This week, I will be meeting with our financial advisor to evaluate stress test scenarios and their impact on a successful retirement. Specifically, we will look at:
- No social security payments. This assumes the worst that social security will not be available when we are qualified to make withdrawals.
- Stock options are worthless. In October, 2007, the value of stock options were about 1/3 of our liquid assets. Currently, the stock options represent about 5% of our savings.
- Low portfolio growth rates. Historically, we've assumed a 7% annual growth rate. We'll look at 5% and 3% also.
In the past, with assumed portfolio growth rates of 7% (including stock options) and social security being available, the Monte Carlo estimation showed a high probability of our savings covering retirement at a 4% to 5% withdrawal rate.
The stress test scenarios will help us determine if our retirement savings have any margins of safety and whether we should seriously consider returning to work.For more on Strategies and Plans Ideas, check back every Monday for a new segment.
This is not financial or retirement advice. Please consult a professional advisor.
Copyright © 2009 Achievement Catalyst, LLC