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Old 08-15-2009, 12:14 PM   #21
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well, Being a Former Self employed business owner? I'd say NOPE, not yet!
Why? You had alot of place to hide $ from taxes while running the Business and won't anymore and thus Have to pay higher Taxes!
Make $135k yr on $3.2 Mil? and still have enough to reinvest for Growth to compensate Inflation and Some growth to have t have more In your Last 5 yrs of Life? Doubt it..
Just add even 3% apy to that for Inflation and Higher Bills over the next 20-30 yrs and what do you Get for the Average?
In just 24 yrs? You're going to need about Duoble or $270k yr! Right?
Now if you needed Only about 50% of that? Sure! But not if you want to keep living "The Good Life".. That's a Rich person's lifestyle and that's going to be Alot higher as time goes by..

I saved up 50% more than any Computer program told me as a margin of error and I also Took 20% off the top of any 'estimated Gross Rtns/APY's and Ylds' they said they "could make'...again , safety cushion.. to force me to save more $ before Pulling the Plug on having to work for a living..
And What if the Wife decides to Leave you and Wants a Divorce? Kiss another 50% that good bye! Most never See it comming either.. ( 1 Buddy didn't know she was having an Affair for over 10 yrs prior! He was Gone all the time..., the other Wanted to travel and go do things and she wanted to stay behind to be with the Kids and Grandkids all the time..and OCD about it! and another? ( Me and my Wife) She Died after 3 yrs of Cancer and used up over 50% of our savings $ paying Med. Bills for cures and treatments, etc. that our Ins. Plans wouldn't pay for )

Compromise? Work 50% Less for awhile and see how it goes..

Yours ( and her's) life will dramatically Change when You retire.. and the first couple of yrs will be the Adjustment Time.. And there is just som much Golfing and Walking the Beaches and that gets boring too.. So, your Volunteering work might Help, but your in for a rude awakening on that too..since, your whole attitude will change from being a Preditor in the Business World to be a Passive one..

A Pro' firm set me up with a port similar to this one back in 99' before I retired ( they used ishares and other Funds N/A to retial buyers ) and converted to Retial funds..
VWINX, VWEHX, TGBAX, FNMIX and LSBRX.. with ave 6% Ylds and 8% apy's
Went along fine until 08' and it lost -18% ave.. but it was +72% more by then and it's comming back and the yld is there to help pay the bills + my SS..

Instead of getting some Computer program telling you? Go see at least 3 different Pro firms and get their Opinions.. They just might come up with some things you didn't think about or count on ...
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Old 08-15-2009, 02:01 PM   #22
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I am in a similar position and I have decided to go the more conservative route since I am 40 and retired. While the 4% withdrawal rate may work for you I think you need to include all taxes in the 4% and I believe all investent fees as well. This would be the best case scenario. So $128k including taxes and mutual fund/etf expenses.

In my case I have elected to do several things to increase my odds of survival.

First I have elected to make my $$ last till age 95 or 55 more years. I have elected to not count my tax-deferred savings into my withdrawal plan until I get 65. And last I have elected to take a straight 3% of my account balance on a yearly basis and not adjust for inflation but ride the account balance.

So if I were in your shoes I would be living on $75,000 per year based on a 3% withdrawal rate on the taxable account only. I plan on increasing my withdrawal rate with age, maybe when 45 I'll go 3.25, 50 I'll go 3.5% - 60 maybe 4 % etc. 4% imo is made more for retirees in the 55-65 age range. At age 65 I would add in my tax-deferred accounts into the equation and go celebrate!

So while you may be able to retire on 135k and it may work it would push the envelope too much for me.

Keep in mind Firecalc while a GREAT tool uses data that was from a great success story (United States 1900's) and the other countries have not been so fortunate and the US is not guaranteed to repeat those results thus the FireCalc numbers MAY be optimistic.
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Old 08-15-2009, 04:39 PM   #23
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Try a different calculator: Retirement Calculator.
Based on the following parameters, you should have enough (3,202,034.82)
Annual Income required: $125,000
Years during retirement: 50
Inflation: 3.5
Annual Expected Return: 7.0

You should always follow your heart. You can always adjust your spending. You can return to work if a financial disaster strikes. No matter how much you have acquired now or in the future, you will never feel secured as the future is unknown or turn out as planned. There will always be events (i.e., financial market collapses, major medical bill) that will discourage us to take the big step. In short, do what feels right and do it.
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Old 08-15-2009, 04:52 PM   #24
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Annual Expected Return: 7.0
I just can't operate on the notion of an annual expected return of 7%. In my planning, I'm using 4% expected return, and afraid that's too high. Honestly, these last two years have been so painful that I'm still crawling out of the hole. Would love to know what the others on the board are using for their expected rate of return.
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Old 08-15-2009, 05:39 PM   #25
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I know alot of people on this board are very conservative, but I would say that assuming only a 4% return over 50 years is more than just a bit pessimistic.
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Old 08-15-2009, 05:44 PM   #26
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I know alot of people on this board are very conservative, but I would say that assuming only a 4% return over 50 years is more than just a bit pessimistic.
4% annual expected return is more than just a bit pessimistic? Seriously, I thought it might be high. What rate are you using in your planning, if you don't mind sharing?
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Old 08-15-2009, 06:31 PM   #27
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4% annual expected return is more than just a bit pessimistic? Seriously, I thought it might be high. What rate are you using in your planning, if you don't mind sharing?
7% is conservative. Inflation itself is almost 4%. If the rate of return were 4%, that is the same as 0% inflation adjusted return.
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Old 08-16-2009, 10:02 AM   #28
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Just about any time in history (other than right now) you could put 100% of your money in CDs and beat 4%.

