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Old 03-22-2013, 07:37 AM   #21
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No, but I am more conservative than most here.
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Do you think 4% withdrawal rate is still justifiable now based on above strategy?
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Old 03-22-2013, 07:39 AM   #22
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I always base my plans on no or minimal (ie means tested) SS. I think the day MAY come in the which those of us who have millions stashed may not receive any SS at all...we have means, no?
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Old 03-22-2013, 08:28 AM   #23
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No, but I am more conservative than most here.
Maybe most but you are not alone!
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Old 03-22-2013, 08:51 AM   #24
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Thank you all for your replies. My justification for 4% withdrawal is:

* 240K CASH put away to be used in bear market are not part of 3M invested(60/40)..During bear years, I'll leave my portfolio alone and not withdraw anything
* 30K of combined SS Income in today's dollars starting at Age 67(2031)
* During bear market I can live on 80K and have that 240K stretched for 3 yrs

someone asked about the value of my house: 700K now. I've not included that in my asset and my plan is to sale someday and divide into three equal parts to pay for my Kids' house down payment someday. I'm planning to have my kids graduate debt free and give nice amount as down payment to buy their first home..other than that I'm not planning to leave anything behind.

For healthcare, I'm counting on obamacare for subsidy. During retirement, I'll not be working so I can plan my MAGI below 92K to qualify for obamacare subsidy..this way my premium will be around 800/month for a family of 4.

About 8%...only time will tell me. It feels great to know that my worst case scenario assuming 5% return is 2019/2020.

Do you think 4% withdrawal rate is still justifiable now based on above strategy?

I know where you are coming from by not including the 240 in cash in your portfolio amount. In fact, when I ERd, I did a similar thing - I kept more money in cash that I could live off of for a few years so I wouldn't need to sell my other investments at a bad time. It's really a judgement call as to whether 4% is still a justifiable WR. Some will say you are OK, some would say you are not. If I had to say, I'd recommend trying to get your WR down to 3%, but I'm pretty conservative about WR's too. At any rate, I think you are thinking this out logically. Wish I had a crystal ball. Good luck.
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Old 03-22-2013, 08:55 AM   #25
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Great accomplishment 2020! I agree with the other posters regarding 4% SWR and 8% returns being on the high side. One thing that jumped out at me from your post is the 500k capital loss. For real man! That's a big, big benefit for you. Also, my tentative planned date to retire is 4-1-2017....that's kind of weird dude.
500K.. Ouchh..that still hurts. All that was from the year 2000. My annual turnover for that year was 4M, 100% invested in .com companies, margin calls, was young and VERY stupid. But learned a lesson of a lifetime from that mistake - paid off margin, never played margin ever after, never bought any individual stock after that and invested 100% in mutual funds after Y2K.

All the best BigE. I hope I can join you on April 1, 2017.
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Old 03-22-2013, 10:13 AM   #26
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All that was from the year 2000. My annual turnover for that year was 4M, 100% invested in .com companies, margin calls, was young and VERY stupid. But learned a lesson of a lifetime from that mistake - paid off margin, never played margin ever after, never bought any individual stock after that and invested 100% in mutual funds after Y2K.
Wow, pretty darn impressive for a 30 something. What did you do to get the capital to put in the market, sell a tech company before the crash?
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Old 03-22-2013, 10:19 AM   #27
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Are retirement funds in Roth or traditional 401k /IRA ?
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Old 03-22-2013, 10:23 AM   #28
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donheff....I owned an IT Services consulting company back then and had few folks working for my company. It all went downhill after 2001 and by 2008 crash, I was the only one left working from my company so closed it in 2009.
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Old 03-22-2013, 10:24 AM   #29
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Are retirement funds in Roth or traditional 401k /IRA ?
Only 20K in Roth IRA...rest in traditional IRA and company's 401K.
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Old 03-22-2013, 02:57 PM   #30
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If you haven't done so already, track your expenses for the next few years and estimate what you are likely to spend in retirement (minus kids, smaller house?, no work clothes/lunches, extra hobbies, more travel, etc). Estimate your taxes in retirement. With a 500K loss carryover, a house paid off and no kids, you might be surprised and find 2014 is a feasible FIRE date!
If you are willing to adjust your lifestyle a bit in (market) down years, you should be good.
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Old 03-22-2013, 03:13 PM   #31
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If you haven't done so already, track your expenses for the next few years and estimate what you are likely to spend in retirement (minus kids, smaller house?, no work clothes/lunches, extra hobbies, more travel, etc). Estimate your taxes in retirement. With a 500K loss carryover, a house paid off and no kids, you might be surprised and find 2014 is a feasible FIRE date!
If you are willing to adjust your lifestyle a bit in (market) down years, you should be good.
Yes..started tracking my expenses. Turns out to be about 70K with three growing kids and their 529 contribution. It'll be same in retirement as the money I put in for 529, will be used to pay for health care insurance when I stop working. I live in NJ and no plan on moving to elsewhere due to close proximity of relatives and friends from both sides. (12K property taxes, 5K utilities, 2K Car Insurance, 4K life insurance + 12K health insurance assuming obamacare subsidy = 35K.. 50% of projected expense right there)
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Old 03-22-2013, 03:43 PM   #32
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Thank you all for your replies. My justification for 4% withdrawal is:

