u/awohio1

Saw some posts recently and it got me thinking. What is your plan for true old age financial management? (bills, taxes, investments) I'm talking about when we're in our 80s, 90s, when mental acuity or surprise acute health problems are more likely to be an issue.

I've been a self directed investor for 40 years, but over the next 20+ years, something will need to change. Am married, no kids. My wife is involved enough in our finances that she could step up to day to day management of things if I was not able to. Having an overly traditional "wife stays out of the finances" relationship has some big downsides as you age. But we are about the same age, so we should plan for what happens if both of us are not up to managing finances.

Someone that has a long term relationship with a good financial planner might be able to lean on that person. But then if your financial planner is 10-20 years younger than you, they may be retiring about the time you acuity is an issue.

People with kids obviously have a possible solution to that problem, but that presumes a good relationship, and kids who are capable of stepping up. My mom was pretty capable with her finances, but I stepped up to help. My in-laws were less capable, and my wife and I stepped up to help with that side.

One thing, financial firms now have provisions for you to designate a "trusted contact" for you in case they suspect that your acuity is slipping, or if they think you are being scammed. A younger family member or friend that you trust would be helpful for that. But that is just one small part of the picture.

Engaging an investment person might be a prudent thing at an older age, even most of your life you avoided people charging a 1% assets under management type fee. Maybe that is time to get an annuity if you don't have regular payment flow from something else.

Anybody else here have some thoughts?

I have a 1987 Porsche 944 Turbo, I love that the data plate says made in West Germany. It occurred to me that it would fun to have a back to back drive or just a ride in both my 944 and a Trabant. You get to drive the 944, I get to drive the Trabant.

Am open to travel to get to the Trabant.

I'll supply the 944, you supply the Trabant, I'll buy lunch. Or if you don't care about the 944 experience, I'm open to paying for the opportunity to drive/ride in a Trabant. I don't see any Trabants on Turo.

Any takers?

I do see that there are Trabant experiences / rental opportunities in Europe, that might factor in a a vacation trip.

A major component of retirement planning is determining what a safe withdrawal rate is given one's personal circumstances. (assets, asset allocation, spending, expected time in retirement, etc).

I've used several websites to help model retirement planning, mostly the one that is provided within my Fidelity account. I've found a good free web site that shows an informative look behind the scenes of the calculations. I have no affiliation with this site: https://ficalc.app

If you've done any reading about retirement planning, you've heard the conventional wisdom of "4% is a safe withdrawal rate for a 60/40 stock/bond portfolio" That means, calculate 4% of your retirement assets at the start of retirement, and plan on withdrawing and spending that same dollar amount every year, adjusted for inflation. I've always thought, well duh, average stock returns in the US are 10%, or 7% after inflation, why wouldn't even a 6 or 7% withdrawal rate be safe?

But the 7% after inflation average includes 20-30 time periods where the market does considerably better, and considerably worse than that. So how was 4% determined to be the magic number?

That number was arrived at using "Monte Carlo" simulations where the numbers are back tested against actual US financial markets over the past 150 years. Given a starting asset value, an asset allocation, a desired timeframe and a withdrawal rate, and compare the results over every rolling window of time since 1871.

So, if you are looking for a 30 year retirement period, look at the period of 1871-1900, from 1872-1902, 1873-1903, etc, all the way up to 1996-2025.

The calculation will then show you how many of those 125 rolling windows would your asset allocation and withdrawal rate have been successful, with success being determined by you having money left at the end of the specified period (ex. 30 years).

The app allows you to enter in retirement income, could be social security, pension, or working while being partially retired, etc. It also has more sophisticated ways of determining your withdrawal rate.

As an example:
$500k assets
70/25/5 stock/bond/cash split
25 year window
$50k annual spending
$30k annual social security income (that is the current average), and no other retirement income.
So $20k annual withdrawal, which is 4% of $500k.

72.3% of those simulations are successful, meaning you don't outlive your assets after 25 years.

Reduce annual spend to $45k, so $15k annual withdrawal (3% rate), and the success rate goes to 96.9%.

Using more sophisticated withdrawal rate can dramatically improve your results, and that is more like what real people do. Spend less in bad years, more in good years, etc.

I've added a new batch of WW2 technical manuals to my website, including some additional tank manuals. (M3 Lee, M36 tank destroyer, M4A3 and M4A4 Shermans)

TM9-750

CurioAndRelic.com