Substantial Spending Needs? affect, become, annual

krause2

Is there a rule of thumb for this?

Compared to the total asset base, when do annual spending needs become substantial and when are they not substantial?

5%?
10%?
20%?
30%?

At what point do we consider them substantial enough to affect risk tolerance/IPS

IAmNeil

I would say anything beyond 10 makes client vulnerable

no rule of thumb though

Analyze_This

Also, along the same lines...

In the 2007 AM Exam Q1 they talk about the option of "re-employment" because the retired couple are still young (i.e., 50 years old)

How old do you have to be before this isn't an option for you anymore? This seems really ambiguous?

Unforseen

pupdawg82 Wrote:
-------------------------------------------------------
> I would say anything beyond 10 makes client
> vulnerable
>
> no rule of thumb though


Ok 10% works for me... thanks Pup!

thommo77

CF_AHHHHHHHHH Wrote:
-------------------------------------------------------
> Also, along the same lines...
>
> In the 2007 AM Exam Q1 they talk about the option
> of "re-employment" because the retired couple are
> still young (i.e., 50 years old)
>
> How old do you have to be before this isn't an
> option for you anymore? This seems really
> ambiguous?

It's subjective BS, but if they are 50'ish then it's an option, over 65 (maybe even 60?) it wouldn't be on.

cityboy

remember, we're looking at guideline answers. they are including the b.s. of thousands of candidates that they couldn't reject as "wrong". they aren't looking for us to come up with that for full credit.

jmh530

There are so many issues (terms) without tangible/clear definitions !

mp3bu

I use the following, for income need

<5% higher ability to take risk
5-7% average
>7% lower ability

In the real world there aren't many that would say anything over 5% is a safe withdrawl rate and that takes into account inflation/mgmt fee.

PalacioHill

Agree w/Sponge Bob. The only exception I can think of (will have to check tonight - don't have the answer key handy) is the '05 exam, #7. Anyone have this open now?

Re: their ability to work again, agree with jut111... it's a fluff answer that isn't technically wrong, so they incorporate into the answer key.

NakedPuts2011

another point to remember - we're the ones that have looked more at old exams than the graders.