How much do I need to retire?

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tibbitts
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Re: How much do I need to retire?

Post by tibbitts »

sailaway wrote: Sun Oct 17, 2021 5:44 pm
tibbitts wrote: Sun Oct 17, 2021 5:34 pm
I would still be concerned about 4% for 40 years.
But it isn't 4% for 40 years. It is 4% for 8 to 16 years, depending on their SS decisions, then the percent is reduced.
That's not unreasonable; I was really just responding to
4% rule says you need $3.5m
and saying that I wouldn't consider 4% for this situation, being 40 years. But I agree it's a valid point that if you the adjust the rate to 3.something% at 4.2m you get the same result. I was instinctively diving for cover at the mention of 4%.
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JoeRetire
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Re: How much do I need to retire?

Post by JoeRetire »

tibbitts wrote: Sun Oct 17, 2021 5:34 pm
JoeRetire wrote: Sun Oct 17, 2021 2:48 pm
tibbitts wrote: Sat Oct 16, 2021 7:37 pm
chassis wrote: Sat Oct 16, 2021 2:41 pm @Twiggsapproved
4% rule says you need $3.5m
Nobody would suggest the 4% "rule" for someone at the OP's age, assuming the OP projects average lifespans.
With an additional $700k and $35k/year starting at 70,
I would.
I didn't/don't see anything about $700k, at least in the original post - maybe somewhere else in the thread. I would still be concerned about 4% for 40 years.
In the original post: "We currently have 4.2m outside our home and 529."
"4% rule says you need $3.5m"

4.2m - 3.5m = $700k

At 70, $35k/year from Social Security.
Last edited by JoeRetire on Sun Oct 17, 2021 7:59 pm, edited 1 time in total.
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YeahBuddy
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Re: How much do I need to retire?

Post by YeahBuddy »

Looks like you can easily retire early. Congrats! This is a problem less than 1% of humans encounter.
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tibbitts
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Re: How much do I need to retire?

Post by tibbitts »

JoeRetire wrote: Sun Oct 17, 2021 7:48 pm
tibbitts wrote: Sun Oct 17, 2021 5:34 pm
JoeRetire wrote: Sun Oct 17, 2021 2:48 pm
tibbitts wrote: Sat Oct 16, 2021 7:37 pm
chassis wrote: Sat Oct 16, 2021 2:41 pm @Twiggsapproved
4% rule says you need $3.5m
Nobody would suggest the 4% "rule" for someone at the OP's age, assuming the OP projects average lifespans.
With an additional $700k and $35k/year starting at 70,
I would.
I didn't/don't see anything about $700k, at least in the original post - maybe somewhere else in the thread. I would still be concerned about 4% for 40 years.
In the original post: "We currently have 4.2m outside our home and 529."
"4% rule says you need $3.5m"

4.2m - 3.5m = $700k

At 70, $35k/year from Social Security.
Correct. As I explained although the math works out the same, I was (and still would be) diving for cover at the mention of 4% for 40 years, without even thinking about the math.
chassis
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Re: How much do I need to retire?

Post by chassis »

tibbitts wrote: Sun Oct 17, 2021 8:45 am
willthrill81 wrote: Sat Oct 16, 2021 8:51 pm
chassis wrote: Sat Oct 16, 2021 8:49 pm
tibbitts wrote: Sat Oct 16, 2021 7:37 pm
chassis wrote: Sat Oct 16, 2021 2:41 pm @Twiggsapproved
4% rule says you need $3.5m
Nobody would suggest the 4% "rule" for someone at the OP's age, assuming the OP projects average lifespans.

@tibbitts I would suggest the 4% "rule" for the OP. Why wouldn't you suggest it for the OP?
Because there's a good chance the OP and/or spouse will live for more than the 30 years that the '4% rule' is associated with. The OP is explicitly planning on a 40 year retirement.
Exactly. Also today the OP would have a somewhat globally diversified portfolio (assuming in the range of the 20% international vs. market weight debates for the moment), and evidence suggests that that would have lowered the 4% result in the original research to somewhere in the mid/upper-3% range.
@tibbitts have you personally modeled a 4% withdrawal rate with a detailed model?

You mentioned the 4% rule is associated with 30 years. And what is your point? Respectfully, so what?
HopeToGolf
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Re: How much do I need to retire?

