Spending for late 30s retiree

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Topic Author
ScroogeMcDuck
Posts: 164
Joined: Thu Jan 22, 2015 3:25 pm

Spending for late 30s retiree

Post by ScroogeMcDuck »

Let's say you retired in your late 30s with a family of three (two adults, one child and no plan for more). How much would you be comfortable spending annually with the following portfolio?

$2.7 million invested 60/23/17 in VTI/VXUS/Series I bonds and money market funds
$400k illiquid private company stock
$150k savings for college (in 15 years) 100% in VTWAX
$900k home equity (no mortgage)

Additional details:
- Spouse A will get $30k annually from social security if taken at 70 and likely $1-2 million inheritance
- Spouse B will get $20k annually from social security if taken at 70 and likely $8-9 million inheritance
- All family members are in good mental and physical health, marriage is very happy. Both spouses have family members who have lived into their 90s.
steadyosmosis
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Re: Spending for late 30s retiree

Post by steadyosmosis »

ScroogeMcDuck wrote: Sat Jun 03, 2023 5:39 pm Let's say you retired in your late 30s with a family of three (two adults, one child and no plan for more). How much would you be comfortable spending annually with the following portfolio?

$2.7 million invested 60/23/17 in VTI/VXUS/Series I bonds and money market funds
$400k illiquid private company stock
$150k savings for college (in 15 years) 100% in VTWAX
$900k home equity (no mortgage)

Additional details:
- Spouse A will get $30k annually from social security if taken at 70 and likely $1-2 million inheritance
- Spouse B will get $20k annually from social security if taken at 70 and likely $8-9 million inheritance
- All family members are in good mental and physical health, marriage is very happy. Both spouses have family members who have lived into their 90s.
$97,500 (or less) annually.
Age<59.5. Early-retired. AA ~55/45. Taxable account, Roth IRA, HSA...all are 100% equities. 100% of fixed income is in tIRA. I spend from taxable and re-balance in tIRA.
sailaway
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Re: Spending for late 30s retiree

Post by sailaway »

$108k, that includes taxes and sinking funds.

We are actually in a very similar situation and applying the 4% rule to portfolio. DH is still working because he wants to buy something that would drop out portfolio below what we are comfortable with, especially with the increased ongoing costs of his proposed purchase.

Inheritance is just too far out to count on. We basically assume it will come when DH is 70, if at all. My mother has already said that if anything happens to my father, she will probably redo her will to give to the grandkids, since her own kids already had 50-60 years to straighten themselves out with support, while the grandkids haven't gotten nearly as much support. No reason the ILs couldn't make the same choice.
TravelforFun
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Re: Spending for late 30s retiree

Post by TravelforFun »

3% of the $2.7 million first year then adjust the amount for inflation annually afterwards. Once you or your spouse receives the inheritance, recalculate the withdrawal amount.

TravelforFun
yules
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Re: Spending for late 30s retiree

Post by yules »

ScroogeMcDuck wrote: Sat Jun 03, 2023 5:39 pm Let's say you retired in your late 30s with a family of three (two adults, one child and no plan for more). How much would you be comfortable spending annually with the following portfolio?

$2.7 million invested 60/23/17 in VTI/VXUS/Series I bonds and money market funds
$400k illiquid private company stock
$150k savings for college (in 15 years) 100% in VTWAX
$900k home equity (no mortgage)

Additional details:
- Spouse A will get $30k annually from social security if taken at 70 and likely $1-2 million inheritance
- Spouse B will get $20k annually from social security if taken at 70 and likely $8-9 million inheritance
- All family members are in good mental and physical health, marriage is very happy. Both spouses have family members who have lived into their 90s.
I would never plan on a marriage lasting 35 years, no matter how happy at the moment! Maybe I’m just not a romantic :(

Yules
3PKWzh9
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Re: Spending for late 30s retiree

Post by 3PKWzh9 »

We are in our late 30s and have about ten times as much wealth (although no inheritance coming), but we know what it is like to have the OP's financial profile, because we did in our early-mid 30s (again, minus the inheritance).

Our answer? About $80K annual income, which allows, assuming all capital gains or qualified dividends, for about $56K in actual annual spending.

In our opinion OP is very much not ready to retire. The margin of safety required to face what is coming –– inflation, unforeseeable medical costs, college costs which will be about $200K/yr/child for OP, possible divorce, the child's inability to afford a home which will require a $3M disbursement from principal, and [off topic speculation on future tax and other policies removed by admin alex].

