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Portfolios 310: How to Withdraw from Your Portfolio in Retirement

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1.
Many retirees have sources of income that are fixed, such as Social Security or pensions. How does inflation affect their purchasing power?
Choose wisely. There is only one correct answer.
It depends on the source. Many sources of fixed income lose their purchasing power due to inflation. But some of them get adjusted annually for the rate of inflation, thus keeping abreast of it.
2.
Once you have multiplied your withdrawal rate factor by your total investable assets for retirement, let's say you come up with $35,000. This will be the amount you can spend each year of your retirement.
Choose wisely. There is only one correct answer.
False. Given that you must adjust for inflation each year, the $35,000 would be good for your first year only.
3.
Your retirement time horizon will be _______.
Choose wisely. There is only one correct answer.
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.'
4.
If you aren't satisfied with your withdrawal rate from your portfolio, what can you do?
Choose wisely. There is only one correct answer.
Accept a lower confidence level. You can also put off retirement or adjust your asset mix to possibly increase your withdrawal rate.
5.
What do changing healthcare costs, vacation costs, and other expenses mean for your portfolio's withdrawal rate after you retire?
Choose wisely. There is only one correct answer.
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.
6.
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?
Choose wisely. There is only one correct answer.
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.