Post by HopeToGolf »

Feel free to walk. Assuming your expense estimate is accurate and includes taxes, you are good to retire. Congratulations.
tibbitts
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Re: How much do I need to retire?

Post by tibbitts »

chassis wrote: Sun Oct 17, 2021 8:55 pm
tibbitts wrote: Sun Oct 17, 2021 8:45 am
willthrill81 wrote: Sat Oct 16, 2021 8:51 pm
chassis wrote: Sat Oct 16, 2021 8:49 pm
tibbitts wrote: Sat Oct 16, 2021 7:37 pm
Nobody would suggest the 4% "rule" for someone at the OP's age, assuming the OP projects average lifespans.

@tibbitts I would suggest the 4% "rule" for the OP. Why wouldn't you suggest it for the OP?
Because there's a good chance the OP and/or spouse will live for more than the 30 years that the '4% rule' is associated with. The OP is explicitly planning on a 40 year retirement.
Exactly. Also today the OP would have a somewhat globally diversified portfolio (assuming in the range of the 20% international vs. market weight debates for the moment), and evidence suggests that that would have lowered the 4% result in the original research to somewhere in the mid/upper-3% range.
@tibbitts have you personally modeled a 4% withdrawal rate with a detailed model?

You mentioned the 4% rule is associated with 30 years. And what is your point? Respectfully, so what?
Why would anyone waste time "personally" modeling any particular withdrawal rate after there have been countless models discussed in hundreds of threads here over the years? My point is that I find even mentioning a 4% SWR in the context of >30 year retirement needlessly confusing. I understand that because the OP would only require a 3.x% withdrawal rate to generate the desired $140k/yr, the OP would be more likely to be successful than if they were actually using a 4% withdrawal rate. The example of taking 4% from a smaller starting portfolio just didn't seem helpful.
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David Jay
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Re: How much do I need to retire?

Post by David Jay »

chassis wrote: Sun Oct 17, 2021 8:55 pm You mentioned the 4% rule is associated with 30 years.
That is the research. Bengen (original), Trinity study, The work that ERN has done.

The typical study is 95% likelihood of not exhausting the portfolio in 30 years using “worst case” historic time periods. Which of course means that in most time periods retirees will do much better.

Here are the numbers I recommend by retirement age:
60s - 4%
Late 50s - 3.5%
Early 50s - 3%
40s or earlier - 2.5% (2.5% is a perpetual portfolio so it is appropriate at any age)
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cdc
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Re: How much do I need to retire?

Post by cdc »

Twiggsapproved wrote: Fri Oct 15, 2021 8:46 pm Let’s take this in reverse if I may do so.

We are 54/52 with one 12 year old.

We are fine with a 529 to meet the child’s needs in 5-6 years.

We want to spend 140k annually in retirement and that includes taxes and housing (paid off)

Assume a 40 year lifespan from here and ss at 62 being $15000 annually and the other at 70 being $35000 annually?

What would be the number needed to retire as to total assets?

We currently have 4.2m outside our home and 529.

Thanks for your input!
Your numbers are almost identical to mine, including spending, except that I have half your savings and two pensions with a PV of about $800,000 and my SS is (combined about $10,000 higher/year. I just retired and am quite confident. You’re fine.
cdc
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Re: How much do I need to retire?

Post by cdc »

Boglelicious123 wrote: Fri Oct 15, 2021 8:49 pm I’m curious…what are you planning on spending 140K on annually (assuming it’s just the 2 of you and your house is paid off)?

Not trying to be rude, just having a hard time figuring out how I could spend that unless I go on vacation every few weeks. Maybe you can give me some ideas for retirement!
The Boglehead forum is great, but these sorts of responses drive me nuts. OP did not ask to critique his spending. He asked how much he needed to save to meet that spending. It turns out he has plenty.
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Twiggsapproved
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Re: How much do I need to retire?

Post by Twiggsapproved »

mikejuss wrote: Sun Oct 17, 2021 5:41 pm You're good to go, OP. You can safely withdraw 4% of your portfolio now and then enjoy a little cushion from Social Security later. Question: are you really thinking of retiring--and, if so, why?
Company being sold, in a small niche business. And I’m totally burned out. I get very little equity from the sale and I can’t stand the business or industry.