We are really conservative, and we have a simple rule of thumb: we have to live within ONLY the dividends gained ONLY from the government- and agency-obligation piece of our portfolio.
runner540
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Re: Spending for late 30s retiree

Post by runner540 »

3PKWzh9 wrote: Sat Jun 03, 2023 7:09 pm We are in our late 30s and have about ten times as much wealth (although no inheritance coming), but we know what it is like to have the OP's financial profile, because we did in our early-mid 30s (again, minus the inheritance).

Our answer? About $80K annual income, which allows, assuming all capital gains or qualified dividends, for about $56K in actual annual spending.

In our opinion OP is very much not ready to retire. The margin of safety required to face what is coming –– inflation, unforeseeable medical costs, college costs which will be about $200K/yr/child for OP, possible divorce, the child's inability to afford a home which will require a $3M disbursement from principal, and confiscatory taxes and policies –– you just don't have an appropriate margin yet....
Wow. You have $30 MM and are spending the median household income? Your kids will not be buying $3MM homes, they will buy $15 MM estates with what you leave behind.
gips
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Re: Spending for late 30s retiree

Post by gips »

3PKWzh9 wrote: Sat Jun 03, 2023 7:09 pm [deleted by admin alex]
thinking your post violates forum policy on politics.

[from the forum policies
"If you feel that someone has attacked you or otherwise violated the policies of this forum, do not respond in kind. Instead, please click the report button on the offending post. This is the quickest method to notify the site moderators." - This also applies to your next post, which I have deleted in full. admin alex]
3PKWzh9
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Re: Spending for late 30s retiree

Post by 3PKWzh9 »

Well, I suppose my point here is that my kids will be buying $15M homes, but they probably won't be any nicer than today's $3M home!
newyorker
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Re: Spending for late 30s retiree

Post by newyorker »

ScroogeMcDuck wrote: Sat Jun 03, 2023 5:39 pm Let's say you retired in your late 30s with a family of three (two adults, one child and no plan for more). How much would you be comfortable spending annually with the following portfolio?

$2.7 million invested 60/23/17 in VTI/VXUS/Series I bonds and money market funds
$400k illiquid private company stock
$150k savings for college (in 15 years) 100% in VTWAX
$900k home equity (no mortgage)

Additional details:
- Spouse A will get $30k annually from social security if taken at 70 and likely $1-2 million inheritance
- Spouse B will get $20k annually from social security if taken at 70 and likely $8-9 million inheritance
- All family members are in good mental and physical health, marriage is very happy. Both spouses have family members who have lived into their 90s.

Unrelated but you are living the dream.
Wanderingwheelz
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Re: Spending for late 30s retiree

Post by Wanderingwheelz »

3PKWzh9 wrote: Sat Jun 03, 2023 7:09 pm We are in our late 30s and have about ten times as much wealth (although no inheritance coming), but we know what it is like to have the OP's financial profile, because we did in our early-mid 30s (again, minus the inheritance).

Our answer? About $80K annual income, which allows, assuming all capital gains or qualified dividends, for about $56K in actual annual spending.

....

We are really conservative, and we have a simple rule of thumb: we have to live within ONLY the dividends gained ONLY from the government- and agency-obligation piece of our portfolio.
With $30,000,000 in investments you’re only allowing yourself $80,000 a year?
Being wrong compounds forever.
chassis
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Re: Spending for late 30s retiree

Post by chassis »

ScroogeMcDuck wrote: Sat Jun 03, 2023 5:39 pm Let's say you retired in your late 30s with a family of three (two adults, one child and no plan for more). How much would you be comfortable spending annually with the following portfolio?

$2.7 million invested 60/23/17 in VTI/VXUS/Series I bonds and money market funds
$400k illiquid private company stock
$150k savings for college (in 15 years) 100% in VTWAX
$900k home equity (no mortgage)

Additional details:
- Spouse A will get $30k annually from social security if taken at 70 and likely $1-2 million inheritance
- Spouse B will get $20k annually from social security if taken at 70 and likely $8-9 million inheritance
- All family members are in good mental and physical health, marriage is very happy. Both spouses have family members who have lived into their 90s.
What is the annual household income?
3PKWzh9
Posts: 46
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Re: Spending for late 30s retiree

Post by 3PKWzh9 »

Wanderingwheelz wrote: Sat Jun 03, 2023 7:27 pm
3PKWzh9 wrote: Sat Jun 03, 2023 7:09 pm We are in our late 30s and have about ten times as much wealth (although no inheritance coming), but we know what it is like to have the OP's financial profile, because we did in our early-mid 30s (again, minus the inheritance).

Our answer? About $80K annual income, which allows, assuming all capital gains or qualified dividends, for about $56K in actual annual spending.

....

