Question #1: Give this question your best shot. What kind of a spender will you be in retirement? Will you spend about the same as you do now? More? Less?
Question #2: Given how much you will receive from Social Security and any pensions, how much yearly income do you need your portfolio to provide you with in retirement?
Question #3: This class went into great detail on the so-called 4% “Historically Safe Withdrawal Rate.” We also discussed the fact that many retirees do not necessarily need to hold their withdrawal rate down to 4%. For many retirees, it’s OK to withdraw as much as 5% of the portfolio. That means your retirement portfolio should be at least 20 times as large as the income need you gave as the answer to Question #2. Alright, look at your investment balances. How close are you to having a portfolio than can support you effectively upon retirement?
If you have a portfolio balance that is more than 20 times your retirement income need, please feel free to skip to Question #10. If your portfolio balance is not that high, though, please consider the following questions.
Question #4: Are you already retired? If not, how far away is retirement?
Question #5: Given your health history and family history, what is your life expectancy? Should you be planning a 30 or 40 year retirement?
Question #6: If you are not retired yet, how secure is your employment? What are the chances you will be laid off unexpectedly?
Question #7: What are the chances that you will be willing and able to work in retirement to cover any shortfalls?
Given your answers to Questions 3 through 7, you should know whether or not you are financially ready for retirement. If you are in good shape, feel free to skip down to Question #10. If you are struggling, ask yourself the following questions.
Question #8: Are you willing to spend a little less later on in life if your portfolio runs out of money?
Question #9: Are you willing to spend a lot less if you have bad luck and the markets crash in the early years of your retirement?
Now look at your answers to Questions 8 and 9. If you are willing to spend less in the future, then perhaps it is time to start spending less now.
Whether or not you have saved enough, the following questions are good questions for anyone in or near retirement.
Question #10: Do you know exactly what is in your investment portfolio?
Question #11: How much do you have invested in stocks and bonds? How much in other sorts of investments like gold, real estate and shares of privately held businesses?
Question #12: Within your stock portfolio, how much do you have invested in small stocks, value stocks and international stocks?
Question #13: Given what you have learned in this class, what is your own opinion of the level of diversification in your portfolio? Are you as diversified as possible?
Question #14: How important is it for you to maximize your investing in retirement?
Question #15: If you are a do-it-yourself investor, you can improve on the results of the simple Vanguard Lifestrategy funds described in Part 5 of Class #15. However, doing so requires a lot more oversight and emotional discipline than those ultra-simple strategies. Are you interested enough to carry through with a more complex style of investing in retirement?
Question #16: At first, it may seem like a great idea to find a financial advisor to help you through retirement. However, it’s not necessarily easy to find an advisor who truly will act in your own best interests. And even if you do find one, having a financial advisor will always mean giving up some control. Are you willing to work with a financial advisor?
Question #17: Besides funding your own income needs, what is your purpose for money? What do you hope your money will achieve? Do you want to leave a legacy or donate to charity?
Final Question: After going through the class and these exercises, how do you feel?
If you’d like to talk about your answers, feel free to email firstname.lastname@example.org
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