Watching this again after becoming a good student of your videos AND my husband actually entering retirement. Thank you!
@CheckThisOut77
10 ай бұрын
Basically: Sell high. Sell stocks/other assets when they are higher. This helps fight the “buy high/sell low” trap (which is very easy to fall into). P.S. This guy is one of the best on the subject of Retirement. ‘Highly recommended.
@jennifernguyen829
Жыл бұрын
James, thanks for the informative video. Could you please do a video that takes Guyton's Portfolio Management Rule and incorporate tax efficient strategies and considerations of the types of accounts (taxable vs. tax deferral)?
@jeffwoodruff1339
Жыл бұрын
That Pepperdine U diploma must be in education. Best presentations on the internet. Thanks!
@RootFP
Жыл бұрын
Thanks, Jeff!
@luisg.classen7716
Жыл бұрын
James, just wanted to let you know that you have the gift of taking complex and abstract topics and putting them in an easy to understand and digest language via analogies. Keep doing the great job you do educating us. Awesome job!
@ppw8716
2 жыл бұрын
I actually understood! Thank you for your very clear explanation. You’re very much appreciated. Thank you for your great work.
@RootFP
2 жыл бұрын
Thank you!
@jrcll7856
2 жыл бұрын
i`m 62.... retiring next yerar , S/S at that age is not quite enough so i`m pulling from my 401k for 3 to 4 years, its the whole reason i put 15- 16 % into 401k all those years until S/S payments are adequate... also have a SPIA annuity kicking next april that will give me 659.00 a month
@RootFP
2 жыл бұрын
Yep, you save to your 401k so that in retirement you can enjoy that money!
@dforrest4503
2 жыл бұрын
I like the rules presented in the video, with one caveat. The first place I’m taking money beyond my pension when I retire is dividends and capital gains from taxable assets, since those I’ve already paid taxes on. Second is cash. In good years I’ll replenish the cash with excess capital gains instead of reinvesting them all like I do now. Only about two years away!
@RootFP
2 жыл бұрын
Those two years will fly by! Good luck!
@mechthildhaeussler5736
2 жыл бұрын
The best explanation of this important but often hard-to-understand approach I have ever watched, great work. Unfortunately very relevant regarding current markets. I will "sort of" implement it - only "sort of" because at the same time I am applying an allocation glidepath according to M. Kitces (meaning to increase my equity allocation slowly but steadily in the first 10-15 years of retirement). As matter of fact, the only tweak to the Guyton rules is in the definition of "excess" which is evolving from year to year.
@RootFP
2 жыл бұрын
Thank you!
@johnyjsl9219
2 жыл бұрын
Thank you for your clear explanation James.
@RootFP
2 жыл бұрын
You’re welcome!
@cablaze1
Ай бұрын
I see this as an oversimplification if you look at it from a tax standpoint. Having taxable accounts, qualified accounts, and Roth accounts makes this a more difficult issue to manage.
@karendurston2528
3 ай бұрын
Appreciated hearing this. Makes alot of sense to me.
@Pierceb2
7 ай бұрын
Your videos are concise nd to the point. This is the most helpful one for me. Where I get confused is you for example plan on drawing 4% and the prior years inflation was 3% and it was an up market do you withdraw 7% or do you mean 4.03% . Then do revert to 4% plus the following years inflation rate? Some white boars examples over several successive years with associated dollars would really be helpful to me.
@keithmachado-pp6fv
18 күн бұрын
I like the prosperity rule. I need to do a better job of spending and enjoying my money so I don’t repeat the holloween candy mistake. Let me explain. When I was 10 years old I had my holloween candy and would eat the candy I liked least and “saved” the best candy for last. One day I came home from school and my mother threw out all the rest of the candy so I never got to eat the good stuff.
@kevinmcnally3811
Жыл бұрын
I like Guyton Klinger guardrails or even Vanguard Dynamic Spending (ceiling and floor), but aren't we overcomplicating when you specify where you take the money from? Can't you just rebalance to your normal asset allocation annually after you withdraw the amount you need for the year? I am not sure it matters where you take it from if you rebalance every year.
