4% rule.

[NW-Bound]

It’s principal.

Yes. A bond or a loan has its principal, the same as a school having a principal. English is funny.

On the other hand, a scrupleless politician has no principles. I shall not name an example though (there are many).

It is true that a stock has no principal, but it is backed up by a company's assets, such as manufacturing plants, real estate, machinery, vehicles, as well as intellectual property.

Now, many highflyers stocks do not have much in tangible assets, but they make up for that with promises. You've got to be careful with those promises, as they may turn out to be worth very little.

 

[Koolau]

Yes. A bond or a loan has its principal, the same as a school having a principal. English is funny.

On the other hand, a scrupleless politician has no principles. I shall not name an example though (there are many).

It is true that a stock has no principal, but it is backed up by a company's assets, such as manufacturing plants, real estate, machinery, vehicles, as well as intellectual property.

Now, many highflyers stocks do not have much in tangible assets, but they make up for that with promises. You've got to be careful with those promises, as they may turn out to be worth very little.

Yep, maybe it would be easier to make a list of politicians - well, never mind.

But, back to stocks for a moment. Hey, I guess it's the same thing. DO you believe their promises? YMMV

 

[NW-Bound]

Yep, maybe it would be easier to make a list of politicians - well, never mind.

But, back to stocks for a moment. Hey, I guess it's the same thing. DO you believe their promises? YMMV

About politicians, I never understand people who worship one. They are BS'ers, some a lot more than others. How one can confuse a politician with Mother Teresa is mind-boggling. Pols are either OK, or disgusting to me. Have not seen any saint.

About stocks, of course you can never trust a company blindly, although like pols, some are absolute BS'ers. The CEOs who talk the least and work quietly are often the better ones. Just show me the money.

I do look at sales, and P/E, and basic stuff like that when I buy a stock. Of course, even then you can get fooled by companies that cook the book like Enron and MCI/Worldcom, but those are not the norm.

 

[Koolau]

About politicians, I never understand people who worship one. They are BS'ers, some a lot more than others. How one can confuse a politician with Mother Teresa is mind-boggling. Pols are either OK, or disgusting to me. Have not seen any saint.

About stocks, of course you can never trust a company blindly, although like pols, some are absolute BS'ers. The CEOs who talk the least and work quietly are often the better ones. Just show me the money.

I do look at sales, and P/E, and basic stuff like that when I buy a stock. Of course, even then you can get fooled by companies that cook the book like Enron and MCI/Worldcom, but those are not the norm.

Yes, and what I love about the true "saints" - you mentioned Mother Teresa - THEY never claim to be saints. They just do what they do and others decide - usually after they're gone if they were saints. I never expect to be sainted - heh, heh far from it. I'll be happy if folks say about me, he was mostly an okay guy. YMMV

 

[Time2]

It’s principal.

Ya, so their!

 

[FIREarly]

Originally Posted by FIREarly View Post
What if the 4% rule went up at the same rate as inflation?
In this hypothetical case, where would the 4% rule be today?

Not sure what you are asking. The 4% rule says your spending goes "up at the same rate as inflation".

Understood, thank you. It was a quick post and trying to focus more on increasing my saving and investing and not factoring in the spending of the money yet (+/-10-20 years away).

If anyone has the upcoming winning Mega Millions numbers PM me, hahaha

 

[Safire]

After going through all the posts, and thinking about our situation, I'm redoing my OP.

We had our son later in life. When we retire in 2036, he will only be 27. Additionally, longetivity runs on his paternal side of the family - the men and women all live into their early 90s. My genes are weaker, and we tend to die off in our mid to late 70s. Let's assume an average and we're looking at an average life expectancy for our son in the early 80s.

He will turn 80 in 2089. So our retirement needs to last us from 2036 to 2089! We (parents) plan to live off of whatever SS + pension that we get and withdraw minimally from our retirement a/cs, so that the pot can grow as much as possible until we die (which may be in late 2050s for H and mid/late 2040s for me).

By my calculations, our nest egg *MAY* grow to 2.5 million by 2036 (assuming a ROR of 5% from here on out, maxing out our one after tax 401K and two ROTHs). We will be in the market for a small condo as soon as this housing craze calms down and pay it off in 15 years. The pension lump sum calculation (as of today) is 825K. Employer offers some health benefits for retirees with a set number of years in service which we may get.

