For those of you with a DBP

gayl

gayl

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I have a # in my head (40×age) that I try to reach despite only spending 60% of my monthly net. As posted on other threads, I'm slowly bringing that % up by gifting to kids + charities ... it just takes time after decades of saving & learning to be frigal. Am I alone?

Do you also have a target #?
 
Huh?

I'd be happy to help but I don't understand your question. Could you clarify what number you're talking about? 40 times your age? What are the units? Is that how many millions you want in your nest egg? :confused:
 
No we don't use a target #, excess cash at the end of the month is moved to higher yielding savings accounts and periodically to a CD. The excess funds are really just deferred spending accounts since that money will be spent if not this year, within the next 5 years or so. Ideally we would like to have about 50k in these accounts, maybe that is our target # since we really never reach it. The 50k might be a bit much but that is because we have several known large expenses that we cannot defer for ever... (new roof and pool resurface) . We also have a HELOC that we will draw from when the time comes. Our pensions cover all of our living expenses, its all the extras that we use rental and note income for. We're not leaving a legacy, we can't take it with us so that makes spending a little easier for us. (DW doesn't need to rationalize at all)
 
Mdlerth said:
I'd be happy to help but I don't understand your question. Could you clarify what number you're talking about? 40 times your age? What are the units? Is that how many millions you want in your nest egg? :confused:
Click to expand...
I want 40× age in my investment accounts as that is what my 7 grandkids + 2 kids will be inheriting. So the "unit" is my current age which will hopefully go up several times b4 I die.

And yes I'm serious. Plus I'm not leaving to their significant others or spouses (although I really like daughter in law + grandson's boyfriend)

That's my shifting target goal, others have their own
 
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Still unclear. If you are 50 you want $2 million and $2.4 million when you are 60, $2.8 million at age 70, etc.?

If so, I've never heard of anyone thinking of it that way.

What is DBP? I thought defined benefit pension but it can't be as I don't see what a pension has to do with your post.
 
I still don't get it. If you were 100 it would only be 4 grand.
 
I'm mystified by the OP as well.

40 what?

What is a DBP?

And you say you're "slowly bringing that % up by gifting to kids + charities".
What % of what?
And how does gifting raise it?

I'm afraid your OP has way too many assumptions in it. Probably crystal clear to you, but not to me. How about spelling it out for us?
 
RobbieB said:
I still don't get it. If you were 100 it would only be 4 grand.
Click to expand...
Lol, who needs money at 100? Baby food is cheap.


gayl said:
I have a # in my head (40×age) that I try to reach despite only spending 60% of my monthly net. As posted on other threads, I'm slowly bringing that % up by gifting to kids + charities ... it just takes time after decades of saving & learning to be frigal. Am I alone?

Do you also have a target #?
Click to expand...

Can you define the DBP? I thought you meant a pension like mine, but I can not make it fit into the equation. thanks:confused:
 
At 70 it would be 2.8 million, at 80 it would be 3.2m, at 100 it would be 4m. Letting investments grow / compound. I'm at 40×age so I'm putting investment dividends into charity (as suggested on another thread).

DBP = defined benefit pension = 40% to investments / 60% spending.

So the reason why I wondered how others receiving a defined benefit pension with a cola figure in planning their legacy accounts is that others who do not have a defined benefit pension plan may not have the ability to establish legacy accounts
 
gayl said:
.... So the "unit" is my current age which will hopefully go up several times b4 I die. ...
Click to expand...

In addition to all the other questions, you expect your age to go up several times? What is your age? If 50 YO, going up 'several times' would be ages 100 and 150 and 200.

DBP, gifting? :confused:

double :confused:

-ERD50
 
gayl said:
At 70 it would be 2.8 million, at 80 it would be 3.2m, at 100 it would be 4m. Letting investments grow / compound. I'm at 40×age so I'm putting investment dividends into charity (as suggested on another thread).

DBP = defined benefit pension = 40% to investments / 60% spending.

So the reason why I wondered how others receiving a defined benefit pension with a cola figure in planning their legacy accounts is that others who do not have a defined benefit pension plan may not have the ability to establish legacy accounts
Click to expand...

OK, I understand the part of DBP, mine doesn't have a cola. I spend about 60 %, but with inflation it will get eaten away. So I dont qualify to answer this. Maybe the military folks with cola'd pensions are the target audience here.
 
gayl said:
.... others who do not have a defined benefit pension plan may not have the ability to establish legacy accounts
Click to expand...

I think that is a very false premise. Many people here spend much less than they earn even in retirement.

If one retired at 50 with $2 million and had $4 million at age 100 that is only 1.4% growth a year... a balanced portfolio will grow more than that even after withdrawals.... no need to add savings to get to the numbers that you want.
 
Why are you putting investment dividends to charity if your goal is to accumulate money to leave to heirs?
 
In my perfect world, my last check I write will bounce, and my credit cards will be maxed out.

I have no kids, only two nieces and a nephew. I am not leaving anything if I can help it.
 
We are not planning to leave anything behind either. This is our time to enjoy and spend our $.
 
badatmath said:
Why are you putting investment dividends to charity if your goal is to accumulate money to leave to heirs?
Click to expand...
IMHO I have a social responsibility to help those less fortunate. But it's also based upon another thread where that seem to be a great resolution on how to spend some of the money. Also I don't save 40% because I'm trying to build up anything, I save 40% because I don't know what to spend it on. The initial plan was a big family vacation every summer plus money for the kids for college. But the one already in college just got a free ride and the kids are traveling all over the world on their own money right now. Therefore the total amount seems to just go up without any help from me right now. Compounding works
 
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I too was confused by the initial wording but the issue is sort of clear after all the back and forth. I have a cola'd DPB that covers about 60% of my expenses and pull the other 40% from investments. Like you, I plan to leave an estate to the kids. I don't bother with a fixed number - I will see where the market goes. I do plan to start gifting to the kids and ratcheting up my charity giving if I get into my mid/late 70s and all is good with the economy. In the meantime I contribute modestly to charities along the lines I have always done and otherwise leave the portfolio intact to be sure we can continue to meet our needs and hopefully leave the legacy estate.
 
I am still confused. If you have a pension has nothing to do with if you are still saving in retirement. It is all about your expenses and the available money you have each month/year/whatever increment of time. If you have more money after spending is done, you can save. If less, than you need some withdrawal. Spend at the level you are comfortable with allowance for risk tolerance and sustainable withdrawal rate, and let the money sort out how it falls.

Leaving money for inheritance is a personal decision and choice. It also has nothing to do with having a pension or not. Having a pension to supply money each month/year might make it easier to leave an inheritance behind since you need less withdrawal each month/year.

I am totally confused about the 40xAge thing. There is no units besides years. It is not a financial unit like dollars; or even a percentage to be used against some dollar value. At least the way it is defined by OP. Call it a part of me being an engineer and able to understand math, this 40xAge thing has me baffled.

Good for anyone that has sufficient pension that it covers all of your spending and you can still save in retirement.
 
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