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Re: What do you consider an acceptable success %
Old 02-11-2007, 02:18 PM   #61
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Re: What do you consider an acceptable success %

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Originally Posted by Cute Fuzzy Bunny
In a serious situation, we can drop to 12k or so for a year
Well that just about covers my expected health insurance with maybe $1-$2k to spare.

I think I need to move.
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Re: What do you consider an acceptable success %
Old 02-11-2007, 02:23 PM   #62
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Re: What do you consider an acceptable success %

The benefits of a working wife with health care coverage.

Without that, in a situation that would demand dropping to a 12k budget? I think we'd do without the health care coverage.

Good news is that there are few scenarios that would result in our having to drop back that far. I'd go back to work first.
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Re: What do you consider an acceptable success %
Old 02-11-2007, 03:00 PM   #63
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Re: What do you consider an acceptable success %

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one's ability to absorb the risk of lower success %s is clearly related to the amount of slack in one's budget.
Yup, or work.

Amazing the impact even a couple days of work per week can have on an income stream and wthdrawal rate.
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Re: What do you consider an acceptable success %
Old 02-11-2007, 03:02 PM   #64
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Re: What do you consider an acceptable success %

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Originally Posted by 3 Yrs to Go
Well that just about covers my expected health insurance with maybe $1-$2k to spare.

I think I need to move.


Yeah....... much agreement here on that! If I had to cut our RE budget to $12K, I'd consider my RE a total bust.

Of course, with a working wife providing adequate income and benefits, my RE income from investments could be zero for a nice life!

Folks have been mentioning that a lower probability of success, say 85 - 90%, would be acceptable if the budget is adequately padded so that reducing expenditures wouldn't be too painful if necessary. But doesn't having a higher probabability of success, say 95%, and having a padded budget both require a larger portfolio? Don't they both take you to the same place?

Also, a note to newer board members: be aware that in discussions like this where specific dollar amounts are mentioned, keep in mind the various posters have dramatically different life scenarios. Some have working spouses, some have large, cola DBP pensions, some are doing it only on their investment portfolios, ages vary greatly, etc. It's not a matter of right or wrong, but of different points of view and the devil is in the details!



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Re: What do you consider an acceptable success %
Old 02-11-2007, 04:15 PM   #65
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Re: What do you consider an acceptable success %

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Originally Posted by 3 Yrs to Go
Well that just about covers my expected health insurance with maybe $1-$2k to spare.

I think I need to move.
That, or the fuzzy one needs to quit fantasizing.

Ha
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Re: What do you consider an acceptable success %
Old 02-11-2007, 04:24 PM   #66
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Re: What do you consider an acceptable success %

Ha...my fantasies are WAY better than 12k a year budgets...
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Re: What do you consider an acceptable success %
Old 02-11-2007, 04:32 PM   #67
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Re: What do you consider an acceptable success %

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Originally Posted by tui_xiu
Amazing the impact even a couple days of work per week can have on an income stream and wthdrawal rate.
You guys go first. I'll catch up with you later... I need to refine the anthropological "happiness" research on those beer brands.
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Re: What do you consider an acceptable success %
Old 02-11-2007, 04:36 PM   #68
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Re: What do you consider an acceptable success %

I vote for 80-90% or 85%, I think I start with 5% of that fixed exp will be 2.5%. If my portfolio goes below a certain number, I will start part time, looking at spreadsheet output of firecalc, first 10 yrs are generally make or break. I am debating should I start a consultancy business front just for insurance and keeping resume current at least for first 5-10 yrs of ER.

I have one question here, how do you treat kid's college fund? Is it part of total portfolio and education expenses will be cut following some really bad years?
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Re: What do you consider an acceptable success %
Old 02-11-2007, 04:42 PM   #69
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Re: What do you consider an acceptable success %

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Originally Posted by tui_xiu
Amazing the impact even a couple days of work per week can have on an income stream and wthdrawal rate.
Amazing the impact even a couple of days of work per week can have on the stress level and total screwing up of any travel plans!

No thanks!

Even Martha saw the light!

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Re: What do you consider an acceptable success %
Old 02-11-2007, 04:46 PM   #70
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Re: What do you consider an acceptable success %

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Originally Posted by Want2retire
I know that I'm building a "fudge factor" into my budget, that I will invest most of the time. It's tentatively about 1/3-1/2 of my post-retirement budget.
IMO that fudge factor is very, very important!

