Safe and how much

[searcher]

Turning 60 (wife 55) and thinking about the ER, but it seems a scary. Keep hearing or maybe as it approaches noticing every negative comment about the economy. i.e. cutting social security, bear market ahead, etc.

I am assuming that if they cut Social Security it won't be by more than 25%, is this a reasonable assumption ?

Investments: 600K invested
Dodge & Cox balanced 25K
Oakmark Eqty Income 25K
T Rowe Capital Appreciation 50K
Undecided 70K
Insurance Company Stable Value 330K
I Bonds purchased 5 yrs ago 100K

The Stable Value and I bonds will produce a steady stream minimum of 2 - 3% above inflation.

If I have a minimum of 3% over inflation on all, we would be in pretty good shape. Is this realistic, very conservative amount if we get into a stagnit or bear market conditions ?

Require 49K
Pension 20K, 25% of SS = 11K @62, 18k from investments.

Am I missing something that would effect the withdrawal rate.
(I won't make it over 23 years and my wife 34, probably less the more I think about this stuff.)

 

[Michael]

I am assuming that if they cut Social Security it won't be by more than 25%,

The President's current plan won't cut Social Security for anyone over age 55, so you are probably safe there.

 

[JWR1945]

The Stable Value and I bonds will produce a steady stream minimum of 2 - 3% above inflation.

If I have a minimum of 3% over inflation on all, we would be in pretty good shape. Is this realistic, very conservative amount if we get into a stagnate or bear market conditions?

You can withdraw 3% (plus inflation) annually for 49.5+ years with complete safety.

What this requires is TIPS (and/or I bonds) that yield 2% above inflation. If so, you can withdraw 3% for 30 years and still have 59% of your principal (in real dollars). If you can match inflation (i.e., get a real interest rate of zero percent or better), this will last another 19.5 years.

Here are the links. They include the formulas:
3% SWR for 56 Years from Mon Oct 13, 2003.
http://nofeeboards.com/boards/viewtopic.php?t=1541
http://nofeeboards.com/boards/viewtopic.php?p=12536#12536

What you forgot is that you can draw down principal.

Have fun.

John R.

 

[mark]

Social Security estimates it can pay 73% of expected benefits, so I reduce my expected SS income by 27%, then subtract off the medicare B deduction (about $77 per month), and I treat it as fully income taxed since the laws affecting it are not indexed to inflation.