We are really conservative, and we have a simple rule of thumb: we have to live within ONLY the dividends gained ONLY from the government- and agency-obligation piece of our portfolio.
With $30,000,000 in investments you’re only allowing yourself $80,000 a year?
I am sorry, I meant that based upon *our* ratios and risk standards, if we were in the *original poster's shoes*, we would only withdraw $80K/yr.
Badinvestor
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Re: Spending for late 30s retiree

Post by Badinvestor »

3PKWzh9 wrote: Sat Jun 03, 2023 7:09 pm [deleted by admin alex]
I think there's a Boglehead saying, "in before the lock."

[There's also a Bogleheads policy stating "Note that discussions of proposed laws or regulations are prohibited."]

More than means testing, I worry about electricity rationing and the criteria for how an individual's ration is determined (e.g., via a "social credit score"). Announced plans, not yet however made into law/regulations, include ending fossil fuel electricity generation and fossil fuel home heating (not a problem in most of CA however). The end of ICE vehicles, already the law in various places, means a greater need for electric energy than exists today.

I can't imagine retiring so early.
3PKWzh9
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Re: Spending for late 30s retiree

Post by 3PKWzh9 »

frose2 wrote: Sat Jun 03, 2023 7:40 pm [deleted by admin alex]
Yes, historically utility rates have gone up in excess of inflation in the US: https://www.eia.gov/todayinenergy/detail.php?id=51438

This is the challenging thing about threads where a poster has asked for help with a 30-50 year retirement. The world in 50 years is simply going to be very different. As frose2 says, energy will be a different ballgame. Has the original poster budgeted for a large solar panel and battery installation? That would be one way to get some level of control on these far time horizon questions.
vxdx
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Re: Spending for late 30s retiree

Post by vxdx »

[comment on removed material deleted by admin alex]

To op I’d use a 3% withdrawl rate and not try to plan too conservatively based on the amount of time left (hopefully).
Alex Frakt
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Re: Spending for late 30s retiree

Post by Alex Frakt »

topic unlocked

Look folks, where people are asking about long time horizons, you can bring up general concerns. But you cannot ignore our prohibition on discussions of politics, including proposed legislation and regulations.
000
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Re: Spending for late 30s retiree

Post by 000 »

If it were me, no more than 2.5% of current liquid assets + actual dividends paid by illiquid assets.

Inheritance, social security, and life expectancy are far out.
Topic Author
ScroogeMcDuck
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Re: Spending for late 30s retiree

Post by ScroogeMcDuck »

Looks like I missed something interesting while I was out to dinner! :D

Here's some more context - we're in our third year of retirement and last year spent $55k, including $500 of income tax, so 2% of our current liquid portfolio. We had a very good time last year but I think we can afford to spend more and this year we're trying to spend $67k (2.5% withdrawal). We're both natural savers so it feels strange to try to spend more. I think my question comes from me trying to feel ok with it.

For example, we intentionally spent more than usual on one of our vacations this year ($1k per day instead of $300ish per day). It was enjoyable but not something we need to do all the time and it certainly wasn't 3x more enjoyable than our usual vacations. But maybe that's fine? I recently listened to a Mad Fientist podcast on how to enjoy spending https://www.madfientist.com/i-will-teac ... interview/ and am coming around to the idea that maybe we don't need to optimize every dollar. I would like to spend more money on private coaching for my hobby sport but again am having a hard time justifying it. If anyone has recommended resources on this topic please let me know. I also read Die With Zero but it really didn't appeal to me.
Topic Author
ScroogeMcDuck
Posts: 164
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Re: Spending for late 30s retiree

Post by ScroogeMcDuck »

chassis wrote: Sat Jun 03, 2023 7:30 pm What is the annual household income?
$0 earned income, we are retired. I think we had $55k in taxable interest/dividend income last year (although fed taxes were $0).
Topic Author
ScroogeMcDuck
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Re: Spending for late 30s retiree

Post by ScroogeMcDuck »

newyorker wrote: Sat Jun 03, 2023 7:26 pm Unrelated but you are living the dream.
Thank you, we've been extremely fortunate.
000
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Re: Spending for late 30s retiree

Post by 000 »

Maybe search the forum for perpetual withdrawal rate.
Derpalator
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Re: Spending for late 30s retiree

Post by Derpalator »

000 wrote: Sun Jun 04, 2023 1:21 am If it were me, no more than 2.5% of current liquid assets + actual dividends paid by illiquid assets.

