Ask Terry Questions Retirement Savings

Retirement Savings

By Terry Savage on October 29, 2018 | Financial Planning / Retirement

My wife and me have been retired 5 years. We are both 71 years old. Our house is fully paid and full health coverage through past employer. We only have $150k in our IRA where we withdraw the RMD (+5%) for travel vacation every year Will our IRA savings last for another 15-20 years?

Terry Says

That all depends on how your account is invested! If you are earning 4 percent a year (perhaps in dividend paying stocks or bonds that carry a 4 percent yield) you should be ok. But if you are invested in stocks, and the market declines 30 percent, then you will run out of money before you run out of time! (Even though your RMD will decline, if you need the money you will have to take out more at the worst time –or change your travel habits.)

To do more specific modeling, either get a Certified Financial Planner (fee only) through — or go to Fidelity or Vanguard and have them model the appropriate withdrawal and investment scenario for your situation. (It’s called Monte Carlo modeling — and it has nothing to do with gambling — and everything to do with probabilities!)

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