@pilgrimtiger2023
2 жыл бұрын
Thanks James. Get a lot out of your videos.
@RootFP
2 жыл бұрын
I’m glad to hear that!
@Erginartesia
Жыл бұрын
🎉what if the prior year (2022) is lower, but your portfolio’s ‘correction’ is not at desired level.. this is particularly true when there are several years in a row. That is what I’m trying to figure out now.
@amyw.9477
7 ай бұрын
These are great guidelines...thanks for explaining this in a way that is easy to understand.
@sandrarobinson4448
Жыл бұрын
This makes so much sense! Thank you.
@khaldounsamman9128
7 ай бұрын
James, I'd love you to do a video for those of us who want to die with as little as possible remaining in our portfolio. I'm single with no children and want to retire at 67 and I'm betting on being dead at 83. If I live longer I'll find a way to live on social security. The idea is to enjoy my savings I've worked for and help my loved ones like nieces and nephews while I'm still here with them.
@phillyboylaboy
Жыл бұрын
Gr8 video and explanation. These rules applies alongside the 3 bucket strategy. Thank you. 😊
@JFreeUNC
3 ай бұрын
I always thought guardrail was taking a little more than 4% in good years, and reducing withdrawals in down market years. Maybe 5% vs 3%.
@helenwood3199
10 ай бұрын
Has anyone tested Guyton's order of withdrawal theory? Does it work for all circumstances? Would you show us applied examples to prove the theory, please?
@LamNguyen-qb4ic
Жыл бұрын
Thank you James. 👍
@RootFP
Жыл бұрын
Very welcome
@coast_into_retirement
Жыл бұрын
Thank you for the great video. A quick question . I don't know if I missed it but , what is your initial withdrawal to start ? 4 % ? Keep the videos coming . I am also an avid listener to your podcast.
@RootFP
Жыл бұрын
You're welcome! 4% rule is from Bill Bengen.
@HB-yq8gy
Жыл бұрын
James, what about 2045 target funds ? I like those are simple easy.
@user-in1zb4vg9r
Жыл бұрын
So what are the "certain thresholds" in the Capital Preservation and Prosperity rules?
@richardallen6432
10 ай бұрын
Always common sense advice from James.
@anthonyiannozzi6777
Жыл бұрын
So well explained.
@davidjensen8090
2 жыл бұрын
Excellent coverage, James...thanks. Q: Do you think this is a more robust / flexible approach than the Bucket(s) strategy?
@RootFP
2 жыл бұрын
Thanks, David! There is overlap in each of the strategies, but I like the guardrails approach because i think it is more robust
@sjbutler2330
3 ай бұрын
If I make enough yearly with defined pension oas and cpp, why take out more than needed from my rrsp, or tfsa or investments? I'm single and live simply. Do not Travel. I just plan to take what I have to from my rrif, when I change over in 4 years. I will also inheret at some point as well.
@Daveondustyroad
2 жыл бұрын
Wouldn't it be much simpler to pull your yearly salary out from any taxable account and then immediately re-balance the entire portfolio which should be done yearly? As and example - take income from Bond fund, re-balance, and net result it 20/80 split. Or take income from all Stock, re-balance, and net result is 20/80 split again. No difference.
@rayzerot
11 ай бұрын
I don't know the exact answer but my guess is because you don't get taxed to rebalance in your traditional or Roth accounts, unlike rebalancing in brokerage accounts
@PortableKonfidence
Жыл бұрын
First video ive seen on withdrawal ideas. Usually ppl say never sell. Im like so why are we putting money in if we never take it out!
@RootFP
Жыл бұрын
Thank you!
@tomdrewenskus8167
Ай бұрын
This withdrawal strategy said nothing about all of the different account types you could be withdrawing from like an IRA, Roth IRA, inherited IRA, inherited Roth, annuities, life insurance policies, non-IRAs, etc. And some of these account types have tax consequences. I wonder why this was not mentioned?
