Wealth Creation & Preservation Tyce Carle-Thiesson Chartered Accountants
Wealth Creation & Preservation
Wealth is what sustains you when you are not working. It is net worth, not income, which is important when you retire or are unable to work (premature loss of income due to injury or illness is actually a risk management issue).
The key question is – “how long would a certain wealth last?”
Ongoing withdrawal research has sustainable withdrawal rates anywhere between approximately 3 percent and 8 percent, depending on the research’s assumptions. Time, how long wealth might last, then becomes a function of how many times does the percentage withdrawal rate go into all the assets.
Example
Withdrawing 3 percent a year into 100 percent equals 33.3 years; 4 percent equals 25 years; 8 percent equals 12.5 years, etc.
This ignores any growth, which presumably would be used to offset the effects of inflation.
Growth greater than the withdrawal rate would extend the time assets may last, while negative growth would reduce the time assets may last.
Based on our above example, clearly a lower withdrawal rate is more conservative.
Knowing this helps you determine how much wealth you need also.
Example
You know you will need $40,000 a year and use a 4 percent withdrawal rate, then you need to use 5 percent and therefore need $800,000, etc.
This simple “wealth rule” helps you estimate both the time and the amount.
We want you to get the best financial and tax advice possible.
If you have any questions, we're here to help!
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Our Expertise Includes:
- tax minimization
- financial planning
- wealth creation/preservation
- retirement & estate planning
- succession planning
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- purchases & sales of real estate
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