Well, you asked! But I worry that I will sit around worrying when my money will run out. Seriously, I do. :|
Zeno
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Re: How much do I need to retire?

Post by Zeno »

Duplicate
Last edited by Zeno on Sat Mar 19, 2022 9:43 pm, edited 1 time in total.
brad.clarkston
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Re: How much do I need to retire?

Post by brad.clarkston »

sailaway wrote: Fri Oct 15, 2021 8:51 pm Well, you already have 25x++ outside of SS, so the rest just depends on your comfort level.
+1 this. x13 your base salary for each spouse is a good general number.
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Zeno
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Re: How much do I need to retire?

Post by Zeno »

brad.clarkston wrote: Mon Oct 18, 2021 8:48 pm
sailaway wrote: Fri Oct 15, 2021 8:51 pm Well, you already have 25x++ outside of SS, so the rest just depends on your comfort level.
+1 this. x13 your base salary for each spouse is a good general number.
Is a "good general number" for what?

I have never heard of the "13x base salary" rule of thumb.

Let's say spouse #1 makes $200K and spouse #2 is stay-at-home. They both are 50. I think your formula suggests they need $5.2M to retire today. Does your formula assume anything about how much the couple spends, their ages, their AA, pensions, SS, etc.?
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Re: How much do I need to retire?

Post by brad.clarkston »

WyomingFIRE wrote: Mon Oct 18, 2021 8:59 pm
brad.clarkston wrote: Mon Oct 18, 2021 8:48 pm
sailaway wrote: Fri Oct 15, 2021 8:51 pm Well, you already have 25x++ outside of SS, so the rest just depends on your comfort level.
+1 this. x13 your base salary for each spouse is a good general number.
Is a "good general number" for what?

I have never heard of the "13x base salary" rule of thumb.

Let's say spouse #1 makes $200K and spouse #2 is stay-at-home. They both are 50. I think your formula suggests they need $5.2M to retire today. Does your formula assume anything about how much the couple spends, their ages, their AA, pensions, SS, etc.?

I'd read that very general rule of thumb in a few books and sites. I guess we just read different material.
I'm not sure why you think that's "my formula" please step back a bit from that.

The OP asked for a very broad concept and he's already at x25+ so I'm not going to argue make believe numbers with you.
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Normchad
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Re: How much do I need to retire?

Post by Normchad »

cdc wrote: Mon Oct 18, 2021 7:58 pm
Boglelicious123 wrote: Fri Oct 15, 2021 8:49 pm I’m curious…what are you planning on spending 140K on annually (assuming it’s just the 2 of you and your house is paid off)?

Not trying to be rude, just having a hard time figuring out how I could spend that unless I go on vacation every few weeks. Maybe you can give me some ideas for retirement!
The Boglehead forum is great, but these sorts of responses drive me nuts. OP did not ask to critique his spending. He asked how much he needed to save to meet that spending. It turns out he has plenty.
Those kinds of responses drive a lot of us nuts.
ginrummy
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Re: How much do I need to retire?

Post by ginrummy »

First few years will be rough interesting. Getting your sea legs. I'd keep a job and have the 100k coming in with healthcare. If both of you step aside you may be staring at one another, ie. spending money to feel like you’re “doing something”.

I think you’re fine, though. Good luck and congrats.
sailaway
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Re: How much do I need to retire?

Post by sailaway »

WyomingFIRE wrote: Mon Oct 18, 2021 8:59 pm
brad.clarkston wrote: Mon Oct 18, 2021 8:48 pm
sailaway wrote: Fri Oct 15, 2021 8:51 pm Well, you already have 25x++ outside of SS, so the rest just depends on your comfort level.
+1 this. x13 your base salary for each spouse is a good general number.
Is a "good general number" for what?

I have never heard of the "13x base salary" rule of thumb.
It is a pretty typical one, especially in the "retirement savings by age" genre, which tends to assume that everyone retires at 65, with SS, but no pension.
just1question
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Re: How much do I need to retire?

Post by just1question »

Twiggsapproved wrote: Fri Oct 15, 2021 8:46 pm Let’s take this in reverse if I may do so.

We are 54/52 with one 12 year old.

We are fine with a 529 to meet the child’s needs in 5-6 years.

We want to spend 140k annually in retirement and that includes taxes and housing (paid off)

Assume a 40 year lifespan from here and ss at 62 being $15000 annually and the other at 70 being $35000 annually?

