Yesterday, I shared how Monopoly taught me to focus on assets. Let’s talk about the traditional retirement model today.
And we’ll start with this… It’s a see-saw that forces you to choose between assets and income. Here’s why that’s a trap…
Imagine saving $1 million for retirement across a 401k and IRA. And let’s say you want to draw $70,000 per year to live comfortably.
At a 15% tax rate, you must sell $83,000 in assets annually to net $70,000 after taxes. This reduces your investment balance, which makes it harder for your money to grow.
If we assume you’re able to generate a steady 4% return with no down years, that $1 million is gone after 17 years of taking $70,000 annual withdrawals. Here’s the math:
That’s it… everything you worked for – gone in 17 years.
To my way of thinking, the traditional retirement model isn’t very robust. Yet the financial planning industry still preaches it today.
And do you see how this forces you to choose between assets to income?
In your working years, you pour savings into your retirement accounts, hoping for growth. In retirement, you sell those assets to live, shrinking your portfolio with every withdrawal.
When your assets are going up, you don’t have extra income. When you’re taking extra income, your assets are going down. That’s the see-saw.
The good news is that there’s a better way.
Tomorrow, I’ll share a strategy that builds your assets faster and generates steady, tax-advantaged income for you. That’s how I broke free from the retirement myth… and it’s easier than you might think.
-Joe Withrow
P.S. I’m going to talk about this comprehensive strategy more at our webinar next week. We are calling it The Strategic Investor’s Playbook: Bulletproof Money, Consistent Cash Flow.
We’re going live at 3:00 pm Eastern on Wednesday, May 14th. If you’re interested in a deep-dive on how to grow your money and create extra streams of income, please set aside some time to join us. We are going to walk through several specific examples to lay it all bare.
You can find the registration page here: The Strategic Investor’s Playbook Webinar Registration