If we are able to live in good health or at least have LTC insurance in place (which I need advice on), between SS & the 3.3M nest egg of which as little as possible is drawn down & with a paid for condo, will the money last him until 2089?

We may be drawing around 1% of the nest egg (30K / annum), provided we get at least 60% of the current SS benefit amount the SS site calculations claims we'll be able to draw at 67. We can wait until 70 to claim SS if we are able to meet our savings goals for cash on hand. But we'll be in REAL trouble if SS goes bankrupt by 2036 and we have to "eat" more than 2% of our retirement egg each year.

In addition to our retirement a/cs and the proceeds from sale of our condo at the surviving spouse's death that will be inherited by his trust, he will qualify for both SSDI & Medicare (assuming neither has gone bankrupt by then). My only fear is that he does not outlive his small inheritance by even a day

BTW, I did try some portfolio visualizer calculators but could not understand how interpret them. So pls help

 

[chassis]

After going through all the posts, and thinking about our situation, I'm redoing my OP.

We had our son later in life. When we retire in 2036, he will only be 27. Additionally, longetivity runs on his paternal side of the family - the men and women all live into their early 90s. My genes are weaker, and we tend to die off in our mid to late 70s. Let's assume an average and we're looking at an average life expectancy for our son in the early 80s.

He will turn 80 in 2089. So our retirement needs to last us from 2036 to 2089! We (parents) plan to live off of whatever SS + pension that we get and withdraw minimally from our retirement a/cs, so that the pot can grow as much as possible until we die (which may be in late 2050s for H and mid/late 2040s for me).

By my calculations, our nest egg *MAY* grow to 2.5 million by 2036 (assuming a ROR of 5% from here on out, maxing out our one after tax 401K and two ROTHs). We will be in the market for a small condo as soon as this housing craze calms down and pay it off in 15 years. The pension lump sum calculation (as of today) is 825K. Employer offers some health benefits for retirees with a set number of years in service which we may get.

If we are able to live in good health or at least have LTC insurance in place (which I need advice on), between SS & the 3.3M nest egg of which as little as possible is drawn down & with a paid for condo, will the money last him until 2089?

We may be drawing around 1% of the nest egg (30K / annum), provided we get at least 60% of the current SS benefit amount the SS site calculations claims we'll be able to draw at 67. We can wait until 70 to claim SS if we are able to meet our savings goals for cash on hand. But we'll be in REAL trouble if SS goes bankrupt by 2036 and we have to "eat" more than 2% of our retirement egg each year.

In addition to our retirement a/cs and the proceeds from sale of our condo at the surviving spouse's death that will be inherited by his trust, he will qualify for both SSDI & Medicare (assuming neither has gone bankrupt by then). My only fear is that he does not outlive his small inheritance by even a day

BTW, I did try some portfolio visualizer calculators but could not understand how interpret them. So pls help

@Safire what do you think about spending 1 hour with a financial planner, for a fee? I think it will help you gain some basic understanding that you need in my view.

 

[RetireeRobert]

After going through all the posts, and thinking about our situation, I'm redoing my OP.

We had our son later in life. When we retire in 2036, he will only be 27. Additionally, longetivity runs on his paternal side of the family - the men and women all live into their early 90s. My genes are weaker, and we tend to die off in our mid to late 70s. Let's assume an average and we're looking at an average life expectancy for our son in the early 80s.

He will turn 80 in 2089. So our retirement needs to last us from 2036 to 2089! We (parents) plan to live off of whatever SS + pension that we get and withdraw minimally from our retirement a/cs, so that the pot can grow as much as possible until we die (which may be in late 2050s for H and mid/late 2040s for me).

By my calculations, our nest egg *MAY* grow to 2.5 million by 2036 (assuming a ROR of 5% from here on out, maxing out our one after tax 401K and two ROTHs). We will be in the market for a small condo as soon as this housing craze calms down and pay it off in 15 years. The pension lump sum calculation (as of today) is 825K. Employer offers some health benefits for retirees with a set number of years in service which we may get.

