|
|
10-05-2015, 05:26 PM
|
#21
|
Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 4,872
|
Yes my plan is to buy into my state's pension with 403b and 457 funds and that ,along with rental income, provides a generous income floor for my frugal lifestyle. I'll do IRA to ROTH conversions from age 55 to 70 up to the top of the 15% tax bracket. My plan is to use the ROTH as the core of my estate to leave to my nieces in the UK as its tax free in both the US and the UK. I'll take dividends and TIAA-Traditional interest from taxable and 401a accounts if necessary, always trying to stay inside the 15% tax bracket to avoid tax on the dividends.
__________________
“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
|
|
|
|
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!
Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!
You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!
|
10-05-2015, 06:04 PM
|
#22
|
Thinks s/he gets paid by the post
Join Date: Jul 2006
Location: Denver
Posts: 3,519
|
Quote:
Originally Posted by audreyh1
Not impractical at all. I manage just fine.
|
+1.
Having headroom in your spending is essential.
If all your expenses are non-discretionary, a drop in your portfolio will send you back to work.
|
|
|
10-05-2015, 06:27 PM
|
#23
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2006
Location: west coast, hi there!
Posts: 8,809
|
Quote:
Originally Posted by walkinwood
+1.
Having headroom in your spending is essential.
If all your expenses are non-discretionary, a drop in your portfolio will send you back to work.
|
Good point about "non-discretionary". Actually, come to think of it, that was kind of what I was getting at above.
We should probably all be mentioning the % discretionary in our numbers when sharing here. But then again, that might get into "envy" territory. And some of us don't have expensive tastes even if we could afford it. For example, I never buy wine much above $9 a bottle.
|
|
|
10-05-2015, 07:02 PM
|
#24
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,145
|
Quote:
Originally Posted by walkinwood
+1.
Having headroom in your spending is essential.
If all your expenses are non-discretionary, a drop in your portfolio will send you back to work.
|
And retiring early is not a good idea if you have no slack.
Someone considering fixed percent might want to be able to handle a 25% drop in withdrawn income any given year or have built up a buffer to help out in years where the withdrawal drops.
__________________
Retired since summer 1999.
|
|
|
10-05-2015, 10:04 PM
|
#25
|
Full time employment: Posting here.
Join Date: Apr 2015
Posts: 903
|
Quote:
Originally Posted by audreyh1
OK - I'll disclose my big secret. I practice a form of "spending smoothing". If my portfolio has a big increase one year, say 10%, my withdrawal increases by 10% - that's like a 10% raise.
But I don't automatically increase my spending by 10%, but let it increase more gradually over the years. I let the excess build to help fund future years when I have to take a "pay cut". This is just being prudent, IMO. Lean years, fat years, etc.
|
That seems a great idea. Curious, where do you keep the extra withdrawals? Just cash or cash equivalent?
Quote:
Originally Posted by audreyh1
And retiring early is not a good idea if you have no slack.
Someone considering fixed percent might want to be able to handle a 25% drop in withdrawn income any given year or have built up a buffer to help out in years where the withdrawal drops.
|
I think for someone planning to ER, having a nest egg of 30-35x of essential expenditures might be prudent. Granted, that doesn't take SS or pensions into account.
|
|
|
10-05-2015, 10:32 PM
|
#26
|
Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 4,872
|
Quote:
Originally Posted by hnzw_rui
I think for someone planning to ER, having a nest egg of 30-35x of essential expenditures might be prudent. Granted, that doesn't take SS or pensions into account.
|
Maybe subtract SS and pensions etc from your income requirements and then times by 30.....although that seems very conservative to me
__________________
“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
|
|
|
10-06-2015, 03:31 AM
|
#27
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,145
|
Quote:
Originally Posted by hnzw_rui
That seems a great idea. Curious, where do you keep the extra withdrawals? Just cash or cash equivalent?
|
Short-term CDs, high yield savings. Nothing volatile as these are funds we could tap into within a few years.
__________________
Retired since summer 1999.
|
|
|
10-06-2015, 03:45 AM
|
#28
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,145
|
Quote:
Originally Posted by hnzw_rui
I think for someone planning to ER, having a nest egg of 30-35x of essential expenditures might be prudent. Granted, that doesn't take SS or pensions into account.
|
One of our long time posters, cut-throat, thought that essential expenses minus pensions/SS should only be half of expected income from the portfolio for an ER. This implies a 50x essential expenses (minus pension/SS) for the 4% rule.
In other words, an ER should have the flexibility to cut their (non pension/SS) spending in half if they really, really had to. Otherwise they might have to face returning to work if they hit a bad stretch right after retiring.
I don't know if we have that much slack, as we have no pensions and are still many years from drawing SS. But we do have a lot of discretionary spending, plus extra funds accumulated to help weather years when our withdrawals fall short.