By all accounts this has been a miserable decade for the stock market. The SP500 has an avg return of -1.09% over the past 10 years which is putrid. I believe its only the 2nd decade in which returns were negative. Here is the AA I plan to use when I retire in a few years:

Pimco Total Return...45%
Fidelity Contrafund...15%
Fidelity Low Priced Stock...10%
Vanguard Small Cap Growth...10%
Vanguard REIT fund....10%
MS Emerging Markets...5%
T.Rowe Price EM bond fund....5%

(Alot of my money is in my 457b plan in which choices are not bad at all, but limited)

This portfolio has an avg return of 7.1% over the past 10 years. Based on how bad the market has been, I have no reason to believe I wont get more than 7% over the long term. Im using 6.5% in my conservative calculation and 8% in my "keep my finger crossed" calculations.
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Old 08-16-2009, 11:12 AM   #29
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Utrecht, thanks so much this explanation. Honestly, it's only been in the last 10 yrs or so that we've been seriously thinking about retiring and we've been disappointed with the returns we've received. Thanks again for your post.
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Old 08-21-2009, 02:22 PM   #30
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I really appreciate everyones help.

After a week of getting a little more detailed with my expenses, I have a nice comfortable detailed budget of $110,000 before taxes.

My wife and I will have an income of $10,000 after taxes from her job, along with full family health and dental.

Knowing that, I need my investments to produce $100k of income before taxes.

Anymore thoughts on this senario?

TOP DAWG
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Old 08-21-2009, 02:35 PM   #31
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In my planning, I'm using 4% expected return, and afraid that's too high .... Would love to know what the others on the board are using for their expected rate of return.
Before the crash of 2008/2009, I was using 5% expected return.

After the crash, I'm still using an expected return of 5%. I actually think my projection is more conservative now than it was before (because before I was factoring in a major crash, and wow we sure had one!).

But I'm sticking with 5% because ... well, I'm a natural pessimist.
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Old 08-21-2009, 02:38 PM   #32
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Anymore thoughts on this senario?
My thoughts after reading your scenario:

First thought: wow! I'd definitely quit my j*b if I had that much money, unless I really enjoyed my work. Even if only to step back, evaluate my life goals, and decide what my next project would be. I definitely wouldn't be keeping my nose to the grindstone with those assets.

Second thought: wow! I'd never need to spend that much to live happily ever after. Guess I really have a low-maintenance life ...

Third thought: I have no idea what the right answer is, but my gut tells me that given your high living expenses, you need to keep working.
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Old 08-21-2009, 05:37 PM   #33
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This is a lot more reasonable. Guessing your taxes to be around $15-20k on your investment dividends and interest that puts you at 115-120k. Also you need to figure out your investment expenses (Expense Ratio) on your entire portfolio. If this is fairly low (< .40%) you should be ok. If you are paying someone 1-1.5% to manage your accounts then you might need to rethink even the 100k. So total expenses are still in the 130k range which is still right at he 4% range for withdrawals. I would just keep a close eye on the portfolio and if it starts looking shaky later you have to be ready to make adjustments. Make sure you read a couple good asset allocation books.


Quote:
Originally Posted by TOPDAWG View Post
I really appreciate everyones help.

After a week of getting a little more detailed with my expenses, I have a nice comfortable detailed budget of $110,000 before taxes.

My wife and I will have an income of $10,000 after taxes from her job, along with full family health and dental.

Knowing that, I need my investments to produce $100k of income before taxes.

Anymore thoughts on this senario?

TOP DAWG
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Old 08-21-2009, 08:55 PM   #34
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Once again, test your taxes with TurboTax with the best estimates you can. I can't imagine that you would pay more than $10K in taxes if that. Remember that taxable income is NOT the same as adjusted gross income (AGI) and that you get a break on qualified dividends and long-term cap gains. Furthermore, return of capital is tax-free.

And don't forget that if you need more tax-sheltered space, your wife could try to contribute all her income to a deductible retirement account (401(k), IRA, SEP-IRA, etc).
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Old 08-22-2009, 10:14 AM   #35
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Quote:
Originally Posted by TOPDAWG View Post
I really appreciate everyones help.

After a week of getting a little more detailed with my expenses, I have a nice comfortable detailed budget of $110,000 before taxes.

My wife and I will have an income of $10,000 after taxes from her job, along with full family health and dental.

Knowing that, I need my investments to produce $100k of income before taxes.

Anymore thoughts on this senario?

TOP DAWG
My recommendation would be to take no more than $96,000 from your portfolio, adjusted for inflation for the first 3 years, after which your SWR should be reaccessed for a possible increase. That SWR plus the 10K from your wife would give you $106,000 and would have to include all your taxes. Good luck!
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