the other extreme and subordinate everything to the possibility that one will live to be 90. Maybe you will, maybe you won't. Notwithstanding the mortality tables which say you might live to 90, when it comes to discussions on when and how to retire I am puzzled by the lack of comment on the fact that you may only have a few years, with something to be said for concentrating on them, not on the other end.
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