MANNY'S VIEW: Stay Faithful to StocksYour Retirement Action PlanRepair. Rebuild. Retire.
A commonly accepted rule of thumb suggests that if you restrict your withdrawals to 4% of your investment portfolio during your first year of retirement and increase your withdrawals in subsequent years to keep pace with inflation, you should have enough money to last a lifetime under most circumstances. But the market meltdown was no ordinary event, and some retirees now have to scale back their withdrawals or risk outliving their savings. Some financial advisers are rethinking how current and soon-to-be retirees should invest their money. Instead of "return on investment," the acronym ROI now stands for "reliability of income."
In fact, I'm intrigued by an "income for life" model that divides a retiree's assets into separate “buckets.” The first bucket holds about 25% of the assets, invested conservatively in a ladder of certificates of deposit or short-term, immediate-payout annuities to generate income for the first five years. Another 50% or so of assets might be invested in bonds and a broad-based stock-market index for intermediate goals. The remaining 25% is invested more aggressively in stocks, commodities and real estate for long-term goals of 15 years and beyond. That allows retirees to benefit from potentially higher returns without having to depend on the market for immediate income needs. At the end of each five-year interval, some assets are used to replenish the income bucket, and the remaining investments are reallocated for the long haul.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
My advice to retirees: Create a secure income plan to cover your costs.
Manny Schiffres says stay faithful to stocks.
-
Will President Trump's Medicare Executive Order Raise Drug Prices?President Trump rescinded a Biden-era Executive Order that would have lowered the copays for some drugs to $2 for Medicare enrollees.
-
Stock Market Today: Dow Adds 538 Points on First Trading Day of Second Trump AdministrationStocks rise while the White House issues a historic series of executive orders.
-
15 Reasons You'll Regret an RV in RetirementMaking Your Money Last Here's why you might regret an RV in retirement. RV-savvy retirees talk about the downsides of spending retirement in a motorhome, travel trailer, fifth wheel or other recreational vehicle.
-
457 Plan Contribution Limits for 2025Retirement plans There are higher 457 plan contribution limits for state and local government workers in 2025 than in 2024.
-
What Does Medicare Not Cover? Seven Things You Should KnowHealthy Living on a Budget Medicare Part A and Part B leave gaps in your healthcare coverage. But Medicare Advantage has problems, too.
-
13 Smart Estate Planning Movesretirement Follow this estate planning checklist for you (and your heirs) to hold on to more of your hard-earned money.
-
Medicare Basics: 11 Things You Need to KnowMedicare There's Medicare Part A, Part B, Part D, Medigap plans, Medicare Advantage plans and so on. We sort out the confusion about signing up for Medicare — and much more.
-
The Seven Worst Assets to Leave Your Kids or Grandkidsinheritance Leaving these assets to your loved ones may be more trouble than it’s worth. Here's how to avoid adding to their grief after you're gone.
-
SEP IRA Contribution Limits for 2025SEP IRA A good option for small business owners, SEP IRAs allow individual annual contributions of as much as $69,000 in 2024 and $70,000 in 2025..
-
Roth IRA Contribution Limits for 2024 and 2025Roth IRAs Roth IRA contribution limits have gone up. Here's what you need to know.
