How much can I spend each month?

[nun]

I have an idea about my sustainable spending level in ER, but I thought I'd see if my calculations agree with yours. So if you are inclined, tell me how much you think I can spend each month given the following numbers. Obviously the assumed rate of return and inflation are big factors.

Age: 50
Sex: Male
AA: 50/50
Tax deferred savings: $500k
After tax savings: $150k
Mortgage balance: $70k
Rental Income: $1200/month
Pension at 59.5: $450/month
SS at 62: $1400/month COLAed
UK SS at 66: $1400/month COLAed

 

[SJ1_]

I have an idea about my sustainable spending level in ER, but I thought I'd see if my calculations agree with yours. So if you are inclined, tell me how much you think I can spend each month given the following numbers. Obviously the assumed rate of return and inflation are big factors.

Age: 50
Sex: Male
AA: 50/50
Tax deferred savings: $500k
After tax savings: $150k
Mortgage balance: $70k
Rental Income: $1200/month
Pension at 59.5: $450/month
SS at 62: $1400/month COLAed
UK SS at 66: $1400/month COLAed

Depends. Seems everyone has different ideas and comfort levels.
I like as close to 100% certainty that my money will not run out as I can get.
I tend to look at the worst case before I do anything.
Having said that I am currently planning on W/D rates of 2.9%
With 30-40% equities.
This is a work in process and will most likely change before I start withdrawing
Money in 3 years.

 

[golfnut]

I"ll take a stab here. Right now, at the age of 50, I would look at withdrawing no more than 3% of the $650,000 or $19,500 annually/$1,625 monthly. Would start withdrawing from the after tax savings until after age 59.5.

Golfnut

 

[nun]

I"ll take a stab here. Right now, at the age of 50, I would look at withdrawing no more than 3% of the $650,000 or $19,500 annually/$1,625 monthly. Would start withdrawing from the after tax savings until after age 59.5.

Golfnut

Using a 4% annual return and 3% inflation I calculated that I could pay off the mortgage and spend $2k a month using my after tax savings and rental income and make them last until I'm 59.5. That's not really enough as health insurance is $400/month and house tax and insurance another $500/month leaving only $1100 a month to live on.

However, if I 72t half of my tax deferred savings I can generate another $1000/month which would be comfortable for me. So I'd get to 59.5 spending $3000/month

 

[GregLee]

how much you think I can spend each month

Roughly $4200/month for 10 years and more thereafter,
which is 2338/month from an annuity you roll the 500k into
plus 667/month = 80k [150k savings - 70k mortgage]/120 months [before pensions start]
plus 1200/month rent
supposing interest on savings compensates for inflation for 10 years and pensions compensate for inflation thereafter.

Edit: the $2338/month figure is from the annuity calculator at http://www.immediateannuities.com/
In reading about 72t, I see I didn't understand how annuitizing an IRA works. Maybe you can still roll the IRA into an annuity early by paying the 10% early distribution penalty, which would still give $2104/month from $450k, using the same annuity calculator.

 

[nun]

Roughly $4200/month for 10 years and more thereafter,
which is 2338/month from an annuity you roll the 500k into
plus 667/month = 80k [150k savings - 70k mortgage]/120 months [before pensions start]
plus 1200/month rent
supposing interest on savings compensates for inflation for 10 years and pensions compensate for inflation thereafter.

Edit: the $2338/month figure is from the annuity calculator at Immediate Annuities - Instant Annuity Quote Calculator.

The annuity route is good as I can tap my tax deferred savings before 59.5 with no 10% penalty, but I worry about the lack of inflation adjustment and the currently very low interest rates, so I prefer to 72t.

If I 72t my $500k I can take out $1800/month and I'd hope to do better than the current 72t 2.4% interest rate and I'd have access to the remaining principal at 59.5 too. So from 50 to 59.5 that would give me $1800+$1200+$700=$3750/month. The $700 is from my after tax money compounding at 4% from 50 to 62.

59.5 to 62 = $3750+450 = $4200/month
62 to 66 = 4200+1400 = $5600/month
66 to... = 5600+1400 = $7000/month

As my monthly spending today without the mortgage is $3000/month it looks like I'm in good shape.

 

[obgyn65]

Please enter your values in this free tool :

Merrill Edge| See Where You Stand

Your "number" will display on the last page.

 

[nun]

Please enter your values in this free tool :

Merrill Edge| See Where You Stand

Your "number" will display on the last page.

The tool isn't flexible enough to work for my ER situation where I will have pensions starting a number of years after I retire

 

[obgyn65]

OK. Then please use this one :

Flexible Retirement Planner

and enter the cash flow types and start years in "additional inputs".

Good luck.

The tool isn't flexible enough to work for my ER situation where I will have pensions starting a number of years after I retire