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?
On the fringe of ER, but not sure
- Thread starter TOPDAWG
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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?
Spanky
Thinks s/he gets paid by the post
7% is conservative. Inflation itself is almost 4%. If the rate of return were 4%, that is the same as 0% inflation adjusted return.
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.
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.
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
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
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.
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.
outofratrace
Dryer sheet aficionado
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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.
LOL!
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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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).
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).
Bikerdude
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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!
