Choose wisely. There is only one correct answer to each question.
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1.
How do most retirees cover their expenses?
With a combination of their investments and fixed sources of income. The more fixed sources of income you have, the lower your withdrawal rate can be.
2.
Once you have multiplied your withdrawal rate factor by your total investable assets for retirement, the resulting number will be _______.
The amount you can spend your first year in retirement. Though the resulting number may look like the amount you can spend each year, you must remember to factor in inflation. Therefore, the number applies only to your first year. Thereafter, you would increase that withdrawal rate by the rate of inflation over the prior year.
3.
You want to withdraw 6% per year from your portfolio over the next 30 years, which you expect to return 8% per year. Will your portfolio last your lifetime?
Maybe--it depends on the actual returns you experience each year. The actual returns you experience each year in retirement make a huge difference in how much you can spend each year. Averages aren't enough.
4.
If you aren't satisfied with your withdrawal rate from your portfolio, what can you do?
Accept a lower confidence level. You can also put off retirement or adjust your asset mix to possibly increase your withdrawal rate.
5.
Your retirement time horizon will be _______.
How long you expect to draw on your portfolio. This usually means how long you expect to live once retired. They key word with time horizons is 'expect.'
6.
What do changing healthcare costs, vacation costs, and other expenses mean for your portfolio's withdrawal rate after you retire?
You will likely need to adjust it. Some expenses will drop, while others will rise. While one cannot say with certainty, this is the probable outcome.