What would be the number needed to retire as to total assets?

We currently have 4.2m outside our home and 529.

Thanks for your input!
You are worried about running out of money. Let me offer an alternative method. I'm not saying it's better or worse than the 4% rule or any other methods offered by others. It's just an alternative.

Take all your assumptions, and add in an assumption of 0% real growth, meaning your returns match the rate of inflation. IMO, that's pretty (some might say ultra) conservative. Do you have enough to last 40 years with $140k spend and your SS?

From ages 54/52 to 64/62, 10 years x $140k = $1.4M
From ages 64/62 to 70/68, 6 years x ($140k - $15k SS) = $750k
From ages 70/62 to 94/92, 24 years x ($140k - $15k SS - $35k SS) = $2.160M
Total = $4.31M

Anyway, that's one of the calculations/methods I use.
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JoeRetire
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Re: How much do I need to retire?

Post by JoeRetire »

Twiggsapproved wrote: Mon Oct 18, 2021 8:12 pm Company being sold, in a small niche business. And I’m totally burned out. I get very little equity from the sale and I can’t stand the business or industry.
Retirement is not the only solution.
These are also good reasons to leave this job and find another one in a different industry.
But I worry that I will sit around worrying when my money will run out. Seriously, I do. :|
You get to decide what to do about that worry.
This isn't just my wallet. It's an organizer, a memory and an old friend.
aristotelian
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Re: How much do I need to retire?

Post by aristotelian »

Assuming about $40k in SS, you can do liability matching to cover the amount of your SS from now until claiming at 70, say 16 x $40k = $640k.

Then the rest of your portfolio needs to cover an additional $100k. With a 3.5% withdrawal rate, you would need an additional $2.9M.

I'd say you need $3.64M. You have that covered plus an additional $600k. In other words, you have an additional cushion of almost 5 years expenses.

I also suspect anyone starting with a budget of $140k could easily cut back if needed since median US income is half that.

Financially, you are absolutely ready to retire and have been for some time.
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Re: How much do I need to retire?

Post by aristotelian »

mikejuss wrote: Sun Oct 17, 2021 5:41 pm You're good to go, OP. You can safely withdraw 4% of your portfolio now and then enjoy a little cushion from Social Security later. Question: are you really thinking of retiring--and, if so, why?
I would phrase it a little differently. At their age, 4% would not have a 100% success rate. For 30 year retirement and 50% stocks, 4% has been 95% successful, and 86% successful for 40 years. I would put their life expectancy somewhere in between so call it a 10% failure probability with 4% withdrawal. That said, they do not need a 4% withdrawal over their lifetime so this does not mean their proposal is unsafe.

I think a more accurate phrasing is "factoring SS they are easily safe based on their target budget."
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Re: How much do I need to retire?

Post by chipperd »

Twiggsapproved wrote: Fri Oct 15, 2021 8:46 pm Let’s take this in reverse if I may do so.

We are 54/52 with one 12 year old.

We are fine with a 529 to meet the child’s needs in 5-6 years.

We want to spend 140k annually in retirement and that includes taxes and housing (paid off)

Assume a 40 year lifespan from here and ss at 62 being $15000 annually and the other at 70 being $35000 annually?

What would be the number needed to retire as to total assets?

We currently have 4.2m outside our home and 529.

Thanks for your input!
Regarding the math, I have found and played around with this calculator: https://financialmentor.com/calculator/ ... calculator

It's one of several I used. I find it interesting in that it can accommodate different "post retirement" incomes like social security, part time work, etc. The weakness of that calculator, in my opinion, is that it's not a Monte Carlo type of calculator, so I typically keep my investment growth at 1% real (1% over whatever inflation number I pick). Although I've played with it so many times, I may pick higher over, or even under, real growth to model sequence of return risks.

I've used that calculator and others, in addition to a one time financial advisor consult, to answer the question "Am I really financially independent?" I go back to that advisors report and some of the calculators whenever my financial anxiety creeps back in.

From a more philosophical perspective, perhaps look at this issue as being financially independent rather than retirement. My wife and I are financially independent since ages 52 and 49 with much less than you (but with a pension), Both of us continue to work part time (her more than me as I'm totally fine doing yard work, house projects and cooking on my own all day) to keep the brain functioning and stay active interpersonally.
It's a nice time of life when you can choose how much interpersonal interaction meets your needs.

