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Is Saving not Spending but Contributing
Old 04-15-2019, 04:32 PM   #1
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Is Saving not Spending but Contributing

A few of the RE calculators ask "savings rate" or contribution to portfolio. So, I enter total spending $100K/year. I'd like to know I can spend that much and be 100% safe in spending that much. I'll kick it up to $110, $120 as market improves.

We really only spend $70K/year. Does that $30K count as savings or contribution to the portfolio. The thing is, that money that we don't spend will stay invested. And those investments are kicking off dividends and we are reinvesting them.

I feel like the calculations are more complex than a simple spend/income/portfolio amount to begin with.
Do you really spend what you enter as "spend amount?" Or just testing the waters?

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Old 04-15-2019, 06:49 PM   #2
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I suggest you enter what you spend.

As far as "market improves", think market appreciates or grows. Hard to "improve" from being a few % from all-time highs.
I expect a pull-back at some point and think of spending in a range.

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Old 04-15-2019, 06:55 PM   #3
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Some calculators ask for contributions for those effectively still working, but spending for those retired.
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Old 04-16-2019, 04:39 AM   #4
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You are simply spending less so agree with entering what you actually spend.

Run both models, and compare results.

To me if the $100K model gives a green light it’s simply saying that you can spend that much if you want.

The $70K model just shows you any differences the lower spending makes over the long run.
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Old 04-16-2019, 05:55 AM   #5
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I do both. I put in what I actually spend as a starting point but the I bump it up until point of failure. This give me a sense of my cushion. I spend around $80K. Calculators so I’m good up to around $100K. Just a little bit of extra information to help me sleep well and to know I can splurge every now and then or handle an emergency. Don’t forget, your actual number needs to include lumpy expenses (e.g. a new car every 10 years) and taxes as you draw from your IRA/401K.
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