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08-19-2018, 03:40 PM
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#21
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Thinks s/he gets paid by the post
Join Date: Mar 2015
Location: philly
Posts: 1,219
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Aah, I wouldn't use it to retire but it might make interesting conversation.
__________________
My darling girl, when are you going to realize that being "normal" is not necessarily a virtue? it sometimes rather denotes a lack of courage~Aunt Francis
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08-19-2018, 05:18 PM
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#22
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Jul 2009
Posts: 5,308
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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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08-19-2018, 05:45 PM
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#23
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Jan 2018
Location: Tampa
Posts: 11,298
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 Quote:
Originally Posted by Katsmeow
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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And thus is why this study is kind of silly. 
__________________
TGIM
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08-20-2018, 07:06 AM
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#24
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Thinks s/he gets paid by the post
Join Date: Jul 2013
Posts: 1,884
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Quote:
Originally Posted by flyingaway
4% rule says that is not enough.
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+1
Using our numbers, the formula under discussion seems very optimistic to me.
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08-20-2018, 08:11 AM
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#25
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Gone but not forgotten
Join Date: Jul 2012
Location: Peru
Posts: 6,335
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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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08-20-2018, 08:39 AM
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#26
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Full time employment: Posting here.
Join Date: Jan 2011
Location: Southern Maine
Posts: 672
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Quote:
Originally Posted by Yarnstormer
How do you put a “net worth” number on a recurring income? Say you have $1000/mo income what is that equivalent to?
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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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08-20-2018, 08:45 AM
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#27
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Thinks s/he gets paid by the post
Join Date: Aug 2017
Location: Champaign
Posts: 4,726
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Quote:
Originally Posted by cyber888
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.
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Does that mean retire for 20 yrs? 30yrs? 40yrs? I think that part is left out.
__________________
"Do not go where the path may lead, go instead where there is no path and leave a trail."
Ralph Waldo Emerson
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08-20-2018, 09:57 AM
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#28
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Full time employment: Posting here.
Join Date: Jan 2011
Location: Southern Maine
Posts: 672
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Quote:
Originally Posted by Rianne
Does that mean retire for 20 yrs? 30yrs? 40yrs? I think that part is left out.
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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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08-20-2018, 02:31 PM
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#29
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Gone but not forgotten
Join Date: Jul 2012
Location: Peru
Posts: 6,335
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Quote:
Originally Posted by ChiliPepr
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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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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08-20-2018, 06:48 PM
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#30
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Thinks s/he gets paid by the post
Join Date: Jun 2017
Location: Western NC
Posts: 4,633
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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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08-20-2018, 06:58 PM
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#31
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Dryer sheet wannabe
Join Date: Jun 2017
Posts: 22
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What asset allocation is this formula based on?
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08-21-2018, 07:01 AM
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#32
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Thinks s/he gets paid by the post
Join Date: Feb 2014
Posts: 3,083
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Who is going to model this and make a graph? I am too lazy.
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08-21-2018, 09:28 AM
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#33
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Moderator
Join Date: Oct 2010
Posts: 10,723
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Quote:
Originally Posted by jim584672
Who is going to model this and make a graph? I am too lazy.
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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".
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08-21-2018, 09:44 AM
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#34
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Full time employment: Posting here.
Join Date: Aug 2013
Location: https://www.google.com
Posts: 750
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I get 7260. I guess we're OK? 
Perhaps we need to up spending.
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08-21-2018, 09:54 AM
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#35
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Thinks s/he gets paid by the post
Join Date: Apr 2011
Location: Madison
Posts: 1,337
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Quote:
Originally Posted by hesperus
I get 7260. I guess we're OK?
Perhaps we need to up spending. |
You probably should!!
__________________
Wild Bill shoulda taken more out of his IRA when he could have. . . .
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08-21-2018, 09:57 AM
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#36
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Thinks s/he gets paid by the post
Join Date: Jul 2006
Location: Denver
Posts: 3,519
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This formula leaves out an important variable. Asset Allocation is just as important.
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08-21-2018, 02:51 PM
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#37
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Thinks s/he gets paid by the post
Join Date: May 2014
Location: Utrecht
Posts: 2,650
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Quote:
Originally Posted by sengsational
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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Out of chart .. I'm 38.
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08-21-2018, 05:46 PM
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#38
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Thinks s/he gets paid by the post
Join Date: Feb 2007
Location: Upstate
Posts: 2,951
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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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08-21-2018, 07:14 PM
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#39
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Moderator
Join Date: Oct 2010
Posts: 10,723
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Quote:
Originally Posted by Totoro
Out of chart .. I'm 38.
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My bad! I just put arbitrary limits. You're such a kid T!
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08-22-2018, 09:32 PM
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#40
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Thinks s/he gets paid by the post
Join Date: Aug 2013
Posts: 1,972
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Quote:
Originally Posted by copyright1997reloaded
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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No to consumerism, Living a simple life, enjoying the experience - not the material stuff
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