Recent posts by John Ameriks
John Ameriks leads Vanguard's Investment Counseling & Research group, which provides portfolio recommendations along with topical commentary and investment counseling.
I’m often asked what I think about the “4% rule” for spending in retirement. According to this rule of thumb, an individual who is planning on a 30-year investment horizon and is holding a broadly diversified and balanced investment portfolio of stocks and bonds, can—with a reasonably low probability of running out of money over 30 years—spend an amount equal to roughly 4% of their total retirement portfolio in the first year, and then adjust that withdrawal every year thereafter for inflation.
We’ve been hearing a lot about gold over the last few months, related to concerns about inflation, the creditworthiness of various governments, and fallout from the financial crisis—all against the backdrop of what is the most significant increase in inflation-adjusted gold prices since the early 1980s.
For many years, the government has published statistics on Americans’ age and employment. A version of that data is shown in the chart below. My sense is that these figures are the basis for much of the conventional wisdom on the age at which people retire, as well as for whatever general notions people have about when they’ll start to need “replacement income.”
Given all the back and forth in Washington these days, with policy meetings and dramatic proposals to revolutionize retirement, I’ve got retirement-income solutions on the brain. So here’s a modest proposal for providing “Retirement Income Security for All.”
A few readers had some strong reactions* to my recent post on the benefits of making investment purchases at the beginning of the year, as opposed to waiting until year-end.