I think you're in great shape.
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Re: How much do I need to retire?

Post by 4nursebee »

Twiggsapproved wrote: Fri Oct 15, 2021 8:46 pm Let’s take this in reverse if I may do so.

We are 54/52 with one 12 year old.

We are fine with a 529 to meet the child’s needs in 5-6 years.

We want to spend 140k annually in retirement and that includes taxes and housing (paid off)

Assume a 40 year lifespan from here and ss at 62 being $15000 annually and the other at 70 being $35000 annually?

What would be the number needed to retire as to total assets?

We currently have 4.2m outside our home and 529.

Thanks for your input!

My math says you have enough. But that is for my comfort.
You need to read over withdrawal methods, decide what fits you, then do the math.
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Twiggsapproved
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Re: How much do I need to retire?

Post by Twiggsapproved »

JoeRetire wrote: Tue Oct 19, 2021 5:51 am
Twiggsapproved wrote: Mon Oct 18, 2021 8:12 pm Company being sold, in a small niche business. And I’m totally burned out. I get very little equity from the sale and I can’t stand the business or industry.
Retirement is not the only solution.
These are also good reasons to leave this job and find another one in a different industry.
But I worry that I will sit around worrying when my money will run out. Seriously, I do. :|
You get to decide what to do about that worry.
Joe Retire: It is hard to describe how helpful those two sentences are for me right now. I am a worrier by nature and your post gives me hope, and that is an important ingredient.

Thanks! Twiggs.

P.s. in your honor I'm making a donation to "the human fund" 👍🏼
RubyTuesday
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Re: How much do I need to retire?

Post by RubyTuesday »

You have enough based on several well reasoned perspectives.

Financially you should be fine. So use that financial freedom to do something else (work in different industry, retire to golf, spend time with family, volunteer).

You get to decide how you manage your time, what you worry about, and what you do about your concerns.

That said, the transition from working/saving/accumulating to retired/withdrawing/decumulating can be challenging psychologically.

We were in very similar situation regarding portfolio value and spending, but remained a little concerned.

To ease my trepidation I spent some time with a spreadsheet and modeled out specific scenarios to understand exactly where our monthly “income” would come from (taxable dividends not reinvested, small pension, long term cap gains from asset sell, automatic monthly transfer to checking from brokerage, etc.).

It helped me get comfortable with the transition and had the added benefit of making me realize our taxes in retirement would could be much lower than I had assumed. Next iteration in retirement model became figuring out Roth conversion and/or 0% gain harvesting strategies.

Now in retirement, I check our expenses every 6 months or so, check portfolio for AA balance, and enjoy time with DW and friends (and golf more).
“Doing nothing is better than being busy doing nothing.” – Lao Tzu
Jags4186
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Re: How much do I need to retire?

Post by Jags4186 »

Boglelicious123 wrote: Fri Oct 15, 2021 8:49 pm I’m curious…what are you planning on spending 140K on annually (assuming it’s just the 2 of you and your house is paid off)?

Not trying to be rude, just having a hard time figuring out how I could spend that unless I go on vacation every few weeks. Maybe you can give me some ideas for retirement!
Different people have different ideas about what is normal or wanted expenditures. I can make $140k disappear easily:

Home: $45,200
Property taxes on $1mm home in a 2% ratable area: $20,000
Weekly house cleaner: $100/wk, $5200
Lawn/Snow service: $200/mo for 10 months, $2000
Property insurance: $2000
Property maintenance: 1% of home value, $10,000
Gas, electric, water, cable, internet, streaming services: $500/mo, $6,000

Vacations: $40,000
1 week Caribbean (Ritz Carlton, 7 nights at $600/nt, first class tickets at $1200/each, $250/day food and drink, $100/day spa, $1000 gambling budget): $10,000
2 week European Vacation...extrapolate how you wish based on the above: $20,000
1 week beach rental for whole family - kids, grandkids, etc.: $10,000

Cars: $22,380
BMW 5-series lease: $700/mo, $8400 annually
BMW X5 lease: $700/mo, $8400 annually
Annual insurance premium: $2500
Gas: 28 mpg average, 20,000 total driven, $3.50/gallon average: $2,500
Car washes: once every other month, $15/wash, $180
Oil changes at dealer 2x/yr: $400