Inheritance, social security, and life expectancy are far out.
Agreed. Especially the inheritance(s). OP noted expecting parents to live into their 90s.
CaptainT
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Re: Spending for late 30s retiree

Post by CaptainT »

You are looking at 60 to 70 year retirement.
Don't count on ss or inheritance until get them.
So you need perpetual level . I would limit to 2% from "retirement money". Given your home and thus mortgage/rent is already covered it is definitely doable. Not sure how plan to spend time if you earn anything you are safe to spend that extra on fun. I know side hobbies can lead to some fun money
sailaway
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Re: Spending for late 30s retiree

Post by sailaway »

CaptainT wrote: Sun Jun 04, 2023 7:04 am You are looking at 60 to 70 year retirement.
Don't count on ss or inheritance until get them.
So you need perpetual level . I would limit to 2% from "retirement money". Given your home and thus mortgage/rent is already covered it is definitely doable. Not sure how plan to spend time if you earn anything you are safe to spend that extra on fun. I know side hobbies can lead to some fun money
So, they need a perpetual withdrawal rate, but you think they should withdrawal even less than any proposed perpetual withdrawal rate?
chassis
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Re: Spending for late 30s retiree

Post by chassis »

ScroogeMcDuck wrote: Sun Jun 04, 2023 2:22 am
chassis wrote: Sat Jun 03, 2023 7:30 pm What is the annual household income?
$0 earned income, we are retired. I think we had $55k in taxable interest/dividend income last year (although fed taxes were $0).
Excluding inheritance and SS you have north of $4m in assets. Home equity and private equity are illiquid or nearly so in the immediate term.

4% "rule" applied to $4m is $160k per year spending, aka portfolio withdrawals.

4% "rule" applied to $2.8m is $110k per year spending, aka portfolio withdrawals.

Will you receive age-based inheritance grants?
michaeljc70
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Re: Spending for late 30s retiree

Post by michaeljc70 »

$100k. I'd look at using a VPW. You can likely increase the rate of spending later if things go well.
michaeljc70
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Re: Spending for late 30s retiree

Post by michaeljc70 »

chassis wrote: Sun Jun 04, 2023 7:18 am
ScroogeMcDuck wrote: Sun Jun 04, 2023 2:22 am
chassis wrote: Sat Jun 03, 2023 7:30 pm What is the annual household income?
$0 earned income, we are retired. I think we had $55k in taxable interest/dividend income last year (although fed taxes were $0).
Excluding inheritance and SS you have north of $4m in assets. Home equity and private equity are illiquid or nearly so in the immediate term.

4% "rule" applied to $4m is $160k per year spending, aka portfolio withdrawals.

4% "rule" applied to $2.8m is $110k per year spending, aka portfolio withdrawals.

Will you receive age-based inheritance grants?
The 4% "rule" is for people retiring for 30 years, not potentially 50+ years.
TacoLover
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Re: Spending for late 30s retiree

Post by TacoLover »

It’s only 2.7 m investable assets. The 4 percent rule is for 30 years. So that would be 80k per year and planning on the realistic possibility of running out in 30 y so then all your income would be only SS. I’d be uncomfortable retiring on that. Inheritance would be nice financially but don’t ever count on an inheritance. I’d say if you’re in a VLCOL area maybe but I’d be very uncomfortable depending on a lifelong income for someone in 30s with 2.7m liquid assets. And 150k for college today is just over two years of college out of state.
TacoLover
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Re: Spending for late 30s retiree

Post by TacoLover »

newyorker wrote: Sat Jun 03, 2023 7:26 pm
ScroogeMcDuck wrote: Sat Jun 03, 2023 5:39 pm Let's say you retired in your late 30s with a family of three (two adults, one child and no plan for more). How much would you be comfortable spending annually with the following portfolio?

$2.7 million invested 60/23/17 in VTI/VXUS/Series I bonds and money market funds
$400k illiquid private company stock
$150k savings for college (in 15 years) 100% in VTWAX
$900k home equity (no mortgage)

Additional details:
- Spouse A will get $30k annually from social security if taken at 70 and likely $1-2 million inheritance
- Spouse B will get $20k annually from social security if taken at 70 and likely $8-9 million inheritance
- All family members are in good mental and physical health, marriage is very happy. Both spouses have family members who have lived into their 90s.

Unrelated but you are living the dream.
I disagree. I could not disagree more. The need to earn a living for us is one to make responsible decisions. To develop important skills others value. To develop oneself. To improve oneself. To become excellent. I would say the idea of not having to support. oneself is almost not human. The idea of waking up without a necessary purpose to fulfill is abhorrent to me. Of course, you can volunteer at the soup kitchen. And of course it is important for a spouse to raise the kids. But the idea of being unnecessary is horrifying to me. I get when you are 70 and don’t have quite the same strength and stamina, but for a young person to choose to be non-productive for a lifetime, and to set that example for his children is horrifying for me.
zie
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Re: Spending for late 30s retiree

Post by zie »

The inheritances are possibles, not definite, I wouldn't count on them at all. If they show up, fine, if not your plan should still work.