@METVWETV
10 ай бұрын
A LOT of Good Information.... Please invest in a quality Microphone or at least, Don't Record In an ECHO CHAMBER!!! Ty 😊
@denniskirschbaum9109
Жыл бұрын
This is great and thought provoking as always, James. Thanks for this content. One question on the where to draw rules: Are these rules so different from just drawing what you need and then rebalancing back to your target. Yes, this is not identical (if stocks way over performed, you would pull only from stocks leaving them over allocated) but I wonder if you wouldn't be better off by just doing a draw from anywhere and rebalancing back to target. Simpler anyway, no?
@RootFP
Жыл бұрын
You're welcome! Thanks, Dennis.
@RootFP
Жыл бұрын
Completely depends on the situation, but I do value simplicity as well.
@Erginartesia
Жыл бұрын
I suspect that you have to worry about taxes when rebalancing.
@ianseward9928
6 ай бұрын
What if you have a multiasset fund so it’s all contained
@rickdunn3883
7 ай бұрын
if we disregard tax location issues: it doesn't matter where you withdraw from. Because you will be re-balancing anyway. Lets take your 60/40 example, if I withdraw from the bond side, it then rebalance to my asset allocation back to 50/50. You would also rebalance to your AA if you withdraw from the equities. What am I missing?
@johnh2812
6 ай бұрын
I’ll bet (based on his other videos) the overall portfolio is not like you suggest e.g. rebalance to 60/40. Instead, figure out what the right amount of fixed income assets you require (e.g. 6 years of expenses) to protect you in a market downturn which allows you enough time for the stock portfolio portion to rebound. If your stock portfolio is growing handsomely the % of stocks in your portfolio could be increasing overtime not a rigid 60/40 mix
@colemant6845
9 ай бұрын
Great video... I currently use the the Vanguard Personal Advisor Service (where 100% of my $2MM retirement funds are). They provide the same drawdown strategy you describe in this video. They charge .3% for this service. What is your fee? Thank you.
@larryrogers6224
2 жыл бұрын
Could you do a video on esop retirement rules and tax issues?
@RootFP
2 жыл бұрын
Hi Larry, I’ll add it to the list!
@canyonoverlook9937
2 жыл бұрын
Would you take more than you need if say stocks are up a lot and then save it for the next year or would you only take out what you need for that year?
@RootFP
2 жыл бұрын
The guardrails paper would suggest selling some of the excess and keeping in your portfolio in cash, but it would depend on your specific situation.
@missouri6014
2 жыл бұрын
Oh that is nice in theory but life doesn’t work that way and after the first year it gets way confusing and no one‘s gonna do it The easiest way is what I’m doing now and that is figure out what percentage of your portfolio you are comfortable in putting into stock mutual funds let’s say 60% as an example and then you put the 40% in the fixed index annuity‘s doing the growth option Then for your income portion just live off of the 10% that you can take out penalty free from the fix index annuity each year you can argue over the percentage of stocks versus the fix index annuity that’s another discussion for another day but just keep it simple I personally have 60% of my Nesta egg in fixed index annuity‘s and 30% in stock mutual funds and 10% in cash Everybody’s percentage would be different according to risk tolerance But they fixed index annuity replaces the old bond portfolio I’ve been doing this for about eight years now the life is so great and so simple Thank you for reading
@RootFP
2 жыл бұрын
Finding the method that works for you is important!
@canyonoverlook9937
2 жыл бұрын
Did you get a lifetime annuity or a fixed term like 20 years?
@missouri6014
2 жыл бұрын
@@canyonoverlook9937 Neither......remember they charge a fee of around 1% to have an income rider. That is really not needed. For me I just use the increase that I get from the cap. Meaning when the SP goes up 5% I take as income 5% for income. This way I always have my principle. You don't have to take the entire gain.......just take a portion. This year there will be no gain. So zero will be the gain.