Daily living expenses: $36,960
Groceries: $800/mo (Whole Foods/Kings equivalent), $9600
Dining out: $200/wk for 49 weeks (exclude 3 weeks of vacation): $9800
Clothes/shopping/knick knacks: $400/mo, $4800/yr
Gifts: kids, grandkids, etc: $6000/yr
Entertainment: 6x concerts/plays/shows a year, $200/tkt average, $2400
Top of line cell plans with phone payments baked in: $200/mo, $2400/yr
Alcohol: 2x bottles/wk, $20/bottle, $1960

Total: $147,540
Haven't even considered any medical expenses yet...
Jovby
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Re: How much do I need to retire?

Post by Jovby »

WyomingFIRE wrote: Mon Oct 18, 2021 8:43 pm
all that matters are the relationships we have with those we love. Most everything else is noise.*
This! I’ve been doing some reflecting lately and keep coming back to this.
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JoeRetire
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Re: How much do I need to retire?

Post by JoeRetire »

Twiggsapproved wrote: Tue Oct 19, 2021 7:41 am
JoeRetire wrote: Tue Oct 19, 2021 5:51 am
Twiggsapproved wrote: Mon Oct 18, 2021 8:12 pm Company being sold, in a small niche business. And I’m totally burned out. I get very little equity from the sale and I can’t stand the business or industry.
Retirement is not the only solution.
These are also good reasons to leave this job and find another one in a different industry.
But I worry that I will sit around worrying when my money will run out. Seriously, I do. :|
You get to decide what to do about that worry.
Joe Retire: It is hard to describe how helpful those two sentences are for me right now. I am a worrier by nature and your post gives me hope, and that is an important ingredient.

Thanks! Twiggs.

P.s. in your honor I'm making a donation to "the human fund" 👍🏼
Money for people. :wink:
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Wiggums
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Re: How much do I need to retire?

Post by Wiggums »

joverby wrote: Tue Oct 19, 2021 8:35 am
WyomingFIRE wrote: Mon Oct 18, 2021 8:43 pm
all that matters are the relationships we have with those we love. Most everything else is noise.*
This! I’ve been doing some reflecting lately and keep coming back to this.
Time is one thing that you can never get back, so use it wisely.
"I started with nothing and I still have most of it left."
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Watty
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Re: How much do I need to retire?

Post by Watty »

One thing that may not have been mentioned is that when you are looking at retirement calculators they often show the results in terms of the percent chance of "success" or "failure". The term failure sounds sort of dire like you spend mindlessly until you are broke and homeless.

More realistically failure might really mean that you have to do something like cut your spending back by 10% when you are 70 because your portfolio is not doing well. That is likely not a big hardship unless you were planning a barebones retirement.
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Re: How much do I need to retire?

Post by willthrill81 »

Watty wrote: Tue Oct 19, 2021 10:06 am One thing that may not have been mentioned is that when you are looking at retirement calculators they often show the results in terms of the percent chance of "success" or "failure". The term failure sounds sort of dire like you spend mindlessly until you are broke and homeless.

More realistically failure might really mean that you have to do something like cut your spending back by 10% when you are 70 because your portfolio is not doing well. That is likely not a big hardship unless you were planning a barebones retirement.
Precisely.

I much prefer the retirement spending chart available at Portfolio Charts to models that assume constant withdrawals. For a given portfolio, you can specify how much withdrawals can go up or down separately per year along with the minimum and maximum withdrawal in relation to the initial withdrawal. You can then view how this would have impacted your portfolio balance and withdrawals over time.
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Wanderingwheelz
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Re: How much do I need to retire?

Post by Wanderingwheelz »

JoeRetire wrote: Sun Oct 17, 2021 2:48 pm
tibbitts wrote: Sat Oct 16, 2021 7:37 pm
chassis wrote: Sat Oct 16, 2021 2:41 pm @Twiggsapproved
4% rule says you need $3.5m
Nobody would suggest the 4% "rule" for someone at the OP's age, assuming the OP projects average lifespans.
With an additional $700k and $35k/year starting at 70,
I would.
I’d sign off on that too with a diversified 65/35 portfolio and a paid for home. I don’t care what age the person is as long as they’re paying attention.
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HeelaMonster
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Re: How much do I need to retire?