__________________
Retired since summer 1999.
|
|
|
10-06-2015, 06:35 AM
|
#29
|
Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 4,872
|
Quote:
Originally Posted by audreyh1
One of our long time posters, cut-throat, thought that essential expenses minus pensions/SS should only be half of expected income from the portfolio for an ER. This implies a 50x essential expenses (minus pension/SS) for the 4% rule.
In other words, an ER should have the flexibility to cut their (non pension/SS) spending in half if they really, really had to. Otherwise they might have to face returning to work if they hit a bad stretch right after retiring.
I don't know if we have that much slack, as we have no pensions and are still many years from drawing SS. But we do have a lot of discretionary spending, plus extra funds accumulated to help weather years when our withdrawals fall short.
|
The size of the non-ss/pensions spending requirement should factor in.
__________________
“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
|
|
|
10-06-2015, 06:51 AM
|
#30
|
Thinks s/he gets paid by the post
Join Date: Apr 2012
Location: Nashville
Posts: 2,506
|
Quote:
Originally Posted by hnzw_rui
...
I think for someone planning to ER, having a nest egg of 30-35x of essential expenditures might be prudent. Granted, that doesn't take SS or pensions into account.
|
Much like everything else, "it depends." We are planning for 4% fixed percentage withdrawals. 1% would cover our "essential" expenses, even more so by the longitudinal standards. But, our purpose/plan for retiring early will be 1) to see each other more, at last; 2) to dive, travel, dive, and travel for about a decade, then buy an RV and along with the outdoors, hit the best restaurant(s) in every city we pass..... If we went with 30-35 times essential expenditures, life would not be as much fun. (although we'd be retired already!)
__________________
OMY * 3 2ish Done 7.28.17
|
|
|
10-06-2015, 08:06 AM
|
#31
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,145
|
Quote:
Originally Posted by nun
The size of the non-ss/pensions spending requirement should factor in.
|
Isn't that what I was talking about?
__________________
Retired since summer 1999.
|
|
|
10-06-2015, 08:10 AM
|
#32
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,145
|
Quote:
Originally Posted by 2017ish
Much like everything else, "it depends." We are planning for 4% fixed percentage withdrawals. 1% would cover our "essential" expenses, even more so by the longitudinal standards. But, our purpose/plan for retiring early will be 1) to see each other more, at last; 2) to dive, travel, dive, and travel for about a decade, then buy an RV and along with the outdoors, hit the best restaurant(s) in every city we pass..... If we went with 30-35 times essential expenditures, life would not be as much fun. (although we'd be retired already!)
|
I think it's pretty clear that "essential" covers the bare bones basic fixed costs of living - no travel, extra vehicles, eating out, etc. Just basics - housing, essential utilities, taxes, minimal food budget, etc.
__________________
Retired since summer 1999.
|
|
|
10-06-2015, 08:38 AM
|
#33
|
Full time employment: Posting here.
Join Date: Apr 2015
Posts: 903
|
Quote:
Originally Posted by audreyh1
One of our long time posters, cut-throat, thought that essential expenses minus pensions/SS should only be half of expected income from the portfolio for an ER. This implies a 50x essential expenses (minus pension/SS) for the 4% rule.
In other words, an ER should have the flexibility to cut their (non pension/SS) spending in half if they really, really had to. Otherwise they might have to face returning to work if they hit a bad stretch right after retiring.
|
I agree. Lol, cut-throat's even more conservative than I am. Then again, after factoring in SS and pension, maybe the numbers even out. Besides, returning to work might not be an option for some (e.g. bad health, caring for a sick parent, etc) so I personally wouldn't consider that as one of my contingency plans.
Quote:
Originally Posted by 2017ish
Much like everything else, "it depends." We are planning for 4% fixed percentage withdrawals. 1% would cover our "essential" expenses, even more so by the longitudinal standards. But, our purpose/plan for retiring early will be 1) to see each other more, at last; 2) to dive, travel, dive, and travel for about a decade, then buy an RV and along with the outdoors, hit the best restaurant(s) in every city we pass..... If we went with 30-35 times essential expenditures, life would not be as much fun. (although we'd be retired already!)
|
The 30-35x I'm thinking is the minimum you'd have to accumulate. Obviously, you'd need a bigger nest egg if you have big plans.
|
|
|
10-06-2015, 09:33 AM
|
#34
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2006
Location: west coast, hi there!
