tag:blogger.com,1999:blog-5465015914589377788.post827441783508552708..comments2024-02-17T11:07:06.232-05:00Comments on Michael James on Money: Your Complete Guide to a Successful and Secure RetirementMichael Jameshttp://www.blogger.com/profile/10362529610470788243noreply@blogger.comBlogger10125tag:blogger.com,1999:blog-5465015914589377788.post-82677342863846105002019-03-01T15:30:55.012-05:002019-03-01T15:30:55.012-05:00@John Russell: The idea of spending only returns a...@John Russell: The idea of spending only returns and leaving principal intact is widely used. However, the definition of "principal" can be quite tricky. I had a relative who only spent interest on Canada Savings Bonds back in the high-inflation days of up to 19% interest. Obviously, this was far too high a spending rate despite not touching principal. Today you can buy income funds that use return of capital to make part of the high payments. But this seems like leaving the principal alone because the investor maintains the same number of fund units. At the other extreme, if you only spend dividends from index funds, you're underspending because the principal is growing faster than inflation.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-6621611924015755852019-03-01T15:02:41.825-05:002019-03-01T15:02:41.825-05:00Also your savings rate will disappear. If your sav...Also your savings rate will disappear. If your savings rate was 20% pre-retirement, that means your lifestyle can be maintained at 80% of your pre-retirement income. <br /><br />As for the withdrawal rate (3%, 4% or whatever) my experience (10 years retired) is that I have only made lump sum withdrawals for special purchases (new truck). My wife on the other hand periodically withdraws the income generated by her investments. Never any capital. <br /><br />I realize that this may not work for everyone, but it is another perspective you may want to look at. Johnhttps://www.blogger.com/profile/09014171319726764035noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-41866763552849318752019-03-01T15:00:10.613-05:002019-03-01T15:00:10.613-05:00@Deborah: I've found this area to be complex;...@Deborah: I've found this area to be complex; the right way to handle drawing down RRSPs is sensitive to many variables. I haven't been able to break it down to rules of thumb.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-11667451133886295682019-03-01T09:55:45.998-05:002019-03-01T09:55:45.998-05:00Looking back, I fault our former fiduciary adviser...Looking back, I fault our former fiduciary adviser (CFP, fee-only) for not discussing "the blackout phase" with us when I stopped working involuntarily at age 63. We had significant assets in tax-deferred accounts we could have drawn on, plus significant inheritance on the near horizon. He tried to discourage us from taking CPP/OAS early but didn't offer alternatives. I'm confident wellw be fine long-term, but we'll probably pay more tax than we needed to.Deborah S.https://www.blogger.com/profile/15078216183644544899noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-71196691594172093492019-02-28T08:17:10.924-05:002019-02-28T08:17:10.924-05:00@always_learning: I've heard early retirees ta...@always_learning: I've heard early retirees talk about how great it is to pay no taxes, but income-smoothing, as you say, is often the better long-term choice. This is especially true if you're destined to be subject to OAS clawback after mandatory RRIF withdrawals kick in.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-46017730725287289092019-02-28T01:06:11.490-05:002019-02-28T01:06:11.490-05:00Thanks for telling me about the "blackout pha...Thanks for telling me about the "blackout phase." I hadn't thought of that opportunity for, as I see it, income smoothing.always_learningnoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-38139386493846361112019-02-25T12:32:53.006-05:002019-02-25T12:32:53.006-05:00@Larry C: I agree. You'd have to save a lot o...@Larry C: I agree. You'd have to save a lot of money to satisfy both pieces of advice. I tend to focus on how much I spend now as a guide to future spending needs rather than using my income as a guide.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-11436293887248887112019-02-25T11:51:31.620-05:002019-02-25T11:51:31.620-05:00“we recommend that at age 65 you consider withdraw...“we recommend that at age 65 you consider withdrawing just 3 percent a year from your portfolio" vs. “The average person will need to replace 80 percent to 90 percent of their preretirement income.”<br /><br />These two lines are difficult to reconcile. Larry Chttp://diyinvesting.canoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-30712403067935044882019-02-23T10:53:43.823-05:002019-02-23T10:53:43.823-05:00@Lance: My rule has always been that I only have m...@Lance: My rule has always been that I only have money in stocks if I think I won't need to spend it in the next 5 years. Prior to retirement, that meant my savings were 100% in stocks. Once I retired, I started maintaining 5 years' worth of my family's spending in fixed income. The rest is in stocks. I spend from this fixed income and replenish it as necessary by selling some stocks.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-26744894532051572942019-02-23T10:00:11.956-05:002019-02-23T10:00:11.956-05:00The points of the book are interesting, but more s...The points of the book are interesting, but more so, your counter points (for which I agree with).<br /><br />Side question, if I may? Prior to your retirement, I believe you were very heavily tilted towards equity vs fixed income in your personal accounts. Did that allocation change when you decided to retire, or thereafter?Lancehttps://www.blogger.com/profile/17990325594378152392noreply@blogger.com