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01-22-2006, 11:56 AM
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#1
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Apr 2004
Location: South Texas~29N/98W Just West of Woman Hollering Creek
Posts: 6,674
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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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01-22-2006, 12:19 PM
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#2
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: May 2005
Location: Lawn chair in Texas
Posts: 14,183
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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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Have Funds, Will Retire
...not doing anything of true substance...
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01-22-2006, 02:53 PM
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#3
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Thinks s/he gets paid by the post
Join Date: Dec 2005
Posts: 1,228
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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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01-22-2006, 04:32 PM
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#4
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Full time employment: Posting here.
Join Date: Aug 2004
Posts: 911
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Re: 12%, 15%, 5%
 Quote:
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Originally Posted by mickeyd
your savings will return 5% after inflation.
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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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01-22-2006, 05:52 PM
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#5
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Oct 2003
Posts: 5,105
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Re: 12%, 15%, 5%
Quote:
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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.
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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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Sometimes death is not as tragic as not knowing how to live. This man knew how to live--and how to make others glad they were living. - Jack Benny at Nat King Cole's funeral
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