The lowest perpetual withdrawal rate globally I've ever seen from academic sources is 2.7%, so 2.7M * 2.7% = 73k.

So 73k would be your floor as it were. 4% would probably be up near the max, so 2.7M * 4 = 108k/yr.

So anything in between 73k and 100k/yr would be reasonable in my opinion. If you find yourself spending up near 100k/yr regularly, perhaps you should scale back a bit, especially in down years.

Have a great life!
Whether rich or poor, a young woman should know how a bank account works, understand the composition of mortgages and bonds, and know the value of interest and how it accumulates. -Hetty Green
michaeljc70
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Re: Spending for late 30s retiree

Post by michaeljc70 »

TacoLover wrote: Sun Jun 04, 2023 10:43 am
newyorker wrote: Sat Jun 03, 2023 7:26 pm
ScroogeMcDuck wrote: Sat Jun 03, 2023 5:39 pm Let's say you retired in your late 30s with a family of three (two adults, one child and no plan for more). How much would you be comfortable spending annually with the following portfolio?

$2.7 million invested 60/23/17 in VTI/VXUS/Series I bonds and money market funds
$400k illiquid private company stock
$150k savings for college (in 15 years) 100% in VTWAX
$900k home equity (no mortgage)

Additional details:
- Spouse A will get $30k annually from social security if taken at 70 and likely $1-2 million inheritance
- Spouse B will get $20k annually from social security if taken at 70 and likely $8-9 million inheritance
- All family members are in good mental and physical health, marriage is very happy. Both spouses have family members who have lived into their 90s.

Unrelated but you are living the dream.
I disagree. I could not disagree more. The need to earn a living for us is one to make responsible decisions. To develop important skills others value. To develop oneself. To improve oneself. To become excellent. I would say the idea of not having to support. oneself is almost not human. The idea of waking up without a necessary purpose to fulfill is abhorrent to me. Of course, you can volunteer at the soup kitchen. And of course it is important for a spouse to raise the kids. But the idea of being unnecessary is horrifying to me. I get when you are 70 and don’t have quite the same strength and stamina, but for a young person to choose to be non-productive for a lifetime, and to set that example for his children is horrifying for me.
I could not disagree more. Spending more time with your friends and family is terrible? Spending time on hobbies you love is terrible? I think it is sad when people can only feel needed/accomplished through their job. If you think you are necessary to a corporation I think you are sadly mistaken. They will throw you out whenever it suits them. Of course, if someone is going to retire and watch YouTube all day and play video games that is something else.
Topic Author
ScroogeMcDuck
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Re: Spending for late 30s retiree

Post by ScroogeMcDuck »

TacoLover wrote: Sun Jun 04, 2023 10:43 am
newyorker wrote: Sat Jun 03, 2023 7:26 pm
ScroogeMcDuck wrote: Sat Jun 03, 2023 5:39 pm Let's say you retired in your late 30s with a family of three (two adults, one child and no plan for more). How much would you be comfortable spending annually with the following portfolio?

$2.7 million invested 60/23/17 in VTI/VXUS/Series I bonds and money market funds
$400k illiquid private company stock
$150k savings for college (in 15 years) 100% in VTWAX
$900k home equity (no mortgage)

Additional details:
- Spouse A will get $30k annually from social security if taken at 70 and likely $1-2 million inheritance
- Spouse B will get $20k annually from social security if taken at 70 and likely $8-9 million inheritance
- All family members are in good mental and physical health, marriage is very happy. Both spouses have family members who have lived into their 90s.

Unrelated but you are living the dream.
I disagree. I could not disagree more. The need to earn a living for us is one to make responsible decisions. To develop important skills others value. To develop oneself. To improve oneself. To become excellent. I would say the idea of not having to support. oneself is almost not human. The idea of waking up without a necessary purpose to fulfill is abhorrent to me. Of course, you can volunteer at the soup kitchen. And of course it is important for a spouse to raise the kids. But the idea of being unnecessary is horrifying to me. I get when you are 70 and don’t have quite the same strength and stamina, but for a young person to choose to be non-productive for a lifetime, and to set that example for his children is horrifying for me.
Lol we've been blissfully retired in our 30s for going on 3 years now thanks. But please keep working yourself.
Topic Author
ScroogeMcDuck
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Re: Spending for late 30s retiree

Post by ScroogeMcDuck »

zie wrote: Sun Jun 04, 2023 10:56 am The inheritances are possibles, not definite, I wouldn't count on them at all. If they show up, fine, if not your plan should still work.

