Ty Bernicke's results sound great...maybe?

[practicalpat]

Hi All,
Looking for some input from the great minds out there. I have just retired at 62 and am in the process of selling my home to further feather the nest egg (thank heavens for So. Calif. real estate). As background: Have 116K IRA in Vanguard index funds (60/40 stock/bond) averaging 10% return, $9288 SS, state pension of $10416 w/annual inflation adjust and long term care ins. I would like to have an additional 30K a year to live on to start. Using Ty B's Firecalc results indicates I would need much less in the "nest" than the "95 rule" to achieve 100% success (no dog food at 90). I had planned on setting up a total 400K in Vanguard Index funds (60/40 stock/bond) and using about 4.5% as my withdrawal but looking at Ty B.'s calculations has me intrigued. I could actually live a little "larger" (50K yr total would feel quite grand) than planned (more travel, etc.) in the first ten or so years AND possibly help my daughter and son-in-law get into a home. I have no problems with the 2-3% decrease each year until 76 since living as a single woman for the last 20 years has made me a great money manager and definitely capable of living within my means. Using Ty B's theory would actually give me a good raise in comparison to the 4.5% withdrawal. Will that actually work? Am I missing something big that would mean dog food in my last years? Hope this had made sense and you understand what I am aiming for. Any input will be greatly appreciated!

 

[SteveR]

Hi Practicalpat,

Welcome to the board. Living below your means is one sure fire ( ) way to FIRE.

How about your health insurance? Is it covered through the state? If not, you need to dial in some $$ to cover that major expense category.

Have you run FIRECalc? You can adjust many variables to see what works best for you. That can save a 100 questions sometimes.

Good luck and I look forward to seeing your posts on the board.

 

[jdw_fire]

Hello and welcome practicalpat,
I don't seem to be following your question because when I plug your numbers

 I have just retired at 62 ... I would like to have an additional 30K a year to live on to start.  Using Ty B's Firecalc ... I had planned on setting up a total 400K in Vanguard Index funds (60/40 stock/bond)

into FIRECalc (with a 30 yr life) I get an 89.6% success rate so something is different.  Would you restate your question with the numbers you are using?

 

[Coach]

...Using Ty B's theory would actually give me a good raise in comparison to the 4.5% withdrawal. Will that actually work?....

Praticalpat, you've asked the hottest question, and the one without an answer. All a caculator can do is provide a model for the future. If the future works out the way it's modeled, everything comes out roses. But if not ....

On the other hand, you will have a great advantage over the model -- you'll actually see what happens in year one, year two and so on, and can make adjustments. It sounds like you can cut way back if things don't go well. Considering that, it seems a shame to forgo the chance to enjoy more earlier in your retirement.

Coach

 

[practicalpat]

Thanks for the immediate replies!

jdw_fire: Ran my numbers again using Ty B's area for a 50K annual income but with only 250K as my nest egg, $9288 SS, $10416 pension, 60/40 stock/bond allocation, 30 year time span, and current age of 62 and still came up with 100% success. If I drop the nest egg down to 200K it comes out at 83% success. Running the numbers on the "95%" area requires me to have at least a 400K nest egg and drop down to an approx. annual $40,000 income for approx. a 95% success. Is that where we differ? Sorry I wasn't as clear as I should have been. You can see why I find Ty B's numbers so much more inviting but I do like to live in reality. The difference between the two areas for needed nest egg leaves me feeling like something can't be right...hence my plea for input.

Coach: I'm very tempted to give it a try and as you say cut back if it isn't working. Probably starting with the higher nest egg of at least 400K would be the wisest and see how things go. Ty B's calculations come out as only needing 250K for 100% success. This is where I get a little nervous since there is such a big difference. Agree that it is only a model and not a guarantee of success. Guess I'm just needing some reasurance...alas, the best laid plans of mice and (wo)men.....

Steve R: Living below my means is my middle name (and the subject of family jokes) but so far it has worked pretty well. I'll continue my cautious ways and enjoy retirement with a sense of humor and a hopefully adequate nest egg. Fortunately my health and dental insurance is covered by the state (believe me, I am thankful!) and I've plugged in extra $$ for co-pays, etc. As for running firecalc? Countless times with all sorts of variables. Sometimes I think I'm obsessed.......but then, dog food doesn't seem to appetizing.

Thank you all for the input. It's helpful to have like minded people to bounce thoughts around with. So many people don't seem to plan for retirement . Makes me worry for them!

ppat...