Safe Withdrawl Rate -- 6%

[Sheryl]

Wow, my brain hurts.     I started out wanting to do all these spreadsheets and analize this six ways to Sunday, now my eyes glaze over just reading it.

I feel like I have absorbed a lot of information from this board and elsewhere, and can feel comfortable with what I intend to spend without all the ongoing calculations.

FIRECalc tells me that I have 100% survival rate with an annual withdrawal amount significantly higher than I ever intend to spend -  so If I work with the basic assumption that I will spending $10 - $20k less than that 100% safe amount  each year, except when I have a major purchase like CFB's list, I should be fine.

Just to be sure I keep an eye on inflation, the market and the portfolio to make sure nothing scary is happening.

I mean, isn't that good enough

 

[cute fuzzy bunny]

Absofrickinlutely.

I do that spreadsheet thing about once a year just to see what our personal rate of inflation looks like, and if anythings out of whack.

Frankly, aside from just opening it, I dont think i've looked at it in at least 12-18 months.

It was just part of my initial "can I do this"/"is this reasonable" financial data wrangling. Did my budget, ran orp, ran firecalc, ran a couple of others, did financial engines. Magic 8-ball. Everything said "yea".

Some people are still in that stage, and some people revisit it often.

 

[Sheryl]

Yeah,  I'm just burned out on it.   

I'm burned out on thinking and working.   

I need to retire.   

The countdown is going very well.   

Can't possibly be more than 18 mos now.   

 

[audreyh1]

As part of the annual budget you need to set aside some money for "savings" each year so that you can buy yourself a really BIG toy now and then......

Audrey

 

[cute fuzzy bunny]

Why do you think i'm so "conservative" all the time...

"Look honey, due to my excellent planning, we have a bunch of money left over!

You want me to buy you a what...?!?"

 

[ESRBob]

TH/CFB,
you get two new cars AND all that other stuff for 50k every 10 years? Dude, I gotta come shopping with you.

 

[cute fuzzy bunny]

Yes you do. I am a LOT of fun to go car shopping with.

I was planning on a couple of used, inexpensive cars. Of course, I've already blown the entire 50k and a bit more in one shot buying the wifes lexus.

I buy most of my appliances from places like the sears dent and scratch place. What I dont get there I get on clearance from Sams Club, mostly stuff people bought and returned the next day.

Here's the stuff and the numbers attached, should have just done that in the first place...

I get every deal, coupon, freebie, rebate, etc I can latch onto. My time is free...

Cars $30,000.00 (pair of $15k 3-4 year old used cars)
Half water heater $300.00
One half furnace $2,000.00
One half AC compressor $1,200.00
Housepaint $300.00 (paint the house myself)
Half refrigerator $600.00
Half Dishwasher $220.00
Half range $350.00
Half Microwave $150.00
Half washer and dryer $400.00
Car tires $1,250.00
Two computers $1,000.00
Printer $450.00 (probably pay half this)
Two tivos $1,000.00 (actually get them free from sat/cable co's now)
Television replacements $2,000.00

Living room set $3,000.00
Bedroom set $2,000.00
Two gas grills $500.00
Replacement clothes $1,000.00
Fitness equipment $500.00
Personal care $200.00
Vacuum Cleaner $200.00
Steam Cleaner $200.00
Tools $500.00


Annual total $5,326.56 (total above / 10)

The cars might be dicey, but then again I have three of them right now...a lexus 430 with 600 miles on it, a 2001 rav4 with 28k miles, and a 2000 expedition with under 50k on it...they're going to last a while. Everything else is pretty reasonable.

 

[ESRBob]

I was planning on a couple of used, inexpensive cars. Of course, I've already blown the entire 50k and a bit more in one shot buying the wifes lexus.

ah, the best laid plans...

btw I _would_ like to come out there and see you buy a half a water heater, though! is the top half cheaper than the bottom half?

Painting the house yourself makes a lot of sense, and helps explain that part. And it looks like you are a serious barbequer wearing those guys out every 5 years.

off to have bkfst with the kid

ps: after bkfst (and thinking about new dishwashers -- wife says no more repairs, wants a new one with stainless steel front) Wondering in your case how any wife who's managed to get a new Lexus --- how long is she going to be satisfied with slightly dinged appliances?

 

[HFWR]

"Now the average American father and mother,
owns one whole car, and half another.
And I'll bet that half-a-car's a trick to drive, don't you..."

Jerry Reed

 

[audreyh1]

Why do you think i'm so "conservative" all the time...

"Look honey, due to my excellent planning, we have a bunch of money left over!

You want me to buy you a what...?!?"

Yes, I figured you would have this covered!! 

So is "honey" good at spending any excess?!?  Mine is pretty good at coming up with more toys he thinks he needs.....

