26X Annual Spending Enough?

[OrcasIslandBound]

Just out of curiosity, do most folks count SS? A 72K income plan becomes a 42K income plan if one can count on SS for the 30K difference, as in our case (eventually). If that is true, then wouldn't a plan that has 1.5M/42K = 35.6 be a fairly good ratio by Rambler's standards? I believe that is how the Fidelity simulation can achieve 95% probability.

I must count SS or plan on working (how do you spell that? w@&k#!ng?) until I'm 65. No thanks, I would rather live a bit while young.

 

[landover]

I look at this in two parts, what is the bare minimum and what is the luxury part. Food, shelter, medical, some entertainment (laptop+internet), a cheap car, cheap vacation, these I consider as minimum. I will also include depreciation of above in bare minimum. I am aiming for 2% in this category, maybe 2.5%. Rest is your choice, but still I will not go above 4% to 4.5% in total.

I guess social security will be there for people over 50 in current form, inflation may be a problem there, just look at some people suggesting changing Medicare and now their friends are balking at supporting them. So SS can give one some more freedom to up the SWR.

I am lately realizing that companies pay good money for stressful jobs but this extra income is advance payment for taking care of future health problems/lower quality of life.

 

[obgyn65]

Hello GetNclose - have you tried this calculator :

Merrill Edge| See Where You Stand

My question: Would you retire at age 50 with a net worth that is 26X annual retirement expenses?

 

[Dawg52]

It's easy to get caught in the one more year trap. But when in doubt, work and extra year or two. And if you do not want to go that route, are you in a field you could work part time if you had to?

 

[clifp]

Just out of curiosity, do most folks count SS? A 72K income plan becomes a 42K income plan if one can count on SS for the 30K difference, as in our case (eventually). If that is true, then wouldn't a plan that has 1.5M/42K = 35.6 be a fairly good ratio by Rambler's standards? I believe that is how the Fidelity simulation can achieve 95% probability.

I must count SS or plan on working (how do you spell that? w@&k#!ng?) until I'm 65. No thanks, I would rather live a bit while young.

Social security is my back up plan if all my investments go south and I suspect that is true of many of the board members. As a board, we are wealthier, more frugal, and more conservative with our finances than the public by a very large margin.

I think it is wise to be conservative on somethings but not everything. So for instance if you were planning on 40/60 portfolio generate a 4% SWR so that you could spend 60K from your 1.5 million and also counted on all 30K in SS to be available and spent 90K each year and increased the spending to keep up with inflation, and went through another 2008 and didn't cut spending that IMO is risking running out of money.

On the other hand, I think assuming that you need 33x and that SS will disappear is excessively conservative, or alternatively perfectly fine if you love your job and don't want to quit w*rk.

I'd look your plan as have 90K worth of income but only planning on spending 72K, give you a 20% margin of safety which seems plenty safe.

 

[rescueme]

I believe the old adage of "where there is a will, there is a way!"

I always thought that "where there is a will, there are some relatives ready to collect on it" ...

 

[RunningBum]

Just out of curiosity, do most folks count SS? A 72K income plan becomes a 42K income plan if one can count on SS for the 30K difference, as in our case (eventually). If that is true, then wouldn't a plan that has 1.5M/42K = 35.6 be a fairly good ratio by Rambler's standards? I believe that is how the Fidelity simulation can achieve 95% probability.

I view SS as bonus money. If I get it, I can live better, travel more, etc, but I'm not counting on it for essentials. Don't forget that if you are looking at 30K SS, some of that is probably taxed, and I suspect to keep SS solvent benefits will either be reduced or more of it taxed. Also be careful if that 72K income plan is in current dollars and the 30K SS benefit is in future dollars. SS COLA has been 0 for the past two years, yet I'm seeing a lot of prices going up around me.

 

[Retire2013]

Thank you GetNClose for starting this thread; It is excellent. If you are willing to work parttime in years where your expenses soar or your investment income plummets, then I think you can ER as soon as you'd like to.

 

[landover]

Also be careful if that 72K income plan is in current dollars and the 30K SS benefit is in future dollars. SS COLA has been 0 for the past two years, yet I'm seeing a lot of prices going up around me.

I always though that SS benefit is given in current dollars, I think till 62 it is indexed to wage growth rate and then inflation.

 

[haha]

I always though that SS benefit is given in current dollars, I think till 62 it is indexed to wage growth rate and then inflation.

That is correct.

Ha

 

[RunningBum]

I always though that SS benefit is given in current dollars, I think till 62 it is indexed to wage growth rate and then inflation.

My mistake. Still, I don't expect their indexing to keep up with real inflation.

 

[Nords]

As a person who is fortunate enough to be able to live off a COLA'D pension, I am not one to give advise on your situation as others can. But I still want to congratulate you are your efforts so far. Building that amount of wealth and being able to fully fund your children's college education is something to be proud of. I sure hope your children appreciate your planning and sacrifice. Good luck in your decision!

Thanks.

I should point out that our daughter is attending a horrifically expensive private college on an NROTC scholarship. She's personally accounting for about three-quarters of that "fully funded" experience, and we'll see how she feels in another three years when the "payback" phase begins.

I'm going to put up a post in a couple weeks about ER and paying for college. They're mutually compatible.

Building the wealth... well, that comes from not having the time or the opportunity to spend it during our working days, and then living a beach-bum lifestyle after our working days.

I'm sure our daughter will appreciate our parental sacrifice someday-- shortly after she starts making her own parental sacrifices!

 

[Mulligan]

Thanks.

I should point out that our daughter is attending a horrifically expensive private college on an NROTC scholarship. She's personally accounting for about three-quarters of that "fully funded" experience, and we'll see how she feels in another three years when the "payback" phase begins.

I'm going to put up a post in a couple weeks about ER and paying for college. They're mutually compatible.

Building the wealth... well, that comes from not having the time or the opportunity to spend it during our working days, and then living a beach-bum lifestyle after our working days.

I'm sure our daughter will appreciate our parental sacrifice someday-- shortly after she starts making her own parental sacrifices!

+1 and True on your last comment!!! Thankfully there wasn't an online forum 30 years ago, or my dad would be letting me have it too!

 

[haha]

My mistake. Still, I don't expect their indexing to keep up with real inflation.

It is important to realize that at present, whatever someone may think "real inflation" might be, social security adjustments taken over a working lifetime more than keep up with CPI. This is because until a certain age, I think 62, SS earnings are adjusted by a wage inflator, which in the past has been greater than CPI inflation. After 62, CPI itself is used.

Ha

 

[MDJO]

If you like what you are doing - wait and save more. If not, quit and find something you like to do in retirement. You will never get more time - it's the most precious asset you have. Might as well enjoy it to the fullest.

 

[robbridg]

My question: Would you retire at age 50 with a net worth that is 26X annual retirement expenses?

No