Protecting Your Retirement Nest Egg

Protecting Your Retirement Nest Egg

Every advisor knows how to get money into a portfolio; it’s getting money safely out of your portfolio that can be more challenging. We often hear questions like:

  • How much can I safely spend from my portfolio in retirement?
  • How will I know if I’m heading for trouble?
  • What will I need to do to get back on track?
Golden Eggs. Making Money and Successful Investment.

At Yeske Buie, we’ve built TheLiveBigWay® Safe-Spending System which is backed by the results of some of the best available research and answers the aforementioned questions by targeting a spending rate and implementing decision rules to ensure Clients remain on a sustainable path.

Our system has been featured in publications like The Wall Street Journal, including a 2021 article by Neal Templin titled, “How to Make Sure Your Retirement Nest Egg Lasts.” This article focuses on the importance of flexibility to make your retirement nest egg last. Specifically, Templin notes that some advisors find that the traditional 4% Rule often results in over- or -under-spending because it fails to account for inevitable market volatility.

Here’s an excerpt from the article highlighting how Yeske Buie’s system provides flexibility and empowers Clients to feel in control of their financial life:

San Francisco financial adviser David Yeske uses rules based on research done by Jonathan Guyton and William Klinger in the early 2000s. Because of his system’s flexibility, Mr. Yeske says his clients who are retired are able to take 5% or even 6% withdrawals in good years.

And by adjustments, he means some belt-tightening will be necessary in years when markets don’t perform so well. When stocks crashed in late 2008 and early 2009, Mr. Yeske says, he told his retired clients that their monthly portfolio distributions were being cut 10% because of his system’s capital-preservation rule. Suppose a retiree with $1 million portfolio was withdrawing 5%, or $50,000 a year in Mr. Yeske’s system. If that portfolio fell to $833,000 or lower, Mr. Yeske’s system would lower the withdrawal 10% to $45,000.

“The bottom line,” he says, “is you can launch yourself on a high-spending trajectory as long as you are prepared to make adjustments.”

“As much as no one wants to cut their spending 10% for the coming year, it nonetheless gives them a sense of control,” Mr. Yeske adds. “And they understand that this is keeping them on a sustainable path.”