* 240K CASH put away to be used in bear market are not part of 3M invested(60/40)..During bear years, I'll leave my portfolio alone and not withdraw anything
* 30K of combined SS Income in today's dollars starting at Age 67(2031)
* During bear market I can live on 80K and have that 240K stretched for 3 yrs
I could restate this as:
You expect to have $3.24 million, and you want it to provide $120k for 15 years and $90k thereafter.

Firecalc says it works, so all I can add is a gut check.

Suppose you put $450 into stable investments that will provide a CPI-adjusted $30k for 15 years. That leaves $2.79 million to provide $90k for life. That's a 3.2% withdrawal rate on the $2.79 million. Seems plausible, especially if you figure there's room to reduce the $90k if things don't look so good.

Bringing SS into the discussion raises the issue of what fraction of the current benefit formula will really be payable while you're collecting. Many opinions on that.

(And, like others, I wouldn't count on the 8%. But you aren't pulling the plug today, so you can adjust as that plays out.)
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Old 03-22-2013, 04:33 PM   #33
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Yes..started tracking my expenses. Turns out to be about 70K with three growing kids and their 529 contribution. It'll be same in retirement as the money I put in for 529, will be used to pay for health care insurance when I stop working. I live in NJ and no plan on moving to elsewhere due to close proximity of relatives and friends from both sides. (12K property taxes, 5K utilities, 2K Car Insurance, 4K life insurance + 12K health insurance assuming obamacare subsidy = 35K.. 50% of projected expense right there)
If I am understanding correctly, 70K is expected expense. Then why use 120K withdrawal assumption? You might also want to look at whether you need life insurance once your kids are somewhat older/independent or even now.
I think you are in great shape and the additional years working (when you have high earning potential) will provide a decent cushion.
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Old 03-22-2013, 04:42 PM   #34
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pixelville: 70K is bear minimum. What's the point of retirement if I've to live with bear minimum? 120K includes lots of travel with Kids over summer and some for my trekking - I can sure cutdown on all these during a bear market. About life insurance, it's term life policy which will expire in 2031. By then Kids will be out of college, hopefully settled and will not need anymore life insurance for me and my wife.
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Old 03-22-2013, 04:46 PM   #35
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Independent: Hmmm..never though it that way. It makes sense. I'll think over that. 3.2% WR sounds great!
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Old 03-22-2013, 05:07 PM   #36
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pixelville: 70K is bear minimum. What's the point of retirement if I've to live with bear minimum? 120K includes lots of travel with Kids over summer and some for my trekking - I can sure cutdown on all these during a bear market. About life insurance, it's term life policy which will expire in 2031. By then Kids will be out of college, hopefully settled and will not need anymore life insurance for me and my wife.
Great. Agreed.
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Old 03-23-2013, 12:37 AM   #37
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retire2020, great job on your current savings.

Just doing some rough calcs, you would have the funds to er in 2017. You'd need to deplete your taxable to help you 'bridge the gap' during er in order for it work IMHO. I used a more conservative 4% real return rate instead of your 8%. The 4% return rate already factors in inflation, thus the numbers you get will be in todays dollars.

Taxable : 1.75M invested at 4% return rate for 4 years at 22k per year leaves you with a healthy 2.14M in 2017. You could draw down these funds until you are forced to take RMDs from your 401k. 2.14M divided by 18 years gives you 119k per year. All you would need is for this account to keep up with inflation as you draw it down to zero by the time you're 70.

401k : 650k invested for 4 years at 4% adding 28k per year leaves you with 904k in 2017. If you let the 904k accumulate (without withdrawing from it) for 18 years (when you'll be around 70 and have to take RMDs) at a 4% return rate, you'd end up with 1.83M.

At 70 you'd get your 30k per year from SS. At a 5% withdrawal rate from your 1.83M in your 401k, you'd have 90k from there. There is your 120k to meet your expenses.

Somebody double check my numbers, but I think they add up. You have a lot in your taxable compared to your tax deffered....which is great in your situation since you want to er. The taxable will bridge the gap between 52 and 70. Good luck.
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