Right, I always advise people to plan for their money to outlive them, not the other way around. However, as I said before, I would arrive at the same result for anyone facing a retirement of more than 30 years, because inflation for that period of time is too unpredictable NOT to be conservative.
The first point concerned your estimate of the original poster's lifespan. So your comment above is a non-sequitir. In any event, if you would do me the courtesy of reading my post again, you will see that I am not opposed -- and I expressly support -- a conservative approach to retirement planning. The issue is one of degree. Ultimately, you can't account for every contingency; if you mean to retire, that means accepting some risk. Accordingly, the question becomes what assumptions are both conservative, yet realistic.
You may posture yourself as a conservative planner, but in just a few minutes I can come up with a host of hypothetical scenarios which would make your $4.5 million figure look positively reckless as a retirement goal. Based on that, why don't we tell the poster to shoot for $45 million, since that is 10X more conservative and thus 10X more prudent? Obviously, we don't suggest such a thing, because at a certain point, it works against his interest to work the rest of his life to accumulate surplus funds to account for extremely remote contingencies.
Yep. Once you take into account Federal, State and local taxes, 30% is a good figure, with or without being hit by AMT.
Capital gains are taxed at 15% long-term; 20% short. States vary, but most rates are small. To my knowledge, there is no "local" tax on capital gains. Moreover, the poster can further reduce his rate by planning out what he withdraws and when, i.e., using losses to offset realized gains. Moreover, tax on this income would be reduced by deductions. Finally, if he is living on $60K, he is very unlikely to bump into the AMT, even if he lives in a high-tax state. And even if he did somehow hit it, he likely would just scrape the border of the AMT trigger, so it would have minimal impact on his overall tax liability. In sum, unless you have something substantive to say, I don't see any basis for your "conservative" assumption that this poster needs to withdraw 90K to get 60K.
Quote:
I like FIRECalc as a seond or third opinion. But seeing completely different conclusions on FIRECalc than in my Schwab retirement calculator and other reputable calculators, I wouldn't gamble with the future of my family on FIRECalc alone, especially as its developers recognize that it's a work in progress.
It is perfectly legitimate to cite to other calculator tools, and I specifically stated that I thought the poster should run the numbers in other tools. That having been said, it would be helpful if you could identify the "other reputable calculators" to which you refer.
As for Schwab, since you mentioned it, I visited their site and put the poster's numbers into that calculator. Whaddya know? It disagrees with you too. In fact, it is pretty close to FIREcalc, giving $1.9 million as the number to hit. That is assuming no further income other than SSI from the poster or his spouse, and annual spending of 60K. You know what you don't see on the Schwab tool? Anything close to what you are advising.
With all due respect, your conclusion that a 39 year-old with young kids and an after-tax expenditure of $60k/yr, can retire on 1.7 for 60years , is way off base.
I am not sure what you intend by this statement. If you are implying that the 60K is an unreasonable amount on which to raise two young kids, then you are off base. The poster himself has run calculations on what he needs and came up with this figure, which itself is 20% greater than the median family income in this country, and thus is not unreasonable on its face. If you mean just to repeat in a more general fashion your position that he needs a "minimum of $4.5M", then I again say that that remains completely unsupported, even by the solitary calculator on which you rely.
Finally, I never said $1.7 was the number. I am in favor of padding that some, so I would probably be in accord with the Schwab calculator result.
BTW, just out of morbid curiosity, if $4.5M is the minimum he needs, what is the number in the middle range?
