Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Re: Request for validation
Old 06-21-2006, 11:17 PM   #21
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,387
Re: Request for validation

Quote:
Originally Posted by bosco
never mind, my mistake

When I do these kind of calculations, I do it differently.* I keep the withdrawal amount the same and adjust the principle for inflation, or for after-inflation earnings.*
If I understand you correctly, this is the way that TIPS do it also. Let me ask if this is how you do it: Say principle Jan 1, 2005 is $1,000,000. Say principle Jan 1, 2006 is $950,000. Further say that CPI Jan 2006/CPI Jan 2005 =1.04. Then your Adjusted Principle is $950,000/1.04 or $913, 462. So if your assumed SWR is 4%, in 2005 you withdrew $40,000, and in 2006 you will withdraw $36,538.

If this is your idea, it seems quite sound to me. I imagine it would be hard to run out of money this way, though I suppose given enough stagflation the withdrawals could get tight.

Ha
__________________

__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: Request for validation
Old 06-22-2006, 09:47 AM   #22
Full time employment: Posting here.
bosco's Avatar
 
Join Date: Jul 2005
Posts: 987
Re: Request for validation

Quote:
Originally Posted by HaHa
Let me ask if this is how you do it:
not exactly. I have a number at the top of my spreadsheet for inflation. If it's 3%, I use 1.03. I have enother number for investment rate of return. Say 1.055 (in the case of a 5.5% CD).

I will adjust my principle by the ratio of (1.055)/(1.03) every year. If I want to experiment with other rates, I change the two numbers at the top. I can break things out further if I want.

I will continue to leave my withdrawal as the same number (i.e. not adjust it). That way, I don't have to adjust social security estimates which (supposedly) the government will increase with the CPI. If something, like, say my wife's pension, receives a 50% CPI adjustement, I will divide it by 1.015.

It really doesn't matter if you apply inflation (or discount rate or whatever) to the principle or the withdrawal. But not to both, which is what I did yesterday. The whole day more or less continued on in the same vein.....
__________________

__________________
I have an inferiority complex, but it's not a very good one.
bosco is offline   Reply With Quote
Re: Request for validation
Old 06-22-2006, 10:52 AM   #23
Thinks s/he gets paid by the post
 
Join Date: Jun 2005
Posts: 4,005
Re: Request for validation

Quote:
Originally Posted by bosco
When I do these kind of calculations, I do it differently. I keep the withdrawal amount the same and adjust the principle for inflation, or for after-inflation earnings. I do it this way because for my situation it is easier. But in my pre-coffee morning haze, I did both. I stand corrected.
I do that too for "back of the envelope" type spreadsheets. Deflate the principal amount by inflation to keep it in "real" terms instead of nominal terms. Then keep the future withdrawals constant since they are in real terms too.
__________________
justin is offline   Reply With Quote
Re: Request for validation
Old 07-04-2006, 09:06 PM   #24
Recycles dryer sheets
 
Join Date: Jun 2006
Posts: 322
Re: Request for validation

Gee I was thinking you were going to be talking one of those really really expensive world cruises.
As a retired person I have read that you can get good deals.

Do yall have a thread on that ?
__________________

__________________
spideyrdpd is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Request for new category jeff2006 Forum Admin 5 08-15-2006 04:26 PM
Portfolio Review Request Sheryl FIRE and Money 14 01-31-2006 02:41 PM
A request to the moderators greg Other topics 4 12-02-2005 04:52 PM

 

 
All times are GMT -6. The time now is 04:39 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.