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Old 11-30-2007, 03:47 AM   #21
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Originally Posted by CyclingInvestor View Post
The $$ I accumulated from the almost stress-free extra 2 years of work was well worth it. The
fact that I will probably never need that money is not relevant. I do not think his product properly
takes this psychological factor into account.
I agree 100% with this. What counts is not just what you are likely to need; but what will happen to you if you turn out to need more than that "likely" figure. If you don't need it great, you have Ben Graham's margin of error. And if you do need it you will have avoided real worry and heartache by being sure that you have it. I think most of us on this board are compulsive enough to want to have this taken care of. I know I am.

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The variables are too great
Old 11-30-2007, 11:55 AM   #22
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The variables are too great

to say much about it. Most people save next to nothing because they are poor and will rely on SS alone. Some have ample pensions and don't need to save anything. Savers are inclined to over save because they have to rely on themselves and like being wealthy. I saved between 25% and 50% of income while working, but due to the shortness of my career, it did not amount to over saving at all. My expenses hardly changed after retirement but they are still much less than my working income. We can plan, but many things can throw our plans off track, so those reliant upon themselves should save more for these contingencies.

The point of early retirement is saving early to allow compounding work for you and not have to work.
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Old 11-30-2007, 12:52 PM   #23
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Originally Posted by ats5g View Post
I thought the $200 version of the ESPlanner allowed Monte Carlo simulations with various investment portfolios? No?
- Alec
The $199 version does include Monte Carlo simulations & you can use a use canned asset classes or create your own. Then assemble them into one of 10 portfolios. You then assign the portfolios to your taxed & tax-deferred accounts. You can change portfolios as you age - for example, to get more conservative.

The outcomes from the MC analysis is useful to see how your AA choices affect the possible outcomes, but the "recommended" living standard is too high. As I said before, they are planning on a new feature which will take into account a users risk aversion to give a more realistic recommendation.

Larry and the chief developer participate in the user forum & they are very responsive to questions, suggestions etc. I find it quite educating. At $199 - its worth the education.

If you register at the site, you can download the user manual which gives you a lot of info on the program. Boy! I sound like a sales rep for ESPlanner - though not a very good one. I'm not affiliated to it in any way.
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Old 11-30-2007, 05:46 PM   #24
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My plan is to amass a nest egg suffficient to generate 100% of current spending (net of taxes), so that we will not need to change our lifestyle at all. I assume the w*rk related expenses will be replaced with more travel and/or health care. Our spending is relatively constant, while our income has varied up and down (but has always been above our spending).
Living an analog life in the Digital Age.
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Old 12-01-2007, 07:39 AM   #25
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I think the target of retiring on 80% of your income is historical and was intended for those with significant company pensions (which are pretty rare these days).

In modern days when (for many of us) our retirements depend so heavily on 401K's, our effective salary is lower due to the necessity of contributions to 401K, Roth, and savings.

For example, my take-home pay after deductions and TSP is 48% of my gross salary, and most of that goes to my Roth and savings. I presently live on less than 20% of my gross salary, which I suppose would be about 30% before taxes, SS, and so on.

My retirement goal is 45% (before taxes and deductions) of my present gross income. That would give me more money to spend in ER than I presently spend. I like that idea, since I will have more time to spend money; you can't really spend when you are sitting in a #$)(%*& cubicle all day long. Besides, I'd rather have the problem of too much money to spend than too little.
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