The Importance of a Safe Withdrawal Rate

Now that tax season is behind us (thanks to the whole Lange staff for another great year), we are working on a newsletter that will direct you to some outstanding resources designed to help you with your financial planning. If you are not currently receiving our newsletter, sign up for the e-newsletter on retiresecure.com.

One area that we think deserves special attention, especially since most portfolios have dropped in value, is a review of the sustainable withdrawal rate during retirement.  A good plan is critical to ensure that you don’t outlive your money.

With that in mind, Jim invited Paul Merriman to be his guest on his radio show, The Lange Money Hour, on April 22nd.  Paul is the author of “Live It Up Without Outliving Your Money” and founder of Merriman, an investment advisory firm based in Seattle that manages over $1 billion in assets.

Both Jim and Paul agree that many variables come into play when trying to determine a safe withdrawal rate.  You have to consider the client’s portfolio, age, risk-tolerance, other sources of income and current market conditions.  An excellent article on the subject can be found on Paul’s website www.FundAdvice.com. On the right hand side of the home page – under articles – click on ‘Retirement: When Your Portfolio Starts Paying You.’

Jim and Paul also discussed what they consider to be the number one mistake that most investors make.  Jim believes the number one investment mistake is letting your emotions guide you (instead of logic.)  Paul believes the biggest investment mistake is trusting in the wrong people.  For instance, many investors act on financial advice solely from their co-workers or relatives.  Paul says that you can’t even trust Wall Street – believe the academics instead – they have the research to back up their claims.

It was another show filled with great advice — thanks to Paul for taking the time to join us.  If you missed the show, look for the complete audio on retiresecure.com the week of April 27th.

Our Debut Show was a Big Success!

Thanks again to Ed Slott, ‘America’s IRA Expert,’ for taking the time to join us for the premiere of our radio show “The Lange Money Hour: Where Smart Money Talks” which aired on March 25th. Ed was a great guest and Jim and Ed ended up covering a lot of excellent tax-saving strategies. If you missed it, be sure to check out the audio that’s posted on retiresecure.com.

In their first appearance together, Jim and Ed explored how seniors can exploit the new law suspending required minimum distributions for 2009, Roth IRA conversion strategies for 2010, how to protect your IRA by using life insurance, planning for after-tax dollars inside a retirement plan after retirement and how to pick a good financial advisor. They even chatted about Bill Mazeroski and his 1960 ninth-inning, World Series-winning, home run against the New York Yankees (believe it or not, it’s a baseball analogy that relates to IRA investors today.) Come to think of it, it’s amazing that they were able to cover all of that in just one hour!

By the way, Ed Slott’s latest book Stay Rich For Life: Growing and Protecting Your Money in These Turbulent Times comes with a companion workbook that is very helpful. Jim was actually using it during the show!

Exciting news for the next show which is scheduled to air on Wednesday, April 8th from 7-8 p.m. ET on KQV 1410am. One of our Lange team members has agreed to join Jim to talk about taxes. Steve Kohman is a CPA, Certified Specialist in Estate Planning, Certified Valuation Analyst and a Resident Insurance Provider. He’s also an incredible “numbers-runner” – crunching the numbers to determine the best plan of action for you.

One week from the tax deadline, Jim and Steve will explain why it’s not too late to do something about your 2008 return. They’re happy to take your questions, so feel free to call the studio line at 412-333-9385.

Catch Jim and Steve on Wednesday, April 8th from 7-8 p.m. ET with a rebroadcast on Sunday, April 12th from 9-10 a.m. ET. Thanks to everyone who’s been listening around the country online at kqv.com. We’ve recently had listeners check in from Florida, Michigan, New Jersey, Ohio and Texas – we love hearing from you!

Keep listening!

Don’t forget that the audio to all of these shows is always posted on retiresecure.com.