hpnutty
Recycles dryer sheets
This first question has to do with the amount we plan to pay for our next house and how this is playing out in my Firecalc results. I am trying to determine how much we can afford in this next house and what the impact would be to our annual spending level. When I increase the cost for the house significantly it doesn't change the spending level for a 95% success rate significantly. And I can't seem to understand why the impact is not higher.
Here are the specifics:
Portfolio: $3.2MM (3/4 tax deferred, 1/4 taxable)
Years: 37
SS $50k starting in 2025
$6k off-chart spending, inflation adjusted starting in 2019
Retiring in 2018, adding $60k between now and then
Total market portfolio 65/35 split, .15% investing fees
Lump sum pension distribution of $2MM in 2018
-> House purchase $400k in 2019
Using these numbers I get a $221k constant spending yielding a 95.4% success rate. If I increase the house purchase price to $500k I get a $217k constant spend with the same 95.4% success rate.
So I pay $4k a year for 20% more house? Does that seem reasonable?
The second question is how to pay for the house. Using the equity in our pay-off current house ($250k), I plan to add $400 of the $800k in our taxable portfolio to establish the all-in budget of $650k for a cash purchase. Does that seem reasonable or can you suggest a better way?
Last question: I've set our annual spend budget at $150K. If we increase the house purchase budget as in the scenario above an additional $100k, that leaves $300k in the taxable portfolio to start retirement before withdrawals. How much liquidity should I have in a $5MM portfolio where most of it is in tax deferred 401K and traditional IRAs?
TIA for your insights!
HP
Here are the specifics:
Portfolio: $3.2MM (3/4 tax deferred, 1/4 taxable)
Years: 37
SS $50k starting in 2025
$6k off-chart spending, inflation adjusted starting in 2019
Retiring in 2018, adding $60k between now and then
Total market portfolio 65/35 split, .15% investing fees
Lump sum pension distribution of $2MM in 2018
-> House purchase $400k in 2019
Using these numbers I get a $221k constant spending yielding a 95.4% success rate. If I increase the house purchase price to $500k I get a $217k constant spend with the same 95.4% success rate.
So I pay $4k a year for 20% more house? Does that seem reasonable?
The second question is how to pay for the house. Using the equity in our pay-off current house ($250k), I plan to add $400 of the $800k in our taxable portfolio to establish the all-in budget of $650k for a cash purchase. Does that seem reasonable or can you suggest a better way?
Last question: I've set our annual spend budget at $150K. If we increase the house purchase budget as in the scenario above an additional $100k, that leaves $300k in the taxable portfolio to start retirement before withdrawals. How much liquidity should I have in a $5MM portfolio where most of it is in tax deferred 401K and traditional IRAs?
TIA for your insights!
HP