Lughnasa Honey Moon
Our financial planner has an office across 169 from General Mills. When we go see him, we call it visiting our money. The reason for going today resulted from thinking about retirement money in a somewhat new way. It involves recalibrating expectations currently set by an “abundance of caution” approach, an approach that understandably conservative advisors use.
According to the best projections our money can buy, under current conditions (not guaranteed to continue) our assets should last well past my 100th birthday with a sizable nut still available. In fact, a nut larger than our current assets. Now this is good news of course, but I view these projections as a speedometer and this one tells me we’re going too slow. That is, we’re leaving money on the table that we could be using to see the grandkids more often, do more work on our lawn, take a trip, whatever.
So we went into negotiate some ground rules with RJ about withdrawals. By making certain conservative moves years ago, at the advice of yet another financial counselor, Ruth, we have put together a fairly large savings account which we hold in a low volatility mutual fund outside of the IRA and under our immediate control. This account allows us to self-fund any shortfalls from our IRA withdrawal in case of a correction and, even, a crash. This is necessary because we have set our withdrawal rate at a steady 4%, no matter what, the 4% number arrived at in order to preserve capital over the long term.
With this safety mechanism in place it then becomes possible to identify an asset floor, if you will, above which we do not need to retain the money in investments. Which we did today. When our assets move above this floor, we’ll make occasional withdrawals that exceed our monthly draw. Below it we won’t.
Feels good.