The lowest perpetual withdrawal rate globally I've ever seen from academic sources is 2.7%, so 2.7M * 2.7% = 73k.

So 73k would be your floor as it were. 4% would probably be up near the max, so 2.7M * 4 = 108k/yr.

So anything in between 73k and 100k/yr would be reasonable in my opinion. If you find yourself spending up near 100k/yr regularly, perhaps you should scale back a bit, especially in down years.

Have a great life!
Thank you
Topic Author
ScroogeMcDuck
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Re: Spending for late 30s retiree

Post by ScroogeMcDuck »

michaeljc70 wrote: Sun Jun 04, 2023 7:48 am $100k. I'd look at using a VPW. You can likely increase the rate of spending later if things go well.
Wow VPW says $122k!
TacoLover
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Re: Spending for late 30s retiree

Post by TacoLover »

ScroogeMcDuck wrote: Sun Jun 04, 2023 11:10 am
TacoLover wrote: Sun Jun 04, 2023 10:43 am
newyorker wrote: Sat Jun 03, 2023 7:26 pm
ScroogeMcDuck wrote: Sat Jun 03, 2023 5:39 pm Let's say you retired in your late 30s with a family of three (two adults, one child and no plan for more). How much would you be comfortable spending annually with the following portfolio?

$2.7 million invested 60/23/17 in VTI/VXUS/Series I bonds and money market funds
$400k illiquid private company stock
$150k savings for college (in 15 years) 100% in VTWAX
$900k home equity (no mortgage)

Additional details:
- Spouse A will get $30k annually from social security if taken at 70 and likely $1-2 million inheritance
- Spouse B will get $20k annually from social security if taken at 70 and likely $8-9 million inheritance
- All family members are in good mental and physical health, marriage is very happy. Both spouses have family members who have lived into their 90s.

Unrelated but you are living the dream.
I disagree. I could not disagree more. The need to earn a living for us is one to make responsible decisions. To develop important skills others value. To develop oneself. To improve oneself. To become excellent. I would say the idea of not having to support. oneself is almost not human. The idea of waking up without a necessary purpose to fulfill is abhorrent to me. Of course, you can volunteer at the soup kitchen. And of course it is important for a spouse to raise the kids. But the idea of being unnecessary is horrifying to me. I get when you are 70 and don’t have quite the same strength and stamina, but for a young person to choose to be non-productive for a lifetime, and to set that example for his children is horrifying for me.
Lol we've been blissfully retired in our 30s for going on 3 years now thanks. But please keep working yourself.
Thank G-d we live in America and we are each free to make the decisions. We deem best for our families. You for yours and me for mine! Sorry for coming out harsh because it definitely came out that way.
Wwwdotcom
Posts: 558
Joined: Thu Apr 06, 2023 6:35 pm

Re: Spending for late 30s retiree

Post by Wwwdotcom »

I would spend the least possible (without pinching too hard) while maximizing health. Ballpark of 50k. Maybe then switch to those "SWR" of 3.5% at around 50 years old.
Last edited by Wwwdotcom on Sun Jun 04, 2023 11:43 am, edited 1 time in total.
anoop
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Re: Spending for late 30s retiree

Post by anoop »

000 wrote: Sun Jun 04, 2023 1:21 am If it were me, no more than 2.5% of current liquid assets + actual dividends paid by illiquid assets.

Inheritance, social security, and life expectancy are far out.
This is an interesting take. What is liquid vs illiquid? Let’s say between 6 month t-bills (1), treasury bonds (2), S&P 500 (3), a bunch of high dividend stocks (4) (say throwing off more than 3% in dividends each).
TacoLover
Posts: 655
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Re: Spending for late 30s retiree

Post by TacoLover »

anoop wrote: Sun Jun 04, 2023 11:42 am
000 wrote: Sun Jun 04, 2023 1:21 am If it were me, no more than 2.5% of current liquid assets + actual dividends paid by illiquid assets.

Inheritance, social security, and life expectancy are far out.
This is an interesting take. What is liquid vs illiquid? Let’s say between 6 month t-bills (1), treasury bonds (2), S&P 500 (3), a bunch of high dividend stocks (4) (say throwing off more than 3% in dividends each).
Liquid is liquid. Part of the assets listed is his home which doesn’t really count as assets unless he’s selling and downsizing. Part is the kids 529 fund which can’t be considered in assets to live on. So he has for sure 2.7m. He is planning on ss in 30 years and planning on a large inheritance in the future which also isn’t something he has and can’t be relied upon for making calculations. And part ownership in a private company which again can’t be accessed at this time.
zie
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Re: Spending for late 30s retiree

Post by zie »

