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How long will the money last--New York Times
Old 08-17-2003, 03:27 PM   #1
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How long will the money last--New York Times

FYI, there's an interesting piece in this Sunday's New York Times' Business Section headlined "How to Avoid Cracking the Retirement Nest Egg."

There isn't much new information for regular readers of this forum. Most of the numerous experts quoted suggested a safe withdrawal rate of 4% to 5%.

One planner, from T. Rowe Price, who suggested a rate between 3% and 5%, said that most people are shocked that the recommended withdrawal rate is so low.

And one guy, Dr. Philip Cooley, who professes business at Trinity College in San Antonio, Tex., had this say:

It's "absurd" to tell people with $1 million portfolios that they can spend less than $4,000 a month.

"When you recommend such low rates, you cause the retiree to forgo a joyous life in early retirement and they end up with a lot money later on, when they can't take advantage of it," he said.

It's a shame, isn't it... all those old people running around with money they can't take advantage of?

OK.. back to my joy-less existence on less than $4,000 a month!

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Re: How long will the money last--New York Times
Old 08-17-2003, 05:32 PM   #2
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Re: How long will the money last--New York Times

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OK.. back to my joy-less existence on less than $4,000 a month!
Heh, I guess they figure if you aren't producing for the economy then you should be feeding it.
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Re: How long will the money last--New York Times
Old 08-18-2003, 05:26 AM   #3
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Re: How long will the money last--New York Times

Quote:
And one guy, Dr. Philip Cooley said......

"When you recommend such low rates, you cause the retiree to forgo a joyous life in early retirement and they end up with a lot money later on, when they can't take advantage of it."
Prof. Cooley obviously doesn't get ER. At least half the joy comes from NOT having to punch the clock for the "Man" each day. I find this part of early retirement joy costs nothing.

Too many people in this world think you have to spend your way to happiness. Personally, I don't subscribe to that philosophy.

Red
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Re: How long will the money last--New York Times
Old 08-18-2003, 12:10 PM   #4
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Re: How long will the money last--New York Times

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Too many people in this world think you have to spend your way to happiness. *Personally, I don't subscribe to that philosophy.
Amen! But a lot of retired people have very good pensions, with health care and all. These people have a totally different outlook from one such as myself who will have modest SS plus my savings to live from. Now my savings are considerable, but still I must be much more careful say than my 52 year old brother, who just retired from a large school system after teaching a little over 30 years. He is planning to spend his savings on a horse breeding operation. And why not? Very little bad is likely to happen to his retirement income, that wouldn't obliterate mine. (Nuclear war, etc.)

It's true that walking on the beach is fun and free, but most of us have to spend a little to get there. Also, social life costs money. If you are a retired farmer in your hometown, you can get together with your buddies every day for $2 worth of coffee and donuts. But golf, bowling, even fishing can run up.

I like to read about the occasional guy who was a file clerk his whole life, and retired with a portfolio worth $5million. Invariably he wore old clothes, ate whatever he found in the day old bin, and applied for whatever benefits he could get for free. Often he was a loner too. In our culture, it must be quite hard to live like that. We are coached to define ourselves by our tastes, by the consumption discriminations we make.

As I started to prepare for early retirement, I found I had to create some positive image to replace the image of a solid middle class person with middle class tastes, spending habits, etc. I started to define myself as a "low roller"; a Wal-Mart kind of guy. It wasn't and it still isn't always easy. However I am contrary by nature, so I get some pleasure from doing this when so many people are trying to qualify for the Country Club.

In some ways, living on less than you maybe could is like being on a diet. Most of us could monetarily afford to eat as much as we wanted. That is why poor people are often not thin. But still, most people must struggle to eat reasonably. I attacked that problem by developing a positive goal of health and fitness. So when I eat, I am carrying out a positve plan for body maintenance and good food, not struggling to do without.

I admit it is harder to be tight with my other spending, but I am trying to follow the same plan. Trying to remind myself how secure I will feel, knowing that I am not taking foolish risks with my future.

Like the professor said, it's hard to live cheap when you have some money. It's like being "land poor". Lot's of net worth, but less to spend than a factory worker getting some overtime.

Well, I guess that should be enough for a while!

Mikey

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Re: How long will the money last--New York Times
Old 08-23-2003, 09:05 PM   #5
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Re: How long will the money last--New York Times

>Prof. Cooley obviously doesn't get ER. At least half the joy
>comes from NOT having to punch the clock for the "Man"
>each day. I find this part of early retirement joy costs
>nothing.

Exactly so, Red. When I am on vacation or even just on the weekend, there's nothing so nice as waking up, thinking that I have to get up to go to work, and then realizing that I DON'T! HA! Now that is pure joy and as you say costs nothing.


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Re: How long will the money last--New York Times
Old 08-24-2003, 05:15 AM   #6
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Re: How long will the money last--New York Times

Amen guys! Before I ERed, I was "The Man". I am pretty sure my "ER joy" at not having to be anywhere
when I get up is every bit as pleasant as yours.
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Re: How long will the money last--New York Times
Old 08-24-2003, 05:35 AM   #7
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Re: How long will the money last--New York Times

Even after ten years of ER, once in a while with my morning coffee I get sinfull pleasure watching morning commuters crossing the lake on the way into work.
As for making the money last, we practice the same cheap living that got us to ER in first place- and then do spending spikes(vacation, new truck, etc.)-so our taxable income yo-yo'ed over the years. Computer models, percent withdrawals, time spans are used as guidelines only.
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Re: How long will the money last--New York Times
Old 08-24-2003, 07:46 PM   #8
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Re: How long will the money last--New York Times

All excellent posts. The wife and I are now practicing living on a tighter budget. Just this morning, I bought a hair cutting kit. Worked great. You cannot tell the difference in "my" hair cut from a $10 professional job. Of course it helps if one wear their hair short any way and is balding. Why spend ten bucks when I can get the same results at home? Dang kit already paid for it self!

Wife is also doing the hair color thing at home vs. fifty or sixty dollars at the salon. I even saw her cutting coupons out of the Sunday paper today.

Interesting what one can save by just looking at things different.

Bill
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