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Question for the Money Doctors

Question submitted on Apr 22, 2012.

Question

In July we will be 74 (husband) 73 (wife) No debt,$575,000 invested mutual funds-(Price and Vanguard) ($242,000 rollovers,$306,000 Roths,$27,000 Jt. Ten.)Currently taking out $25,000 including RMD''s. (Kids are very well off). When will we run out? or should we spend more, even though we are happy at this level. Very blessed and healthy.

Answer

Some retirement withdrawal studies done by Bengen in the 1990s became the basis for the financial industry''s current 4% "safe" withdrawal ratio, where the investor can reasonably expect to not run out of funds over their lifetime.  Your current withdrawal ratio of 4.35% is reasonably close.

Not knowing your asset allocation, it is difficult to project whether you may run out of money or not based on rate of return assumptions going forward.  Given you are reasonably close and happy at that withdrawal level you could be ok.  However, I would look for a CPA, PFS (www.findapfs.com)  in your market to help project this if you want a more concrete answer.  


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