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Old 04-17-2008, 04:06 PM   #1
Confused about dryer sheets
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Bubbles here to say hello.

I don't have a website/blog,etc. This is a first time experience for me so please be aware. BACKGROUOND: I am 72 yrs.old female, retired Social Worker, spouse of 49 yrs is retired Engineer. 4 adult children living on their own. Both of our parents raised us in a frugal invironment, out of necessity. Consequently, we followed their method of never over extending, no credit card debt, etc. PRESENT SITIUATION: We have been retired since 1991, own our home outright and are debt free. Continuing our present life style, we both feel there would be no need to worry about the future. What does worry us is the possibly of outliving our assets (we are both active and healthy). What I want to find out is how much descretionary spending we can do and still maintain our nest egg at it's current level. We have one pension; social security about equal to the pension; savings of about 12 times our annual income. Presently we live on our SS & pension income, the income from our savings and some of the minimum distribution from our IRA's each year. FUTURE: we hope to leave an inheritance for our 4 children and at the same time realize the true definition of the term "golden years." I realize that I am not painting a dark picture here but it is diffecult to go from very conservative to "having fun." I will appreciate your replys and also any information that you may know of where I may get an answer. Our investment counselor will not or can not answer my question regarding descretionary spending.
Thank you:confused:

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Old 04-17-2008, 06:48 PM   #2
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Welcome Bubbles! I think there is enough detail in what you have written for us to form opinions, but I am not sure.

I am not clear enough to have anything useful to say.


"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
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Old 04-17-2008, 07:39 PM   #3
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Originally Posted by Bubbles View Post
Our investment counselor will not or can not answer my question regarding descretionary spending.
Thank you:confused:
Bubbles, I think your concerns are very common. If you are paying an advisor and not getting answers, your first move might be to switch advisors.

After that, take a look at FIRECalc (click on the blue text to the left to get there). It may take a while to get used to but perhaps it will help you know if you have enough. And don't be shy about asking for help around here.

San Francisco Area
ESR'd March 2010. FIRE'd January 2011.

As if you didn't know..If the above message contains medical content, it's NOT intended as advice, and may not be accurate, applicable or sufficient. Don't rely on it for any purpose. Consult your own doctor for all medical advice.
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Old 04-17-2008, 07:47 PM   #4
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Bubbles, when you play around with FIRECalc for a while, you should see the option to specify an amount you want to leave when you leave (so to speak ). The program should give you a good idea of how much you can spend and still have an excellent chance of having at least that much to pass on when you do.

As Rich said, if you need help with using the program, let us know.
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Although rare, it is possible to read something on this forum you don't agree with and simply move on with your life

Retired in 2005 at age 58, no pension
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Old 04-18-2008, 05:47 AM   #5
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Maybe I do not understand the question, but if you continue to spend only what comes in from your various sources of income (pension, ss, interest, dividends) you cannot outlive your savings (aka principal) as you never touch it.
If you want to preserve your assetes, do not regard the minimum distribution from IRA as income but as principal. If you redirect it to a fund, savings account or whatever it will produce income there that you could use for spending.
(Such strategy will not protect you from loss if the value of your shares, funds etc. drops.)
Increase of cost for healthcare, assisted living etc. cannot realistically be calculated in advance for several years IMO.

From a daughters point of view: I want my mom to enjoy her retirement as long as she can - and if this means that I will not receive a smaller inheritance or none, be it so. But she is a saver and would not listen....
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Old 04-20-2008, 10:07 PM   #6
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Conventional wisdom is that you need to have 25 years worth of expenses (that you will need from sources other than pension and SS). This allows a 4% starting withdrawl rate (=1/25). The nest egg grows, theoretically, so you usually have enough for more than 30-35 years of withdrawls.

What percentage of the total nest egg do you use now, including your minimum distributions that are not re-saved in an after tax account? If you "re-set the starting clock to today" and said that you would be willing to take a 4% SWR from today and adjust annually for inflation, then subtract the percent you are already using as a source of living expenses, then you have the additional discretional spending percentage that is available to you. That would mean with a reasonable asset allocation, you would likely have about 30 years worth of the expense/discretionary spending combination I described.

It would work like this: Say you had $800,000 in your nestegg. 4% of that is $32,000. However, if the income you are already taking from your nestegg (in the form of dividends, interest, and minimum distributions) is $20,000, then you would have an extra $12,000 (pre-tax) to use for discretionary spending. You could adjust that 32k for inflation each year (or most years, being careful in a year like this one not to withdraw too much) then your nest egg will likely outlast you. That said, I would be assuming a 60/40 asset allocation (stocks/bonds) which may be a little more aggressive than your AA, considering your age.

Anyway, please understand that I am not a certified financial advisor, and that this is nothing more than food for thought, but it seems pretty logical to me. If you are paying a CFA to help you, I don't know why he/she could not give you some rough figures or percentages to work with. At the end of the day, all financial decisions are yours.

Good luck!

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Thanks from Bubbles
Old 05-07-2008, 06:41 PM   #7
Confused about dryer sheets
Join Date: Apr 2008
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Thanks from Bubbles

Thank you to Rich_ in_ Tampa, REWahoo, Chris2008 and Rambler for
taking the time to reply to the situation that I presented. We found the
FIRECalc to be a good insturment. It certainly would have quelled a lot of
our fears had we had use of it 17 years ago. Thanks to you, we know
about it now and are going to pass on that information to our children.
In reviewing our retirement spending pattern we found that the picture is
not as bleak as we thought and we are taking your advice about replacing
our investment counselor.
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Old 05-08-2008, 05:38 AM   #8
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Hello Bubbles, welcome to the forum.

Trailer Park Boys is my favourite show, too.
"To know what you prefer, instead of humbly saying Amen to what the world tells you you ought to prefer, is to have kept your soul alive". Robert Louis Stevenson, An Inland Voyage (1878)
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Old 05-08-2008, 02:51 PM   #9
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From the official website [Trailer Park Boys]:
Bubbles is the heart and soul of Sunnyvale, not to mention the smartest person in the park. He loves his best friends Julian and Ricky, cats, shopping carts, the music of Rush, truck-driving, spaceships and this year adds model trains to the list. If it were up to him, Bubbles would lead a quiet life in the park. Unfortunately, hes constantly getting caught up in Julian and Rickys schemes and is afraid they or even he will go to jail again. The start of season seven sees Bubbles more frustrated than ever with the boys, and as the season goes on, its clear hes reached the breaking point.

"To know what you prefer, instead of humbly saying Amen to what the world tells you you ought to prefer, is to have kept your soul alive". Robert Louis Stevenson, An Inland Voyage (1878)
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