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View Poll Results: Take your net worth and divide by (90 minus your age). Divide this by your annual expenses. The res
less than 0.5 11 25.58%
greater than 0.5 to 0.7 5 11.63%
greater than 0.7 to 0.8 3 6.98%
greater than 0.8 to 1.0 11 25.58%
greater than 1.0 13 30.23%
Voters: 43. You may not vote on this poll

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Re: SG FOM (for retirees)
Old 07-27-2005, 05:16 PM   #21
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Re: SG FOM (for retirees)

Quote:
Originally Posted by MasterBlaster
Perhaps a better FOM would be one that included the time value of money (your assets)

something like :

FOM = Assets(1+int rate)^(90-AGE)* * - BurnRate(90-AGE)

where:

int rate is the INFLATION ADJUSTED gains on your assets normalized by percent
(ie. 5 per cent annual gains ==> int_rate of .05)

^ is the exponent

so the new FOM is then the lifetime inflation adjusted Assets compounded over your lifetime less your lifetime inflation adjusted spending. If this new FOM is greater than zero then you are in good shape.

Yeah . . . consideration of the time value of your money would be better. I just tried to keep it simple. But the FOM as originally expressed underestimates the situation for young people relative to old pharts.
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Re: SG FOM (for retirees)
Old 07-27-2005, 05:21 PM   #22
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Re: SG FOM (for retirees)

Quote:
Originally Posted by MasterBlaster
. . .
You have listed the knee in the curve at 0.83. Where did that (magic) number come from ??

. . .
A lot of the early historical retirement studies used a 30 year retirement period and a starting nest egg value of $1M. The 4% rule came out of these studies which corresponds to $40,000/ year in expences. If you plug these numbers into the FOM, you get a value of 0.83.
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Re: SG FOM (for retirees)
Old 07-28-2005, 10:58 AM   #23
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Re: SG FOM (for retirees)

Quote:
Originally Posted by ((^+^)) SG
Yeah . . . consideration of the time value of your money would be better.* I just tried to keep it simple.* But the FOM as originally expressed underestimates the situation for young people relative to old pharts.* *
Now, see, there's your problem.

We need an engineer to start varying each term of the formula, graph the results on three axes, perhaps with a fourth time variable animated in a video, and then we can each pick our personal sweet spot from the plot.

I'd do it but I've just noticed that the surf forecast is "south shore two to four" and I only have two hours before departure.
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