How Much Money Do You Need To Retire? - NARFE
[Pages:43]How Much Money Do You Need To Retire?
A NARFE Federal Benefits Institute Webinar
Presented by Mark Keen, CFP
This webinar provides general information only.
For individual assistance, NARFE recommends you contact a financial planner who has a stated fiduciary responsibility to act solely in your interest.
National Active and Retired Federal Employees Association Sponsored by
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How Much Money Do You Need To Retire?
A NARFE Federal Benefits Institute Webinar
Presented by Mark Keen, CFP
National Active and Retired Federal Employees Association Sponsored by
2
Framing the Conversation
Retiree Risks
Sequence Risk
62
Early
75
Retirement
National Active and Retired Federal Employees Association Sponsored by
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Sequence of Returns
Accumulation
Distribution
Portfolio A
Portfolio B
Portfolio A
Portfolio B
Annual Year-end Annual Year-end
Annual Year-end Annual Year-end
Age Return
Value
Return Value
Age Return
Value
Return
Value
$ 100,000
$ 100,000
$ 691,527
$ 691,527
41
29% $ 129,000 -12% $ 88,000 66
29% $ 847,467 -12% $ 578,117
42
18% $ 152,220 -21% $ 69,520 67
18% $ 957,987 -21% $ 428,578
43
25% $ 190,275 -14% $ 59,787 68
25% $ 1,151,631 -14% $ 337,030
44
-6% $ 178,859 22% $ 72,940 69
-6% $ 1,047,018 22% $ 365,082
45
15% $ 205,687 10% $ 80,234 70
15% $ 1,159,317 10% $ 358,783
46
8% $ 222,142 4% $ 83,444 71
8% $ 1,208,772 4% $ 331,447
47
27% $ 282,121 11% $ 92,623 72
27% $ 1,482,707 11% $ 322,079
48
-2% $ 276,478 3% $ 95,401 73
-2% $ 1,411,379 3% $ 287,941
49
15% $ 317,950 -3% $ 92,539 74
15% $ 1,572,715 -3% $ 236,816
50
19% $ 378,360 21% $ 111,973 75
19% $ 1,817,845 21% $ 231,960
51
33% $ 503,219 17% $ 131,008 76
33% $ 2,355,932 17% $ 217,025
52
11% $ 558,574 5% $ 137,558 77
11% $ 2,561,958 5% $ 177,622
53
-10% $ 502,716 -10% $ 123,802 78
-10% $ 2,261,394 -10% $ 115,492
54
5% $ 527,852 11% $ 137,421 79
5% $ 2,321,149 11% $ 71,834
55
17% $ 617,587 33% $ 182,769 80
17% $ 2,654,553 33% $ 25,980
56
21% $ 747,280 19% $ 217,496 81
21% $ 3,146,828 19% $
-
57
-3% $ 724,862 15% $ 250,120 82
-3% $ 2,998,603 15% $
-
58
3% $ 746,608 -2% $ 245,118 83
3% $ 3,029,697 -2% $
-
59
11% $ 828,734 27% $ 311,299 84
11% $ 3,297,624 27% $
-
60
4% $ 861,884 8% $ 336,203 85
4% $ 3,366,474 8% $
-
61
10% $ 948,072 15% $ 386,634 86
10% $ 3,634,428 15% $
-
62
22% $ 1,156,648 -6% $ 363,436 87
22% $ 4,355,529 -6% $
-
63
-14% $ 994,717 25% $ 454,295 88
-14% $ 3,688,778 25% $
-
64
-21% $ 785,827 18% $ 536,068 89
-21% $ 2,860,226 18% $
-
65
-12% $ 691,527 29% $ 691,527 90
-12% $ 2,455,146 29% $
-
Average 8%
8%
8%
8%
Accumulation: Both Portfolio A and B start with $100,000 and take no withdrawals. Portfolio A experienced strong performance in early years and poor performance later. Portfolio B experienced the exact same returns, but in reverse order. Sequence of returns doesn't matter with you're accumulating assets.
Distribution: Both Portfolio A and B start with a $691,527 next egg. Both withdrew 5% of the first year value and adjusted their withdrawals for 3% inflation each following year. Sequence of returns matters a great deal during distribution years
This example is hypothetical. It is designed for illustrative purposes only and does not represent any actual investment.
National Active and Retired Federal Employees Association Sponsored by
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Framing the Conversation
Retiree Risks
Sequence Risk
Inflation Risk
62
Early
75
Mid
85
Retirement
Retirement
National Active and Retired Federal Employees Association Sponsored by
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Inflation
Inlfation Rate
Rolling 30-Year Inflation Averages
6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00%
30-Year Period Ending The Inflation rate is calculated using the current Consumer Price Index (CPI-U) published monthly by the Bureau of Labor Statistics.
5.44% 3.52% 0.79%
National Active and Retired Federal Employees Association Sponsored by
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Inflation
$250,000
$48,000 Adjusted for Inflation Over a 30-Year Retirement
$200,000
$150,000
$100,000
$50,000
$62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92
Min
Average
Max
The Inflation rate is calculated using the current Consumer Price Index (CPI-U) published monthly by the Bureau of Labor Statistics.
National Active and Retired Federal Employees Association Sponsored by
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Framing the Conversation
Retiree Risks
Sequence Risk
Inflation Risk
Longevity Risk
62
Early
75
Mid
85
Late
95
Retirement
Retirement
Retirement
National Active and Retired Federal Employees Association Sponsored by
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