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Re: Befuddled
Old 08-25-2006, 01:14 PM   #21
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Re: Befuddled

Rich.....

The problem I had with planning for variable spending in retirement is that it requires a larger retirement portfolio to begin with.* For me, to plan for variable spending, I needed a retirement budget generous enough that life was still very tolerable, even after cutting back.* That is, the budget included a generous amount of discretionary spending to eliminate or reduce as needed still leaving a comfortable "living budget."* To finance this higher budget, I needed a larger portfolio and worked several years longer.* I finally made it to RE at 58 yo.

Approximately two months into RE, we feel like we made the right decision to work longer and save more.* Our withdrawal plans are conservative and if we reduced our budget, only truly discretionary items would be eliminated.* In my case, I didn't really mind my career and was able to get myself assigned to several interesting projects, including some international travel, during the final years.* Staying as long as I did wasn't a painful issue.* I can imagine that for someone who really hates reporting for duty everyday, it might be tougher deciding to take such a conservative retirement budgeting approach and work longer to support it.

I have also noticed that it's those retiring with the most that consider themselves best positioned to cut back.* Makes sense.* If your retirement budget is $120K a year, it's going to be much easier to cut back than someone getting by on $40K.* For those already planning a modest retirement lifestyle, it's going to be more challenging to cut back by 50%.

In the end, everyone's circumstances are different and we all have to decide for ourselves.* I did the exactly right thing for me.* That might be the wrong thing for you.



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Re: Befuddled
Old 08-25-2006, 01:30 PM   #22
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Re: Befuddled

Hmmm

The last little go round was hardly a blip, I think I was down one quarter in 2002 maybe -16.5% or 250k including div stocks which was more than my 200k starting out in ER in 1993 (she had 100k or so). Now 1973-4 when I was still working - that was chewy.

Since I had precalculated my panic point at - 22.3%(ala a 73/74) - I was home free so per Bogle - I hurried up and did nothing.

Now a big drop and a long (say 5-10 yr) flat - with only dividends to console me - is kinda what I'm expecting anyway - but then I'm an optimist.

I'm always the guy on this forum who picks the lowest number for the end of the year market when they run the poll.

heh heh heh heh heh - running some defense is good.
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Re: Befuddled
Old 08-25-2006, 03:07 PM   #23
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Re: Befuddled

Quote:
Originally Posted by unclemick2
Hmmm

The last little go round was hardly a blip, I think I was down one quarter in 2002 maybe -16.5% or 250k including div stocks which was more than my 200k starting out in ER in 1993 (she had 100k or so). Now 1973-4 when I was still working - that was chewy.

Since I had precalculated my panic point at - 22.3%(ala a 73/74) - I was home free so per Bogle - I hurried up and did nothing.

Now a big drop and a long (say 5-10 yr) flat - with only dividends to console me - is kinda what I'm expecting anyway - but then I'm an optimist.

I'm always the guy on this forum who picks the lowest number for the end of the year market when they run the poll.

heh heh heh heh heh - running some defense is good.
Sounds like you got it covered................
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Re: Befuddled
Old 08-25-2006, 05:16 PM   #24
 
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Re: Befuddled

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Originally Posted by FinanceDude

He's making a good point...........something people don't think about.........I wonder what retired people did when their variable accounts dropped 30% or more in the last market crash?.......which they did.

If you have $1million at ER, and take 4% a year, that's $40K. If the market "corrects" it to $700K million, 4% is $28K............I think I WOULD notice if my income decreased by $12K a year.........how about you??

There is no clear answer to this scenario..............

If the market drops 30% your portfolio would 'correct' to $700K, if you were invested 100% in stocks. That is why retirees should be diversified into Bonds as well. A 50/50 portfoilo would only correct to $850K and you would only have to cut back $6K that year. Not nice, but doable.
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Re: Befuddled
Old 08-26-2006, 07:30 AM   #25
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Re: Befuddled

When using Firecalc I presume that you have to include taxes in the withdrawl amount?
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Re: Befuddled
Old 08-26-2006, 07:35 AM   #26
 
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Re: Befuddled

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Originally Posted by Bulldog
When using Firecalc I presume that you have to include taxes in the withdrawl amount?
Yes!
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