Poverty in old age is a risk that many people underestimate. If you have built up a stock portfolio, it may be worthwhile to set up a stock payout plan. However, there are a few things to keep in mind.
Old-age poverty in Germany above the EU average
Poverty in old age is a problem in Germany. According to a response from the federal government to a small query from the AfD parliamentary group, the poverty risk rate for people over 65 in Germany in 2021 was 28.1 percent, higher than the EU average of an estimated 27.4 percent. Increased inflation, especially for food, is putting an increasing burden on pensioners. The reasons for poverty in old age are varied. According to aktion-deutschland-hilft.de, single women are particularly at risk of poverty in old age, as they are more often responsible for child care in Germany and are therefore often able to work less.
However, there are ways to protect yourself against old-age poverty at an early stage. One way is to invest part of your savings on the capital market in stocks or bonds while you are still working. This way you can diversify your assets and benefit from rising prices.
Stock payout plan advisable
However, as retirement approaches and you want to liquidate your portfolio in order to live on your savings, there are a few things to consider. It is definitely worth setting up a stock payout plan, as this means that the invested money is not taken off the stock market in one fell swoop, but remains partially invested and can generate further income t online. However, if you assume that there will be major fluctuations on the stock market and want to protect yourself against them, you can also sell a larger portion. As long as you receive interest on a current account, you can “park” the money here to protect it from price fluctuations.
Four percent rule
Anyone who has built up a fortune is probably wondering how much they can actually pay out each month so as not to use up all of their assets too quickly. Scientists at Trinity University in Texas investigated this question and established the so-called four percent rule. This rule states that if you withdraw just four percent of your portfolio annually, you can do so for a very long time until the initial deposited assets are used up. At 100,000 euros that would be around 333 per month, as t-online calculates. To calculate the monthly payout amount, you should divide the total value of the securities investment by the desired number of withdrawal months. This way you can determine how much you can withdraw each month. Ideally, the capital then lasts until the end of the specified period. However, you should keep in mind that the value of the portfolio can change quickly due to market fluctuations, which may lead to adjustments in the withdrawal rate, according to t-online.
Editorial team finanzen.net