dex
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Oct 28, 2003
- Messages
- 5,105
With the turn down in the market and a broken shoulder; I have been working on my budget and financial projections. (So far it shows I'm OK.)
It might be helpful to others to see how I prepare a budget and forecast.
Let me know if you see any holes in my assumptions.
Objective of budget and financial projections – to see if I will have enough money to live the life I want - until death -85
Basics: 53, retired, single, no debt, House paid for – value not in any of the following calculations
All “From – to” below means 2009 to 2040
Budgeting:
I have a line item budget (includes taxes) for 2009 – I grow it at 4% per year after that and adjust it for known items – e.g. I have a no interest loan that expires in 2009; so I take that amount out in 2010.
I don’t use the 4% withdrawal rate because my budget is less.
Withdrawal rate from Non Deflated Base - From 2.3 to 3.7%
Withdrawal rate from Deflated Base - From 2.4 to 9.0%
Forecast:
The below might sound complicated but it really isn’t – I have a spread sheet set up for it.
Steps:
1.Compute current weighted returns (interest, dividends, etc - not estimated growth) for various investments in two categories – taxable accounts and tax deferred accounts.
e.g.for taxable account current interest/dividend = 4.4%; cash 2.5%; weighted average 3.63%
2.Add expected growth rates per year to the two accounts. So far I’m using 2009 10%; 20010 6%; 2011 4%; 2012 2%, 2013 forward only the weighted returns #1 above.
Compute the weighted average including the growth rate
So the total growth rate for 2009 is 9.8%
3.Yearly Projecting = Previous year total, less estimated spending budget, multiplied by weighted average (step 2)
4.Social Security – starting at 62 – growing at 2.5% per year
+++
Growth rates – 4.2% to 1.6% Before applying a deflation percentage
++++
Deflator 3%/year starting in 2007 = 100 to 265.5%
Growth rates after deflator 2009 1.2% to 2040 (1.4%)
I know one flaw is that there are no years with a negative growth rate.
++++++
I would be curious to know how others prepare their projections.
Other Info.
http://www.early-retirement.org/for...k-markets-and-how-i-keep-my-sanity-39423.html
It might be helpful to others to see how I prepare a budget and forecast.
Let me know if you see any holes in my assumptions.
Objective of budget and financial projections – to see if I will have enough money to live the life I want - until death -85
Basics: 53, retired, single, no debt, House paid for – value not in any of the following calculations
All “From – to” below means 2009 to 2040
Budgeting:
I have a line item budget (includes taxes) for 2009 – I grow it at 4% per year after that and adjust it for known items – e.g. I have a no interest loan that expires in 2009; so I take that amount out in 2010.
I don’t use the 4% withdrawal rate because my budget is less.
Withdrawal rate from Non Deflated Base - From 2.3 to 3.7%
Withdrawal rate from Deflated Base - From 2.4 to 9.0%
Forecast:
The below might sound complicated but it really isn’t – I have a spread sheet set up for it.
Steps:
1.Compute current weighted returns (interest, dividends, etc - not estimated growth) for various investments in two categories – taxable accounts and tax deferred accounts.
e.g.for taxable account current interest/dividend = 4.4%; cash 2.5%; weighted average 3.63%
2.Add expected growth rates per year to the two accounts. So far I’m using 2009 10%; 20010 6%; 2011 4%; 2012 2%, 2013 forward only the weighted returns #1 above.
Compute the weighted average including the growth rate
So the total growth rate for 2009 is 9.8%
3.Yearly Projecting = Previous year total, less estimated spending budget, multiplied by weighted average (step 2)
4.Social Security – starting at 62 – growing at 2.5% per year
+++
Growth rates – 4.2% to 1.6% Before applying a deflation percentage
++++
Deflator 3%/year starting in 2007 = 100 to 265.5%
Growth rates after deflator 2009 1.2% to 2040 (1.4%)
I know one flaw is that there are no years with a negative growth rate.
++++++
I would be curious to know how others prepare their projections.
Other Info.
http://www.early-retirement.org/for...k-markets-and-how-i-keep-my-sanity-39423.html