Audrey

 

[cute fuzzy bunny]

Eh, the lexus was an indulgence. She's only had one new car her whole life and thats the rav4 I bought her 5 years ago. She's never had a really nice new car. I have. Several times.

Other than that, she's really low maintenance. Not a big clothes horse, doesnt want to be wined and dined or taken on trips around the world. I buy more worthless crap than she does. Ok, she has a heck of a shoe collection but if thats the only spendaholism thats ok.

Bob - I only buy appliances with scratches or dings on the sides where they're not visible. And I just replaced every appliance in the kitchen last year, all from sales and with a year no pay/no interest. Except the fridge. I ordered that delivered from sears because they dent EVERYTHING they deliver. I mean EVERYTHING. The first one came with a dent in the front door that you could fit a football in. Went back. Second one...fingers crossed...little ding and several scratches on the right side in the back where its invisible when set in next to the counter. DING DING DING! Couple of hundred bucks off. Stove was a clearance item for half off, nice ceramic cooktop model. Dishwasher was a closeout on sale for 1/3 off. New TV in the living room was bought from Sams Club, the guy who bought it started putting the stand together and screwed it up and returned it. Never opened the box with the tv in it. I bought it from the floor for 25% off new, put a dowel and some glue in the hole the original buyer screwed up, and it went together perfectly.

I *was* going through a grill every 5 years...here in the southwest you can grill year round. After 5 years I needed a new grill surface, a new burner, probably a spark starter, and the whole thing needed a half a day of scraping and scrubbing. So I freecycled them and bought a new cheap one. Last year i bought a fully 304 stainless steel one that should last a lot longer.

I do the "half of a..." thing because I wanted to do the capital spends in 10 year increments and water heaters/furnaces/fridges dont wear out in ten years. At least I hope not. You go further out than 10 years and you cant really rely on inflation adjusting costs and so forth. Its like trying to predict your spending budget in 2025...at best its going to be a bad guess.

Given a guess at inflation adjustment followed by a 30% "fudge factor" I apply to the whole budget...I think its a decent guess.

Stainless steel dishwashers? Try Sears # 02216193000 for $299 marked down from $419. One of consumer reports top rated dishwashers and pretty similar to the one I put in. Pick it up yourself in store to avoid delivery fees, they dont weigh that much. One water line, one drain line, couple of screws for the power cord, couple of screws holding it in, yank the old one out, stick the new one in, reverse the process to re-hook up. Dont re-use the original drain line, use the new one that comes with the dishwasher. Takes me about 30-40 minutes to put one in.

 

[sgeeeee]

This is a list I compiled from a number of internet sources.  It does not represent me at all, but the numbers all have some basis in one study or another.

CAPTIAL ITEM COST LIFESPAN (YEARS) ANNUALIZED COST
Car................ $24,000 5 $4,800
Water heater $250 13 $19
Furnace.......... $2,000 20 $100
Air conditioner $4,000 15 $267
Housepaint.... $200 20 $10
Refrigerator... $600 17 $35
Freezer.......... $240 20 $12
Dishwasher... $350 10 $35
Range........... $400 12 $33
Microwave..... $175 6 $29
Washer&dryer $750 15 $50
Car tires........ $600 2.5 $240
Computers.... $600 5 $120
Printer........... $130 10 $13
Television...... $300 8 $38
Stereo........... $500 15 $33
Living room set $4,000 15 $267
Bedroom set.. $1,700 15 $113
Dining room set $1,000 10 $100
Patio furniture $400 7 $57
Gas grill.......... $500 7 $71
Exercise machines $425 10 $43
Vacuum Cleaner $115 17 $7
Steam Cleaner $650 10 $65
house maint/reno $7,500 14 $536
TOTAL............. $7,093

 

[Rich_by_the_Bay]

I want some of that house pain that lasts 20 years.

If fact, I want the franchise.

 

[cute fuzzy bunny]

Good numbers. Probably vary somewhat by region and weather. In screaming distance of what I guessed, considering I keep my house maintenance stuff in my expense budget and buy inexpensive furniture.

Supports the thought of adding 5-7k a year to your base everyday 'utilities/food/gas' type expenses to account for capital items.

And yeah, I want the same housepaint. Best I could get out of a very well primed, very well applied expensive and highly regarded paint was about 7 or 8 before it started needing some work. I would bet my wifes old house will break 10 as we bought pre-primed hardiplank, then primed it with a very good expensive primer, then two coats of very good exterior paint. The hardi supposedly holds paint better than other surfaces. I'll drive by it one a year and see when they finally end up painting it.

 

[SteveR]

I keep looking at SG's list and keeping doing the math for the age of my house.  Looks like I have some suprises coming up in the next year or so.  

