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1.
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.'
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.
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.
4.
If you aren't satisfied with your withdrawal rate from your portfolio, you may need to put off retirement.
True. Though there are other options besides that, putting off retirement might be necessary.
5.
In terms of portfolio withdrawal, what does a 50% confidence level mean?
There's a 50% chance that your portfolio will expire before you do. For some, a 95% or 100% confidence level is crucial: You want your withdrawal rate to survive most worst-case scenarios. Others may accept a lower probability of success.
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.