gauss
Thinks s/he gets paid by the post
- Joined
- Aug 17, 2011
- Messages
- 3,615
I am unclear how folks typically calculate WR unless they are starting retirement when SS and any COLA pensions are already started.
For my case, SS will not begin until 17 years after ER, and we have various non-COLA pensions that will come online at various points.
The attached picture (in real 2011 $) illustrates my situation with the following legend:
The naive calculation would be to just look at the ratio of Investment income to total income for the first year and then multiply this ratio by first year investment income divided by Nest Egg balance in first year.
Given that this ratio varies greatly over the time period, this is likely incorrect.
This would seem to be a similar issue for anyone with a non-COLA pension.
Thanks for any pointers to discussions or references that discuss this.
gauss
FWIW - My attempt at correctly doing this was to calculate the (NPV), in first year, of all the income streams of the 50 year time period. I would then calculate the ratio of NPV (Investment Income) / NPV (Total Income) in first year and then multiply this by Investment Income(first year)/Nest Egg Value (in first year).
For my case, SS will not begin until 17 years after ER, and we have various non-COLA pensions that will come online at various points.
The attached picture (in real 2011 $) illustrates my situation with the following legend:
- Lt Brown - Social Security of DW & DH
- Blue/Red - Pensions of DW & DH
- Lt Blue - Portion to be made up from Investments
The naive calculation would be to just look at the ratio of Investment income to total income for the first year and then multiply this ratio by first year investment income divided by Nest Egg balance in first year.
Given that this ratio varies greatly over the time period, this is likely incorrect.
This would seem to be a similar issue for anyone with a non-COLA pension.
Thanks for any pointers to discussions or references that discuss this.
gauss
FWIW - My attempt at correctly doing this was to calculate the (NPV), in first year, of all the income streams of the 50 year time period. I would then calculate the ratio of NPV (Investment Income) / NPV (Total Income) in first year and then multiply this by Investment Income(first year)/Nest Egg Value (in first year).
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