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Old 08-19-2018, 03:40 PM   #21
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Aah, I wouldn't use it to retire but it might make interesting conversation.
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Old 08-19-2018, 05:18 PM   #22
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I find two issues with it just from a basic standpoint.

According to this, DH and I both should still be working full time. Why? We don't get to over 1000 without using SS income. That seems absurd.

On the other hand, if I decide to only include in this income needed after taking into account SS then we have a number well over 2000. That is absurd also. This is based upon net worth.. Net worth includes home equity. I do think that is a "real" part of net worth but it is not something I can actually spend each year so I don't include it in how much I can withdraw.
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Old 08-19-2018, 05:45 PM   #23
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Originally Posted by Katsmeow View Post
I find two issues with it just from a basic standpoint.

According to this, DH and I both should still be working full time. Why? We don't get to over 1000 without using SS income. That seems absurd.

On the other hand, if I decide to only include in this income needed after taking into account SS then we have a number well over 2000. That is absurd also. This is based upon net worth.. Net worth includes home equity. I do think that is a "real" part of net worth but it is not something I can actually spend each year so I don't include it in how much I can withdraw.
And thus is why this study is kind of silly.
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Old 08-20-2018, 07:06 AM   #24
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4% rule says that is not enough.
+1

Using our numbers, the formula under discussion seems very optimistic to me.
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Old 08-20-2018, 08:11 AM   #25
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Works for me... using this calculation leaves my net worth intact @ SS life expectancy.... exactly the same as Firecalc.
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Old 08-20-2018, 08:39 AM   #26
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How do you put a “net worth” number on a recurring income? Say you have $1000/mo income what is that equivalent to?
You don't. You would apply the recurring income to reduce your monthly expenses by $1,000.

For example, the formula give in this thread is "Multiply Age x Networth, then divide by Yearly Expenses". In this case, if you are 60, have a net worth of $1,000,000, yearly expenses of $60,000, but also have reoccurring income of $1,000/month; your formula would be (60*1,000,000)/(60,000-12,000)=1,250
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Old 08-20-2018, 08:45 AM   #27
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Originally Posted by cyber888 View Post
I

Multiply Age x Networth, then divide by Yearly Expenses

If it is greater than 1,000, you can retire.
Age is the average between husband and wife.

What do you guys think.

Does that mean retire for 20 yrs? 30yrs? 40yrs? I think that part is left out.
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Old 08-20-2018, 09:57 AM   #28
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Does that mean retire for 20 yrs? 30yrs? 40yrs? I think that part is left out.
That is taken care of with your age multiplier...

According to this formula, if you need $50,000/year and have $1,000,000:
If you are 40, your result is 800, not enough to retire...
If you are 60, your result is 1,200, enough to retire.

Granted, if you are 60 and plan to live to 120, you do not have enough. This assumes you will be passing away around the standard lifespan.
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Old 08-20-2018, 02:31 PM   #29
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Granted, if you are 60 and plan to live to 120, you do not have enough. This assumes you will be passing away around the standard lifespan.
Exactly... current age is used to calculate life expectancy, for purposes of the formula. For instance, if you are 60 now, your SS life expectancy would be 83, and that is the age used in the formula.

Most calculators that we use rely on probability.
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Old 08-20-2018, 06:48 PM   #30
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IMHO people here are way too optimistic about their lifespan.

So a 6% WR @ age 60...isn't likely to matter.

I favor that "death" retirement calculator...for me...1/3 odds by 75, 2/3 odds by 85.
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Old 08-20-2018, 06:58 PM   #31
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What asset allocation is this formula based on?
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Old 08-21-2018, 07:01 AM   #32
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Who is going to model this and make a graph? I am too lazy.
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Old 08-21-2018, 09:28 AM   #33
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Who is going to model this and make a graph? I am too lazy.
x is age, y is the number of years spending saved (net worth / annual expenses). This rule says if you're in one of the brown areas, don't retire. The line starting at y=25 is the "rule".
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Old 08-21-2018, 09:44 AM   #34
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I get 7260. I guess we're OK?
Perhaps we need to up spending.
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Old 08-21-2018, 09:54 AM   #35
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I get 7260. I guess we're OK?
Perhaps we need to up spending.



You probably should!!
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Old 08-21-2018, 09:57 AM   #36
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This formula leaves out an important variable. Asset Allocation is just as important.
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Old 08-21-2018, 02:51 PM   #37
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x is age, y is the number of years spending saved (net worth / annual expenses). This rule says if you're in one of the brown areas, don't retire. The line starting at y=25 is the "rule".
Out of chart .. I'm 38.
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Old 08-21-2018, 05:46 PM   #38
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Age x Networth / Yearly Expenses. >1000

A little Algebra I to solve for Yearly Expenses
Age x Networth / (Yearly Expenses * 1000) > 1

Age x Networth / 1000 > Yearly Expenses

So, if Age = 60 and Networth = $1,000, then (Max) Yearly Expenses needs to be < $60,000. Age 40 yields $40,000.

I like this formula, I can spend more as I am over 40.
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Old 08-21-2018, 07:14 PM   #39
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Out of chart .. I'm 38.
My bad! I just put arbitrary limits. You're such a kid T!
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Old 08-22-2018, 09:32 PM   #40
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Age x Networth / Yearly Expenses. >1000

A little Algebra I to solve for Yearly Expenses
Age x Networth / (Yearly Expenses * 1000) > 1

Age x Networth / 1000 > Yearly Expenses

So, if Age = 60 and Networth = $1,000, then (Max) Yearly Expenses needs to be < $60,000. Age 40 yields $40,000.

I like this formula, I can spend more as I am over 40.


Hehe. You mean Networth = $1,000,000. That works to determine expenses
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