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Old 02-28-2013, 05:37 AM   #21
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Originally Posted by Fean View Post
In the example given ($52k saved per year, 4% annual WR, 20% tax rate):

1 year of work = $52,000 saved = $2080/year interest before tax = $1664/year interest after tax

1 week of work = $1000 saved = $40/year interest before tax = $32/year interest after tax

1 week of work does not generate $32/week interest after tax. It generates $1000 which corresponds to $32 of interest every year, not $32 of interest every week.

We must be using different terminology or working off of different assumptions. I suspect that you are continuing to think of interest in annual terms. The OP referred to the interest generated each week. In other words, working 1 week generates $X of interest each week indefinitely. I realize that this isn't the standard way of viewing things. That is one of the reasons I started this thread. Thinking about how working 1 additional day or 1 additional week affects my daily or weekly spending capacity in the future helps me keep OMY in perspective. Maybe this isn't a useful technique for other people though. Perhaps there is a reason I've never seen anyone else think about it in these terms

Regardless, I appreciate your feedback and input. Any confusion regarding this thread is almost certainly due to my failure to communicate the issue properly in the original post.

OK, yes, I was wrong, you are right. I was thinking in terms of working that full year. You explained it fine, I just didn't wrap my head around the concept of "what does this day/week do for me?" My fault.

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Old 02-28-2013, 09:16 AM   #22
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Originally Posted by obgyn65 View Post
Interesting concept. However, how do you factor in your "mortality credit" ? A similar amount of money saved at age 20 or 50 will have a very different impact on your "$ per day" or "$ per week".
This approach is really only a reasonable approximation if you are in "one-more-year" mode trying to build up a bigger budget and/or buffer. I wouldn't recommend it if you are a long way from retirement for exactly the reason you listed.


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Old 02-28-2013, 09:21 AM   #23
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Originally Posted by RunningBum View Post
Not that I'm in favor of One More Year, but OMY doesn't just let you pad your nest egg, it also keeps you from dipping into that nest egg for all of your living expenses for that year.
That's what I'm struggling with.

I've hit "my number". Run it anyway you want, and we're FI. The market run up helped. Perhaps that's on my mind too. If I retire today, and we get that 20% drop, uh-oh, it will be on the edge again.

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