@CliffordStaley
10 ай бұрын
60 40 is an old concept today
@ShahedChowdhuri
2 жыл бұрын
Since you’ve separated out stocks and bonds in the guidelines, how would you handle withdrawals from 401k that’s invested in a target date fund that includes both stocks and bonds?
@RootFP
2 жыл бұрын
You couldn’t do the same thing with a target date fund. The fund company would be responsible for your redemption but you couldn’t specific where it comes from within the fund.
@ShahedChowdhuri
2 жыл бұрын
@@RootFP makes sense, thanks!
@krod2162
9 ай бұрын
I'm no expert but this whole thing I just heard sounds too risky for my taste. Sounds like it's people who don't want to live frugally. Just want to spend spend spend. And they're looking for a way to get away with it.
@stephtraveler7378
Жыл бұрын
Great content. I suggest you jack your chair up a bit so you don't look like a small child at a big table. Its optics....but its the video world we live in.
@RootFP
Жыл бұрын
Haha thank you for the tip! I agree that’s important.
@OldManDave1960
11 ай бұрын
😂😂😂😂😂
@mikhailkalashnikov4599
10 ай бұрын
LOL- where we're heading none of these "traditional" retirement strategies are worth a damn. Get out-get out, while you still can!
@janethunt4037
Жыл бұрын
This was a great explanation. I think you convinced my husband that we won't go broke by taking more than 4%.
@Banthah
Жыл бұрын
Terrific video. I’m from the UK and what I like is that iths applies to anyone, anywhere, and is not just USA specific. I have 5 years to retirement and I have watched a number of different videos on withdrawal methods. But this is the first one that gives a specific order from your portfolio, based on returns. Thanks for this, very helpful
@RootFP
Жыл бұрын
Glad to hear it, Chris!
@HS-mk8du
Жыл бұрын
😮
@serialmigrant
8 ай бұрын
Same here, I'm Canadian but worked in the USA for 2 yrs, so I can "translate" the info considering Canadian specificities... But the basics all apply.
@alanwilson5965
7 ай бұрын
I agree. I have been looking for just this type of information. I appreciate your smooth and calm presentations. I have 'saved' this KZitem to review. Thank you very much and keep up the good work.
@DB-xp9px
Жыл бұрын
great video. what is lost here (probably cuz the answer is, as always, "it depends") is how many year's worth of cash reserves u should have to pull from in the years both bonds/stocks are down. most bear markets only last 2-3 years, if i remember correctly, but we have longer stretches such as 2000-2010
@williamrogers1219
7 ай бұрын
This is about rebalancing via withdrawals (i.e., withdrawing the higher asset class up to including the desired asset allocation) However one would assume if one asset class increased significantly to the desired asset allocation, the portfolio would have been previously rebalanced based on the trigger method of rebalancing.
@dlg5485
Жыл бұрын
A dynamic withdrawal strategy like this is absolutely the best way to go if you can stick to it.
@kzalaska4804
Жыл бұрын
Great explanation of a relatively complex idea. I am retiring in one year and plan to use this strategy.
@robynnichols1695
2 жыл бұрын
Great explanation. I have heard of the guardrail rule but never heard it explained this way!
@RootFP
2 жыл бұрын
I'm glad you liked the video!
@Rob-me8vp
9 ай бұрын
Have you done videos to go over the other rules noted in Morning Star 9/30/23? 1 Base case 2 TIPS ladder 3 Forgo inflation adjustment 4 Guytons guardrails 5 Actual spending Do you not agree with the others and prefer Guyton’s guardrails?
@keithmachado-pp6fv
18 күн бұрын
Your videos are great. How does the type of account impact this order? For example deferred account vs brokerage etc. Where my situation is different is that I won’t need my brokerage account in my lifetime so I will not be pulling from that account which would cause an unnecessary tax as my heirs would get a step up in basis and that is where my stocks sit so no for rule #1. Number 2 pulling from bonds is fine if they have matured. Number 3 cash makes sense.