Posts: 8,809
|
Also
Quote:
Originally Posted by audreyh1
I think it's pretty clear that "essential" covers the bare bones basic fixed costs of living - no travel, extra vehicles, eating out, etc. Just basics - housing, essential utilities, taxes, minimal food budget, etc.
|
I track our fun + discretionary items carefully. But not weekly eating out or fairly minor $100 purchases. So a new refrigerator would be in the discretionary category but not a hedge trimmer. I suppose if we were in a catastrophic economic situation I'd change that definiton but not for a bad sequence like the one that started in 1968 (to about 1982).
|
|
|
10-06-2015, 11:05 AM
|
#35
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2013
Location: Les Bois
Posts: 5,761
|
thought of this thread when I was reading this article that mentioned Pfau is now recommending a 2% SWR? Warning: contains a recommendation to buy SPIAs
http://finance.yahoo.com/news/2-ways...110041158.html
__________________
You can't be a retirement plan actuary without a retirement plan, otherwise you lose all credibility...
|
|
|
10-06-2015, 12:11 PM
|
#36
|
Full time employment: Posting here.
Join Date: May 2015
Location: Atlanta suburbs
Posts: 633
|
Quote:
Originally Posted by Big_Hitter
|
I just saw that from the referenced article
"What is that SWR these days? Well, it’s probably less than the historical 4%. In fact, Wade Pfau recently argued that it’s more like 2% . "
I guess the promotion and selling of annuities is so important that they have to make all alternatives look terrible. It shows the flaw in research papers in any field, not just Wade's papers - who is paying the researcher to research the topic and write about it? Doctors push drugs when the pharma company pays the doctor; tobacco companies pay researchers to write good things about them; the list can go on.
|
|
|
10-06-2015, 01:16 PM
|
#37
|
Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 4,872
|
Quote:
Originally Posted by DEC-1982
I just saw that from the referenced article
"What is that SWR these days? Well, it’s probably less than the historical 4%. In fact, Wade Pfau recently argued that it’s more like 2% . "
I guess the promotion and selling of annuities is so important that they have to make all alternatives look terrible. It shows the flaw in research papers in any field, not just Wade's papers - who is paying the researcher to research the topic and write about it? Doctors push drugs when the pharma company pays the doctor; tobacco companies pay researchers to write good things about them; the list can go on.
|
When research commissioned by a company produces a result favorable to that company questions must be asked. So has anyone shown Pfau's methods or assumptions to be flawed? Is he being honest in his research? or are you really accusing him of publishing incorrect results just because of his funding source.
People immediately shrink from annuities, but is there any technical reason to dismiss his results, or is it just an aversion to annuities and an assumption that he is being dishonest for a pay check?
__________________
“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
|
|
|
10-06-2015, 01:27 PM
|
#38
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2007
Location: New Orleans
Posts: 47,500
|
Quote:
Originally Posted by DEC-1982
I just saw that from the referenced article
"What is that SWR these days? Well, it’s probably less than the historical 4%. In fact, Wade Pfau recently argued that it’s more like 2% . "
I guess the promotion and selling of annuities is so important that they have to make all alternatives look terrible. It shows the flaw in research papers in any field, not just Wade's papers - who is paying the researcher to research the topic and write about it? Doctors push drugs when the pharma company pays the doctor; tobacco companies pay researchers to write good things about them; the list can go on.
|
+1 Personally I would advocate caution and abundant application of critical thinking skills before swallowing what Pfau (or anyone else) has to say about investing.
There's a lot of money in retirement nesteggs, and everyone and his brother wants to get his/her hands on yours. Spammers included, for example.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities. - - H. Melville, 1851.
Happily retired since 2009, at age 61. Best years of my life by far!
|
|
|
10-06-2015, 02:01 PM
|
#39
|
Full time employment: Posting here.
Join Date: May 2015
Location: Atlanta suburbs
Posts: 633
|
Quote:
Originally Posted by nun
When research commissioned by a company produces a result favorable to that company questions must be asked. So has anyone shown Pfau's methods or assumptions to be flawed? Is he being honest in his research? or are you really accusing him of publishing incorrect results just because of his funding source.
People immediately shrink from annuities, but is there any technical reason to dismiss his results, or is it just an aversion to annuities and an assumption that he is being dishonest for a pay check?
|
In all fairness to Pfau, I need to find the article where Pfau says SWR needs to be around 2%. Just because a Money article says Pfau said that doesn't mean Pfau actually said that.
What got me riled up is this mention of 2% SWR in the same article as annuities.
The S&P500 Index ETF delivers about 2% (slightly higher today). There is no guarantee that it will stay at 2% for the next 30-45 years; it might go lower and it might go higher; and it probably will vary. But if you use the approx 2% dividend for your SWR, you could fund your retirement to perpetuity.
|
|
|
10-06-2015, 02:13 PM
|
#40
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,021
|
Quote:
Originally Posted by DEC-1982
In all fairness to Pfau, I need to find the article where Pfau says SWR needs to be around 2%.
|
Possibly the Pfau article from May 2012 discussed in this thread?
http://www.early-retirement.org/foru...afe-61573.html
__________________
Numbers is hard
|
|
|
|
|
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
|
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
|
» Recent Threads
|
|
|
|
|
|
|
|
|
|
|
|
|
» Quick Links
|
|
|