ScroogeMcDuck wrote: Sun Jun 04, 2023 11:12 am
michaeljc70 wrote: Sun Jun 04, 2023 7:48 am $100k. I'd look at using a VPW. You can likely increase the rate of spending later if things go well.
Wow VPW says $122k!
There is also TPAW: https://tpawplanner.com which is similar but not the same as VPW. There is a thread here about it.
Whether rich or poor, a young woman should know how a bank account works, understand the composition of mortgages and bonds, and know the value of interest and how it accumulates. -Hetty Green
makeitcount
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Re: Spending for late 30s retiree

Post by makeitcount »

I would be OK with 3% of the 3.1m (2.7+0.4) and would reevaluate if/when those inheritances materialize.
"Yeah, well, you know, that's just like, uh, your opinion, man." - J. Lebowski
000
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Re: Spending for late 30s retiree

Post by 000 »

anoop wrote: Sun Jun 04, 2023 11:42 am This is an interesting take. What is liquid vs illiquid? Let’s say between 6 month t-bills (1), treasury bonds (2), S&P 500 (3), a bunch of high dividend stocks (4) (say throwing off more than 3% in dividends each).
All of those are liquid to me. By illiquid in this case I was referring to the private company stock (and the house).
anoop
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Re: Spending for late 30s retiree

Post by anoop »

000 wrote: Sun Jun 04, 2023 4:58 pm
anoop wrote: Sun Jun 04, 2023 11:42 am This is an interesting take. What is liquid vs illiquid? Let’s say between 6 month t-bills (1), treasury bonds (2), S&P 500 (3), a bunch of high dividend stocks (4) (say throwing off more than 3% in dividends each).
All of those are liquid to me. By illiquid in this case I was referring to the private company stock (and the house).
Thanks. I’m not the OP but at 4% I can probably pull it off now, while at 2.5% I will probably have to make a significant lifestyle adjustment. This is at the back of my mind all the time because of current work & health situations. If I had health I would probably never consider retiring.
visualguy
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Re: Spending for late 30s retiree

Post by visualguy »

michaeljc70 wrote: Sun Jun 04, 2023 11:02 am
TacoLover wrote: Sun Jun 04, 2023 10:43 am
newyorker wrote: Sat Jun 03, 2023 7:26 pm
ScroogeMcDuck wrote: Sat Jun 03, 2023 5:39 pm Let's say you retired in your late 30s with a family of three (two adults, one child and no plan for more). How much would you be comfortable spending annually with the following portfolio?

$2.7 million invested 60/23/17 in VTI/VXUS/Series I bonds and money market funds
$400k illiquid private company stock
$150k savings for college (in 15 years) 100% in VTWAX
$900k home equity (no mortgage)

Additional details:
- Spouse A will get $30k annually from social security if taken at 70 and likely $1-2 million inheritance
- Spouse B will get $20k annually from social security if taken at 70 and likely $8-9 million inheritance
- All family members are in good mental and physical health, marriage is very happy. Both spouses have family members who have lived into their 90s.

Unrelated but you are living the dream.
I disagree. I could not disagree more. The need to earn a living for us is one to make responsible decisions. To develop important skills others value. To develop oneself. To improve oneself. To become excellent. I would say the idea of not having to support. oneself is almost not human. The idea of waking up without a necessary purpose to fulfill is abhorrent to me. Of course, you can volunteer at the soup kitchen. And of course it is important for a spouse to raise the kids. But the idea of being unnecessary is horrifying to me. I get when you are 70 and don’t have quite the same strength and stamina, but for a young person to choose to be non-productive for a lifetime, and to set that example for his children is horrifying for me.
I could not disagree more. Spending more time with your friends and family is terrible? Spending time on hobbies you love is terrible? I think it is sad when people can only feel needed/accomplished through their job. If you think you are necessary to a corporation I think you are sadly mistaken. They will throw you out whenever it suits them. Of course, if someone is going to retire and watch YouTube all day and play video games that is something else.
What's wrong with watching YouTube and playing video games all day if that's what you like doing? 8-)
zie
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Re: Spending for late 30s retiree

