Thank you in advance to anyone that answers which seems to me to be a very simple question but I have never seen specifically asked. If my RLE is for example 160K a year, and will be for the next 10 years until we take SS. Then with both my husband and I taking SS, our expenses are reduced by that amount (160-60=100). So now, if our expenses are 100K for the next 20 years we can figure that our RLE is averaged over the 30 years this way.

10 X 160 K= 1600 K

20X 100 K = 2000K

and 1600K +2000 K= 3600K

3600k divided by 30 (number years of retirement) = 120 K AVERAGE RLE and our "number" should by 25 X 120K or 3 Million

Does this make sense? Is this the "boglehead way" already?

## can I average out my RLE?

### Re: can I average out my RLE?

No, I don't think the math works. You are front loading the spending versus the average, so the portfolio may drop too much in the beginning to sustain itself later. This seems like a recasting of the sequence of returns problem.

### Re: does this make mathematical sense?

I would approach it differently.1year23 wrote:Thank you in advance to anyone that answers which seems to me to be a very simple question but I have never seen specifically asked. If my RLE is for example 160K a year, and will be for the next 10 years until we take SS. Then with both my husband and I taking SS, our expenses are reduced by that amount (160-60=100). So now, if our expenses are 100K for the next 20 years we can figure that our RLE is averaged over the 30 years this way.

10 X 160 K= 1600 K

20X 100 K = 2000K

and 1600K +2000 K= 3600K

3600k divided by 30 (number years of retirement) = 120 K AVERAGE RLE and our "number" should by 25 X 120K or 3 Million

Does this make sense? Is this the "boglehead way" already?

You need $60K/year for 10 years in your short term pot. Figure out how much that would cost using a conservative return. If you assume you can just keep up with inflation that would be $600K. But if you expect interest rates to rise then you might want a little extra.

You also need $100K/year throughout your entire retirement. If you are comfortable with a 4% safe withdrawal rate then that portion of the nest egg would be 25 x $100K = $2.5MM to cover your entire retirement. But many people either assume a lower safe withdrawal rate OR assume that they could cut back their expenses should the stock market tank. Only you know how much you

**need to live on.**

*really*In addition you need to consider what happens when the first spouse passes away. You are then down to one SS payment AND you are stuck with paying taxes as a single person. Did you take taxes into consideration when you estimated your RLE?

### Re: can I average out my RLE?

It's an approximation, like everything else about retirement planning

Early expenses count for a little more. For example, imagine someone planning for a 50 year retirement. Their portfolio is $10 and earns 10% real per year, and they plan on average expenses of $1 a year. With a fixed $1 of spending every year they can live forever without any drawdown, because the $10 throws off $1 a year.

However, what if they decide to frontload their expenditures by spending $9 the first year, and 81.6 cents or so for the remaining 49 years? That averages $1 a year over the 50 years, but they are clearly going to run out of money really soon (after the first year, the portfolio will be worth $1.10, and they withdraw 81.6 cents for year two, so they will go broke in year 3). This is of course an extreme example, but you get the idea.

FWIW, I view our retirement as two phases - the pre social security (and/or pension or annuity) period, with known duration and high expenses, and the post SS phase[1] with lower drawdown but unknown duration. This also makes sense for us because we largely funded the pre-SS phase with a CD ladder.

Everyone's scenario will be different, of course.

[1]actually two phases - while we're collecting both SS benefits, and then when only one of us is collecting.

Early expenses count for a little more. For example, imagine someone planning for a 50 year retirement. Their portfolio is $10 and earns 10% real per year, and they plan on average expenses of $1 a year. With a fixed $1 of spending every year they can live forever without any drawdown, because the $10 throws off $1 a year.

However, what if they decide to frontload their expenditures by spending $9 the first year, and 81.6 cents or so for the remaining 49 years? That averages $1 a year over the 50 years, but they are clearly going to run out of money really soon (after the first year, the portfolio will be worth $1.10, and they withdraw 81.6 cents for year two, so they will go broke in year 3). This is of course an extreme example, but you get the idea.

FWIW, I view our retirement as two phases - the pre social security (and/or pension or annuity) period, with known duration and high expenses, and the post SS phase[1] with lower drawdown but unknown duration. This also makes sense for us because we largely funded the pre-SS phase with a CD ladder.

Everyone's scenario will be different, of course.

[1]actually two phases - while we're collecting both SS benefits, and then when only one of us is collecting.