Today’s episode is part three of David’s interview on Jesse Wright’s podcast.

They discuss the best way to ensure your savings last as long as you do.

Jesse shares a shocking stat: 65-year-old married couples have an 18% chance that at least one person in the relationship will live to be 95 years old. This means that there is a very real chance that at least one of them will outlive their savings.

For David, most Americans outlive their savings because they don’t save or invest enough to fund a 30-year retirement.

The majority of people who save enough are also at risk of running out of money because they’re not managing their money well enough in retirement.

David defines sequence of return risk and how market declines in the early years of retirement could significantly reduce the longevity of your savings.

David talks about the benefits of owning annuities as well as the ones that work best for retirement planning.

According to David, the biggest mistake people make in retirement is having all their savings in tax-deferred accounts by the time they retire.

The name of the game is not just saving enough by the time you retire, but distributing in a way that your savings last through your actuarial life expectancy.

The 4% rule is hard to follow because it only works if you can constrain yourself to 4% each and every year of retirement.

If you can constrain yourself to 4% distributions adjusted for inflation in retirement, you have an 86% chance that your money will last through life expectancy. Every time you take out more than 4%, that success rate drops like a rock.

The assumptions we use in our retirement plans are important and have real life implications if we use the wrong assumptions.

Mentioned in this episode:

David's books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code

DavidMcKnight.com

DavidMcKnightBooks.com

PowerOfZero.com (free 3-part video series)

@mcknightandco on Twitter

@davidcmcknight on Instagram

David McKnight on YouTube

Get David's Tax-free Tool Kit at taxfreetoolkit.com