Post by zie »

anoop wrote: Sun Jun 04, 2023 5:43 pm
000 wrote: Sun Jun 04, 2023 4:58 pm
anoop wrote: Sun Jun 04, 2023 11:42 am This is an interesting take. What is liquid vs illiquid? Let’s say between 6 month t-bills (1), treasury bonds (2), S&P 500 (3), a bunch of high dividend stocks (4) (say throwing off more than 3% in dividends each).
All of those are liquid to me. By illiquid in this case I was referring to the private company stock (and the house).
Thanks. I’m not the OP but at 4% I can probably pull it off now, while at 2.5% I will probably have to make a significant lifestyle adjustment. This is at the back of my mind all the time because of current work & health situations. If I had health I would probably never consider retiring.
You might do a new thread on your situation, and then we can all backseat drive your particular situation for you :) If your health is poor enough that you probably don't have 30yrs in you, then I don't see a big reason to think 4% won't work in most situations. I'd argue the lowest reasonable number for very risk averse or very long timeline would be 2.7% ,not 2.5%, but that's not a large difference. There is always risk in retirement, nobody can predict the sequence one will end up on.
Whether rich or poor, a young woman should know how a bank account works, understand the composition of mortgages and bonds, and know the value of interest and how it accumulates. -Hetty Green
000
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Joined: Thu Jul 23, 2020 12:04 am

Re: Spending for late 30s retiree

Post by 000 »

anoop wrote: Sun Jun 04, 2023 5:43 pm Thanks. I’m not the OP but at 4% I can probably pull it off now, while at 2.5% I will probably have to make a significant lifestyle adjustment. This is at the back of my mind all the time because of current work & health situations. If I had health I would probably never consider retiring.
2.5% was only due to the very long expected withdrawal timeline.

However I don't put much faith in the 4% rule for a 30 year retirement either. 3.5% from a globally diversified portfolio is probably closer to "safe". Additionally there are better withdrawal frameworks than SWR, which have been covered in other threads on this forum.
runner540
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Re: Spending for late 30s retiree

Post by runner540 »

makeitcount wrote: Sun Jun 04, 2023 2:33 pm I would be OK with 3% of the 3.1m (2.7+0.4) and would reevaluate if/when those inheritances materialize.
Would not include the $400k private company equity. If OP actually gets cash flow from that, spend it. But the principal could easily go to $100k or $0.
TeacherDan
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Re: Spending for late 30s retiree

Post by TeacherDan »

I’ve been reading Bogleheads for like 3 years and I’ve never felt the need to post on any topic. But seriously, you’re expecting a 9 million dollar inheritance and you’re wondering what your safe withdrawal rate is? I mean come on now.
bltn
Posts: 1844
Joined: Mon Feb 20, 2017 8:32 pm

Re: Spending for late 30s retiree

Post by bltn »

ScroogeMcDuck wrote: Sat Jun 03, 2023 5:39 pm Let's say you retired in your late 30s with a family of three (two adults, one child and no plan for more). How much would you be comfortable spending annually with the following portfolio?

$2.7 million invested 60/23/17 in VTI/VXUS/Series I bonds and money market funds
$400k illiquid private company stock
$150k savings for college (in 15 years) 100% in VTWAX
$900k home equity (no mortgage)

Additional details:
- Spouse A will get $30k annually from social security if taken at 70 and likely $1-2 million inheritance
- Spouse B will get $20k annually from social security if taken at 70 and likely $8-9 million inheritance
- All family members are in good mental and physical health, marriage is very happy. Both spouses have family members who have lived into their 90s.
90,000 dollars a year, including taxes.

I would count the inheritances when, and if, they materialized. When you receive the inheritance, you can increase the spending.
anoop
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Re: Spending for late 30s retiree

Post by anoop »

zie wrote: Sun Jun 04, 2023 6:32 pm
anoop wrote: Sun Jun 04, 2023 5:43 pm
000 wrote: Sun Jun 04, 2023 4:58 pm
anoop wrote: Sun Jun 04, 2023 11:42 am This is an interesting take. What is liquid vs illiquid? Let’s say between 6 month t-bills (1), treasury bonds (2), S&P 500 (3), a bunch of high dividend stocks (4) (say throwing off more than 3% in dividends each).
All of those are liquid to me. By illiquid in this case I was referring to the private company stock (and the house).
Thanks. I’m not the OP but at 4% I can probably pull it off now, while at 2.5% I will probably have to make a significant lifestyle adjustment. This is at the back of my mind all the time because of current work & health situations. If I had health I would probably never consider retiring.
You might do a new thread on your situation, and then we can all backseat drive your particular situation for you :) If your health is poor enough that you probably don't have 30yrs in you, then I don't see a big reason to think 4% won't work in most situations. I'd argue the lowest reasonable number for very risk averse or very long timeline would be 2.7% ,not 2.5%, but that's not a large difference. There is always risk in retirement, nobody can predict the sequence one will end up on.
The only issue is what happens if the condition gets cured or treatment is available to extend life beyond what is possible today. If I plan for 15 years and a cure shows up in year 8 then I have a problem. What’s even worse is if the cure ends up causing some other less serious condition. So in that way it’s impossible to time things precisely. Complicating things is that I’m single and didn’t buy LTC insurance when I was healthy.
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