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Old 08-22-2011, 05:25 PM   #1
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Hello- I'm new and want to exchange views.

I'm 61 yrs old and my wife is 60. I've been working in a prof. career for 30 yrs straight. My only daughter is done with college and independent.
My wife is retired. My house is fully paid. Our three vehicles are also paid full. I have very little credit card debt.

We're about to jump to this new chapter. Retirement.

We are frugal and simple. How much liquid asset do you think I need in order to spend about $85,000 US/year. The median income of folks where we decide to live is about $75,000. It is a slightly affluent part of the state.

Thanks,
Birchwood
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Old 08-22-2011, 05:30 PM   #2
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Birchwood, I'd recommend you run your numbers through FIRECalc. That should help you answer your question.
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Old 08-22-2011, 07:36 PM   #3
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Of course REW is right, best if you start with FIRECALC, link to the right too.

If you're familiar with the 4% SWR studies, you know that 25 times your expected first year annual spending is widely considered the rule of thumb for required assets to retire at age 65 assuming a 30 year retirement including keeping up with inflation. That works out to $2,125,000 for you - though you're younger than 65 so presumably you could need more. And all this is based on historical returns and inflation, you have to decide if you're comfortable with that, not to mention predicting your own longevity.

Again, FIRECALC is the place to start, best of luck.
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Old 08-22-2011, 07:46 PM   #4
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You don't need 25 times your total spending. You can first deduct social security and any pensions or other steady income. If the two of you get 35K worth of SS and pensions you only need 25K times 50
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Old 08-22-2011, 08:25 PM   #5
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You don't need 25 times your total spending. You can first deduct social security and any pensions or other steady income. If the two of you get 35K worth of SS and pensions you only need 25K times 50
Yes, or, making the reasoning a little more explicit, estimating your and your wife's yearly combined SS income as $35,000 (that's just a wild guess), then for a total income of $85,000, you need $50,000 per year from your investments. Using the rough 25X approximation, this gives a figure for investment savings of 25X$50,000 = $1,250,000.
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Thanks all.
Old 08-22-2011, 08:50 PM   #6
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Thanks all.

At least I have a rough estimate. Based on your data, looks like it's OK.
I Expect to draw about 80K the first yr, plus SS to help pay for health insurance. The 80K is slightly above the median income of folks where we're planning to retire. We're going to buy a house exactly the same price as our old house we sell. Our cars are late model with few miles. We intend to do road trips. We buy only on sale and discounts. Early bird special is the rule, and buy only what we really need.
Thanks again.
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you wanna exchange views - ok
Old 08-25-2011, 12:52 PM   #7
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you wanna exchange views - ok

Hi Birchwood,
Here's my view, lets see yours :


LBTS by trlkdivers, on Flickr

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Old 08-25-2011, 01:25 PM   #8
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Hi Birchwood,
Here's my view, lets see yours :


LBTS by trlkdivers, on Flickr

Welcome to the board
As a buddy of mine used to say, while tilting his head to one side, "I look at it this way".
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Old 08-25-2011, 07:28 PM   #9
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Nemo

Nice pic. BTW, I also do a little photography as a hobby.
The sunset looks nice, even if you broke one of the common rules, not to put the horizon in the center of the pic. The clouds and the dark lower background add to the drama.
Thanks.

Birchwood.
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Old 08-25-2011, 09:17 PM   #10
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Hi Birchwood. Welcome aboard. I had the honor of visiting Aberdeen once in January 1976. I didn't see much, as everything was covered in snow.
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Old 08-26-2011, 09:01 AM   #11
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Wow! Aberdeen, SD. I don't meet to many other locals. My immediate family is from the VERY small town of Westport, just to the north. Many others live/farm in the greater Aberdeen area. You know any of the Schaunamans? They are the most prolific branch of the family.
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Old 08-26-2011, 09:08 AM   #12
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Quote:
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You don't need 25 times your total spending. You can first deduct social security and any pensions or other steady income. If the two of you get 35K worth of SS and pensions you only need 25K times 50
You're right, my bad. I don't have a pension and I exclude SS for purposes of my situation, though I realize I will probably get something from SS - just not what current estimates shows for my remaining up to 40 years. And I build in a safety factor beyond 4% WR because I'm 57, though the OP is in the ER category at only 61 (4% SWR assumes age 65 & age 95 end of plan).

Indeed the right rule of thumb answer is 25 times your spending minus any income you'll have in retirement (SS, pensions, property income, etc.)...
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Old 08-26-2011, 09:35 AM   #13
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You don't need 25 times your total spending. You can first deduct social security and any pensions or other steady income. If the two of you get 35K worth of SS and pensions you only need 25K times 50
If the pensions have a COLA kicker. If not, you'll probably need a bit more than that to compensate for inflation.
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Old 08-26-2011, 12:10 PM   #14
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Culture,

Although we lived in Aberdeen, SD for 27 years, we are not originally from SD. Westport, is a small enclave and we knew some people from there.
Shaunamans, there are a lot of folks with that name here.

Unfortunately we are planning to move to Sioux Falls, SD within a year.
Bigger city, jet service, more things to buy, eat, shop etc., more culture, shows, parks, walking trails, shooting range and better quality of life.
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Old 08-26-2011, 03:31 PM   #15
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Sounds like a good choice. I think Sioux Falls is about the perfect size for a city, at least in my experience.
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Old 08-26-2011, 04:46 PM   #16
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Unfortunately we are planning to move to Sioux Falls, SD within a year. Bigger city, jet service, more things to buy, eat, shop etc., more culture, shows, parks, walking trails, shooting range and better quality of life.
Much of my family has also migrated to Sioux Falls for the same reason. However, you will not find better shooting ranges in Sioux Falls than the section of prairie dogs behind the barn in Aberdeen!
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Old 09-07-2011, 06:45 PM   #17
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I understand the 25 times rule of thumb. My question is how would you propose to get that 4% return? If I could get 4% guaranteed, I think I'd retire tomorrow! Thanks all !
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Old 09-07-2011, 07:07 PM   #18
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I understand the 25 times rule of thumb. My question is how would you propose to get that 4% return?
You spend your principal. It's like an annuity.
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