We have not gone to this much trouble to calculate our replacement/maintenance needs.  We have a slush fund to cover these things which is our "emergency fund".  It is sitting in a short term CD and in a MM account so we can get to it with the least pain.  Our next expense is going to be a driveway replacement this year.......if it ever stops snowing.  

 

[ESRBob]

Stainless steel dishwashers? Try Sears # 02216193000 for $299 marked down from $419. One of consumer reports top rated dishwashers and pretty similar to the one I put in. Pick it up yourself in store to avoid delivery fees, they dont weigh that much. One water line, one drain line, couple of screws for the power cord, couple of screws holding it in, yank the old one out, stick the new one in, reverse the process to re-hook up. Dont re-use the original drain line, use the new one that comes with the dishwasher. Takes me about 30-40 minutes to put one in.

Dang you're good.
Should have checked the postings before I let my own wife head out to the appliance store this afternoon and fall in love with the Kitchen Aid...

I like your budget approach (and I get the half-a-heater thing). In the book I push people to add 2.5k/car plus $1000 a year for homeowners to their budgets in ER just to sort of proxy what you and SG have done in more detail here.

 

[Jane_Doe]

Read thru about 5 pages last night of the report then put it down - WAY too much work and finagling involved. Do you really think people will follow this strategy ? Or more likely, just pick and choose which "rules" they like to follow. No way I would get involved in trying to follow this complicated method of SWR - seems to me it sets you up for a big fall. [I don't think I'll even bother finishing reading the report - my brain doesn't need this extra "junk" floating around in it!]

Just my 2 cents worth!

Jane

 

[MasterBlaster]

Jane Doe and others:

While I haven't really jumped on the 6 percent SWR endorsed by the OP, I do believe that this is close to what most people actually do.

When you have a good year in your portfolio take out a little more. When you have a bad year take out just what you really need.

The original link to the financial planning white paper and gummy's ideas just give some mathematical rigor to what many people actually do with their nestegg.

 

[bbuzzard]

I want some of that house pain that lasts 20 years.

If fact, I want the franchise.

No you don't, at least not if you have to paint the house for $200 also .

 

[Texas Proud]

I find it interesting to see the number of years for some appliances....

I have had my microwave for 22 years now and it still works great... and being single I use it...

Now, my 20 year old washer and dryer do not get the use that much, but they are a bit 'old' and might need replacing in a few years..

Just replaced a 25 year old dishwasher, but I did have to fix it once about 12 years ago...

My computer is 7 years old, but just blew out it's second power supply... I am trading to get a 500 mhz machine (I get the computer for two free movie tickets!!)

The rest of my stuff is probably going to be replace real soon... all of my stuff is approaching 20 or more years and I am getting to the point that it just to old and worn out...

 

[REWahoo]

I have had my microwave for 22 years now and it still works great...

My computer is 7 years old, but just blew out it's second power supply...

TP, another less costly approach would be to spring for a new microwave (prices have come down a lot in the last 22 years), then hook the power supply from your old microwave up to your old computer. Might help to fill it with 10W30, too.

 

[Texas Proud]

TP, another less costly approach would be to spring for a new microwave (prices have come down a lot in the last 22 years), then hook the power supply from your old microwave up to your old computer.  Might help to fill it with 10W30, too.

A good thought... but since I am wrangling to get a free computer that is better than mine... I will go that route.. hey, I am moving into the 21st century with this upgrade.. well, I take that back.. I still will be using Windows 98..

 

[LovesLife]

The rest of my stuff is probably going to be replace real soon... all of my stuff is approaching 20 or more years and I am getting to the point that it just to old and worn out...

TP,
You'll probably find that when you do replace with the "new" stuff that it won't last nearly as long. Too many cheap parts.

 

[cute fuzzy bunny]

Agreed. Gabe wants to play with my computer keyboard all the time, so I dug a 10 year old one out of the back closet. Must weigh twice what my new one does, and he can throw it around without fear of immediate destruction. So far so good.

I was under the impression that it was a good idea to get rid of the older microwaves because they tended to emit a lot more 'bad stuff' (whatever the hell that might be). Anyone have any good non-anecdotal stuff about that?

Also, newer energy star stuff might use so much less energy that its worth it to replace with new.

 

[sgeeeee]

I just want to be clear about the list of non-annual expense items I posted. This is not my own experience or any other single person's experience. I put the list together a few years ago from several different sources. Clearly, every person will be different for each item. My house is brick. DW and I have had the same furniture for almost 30 years. I buy cheaper cars and keep them longer, etc. But the list seemed like a good starting point for people who want estimate their average non-annual expenses.

The idea is to pick and choose the items that mean something to you and use your own cost/lifetime estimates to produce the number that makes sense to you.