Hi I have an investment scenario I am working on. It’s really important. If anyone with knowledge on the subject is willing to help me answering these questions, I would appreciate it.
Married couple:
Name person person 2
Age 56 56
Employment Doctor Professor
Annual Income $195k $75k
Taxable Portfolio : $1 mil
401k – Person1 : $500k
401k – Person 2 : $250k
They two people would like to retire at age 67 and believe they need $150k per year in retirement to achieve their goal (this is in addition to their anticipated social security of $40k).
1) What spend rate (as a percentage of total assets) would you recommend in retirement and why?
2) How would you invest the portfolios differently to maximize tax efficiency?
3) How much will the couple need at age 67 to meet their cash flow objectives?
4) At age 67, from which buckets would they initially draw money first and why? Would this change at all after age 70.5?
5) At what rate would the portfolios have to grow to meet their cash flow objectives in 11 years if they each are adding $23k per year to their 401ks?
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Here’s what I have worked out so far:
Currently their total assets between their portfolios are $1,750,000. They will both add $23,000k a year which means after 11 years person 1’s 401k will be $753,000 and person 2’s will be $503,000. Their total asset 11 years from now when they retire at 67 would be $1,000,000 + $753k + 503k = $2,256,000.
$2,256,000/150k cash flow per yr = 15 years which means without taking into account any sort of capital appreciation, they would have enough money to cover 15 years of life after retirement which puts them at 82 (which I believe is around average life expectancy for a woman in the US).
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Can anyone tell me how you go about predicting life expectancy and therefore how many years they will need to receive $150k cash flow?
Married couple:
Name person person 2
Age 56 56
Employment Doctor Professor
Annual Income $195k $75k
Taxable Portfolio : $1 mil
401k – Person1 : $500k
401k – Person 2 : $250k
They two people would like to retire at age 67 and believe they need $150k per year in retirement to achieve their goal (this is in addition to their anticipated social security of $40k).
1) What spend rate (as a percentage of total assets) would you recommend in retirement and why?
2) How would you invest the portfolios differently to maximize tax efficiency?
3) How much will the couple need at age 67 to meet their cash flow objectives?
4) At age 67, from which buckets would they initially draw money first and why? Would this change at all after age 70.5?
5) At what rate would the portfolios have to grow to meet their cash flow objectives in 11 years if they each are adding $23k per year to their 401ks?
—————————————-
Here’s what I have worked out so far:
Currently their total assets between their portfolios are $1,750,000. They will both add $23,000k a year which means after 11 years person 1’s 401k will be $753,000 and person 2’s will be $503,000. Their total asset 11 years from now when they retire at 67 would be $1,000,000 + $753k + 503k = $2,256,000.
$2,256,000/150k cash flow per yr = 15 years which means without taking into account any sort of capital appreciation, they would have enough money to cover 15 years of life after retirement which puts them at 82 (which I believe is around average life expectancy for a woman in the US).
————————————
Can anyone tell me how you go about predicting life expectancy and therefore how many years they will need to receive $150k cash flow?