Making Your Money Last: Understanding the Challenges
You plan to retire at age 65 and want your money to last for at least 30 years. What factors should your planning include?
Your Withdrawal Rate
Age to which the portfolio may last, based on withdrawal rate
© 2017 Morningstar. All Rights Reserved. The portfolio allocation (%) is made of 50% stocks, 40% bonds, 10% cash. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Stocks are represented by the Ibbotson® Large Company Stock Index. Bonds are represented by the five-year U.S. government bond, Treasury bills by the 30-day U.S. Treasury bill, inflation by the Consumer Price Index, and mutual fund expenses are from Morningstar. The data assume reinvestment of income and do not account for taxes or transaction costs. The portfolio assumes withdrawals by a person beginning at age 65. Past performance is no guarantee of future results.
Your Asset Allocation During Retirement
The effect of inflation on everyday costs ($)
Source: Legg Mason. The calculation methodology was based on dividing the difference of the individual years totals by the previous year’s amount. After the percentage difference was calculated, an average of the historical percentage changes (inflation average) was used to calculate forecasted years.
Social Security Benefits are Not Enough
1 Trends in College Pricing, Average Tuition and Fees and Room and Board (Enrollment-Weighted) in Current Dollars, 1971–1972 to 2017–2018. The College Board, collegeboard.org.
2 U.S. Bureau of Economic Analysis, Personal Consumption Expenditures: Chain-type Price Index [PCEPI], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/PCEPI; February 15, 2018.
3 Box Office Mojo. Adjusting for Ticket Price Inflation 2016 (boxofficemojo.com/about/adjuster.htm).
4 U.S. Department of Commerce, Bureau of Economic Analysis: Auto and Truck Unit Sales, Production, Inventories, Expenditures, and Price (www.bea.gov).
5 U.S. Bureau of Labor Statistics, Consumer Price Index for All Urban Consumers: All Items [CPIAUCSL], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/CPIAUCS; February 16, 2018.
6 U.S. Bureau of Labor Statistics. Consumer Price Index–Average Price Data, Milk, whole, fortified.
7 U.S. Census Bureau. Median and Average Sales Prices of New Homes Sold in United States (www.census.gov/construction/nrs/pdf/uspricemon.pdf).
Investment Products & Strategies
Your financial advisor can help you develop a long-term investment plan with a balance of strategies that addresses your need for portfolio growth, income, capital preservation and risk management.
All investments involve risk, including possible loss of principal. Past performance is no guarantee of future results. Indexes are unmanaged, and not available for direct investment. Index returns do not include fees or sales charges.
Equity investments generally provide an opportunity for more capital appreciation than fixed income investments, but they are subject to greater market fluctuations.
Diversification does not assure a profit or protect against market loss.
Any information, statement or opinion set forth herein is general in nature, is not directed to or based on the financial situation or needs of any particular investor, and does not constitute, and should not be construed as, investment advice, forecast of future events, a guarantee of future results, or a recommendation with respect to any particular security or investment strategy or type of retirement account. Investors seeking financial advice regarding the appropriateness of investing in any securities or investment strategies should consult their financial professional.