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zataomm  5mo ago (text post)   5408 thread views

Colorado Supreme Court Thread

Link to the decision

I don't know to what extent there are established precedents for when a topic is worthy of a mega-thread, but this decision seems like a big deal to me with a lot to discuss, so I'm putting this thread here as a place for discussion. If nobody agrees then I guess they just won't comment.

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I’d personally say over the last 10 years. Being able to do so in most cases simply means a modicum of personal responsibility and good decision making. It also would tend to give a person stake in the continued success of the country. If you’re on the dole, getting more money or less required hoops to getting on the dole is your main concern. If you have a job and pay into the system, you are more inclined to want the productive parts of society to continue and even improve so that you can get more done.

I’m just thinking let’s say you are a relatively upper middle class person. Have a 401k of around 900k-1m invested conservatively. You are at retirement. You on net paid taxes for 35+ years. But now, your investment income of 50-70k pa is going to have a pretty small effective tax rate. And you draw SS. All of a sudden, net-net you are taking in more than you pay despite being a productive taxpayer for decades.

I like the ten year window idea. It largely (though not entirely) solves the above. Of course making it a non-annual test increases complexity.

largely off topic, but are you suggesting withdrawing 5-7% per year from the 401k? (50-70k/1M). 4% is generally the "safe rate of withdrawl" I see quoted.

Looking at the IRS IRA required minimum distribution (RMD) table, at age 80 you are required to withdraw 5% from your 401k, and the percentage goes up each year after that. At age 75 your withdrawal already exceeds 4%. You don't have to spend it, but you do have to take it as income and pay taxes on it.

I’m assuming a return of roughly 4-8% return so maybe some small principal drawdowns but mostly income.

Thats close to correct. I’ve seen 4% before but that is largely for permenent endowments like say Harvard etc. A financial advisor in his numbers might kill you off at some point.

5 maybe 6% though can fit with 2% inflation and last forever. Easier to get to when 30 year rates were 5% and then 8-9% on equities. With 30 year rates at 5% throw on some credit risks (mortgages were 8% then though that includes prepayment risks). You can make the math work for a 7% withdrawal rate for an individual. A 4% withdrawal would significantly lower risks.

I’ve seen 4% before but that is largely for permenent endowments like say Harvard etc.

A withdrawal rate of 4 %/a is recommended by r/financialindependence and by Vanguard for ordinary people who want to retire early, not for permanent endowments.

It depends on assumptions. And I do want to emphasize that you are seem to be using the number for people retiring early. So longer time frame. Based on historical returns 4% withdrawal rate would have your assets growing in real terms. The vanguard data you cite has a 10.3% historical equity returns, 5.3% bonds and 2.8% inflation roughly. Even 50-50 equity bonds would deliver 5% yearly real returns. Those returns are likely high going forward but Can shift some into equities.

If someone retires at 70 and you kill them off at 100 and is receiving social security checks you can model a higher withdrawal rate and they won’t run out of money.

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