Jim Dahne practices medicine in an emergency room and also blogs at The White Coat Investor. One of his recent posts impressed me so much I decided to put my spin on it like a musician covering a tune written by someone else.

You are mortal. Brinks trucks don’t often show up in funeral processions. Spending principal is not the end of the world if it makes your life happier. Sometimes buying better wine and enjoying with your kids beats leaving an inheritance.

Start with a reasonable withdrawal rate. At age 65, a married couple has a 50 percent chance one will live 27 additional years. Numerous studies have shown initial withdrawal rates around 4 percent, adjusted annually for inflation, is a safe withdrawal rate for 30 years. The sequence of returns is more important than the actual return; take it to the bank.

Growth is important, in fact, crucial. For growth, risky assets like stocks are essential. Without growth, inflation erodes a retirement portfolio’s purchasing power. Three percent inflation over a 24-year period reduces a dollar to 50 cents.

I crack up when colleagues cite historical financial data. Except for certain radio hosts, we don’t pull numbers out of thin air, but solid data goes back to 1926. The figures we use are valid but understand the limitations. More importantly, think about realistic spending goals.

Embrace uncertainty. South Walton wind speeds average around 10 mph, but no one builds a home here based on 10 mph winds. We can make reasonable assumptions on what future returns will be, but no one knows exactly nor the sequence of returns. Retirement planning is not a precise science. Along the same line, precision is overrated; it blows engineers’ minds.

Finally, adjust as you go through retirement. With a higher initial withdrawal rate, don’t increase for inflation. Reduce spending if your portfolio takes a hit, either from one-off spend-downs or bad markets. Set up your financial life where fixed expenses are low relative to variable costs.

RIP Queen of Soul

In 1972, I missed George Jackson’s “Aretha, Sing One for Me.” Part-time Walton County resident Eric Lindell caught my slack and put it on one of his records. No one sang like Aretha Franklin, but like a lot of people, she never got around to writing a will or putting assets in a trust. Her long-time business manager urged her to take action, but she resisted. I believe him.

People don’t like thinking about dying, I suppose. No one dies without a will — either you have one or state intestate law dictates how and where your assets go. Going through the interstate process can be “as miserable as a man can be.” We are mortal. See paragraph two.


You can’t always get what you want, but Buz Livingston, CFP can help figure out what you need. For specific recommendations, visit livingstonfinancial.net or come by the office in Redfish Village, 2050 Scenic 30A, M-1 Suite 230.