How much of your investment portfolio should you use in retirement?

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Someone was told they should pull out 4% of their assets in the first year of retirement and 3% every year there after.  Question: should they include the equity in your home?

Answer: No, only consider liquid assets in your portfolio. Example: If you have $1 million in your investment portfolio, 4% of one million is $40,000 to replace your income. If you have a pension plan and/or you are collections Social Security you may not need to use 4%.

Never, ever use the equity in your home to live off of . If you need more money consider a reverse mortgage to increase your cash flows. It’s all about current cash flows.

Remember: you have to have a place to live and with a reverse mortgage you have got to pay it back to the bank or give the house to the bank when you die. Let anyone you are leaving your house too know that you have the reverse mortgage so they won’t be surprised when you are gone.

Tip: Figure out how much you need to live on for the entire year. Look at how much your taxes will be and than compute those amounts to decide if you need to use any investment saving to maintain you current quality of life.

As always go see a Certified Tax Accountant to help you through the maze of living income and tax liabilities.

Trust me you will sleep better at night.

The market closed a record highs (except the Russell 2000). This means your portfolio has also increased in value. See you financial professional to see where your portfolio stands.

It is year end and it time to rebalance your portfolio.

See you tomorrow,

Robert L. Woods, MBA

Robert L Woods

Robert L Woods

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About Me

Robert L. Woods is the retired partner of the Institute For Fiduciary Education ( that provided investment seminars for public and private pension funds, endowments and institutional fund managers. He spent 28 years working for the State of California, as a budget and financial analyst which includes 16 years as an Investment Officer for the California State Teachers’ Retirement System (CalSTRS). At CalSTRS, he established it as one of the nation’s first institutional home loan programs with a down payment assistance component. He also spent 13 years on the Board of Trustees for the Sacramento County Employees Retirement System (SCERS). He was a Trustee with the University of California, Davis, Cal Aggie Alumni Association and a member of the Chancellor’s Council on Community & Diversity. He is a Life Member: Phi Beta Sigma Fraternity, Inc., Theta Gamma Sigma Chapter, Sacramento, CA.

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