If we are able to live in good health or at least have LTC insurance in place (which I need advice on), between SS & the 3.3M nest egg of which as little as possible is drawn down & with a paid for condo, will the money last him until 2089?

We may be drawing around 1% of the nest egg (30K / annum), provided we get at least 60% of the current SS benefit amount the SS site calculations claims we'll be able to draw at 67. We can wait until 70 to claim SS if we are able to meet our savings goals for cash on hand. But we'll be in REAL trouble if SS goes bankrupt by 2036 and we have to "eat" more than 2% of our retirement egg each year.

In addition to our retirement a/cs and the proceeds from sale of our condo at the surviving spouse's death that will be inherited by his trust, he will qualify for both SSDI & Medicare (assuming neither has gone bankrupt by then). My only fear is that he does not outlive his small inheritance by even a day

BTW, I did try some portfolio visualizer calculators but could not understand how interpret them. So pls help

OP, you have a singular very long-term focus on trying to be sure your son is provided for financially. A true parent! Trying to project and plan for such a long-term far future is no easy thing. As another poster suggested, it may be helpful for you and your family to sit down with a fee-only financial planner to help with financial projections. Your post lasers in on your financial worries for your son, and does not mention much about your family circumstances. Perhaps there are organizations or support groups for parents of disabled children which might be helpful for discussions of your worries, and might give you some knowledge of how other families are approaching similar worries for their children. And perhaps knowledge of resources, if any, that may be available in support for your child after you are gone. Best wishes for you.

 

[RetireeRobert]

My biggest concern is not if we will reach our retirement goal. My biggest concern is how to conserve whatever principle we end up with at retirement for our disabled son's use for his lifetime needs after we're gone.

OP, nowhere in this thread have I seen any mention of life insurance.

1) You and your spouse should look into and evaluate "2nd-to-die" life insurance policy with your son (or a trust for your son) as beneficiary. This type of policy pays off only after the second spouse has died. You can gain a lot of financial leverage to provide funds for your son, and peace of mind for yourselves.

Since it is based on two lives, it is somewhat cheaper and easier to get than the typical single life policy. Since you two are relatively young at this point, it will also be easier to qualify for health-wise than if you wait until you are older--and sicker!

2) One other suggestion, my wife (before she died) and I have a hybrid Life insurance/LTC policy which covered both of us under one policy. If benefits are never (or not all) used for LTC needs, then they (or remainder) are paid to beneficiary(s). Even this type of hybrid multi-purpose policy gave us some leverage on the life insurance aspect compared to the single premium we paid. One big plus for us was we knew if we never needed LTC than our kids would get the life insurance payout, and the premium we paid would not have been "wasted" rather it will have been multiplied.


I would urge you for sure to check out and consider how a "2nd-to-die" life insurance policy might assist you in assuring financial security for your son. It does not have to be the total answer, but it may go a long way as "part" of the answer to your son's eventual financial security. And ease your concerns.

Best wishes for you.

 

[TheWizard]

Life insurance as a supplement sounds good.

A 3% withdrawal rate from a nest egg should last indefinitely.

The OP doesn't say anything about the son's mental capacity and proven ability to manage money. If there's any danger of mismanagement due to over withdrawals or becoming a scam victim, then consideration should be given to annuitizing a major portion of the parents' nest egg upon their joint demise.
The annuity payout would be way more than 3% and could be structured with a fixed 2% increase each year...

 

[disneysteve]

OP, nowhere in this thread have I seen any mention of life insurance.

I was just coming on to post the same thing. I don't think life insurance has been mentioned. This is clearly a situation where insurance would solve a lot of the issues you are worried about.

 

[Koolau]

OP Because we had our kids very late in life (2 in our 40s) I carried all the group term life Megacorp offered. Turns out I didn't need it but it offered a significant level of peace of mind. I too bought one of the hybrid life/LTC policies, but not sure I'd recommend that route. Maybe better to keep them separate so you kind of know exactly what you are paying for.

