tag:blogger.com,1999:blog-4402283548766807872.post6753854020615293675..comments2024-03-29T02:47:49.234-04:00Comments on The Blunt Bean Counter: How Much Money do I Need to Retire? Heck if I Know or Anyone Else Does! - Part 4The Blunt Bean Counterhttp://www.blogger.com/profile/11358868550072516313noreply@blogger.comBlogger13125tag:blogger.com,1999:blog-4402283548766807872.post-31829426056727396792014-02-15T14:51:01.235-05:002014-02-15T14:51:01.235-05:00Richard
Interesting thought. Only problem is &quo...Richard<br /><br />Interesting thought. Only problem is "we would now be talking about how to give people a retirement they never saved for" for even more years :)The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-62432756742851770912014-02-15T14:07:39.867-05:002014-02-15T14:07:39.867-05:00It's unfortunate that we need to call it a ris...It's unfortunate that we need to call it a risk that we may live to an old age. Hopefully we don't need to get into strategies to reduce that risk!<br /><br />If there is one thing the government should do it is reducing the vast unpredictability this causes. We're too busy talking about how to give people a retirement they never saved for to consider that option, even though it costs much less. Reducing that risk might even create an incentive for more people to plan ahead.Richardnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-2537099826079440972014-02-15T08:21:17.735-05:002014-02-15T08:21:17.735-05:00Hi Bob,
I follow, but it depends upon your tax ra...Hi Bob,<br /><br />I follow, but it depends upon your tax rate amongst other factors. If you are a high or near high rate taxpayer, you only clear 3.2% or so on a 4.5% div.The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-32808043455384042822014-02-15T07:30:50.588-05:002014-02-15T07:30:50.588-05:00The plan as outlined is that by withdrawing 4% per...The plan as outlined is that by withdrawing 4% per annum, you will not run out of money irrespective of how large your nest egg is. There are so may good quality stocks that pay well in excess of 4% that increase yearly. For example, BCE (5.25%), IPL (4.48%), and CIBC (4.30%). And these are just the ones that are well known and there is no accounting here for capital appreciation (or losses). So, if you are withdrawing 4% of your retirement savings, you will never touch your capital.<br /><br />Bob TAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-1321476869848497442014-02-14T16:33:25.473-05:002014-02-14T16:33:25.473-05:00Hi Bernie
Thx. The key word for me is company pen...Hi Bernie<br /><br />Thx. The key word for me is company pension. A pension as I discuss in the next installment of this series changes the whole dynamics of retirement planning. Anyways, you sound like you have a well thought out plan and even have factored in your wife's lower withdrawal requirement, good on you. The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-54741640214188396692014-02-14T15:54:46.715-05:002014-02-14T15:54:46.715-05:00I'm sorry if I gave the impression that I'...I'm sorry if I gave the impression that I'm currently withdrawing from my portfolio. I've been retired about two years now but, so far, haven't had need to tap into my TFSA, RRSP or open account. I'm 63 and currently living comfortably off my company pension, bridge (equivalent to OAS) & CPP. My plans are to leave my RRSP untouched until forced to at 71. At that time I want to draw 4% (before tax) per annum unless plans change and I need to do it earlier. I have the advantage of a much younger spouse so 4% drawdowns are allowable in a RRIF.<br /><br />Dividend growth investors always speak of drawdowns in before tax terms as taxes vary widely from person to person or country to country for that matter. I have learned much of the dividend growth investing strategies from reading articles and comments in "Seeking Alpha". Many of the retired folks there have had no worries with drawing down 4 to 5% of their portfolios, before tax, exclusively from their dividend income. I see no reason to doubt them.Bernienoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-1555962780046447362014-02-14T12:18:18.812-05:002014-02-14T12:18:18.812-05:00Bernie, thx for providing your strategy. There are...Bernie, thx for providing your strategy. There are various ways to make this work. However, you probably have a fairly large nest egg to live off of just dividends. Not asking you to provide this info, but after tax and inflation (which your dividend increases protect) I wonder what is your withdrawal rate? An average dividend rate less tax less some inflation, less some fees, would seem to result in a 3-3.5% withdrawal amount at max. If you are ok with it, I would would be interested to know what is your actual yearly withdrawal rate before or after tax. Thx<br /><br />The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-16552125305830312014-02-14T12:04:24.814-05:002014-02-14T12:04:24.814-05:00As for the drawdown during the distribution stage ...As for the drawdown during the distribution stage of retirement, a safe percentage figure depends on several moving parts. The most important part is what are you invested in and what returns are you expected to get. The higher your fixed income is the lower your percentage should be depending on your life expectancy. That said it may be necessary to also reduce your percentage with a high equity content of low dividend payers during down markets. I have close to a 100% content of dividend growers which have long records of increasing their dividends at a greater rate than inflation. I'm not at all worried with a 4% drawdown. My dividend yield exceeds this figure by a good margin so I need not sell any stocks unless dividends are cut. I have plans in place to replace stocks with other candidates should dividend freezes or cuts occur. Bernienoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-86887683638959504202014-02-14T11:31:44.431-05:002014-02-14T11:31:44.431-05:00Thx Bet, can I hire u to answer any questions :). ...Thx Bet, can I hire u to answer any questions :). In addition to the inflation factor Bet notes, is the 6% you earned net of fees as Michael James likes to note and does it take into account income taxes? Several factors let alone the 10 or so I will note on MondayThe Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-18396250186780957322014-02-14T09:10:54.444-05:002014-02-14T09:10:54.444-05:00Your way works if your 6% increases to cope with 3...Your way works if your 6% increases to cope with 30 years of inflation. (e.g. if your 6% earned actually grows each year to at least match the rate of inflation.) If not, then gradually you have to use your capital to continue to live. For e.g. when my father in law retired in the 1980s he had a whopping big pension of $20,000 a year. It was luxury. By the 2010s it didn't seem like such a great pension. (It is not indexed to inflation.)<br /><br />Also, many retirees won't have a large enough amount saved to live off of the earnings only. Many need to use a blend of earnings and capital to give them enough to live on. It sounds like you've done an excellent job of saving and investing!Bet Crookshttp://financialcrooks.comnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-90018543343414090782014-02-14T08:05:02.043-05:002014-02-14T08:05:02.043-05:00Not sure I follow the rationale. If I earn 6% and...Not sure I follow the rationale. If I earn 6% and withdraw 4%, I would expect to increase my capital base. Even if I only earn 4%, I should expect that my capital would stay intact. Maybe I am missing something here.<br /><br />Bob TAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-58059782239382893502014-02-13T13:20:07.561-05:002014-02-13T13:20:07.561-05:00Glenn, don't worry, it will get more depressin...Glenn, don't worry, it will get more depressing the next two posts :)The Blunt Bean Counterhttps://www.blogger.com/profile/11358868550072516313noreply@blogger.comtag:blogger.com,1999:blog-4402283548766807872.post-12134709095026366292014-02-13T11:11:54.788-05:002014-02-13T11:11:54.788-05:00Well, THAT was depressing. I worry about having e...Well, THAT was depressing. I worry about having enough for a comfortable retirement, worry about my wife having enough if she lives to 100, we plan and save, and still the academics basically say 'good luck with all that'. Sigh.<br /><br />Maybe I'll call a sales rep and have them whisper some good news in my ear.Life Insurance Canada.comhttp://www.lifeinsurancecanada.comnoreply@blogger.com