You might also consider an padding extra "play budget" for the first year or two of retirement - some extra funds to blow on travel or whatever.

We did just that, and we were really glad. We had a lot of fun without worrying about what implications it had for long term budgets.

Audrey
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Re: What do you consider an acceptable success %
Old 02-11-2007, 05:22 PM   #71
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Re: What do you consider an acceptable success %

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Originally Posted by audreyh1
IMO that fudge factor is very, very important!

You might also consider an padding extra "play budget" for the first year or two of retirement - some extra funds to blow on travel or whatever.

We did just that, and we were really glad. We had a lot of fun without worrying about what implications it had for long term budgets.
What a great idea! I don't really want to travel, but I plan to move and I could use that "play budget" for decorating and furnishing my new home. That's something I love to do, and it would keep me busy during the transition period, carefully searching for the perfect artwork, table, or carpet.

After gleefully spending my "play budget" the first year or so, I'll still include a continual fudge factor. To me it doesn't make sense for me to stop saving for retirement just because I have retired. I want to keep building the wealth.
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Re: What do you consider an acceptable success %
Old 02-11-2007, 05:32 PM   #72
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Re: What do you consider an acceptable success %

Oh yeah - you still need the annual fudge factor.

On fudge factors and padding the retirement budget:

Cut-throat (I think) says it best - take your absolute barebones budget, the one you could "survive" on if times got rough (i.e. no frills at all) and then double it to get your annual withdrawal needs. Then make sure assets are 25X times this.

Then you know that if you really had to, you could cut back 50% under really hard times.

You have to take taxes into account somewhere in the withdrawal needs - but you get the idea.

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Re: What do you consider an acceptable success %
Old 02-11-2007, 06:36 PM   #73
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Re: What do you consider an acceptable success %

Quote:
Originally Posted by audreyh1
Oh yeah - you still need the annual fudge factor.

On fudge factors and padding the retirement budget:

Cut-throat (I think) says it best - take your absolute barebones budget, the one you could "survive" on if times got rough (i.e. no frills at all) and then double it to get your annual withdrawal needs. Then make sure assets are 25X times this.

Then you know that if you really had to, you could cut back 50% under really hard times.

You have to take taxes into account somewhere in the withdrawal needs - but you get the idea.
I was thinking more like triple, to account for a genuine fudge factor. I don't want to compute my retirement assuming that I would live on my barebones survival budget, so I'm assuming normally I would live on twice that. The fudge factor is on top of all that, since I am assuming that it does not get spent, but is reinvested. It's not normally part of my spendable budget.

Yes, taxes... they could reduce my 3.5% withdrawal rate to maybe somewhere less than 2.5%. I can still make it if the market doesn't tank in the next three years.
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Re: What do you consider an acceptable success %
Old 02-11-2007, 07:57 PM   #74
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Re: What do you consider an acceptable success %

Wow - sounds like you are really padding! It's fine to pad as long as it doesn't have to working too long!

Also, taxes might end up being less - I've seen closer to 0.5% average over several years, but last year was not as good - lots of distributions!

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Re: What do you consider an acceptable success %
Old 02-11-2007, 08:33 PM   #75
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Re: What do you consider an acceptable success %

Well, in my case I have to work 3 more years to get free lifetime medical anyway, so I'm trying to see how much I can save between now and then. I'll still have less than most on this board, but it looks like I will have enough for my fudge factor.

That's encouraging about the taxes!
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Re: What do you consider an acceptable success %
Old 02-12-2007, 04:38 PM   #76
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Re: What do you consider an acceptable success %

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Originally Posted by landover
I have one question here, how do you treat kid's college fund? Is it part of total portfolio and education expenses will be cut following some really bad years?
I have separate accounts for my kids college funds, which gets invested differently and looked at differently than the rest of my funds.

In my FIRE spreadsheet, I count the kids' college funds as assets and the NPV of the FV of their college costs as liabilities. Those two items are included when I compute my FIRE stash total. I then take my spending from Quicken for the last month, multiply by 12, and then see what percentage my spending is of my FIRE stash. When it gets to 4% I quit.

I do it this way because I have decided for me personally that I will not retire if it means my kids college funds are underfunded.

There is an outside possibility that I can retire before my kids all finish college. If this is the case then it complicates the planning somewhat. Having separate accounts should help with that.

2Cor521
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