Post by HeelaMonster »

brad.clarkston wrote: Mon Oct 18, 2021 9:15 pm
WyomingFIRE wrote: Mon Oct 18, 2021 8:59 pm
brad.clarkston wrote: Mon Oct 18, 2021 8:48 pm
sailaway wrote: Fri Oct 15, 2021 8:51 pm Well, you already have 25x++ outside of SS, so the rest just depends on your comfort level.
+1 this. x13 your base salary for each spouse is a good general number.
Is a "good general number" for what?

I have never heard of the "13x base salary" rule of thumb.

Let's say spouse #1 makes $200K and spouse #2 is stay-at-home. They both are 50. I think your formula suggests they need $5.2M to retire today. Does your formula assume anything about how much the couple spends, their ages, their AA, pensions, SS, etc.?
I'd read that very general rule of thumb in a few books and sites. I guess we just read different material.
I'm not sure why you think that's "my formula" please step back a bit from that.

The OP asked for a very broad concept and he's already at x25+ so I'm not going to argue make believe numbers with you.
FWIW, I thought the point of that comment (questioning the "x13 base salary for each spouse") was that the "X" being used throughout this thread typically refers to EXPENSES and not salary. In other words, you introduced a different "X" factor, one that may yield quite different results (...and potentially misleading results, since salary may have little relation to retirement spending). I didn't see anyone arguing make believe numbers, so much as clarifying whether you are talking about apples or oranges.
brad.clarkston
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Re: How much do I need to retire?

Post by brad.clarkston »

That's a fair point, sorry for the confusion.

You are correct there is a big difference between salary needs verses expenses. One is a simple x?? number and the other is a mildly complex calculation.

Sailaway hit the nail on the head about the way I was looking at it in strict dollars and cents by age category. Which is the way many 59 to 65 year olds do when they start to panic over the looming retirement date. Once they get past the hyperventilating they move on to the more complicated 'list all expenses plus medicare' which is a very different conversation than the OP started.
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HeelaMonster
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Re: How much do I need to retire?

Post by HeelaMonster »

brad.clarkston wrote: Tue Oct 19, 2021 12:54 pm That's a fair point, sorry for the confusion.

You are correct there is a big difference between salary needs verses expenses. One is a simple x?? number and the other is a mildly complex calculation.

Sailaway hit the nail on the head about the way I was looking at it in strict dollars and cents by age category. Which is the way many 59 to 65 year olds do when they start to panic over the looming retirement date. Once they get past the hyperventilating they move on to the more complicated 'list all expenses plus medicare' which is a very different conversation than the OP started.
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HomerJ
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Re: How much do I need to retire?

Post by HomerJ »

Twiggsapproved wrote: Fri Oct 15, 2021 8:46 pm Let’s take this in reverse if I may do so.

We are 54/52 with one 12 year old.

We are fine with a 529 to meet the child’s needs in 5-6 years.

We want to spend 140k annually in retirement and that includes taxes and housing (paid off)

Assume a 40 year lifespan from here and ss at 62 being $15000 annually and the other at 70 being $35000 annually?

What would be the number needed to retire as to total assets?

We currently have 4.2m outside our home and 529.

Thanks for your input!
You can't do this math? You didn't explain Social Security very well.. Who gets it at 62 and who at 70?

Let's say 54 gets SS at 62... at which point 52 will be 60 years old.

So eight years of pulling 140k = 1.12 million
Then ten years of pulling 125k = 1.25 million.
Then 22 years of pulling 90k = $2 million

= $4.37 million.

So even if your money never grows more than 0% real (just matches inflation) over the next 40 years, you should be fine.

But, of course, the money will grow over the next 40 years, so you are more than fine.

This isn't hard to calculate... You have a paid off house and $4.2 million. You can do this math.

But I know you want assurances, and that's understandable. Okay, you got it. You can retire tomorrow.
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HomerJ
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Re: How much do I need to retire?

Post by HomerJ »

Carol88888 wrote: Sat Oct 16, 2021 5:01 pm I am confused. Don't we need to know from OP how the money is invested. If it is in a 60/40 portfolio it might not produce 3% over the next ten years.
It doesn't have to produce 3% over the next ten years.

That is not how withdrawal rates work. 3% withdrawal can still work over 40 years even if the first 10 years return less than 3% a year.
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
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