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12-08-2012, 12:41 PM
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#21
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Full time employment: Posting here.
Join Date: Apr 2011
Location: Castro Valley
Posts: 788
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I have friends that ask me when they can reitre or how much money they need to save all the time. Without doing an in depth analysis, here's what I say to them:
1) Determine the annual amount of money you need to sustain your total standard of living.
2) Add up all income sources at retirement (i.e. SS, pension rentals etc.)
3) Subtract #2 from #1 and the difference is what your investments need to supply.
4) For a 20 year retirement multiply #3 by 22, for a 30 year retirement multiply #3 by 28 and for a 40 year retirement multiply #3 by 35.
Simple and straight forward. However, most people have a hard time calculating #1.
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12-08-2012, 01:21 PM
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#22
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Thinks s/he gets paid by the post
Join Date: May 2005
Location: Texas
Posts: 1,038
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Quote:
Originally Posted by jkern
I have friends that ask me when they can reitre or how much money they need to save all the time. Without doing an in depth analysis, here's what I say to them:
1) Determine the annual amount of money you need to sustain your total standard of living.
2) Add up all income sources at retirement (i.e. SS, pension rentals etc.)
3) Subtract #2 from #1 and the difference is what your investments need to supply.
4) For a 20 year retirement multiply #3 by 22, for a 30 year retirement multiply #3 by 28 and for a 40 year retirement multiply #3 by 35.
Simple and straight forward. However, most people have a hard time calculating #1.
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Yes, its just that simple. Wonder why more people won't take the time? I guess some just like being wage slaves.
__________________
In theory, theory and practice are the same. In practice, they are not.
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12-08-2012, 04:18 PM
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#23
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Thinks s/he gets paid by the post
Join Date: Jul 2011
Location: The Bay Area
Posts: 2,736
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Quote:
Originally Posted by Katsmeow
The book sounds interesting but from this I get the idea he is one of those who doesn't think anyone should ever consider SS in deciding whether to retired. He seems to think that the only income one has is from portfolio.
This also doesn't seem to consider what if there are two of you.
For example, DH's SS is a little over $22k a year and mine will probably be a little more - for sake of argument, say $25k a year. That's $47k. So why would someone with that SS need $1 million in order to have an income of $50k a year?
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Not really.
On pp#250-251 he lays out a formula that includes: portfolio income, SS, pension(s), home equity, inheritance, and part time work.
Again, this book is light on numbers and heavy on philosophy but, the numbers it does have seem very sound to me.
__________________
You may be whatever you resolve to be.
100% x 10% > 10% x 100%
Small pensions & SS cover essentials
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12-08-2012, 09:22 PM
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#24
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Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 4,872
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Quote:
Originally Posted by jkern
I have friends that ask me when they can reitre or how much money they need to save all the time. Without doing an in depth analysis, here's what I say to them:
1) Determine the annual amount of money you need to sustain your total standard of living.
2) Add up all income sources at retirement (i.e. SS, pension rentals etc.)
3) Subtract #2 from #1 and the difference is what your investments need to supply.
4) For a 20 year retirement multiply #3 by 22, for a 30 year retirement multiply #3 by 28 and for a 40 year retirement multiply #3 by 35.
Simple and straight forward. However, most people have a hard time calculating #1.
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Would this work for ER where you have retirement years without SS?
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”
Current AA: 75% Equity Funds / 15% Bonds / 5% Stable Value /2% Cash / 3% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
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12-08-2012, 10:02 PM
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#25
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Full time employment: Posting here.
Join Date: Dec 2010
Posts: 576
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You can have a house in a good gated golf community (the Houston area), travels and in general lives well, without having to be in the rich or even kind of rich category, if you cut out private jet, sitting on the board or owning a second home.
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12-08-2012, 10:21 PM
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#26
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Moderator Emeritus
Join Date: Dec 2002
Location: Oahu
Posts: 26,856
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Go for longevity-- in about a decade that $20M will only be worth $15M...
__________________
*
Co-author (with my daughter) of “Raising Your Money-Savvy Family For Next Generation Financial Independence.”
Author of the book written on E-R.org: "The Military Guide to Financial Independence and Retirement."
I don't spend much time here— please send a PM.
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12-09-2012, 06:16 AM
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#27
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Thinks s/he gets paid by the post
Join Date: May 2005
Location: Texas
Posts: 1,038
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Quote:
Originally Posted by bondi688
You can have a house in a good gated golf community (the Houston area), travels and in general lives well, without having to be in the rich or even kind of rich category, if you cut out private jet, sitting on the board or owning a second home.
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I'm too rich right now to sit on a board!
For some people money is not enough. They have to have status and recognition too.
__________________
In theory, theory and practice are the same. In practice, they are not.
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12-09-2012, 08:05 AM
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#28
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gone traveling
Join Date: Apr 2009
Location: Eastern PA
Posts: 3,851
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Quote:
Originally Posted by Lazarus
For some people money is not enough. They have to have status and recognition too.
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True.
Those are the one's who go into politics ...
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