Retirement - Managing your money

[Captain Graham]

Let me know what you think about what we are going to do.

We getting ready for retirement and thinking about how to manage our retirement savings.
During our working years it is easy just stay in the market, keep adding money to your 401k and ride out any bear market drops.
After all the stock market always comes back.
But in retirement you are taking money out not adding to your retirement account (401k) so you need a withdrawal strategy so you do not run out of money.
What you do not want to do in retirement is sell stocks when the market is down.
I like the bucket system to help manage our money in retirement.
Please note all 3 buckets are still inside your 401k or retirement account.
It is just a way of organizing your money.
Assumptions for this example
1. Retirement saving is $1,000,000 (this number is picked just to make the math easy)
2. We will be taking out 4% or $40,000 each year to spend.
4% is the considered a normal withdrawal rate.
If your expenses are less you can take out less.
If you take out more then 4% you are at risk of running out of money.
4% assumes you will live 30 years in retirement.
Bucket1 - Out of the stock market to handle a typical bear market
4 years of expenses = 40,000 *4 = $160,000 (16% of your savings)
Bucket2 - Designed to handle a longer bear market but also have a average return on investment.
60 stocks/ 40 bonds
Another 4 years of expenses = 40,000 *4 = 160,000 (16% of your savings)
Bucket3 - Long term growth - 100% in stocks
$1,000,000 - $160,000 - $160,000 = $680,000 (68% of your savings)
Here are 2 videos explaining the system.

https://www.youtube.com/watch?v=PiRdPryT8Jc

https://www.youtube.com/watch?v=vKMGjb1Myv0