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12%, 15%, 5%
Old 01-22-2006, 12:56 PM   #1
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12%, 15%, 5%

This WSJ article is too busy refering to percent of pay to reflect on the fact that what you really need to plan your retirement income for is projected expenses in retiremant not what you made back in the day.

Still, it is a pretty interesting article.

Of course, Mr. Farrell is making three important assumptions: that 80% of your pre-retirement income will suffice in retirement; that 5% is a reasonable rate of withdrawal from your nest egg; and that your savings will return 5% after inflation.

If anything, these assumptions are generous. Some financial planners would argue that people spend just as much money in retirement (on travel, home improvements, health care, etc.) as when they were working full time. Meanwhile, a withdrawal rate -- and a real rate of return -- of 4% would be regarded as more prudent figures.



http://online.wsj.com/public/article...nal_primary_hs
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Re: 12%, 15%, 5%
Old 01-22-2006, 01:19 PM   #2
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Re: 12%, 15%, 5%

I expect to spend about the same in retirement as now, but that's about 50% of my "salary".
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Re: 12%, 15%, 5%
Old 01-22-2006, 03:53 PM   #3
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Re: 12%, 15%, 5%

Seems ballpark reasonable for the situation he describes (mortgage paid off, receiving social security), but for those of us retiring before social security and renting or paying a mortgage, the 25x withdrawls figure is better.
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Re: 12%, 15%, 5%
Old 01-22-2006, 05:32 PM   #4
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Re: 12%, 15%, 5%

Quote:
Originally Posted by mickeyd
your savings will return 5% after inflation.
I never use a real rate of 5% in my calculations; more like 2-3%. For various reasons, I just don't think that the average return going forward will match the historical market average rate of return. I know many of you will disagree with that, but i'm talking about the average for the entire US market, not specific sectors like energy.
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Re: 12%, 15%, 5%
Old 01-22-2006, 06:52 PM   #5
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Re: 12%, 15%, 5%

Quote:
Originally Posted by Marshac
I never use a real rate of 5% in my calculations; more like 2-3%. For various reasons, I just don't think that the average return going forward will match the historical market average rate of return. I know many of you will disagree with that, but i'm talking about the average for the entire US market, not specific sectors like energy.
You may like the discussion on the following; what do you think? I think it is correct.
http://traders-talk.com/mb2/index.ph...opic=47494&hl=

http://traders-talk.com/mb2/index.ph...opic=47510&hl=
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