If you do qualify for good rates on LTC insurance, it just might make sense for you since you don't want to "burn" up your stash, keeping yourself in a "facility." As mentioned earlier, LTC insurance has had some real issues, but maybe by now they've ironed out some of them. I'd say you have one more reason for LTC that most of us do not. AND you would (in theory) be insuring against a loss you could not cover yourself which is rule #1 with any insurance.

But balancing all this, you (probably) have time to be fairly aggressive in your investing - just be certain to fully diversify (domestic, non-hedged foreign, small/large cap, emerging markets, maybe REITs, maybe commodities, etc. etc.) AGAIN - please at least consider dropping a few hundred bucks getting some advice from a GOOD Fee-Only Certified Financial Planner - one that has helped others in your shoes.

Also, get help deciding how much you want to put into 401(k)s and tIRAs as well as ROTHs and after tax accounts. I can't give you advice except to say WE put way too much into the former and not enough into the latter. We'll likely end up paying MORE taxes in the long run. We always chuckle here about this being a 1st world problem but in your case, it could be your son's problem, so deal with it now (with HELP.) End of sermon as YMMV.

 

[RetireeRobert]

OP Because we had our kids very late in life (2 in our 40s) I carried all the group term life Megacorp offered. Turns out I didn't need it but it offered a significant level of peace of mind.

As to life insurance, I am not sure "group term" is the way to go for OP's far future situation. Rather permanent "whole life" policy that can serve its function far far into the future long after OP and spouse are retired would serve the lasting need. But certainly, "while" OP and spouse are working, any group term life and its favorable premium rates available could be utilized by OP as an additional financial leverage resource.

 

[Koolau]

As to life insurance, I am not sure "group term" is the way to go for OP's far future situation. Rather permanent "whole life" policy that can serve its function far far into the future long after OP and spouse are retired would serve the lasting need. But certainly, "while" OP and spouse are working, any group term life and its favorable premium rates available could be utilized by OP as an additional financial leverage resource.

I agree completely if we were talking an either or. I think OP needs both. In addition to the group term, I compromised and used one of the insurance "plans" that had lower premiums at the cost of cash accumulation for future insurance buys. MOST of these are structured so that, if you desire, you can up the cash value simply by sending more premium - so it can work almost as "permanent" or "cash value" life insurance - heh, heh, the policy had the word "flexible" in it.

Additionally, a lot of policies had (maybe still do) investments WITHIN them that at least gave the chance to extend the insurance for a very long time IF the investments turned out well. DW had one of these and her cash value eventually exceeded the death benefit! We 1031'd that into a (what used to be called a) SPDA - Single Premium Deferred Annuity. (Now that product starts with an M and is essentially a CD offered by an insurance co). Thank the good Lord, we did not have a special need such as OP has or I would have tried to add more permanent insurance.

ADDING the term insurance means that the breadwinner(s) will increase the stash whether they live to FIRE or die early during w*rking years. I'm guessing MOST here would typically recommend buying term and investing the difference. In the very special case of OP, I think some sort of cash-value (permanent) insurance makes more sense because you can't outlive it (well, I think mine potentially ends at age 100 or something like that - I forget.)

So yes - add term while w*rking to permanent or similar taken out as soon as you sense you might have the need for it. I'm betting that OP already has a bunch of insurance, but do not actually know. So YMMV.

 

[RetireeRobert]

OP did not say specifically their plans for management and handling of any funds left for their disabled son. Whether the son would be capable of managing them himself, or not. They may have that aspect covered already, but if not, certainly the idea of a trust and professional trust management should be considered. Are there other family members or trusted friends who would be willing and able to manage the funds on son's behalf is another alternative and consideration.

OP may find it helpful to consult with a trust/estates and disabled-care lawyer to lay out alternatives and advantages/disadvantages.

 

[Koolau]

OP did not say specifically their plans for management and handling of any funds left for their disabled son. Whether the son would be capable of managing them himself, or not. They may have that aspect covered already, but if not, certainly the idea of a trust and professional trust management should be considered. Are there other family members of trusted friends who would be willing and able to manage the funds on son's behalf is another alternative and consideration.

OP may find it helpful to consult with a trust/estates and disabled-care lawyer to lay out alternatives and advantages/disadvantages.

I do believe (without reviewing) that OP did mention a trust for his care. I could be wrong as I was once. YMMV