Sunday, June 06, 2010

Blogging WealthTrack

One of my favorite shows to watch on the weekend is WealthTrack with Consuelo Mack. It is a show offered by Public Television and it has been rated the "Best Money on TV" by Money Magazine (which I used to subscribe to).

According to this morning's episode, recorded in January of this year, US Household Wealth fell 11 Trillion Dollars in 2008 or, put another way, a whole 18%.

What is the new target number? That is, how much money do I need to generate every month/year in order to live? How do I get to that number?

Harold Evensky, Author - Retirement Income Redesigned
Marybeth Franklin, Kiplingers Personal Finance
Jonathan Clements, Director of Financial Education CITI, Author - The little book of Main Street Money


1.Segment their money - not all at the same time for same purpose
5-10 years of retirement, guaranteed income
"Buckets of Money"
2. 6-10
3. 11-15
4. Alternative Investments

But where do you keep your assets? For Franklin, the error is clear. Many people have their assets too consolidated, putting all of their money in IRAs/401ks. Cash in regular taxable account provides great flexibility with regard to taxation.

All of the experts agree to the common idea of restricting to 4% of your income for your first year withdrawal. This is a rule of thumb that works for perhaps 90% of the cases, but this wouldn't work for the past couple of years, which were the other 10% of cases.

The big takeaway from this discussion? The idea of an immediate annuity: Just 100K can generate 7%, which pays out for the rest of your life.

The biggest challenge for people? Being able to relinquish control of their principal to make a long term decision about their money like an annuity.