@andyyoo2948
4 ай бұрын
Does this mean that if you have a big enough cash bucket (at the beginning) to withstand a full bear market (across both equities and bonds), you theoretically never have to go into bucket 4 or 5? (ie, "sell low"...)
@katrinbook9685
8 ай бұрын
what if your portfolio is in balanced or target date funds?
@OnlyMusicExclusives
11 ай бұрын
Unfortunately 2022 changed this strategy. Stocks and bonds were both down. And of you had emergency cash it was worth 8% less due to inflation.
@janesmith506
6 ай бұрын
I wonder the same. Maybe this situation calls for cutting withdrawals to absolute minimum. Then if there is quick rebound in stocks, you could do a midyear adjustment? Good question.
@brownwellson54
9 ай бұрын
Protecting your capital is much more important than making money. Basically because if you lose your capital, making money is much harder. ''Missing the train'' vs. ''losing your money''. There are a lot of trains, but if your money is gone, it's over.
@karenmcgovern3452
Жыл бұрын
Another awesome video! But… what if I don’t plan to live to the age of 105 😅, how would this play out for a 30 year retirement? (and why do they use 40???)
@rayzerot
11 ай бұрын
They use 40 because you only live once and they don't want you to be broke for that one time!
@DJohnson-od6oj
6 ай бұрын
Great video. Can you do a part 2 on the order in which you take from your accounts? I.e. Roth, 401k, and other. (I.e brockerage account?)
@colleenconger5265
Жыл бұрын
I’m totally confused why you are not bringing up my tax deferred account which is the largest I have a 401(k) rollover in an IRA
@wisulliv
Жыл бұрын
Is the money for the whole year withdrawal taken from stocks or bonds or allocated from cash in a lump sun on day1 jan 1 ?
@kimle848
Жыл бұрын
Thank you James. You’re very clear in your video and you’ve been a great help.
@RootFP
Жыл бұрын
You are very welcome
@mmabagain
Жыл бұрын
Sounds very much like the three bucket strategy.
@thomaswiegmann4184
9 ай бұрын
It makes no sense to sell your best performers unless you constantly aim to rebalance your portfolio towards an average that is meaningless
@seestuff09
5 ай бұрын
In retirement return isn’t the most important factor it’s income and longevity.
@michaelhiney1686
10 ай бұрын
Wow super helpful James!
@HonestOne
Жыл бұрын
Thank you.
@toddhallam9598
Жыл бұрын
Great explanation. Validates my plan. What about dividends? I have 1/3 of my portfolio in dividend growth stocks and ETF's. What is a scenario where I would withdraw dividends?
@RootFP
Жыл бұрын
Glad it was helpful!
@j.c.2973
Жыл бұрын
@@RootFP you didn’t answer Todd’s dividend question, James. How about it?
@Easyriderjohn
Жыл бұрын
The dividend fund would be considered stock and the dividends received would be considered cash. If you reinvest the cash dividend then it’s stock again.
@pdykesdykes
11 ай бұрын
this was great vid
@RootFP
11 ай бұрын
Thank you!
@tulsatom4307
2 жыл бұрын
How have you seen Required Minimum Distributions (RMDs) affect Withdrawal Rates and Allocations and Buckets in that Uncle Sam’s RMDs > will exceed the 4% rule beginning at age 73 and > will exceed 7% by age 86 * Granted, this only applies to the Traditional Accounts (401k, 403b, IRA), Not the Roth Accounts
@RootFP
2 жыл бұрын
The RMD may push withdrawal rates over desired amounts, but in those cases you have the option of reinvesting the “excess” withdrawal in a taxable account if you want it to remain invested
@peterwest2933
11 ай бұрын
Nice theory but nothing to do with reality. Skyrocketing healthcare, property insurance, food prices etc are never taken into account in these calculations. Government can also start taxing roth just like regular ira when you pass. Government just made regular 401k and ira obsolete for planning.
@Rob-me8vp
9 ай бұрын
How did the govt make 401k and ira obsolete for planning?
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