25x-50x living expenses?

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iraconfused
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25x-50x living expenses?

Post by iraconfused »

Hi Bogleheads.

I am rewording this due to A LOT of confusion from people. Thank you GrowthSeeker.

Hypothetically, if someone at retirement had accumulated a 401k of $2 mil between traditional and Roth and wanted $80k per year total money how feasible is this plan?
Traditional 401k $1.2 mil
Roth 401k $800k

rolled over to vanguard and put into
Roth $800k VWEAX HY corp bond earns $40k per year
Traditional $400k VFIAX S&P 500 admiral
$800k CD ladder for $40k per year

Each year when $40k cd comes in take 1% from VFIAX for inflation and let VFIAX grow for 20 years.

I am not worried about taxes or expenses or anything else. Just how feasible this plan sounds.
Last edited by iraconfused on Wed Jan 15, 2020 12:21 am, edited 1 time in total.
Dottie57
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Re: 25x-50x living expenses?

Post by Dottie57 »

What are your expense and do they include healthcare and income tax?

25 x expenses = 25 year retirement
50 x expenses = 50 year retirement

Hopefully your portfolio is structured to keep up with inflation after taking your yearly allotment.

I am tired an not making sense of what you wrote.
It would be easier to read in a more tabular format, instead of narrative.
Last edited by Dottie57 on Sun Jan 12, 2020 8:53 pm, edited 1 time in total.
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WoodSpinner
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Re: 25x-50x living expenses?

Post by WoodSpinner »

OP,

I think the big thing you are missing is what your AA will be after you have exhausted the CDs....

Probably better to decide on this Allocation and then decide how to fund your expenses. Take from either the CDs or stocks to keep you AA in line.



If I did the math right, you are looking for a 4% withdrawal rate which is fine. Suggest you look at other approaches including Variable Portfolio Withdrawal or Time Value of Money for alternate ways of coming up to spending targets.

WoodSpinner
KlangFool
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Re: 25x-50x living expenses?

Post by KlangFool »

OP,

You are simply wrong. What you choose to spend every year does not have to be the same as what you withdraw from the accounts.

For example, if your annual expense is 60K but you can withdraw/convert your account of 100K at 0% taxes, why won't you do it?

How much you withdraw/convert is dependent on how much taxes you want to pay each year. It has nothing to do with how much you spend each year.

viewtopic.php?t=87471
<<How to pay ZERO taxes in retirement with 6-figure expenses>>


KlangFool
Topic Author
iraconfused
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Re: 25x-50x living expenses?

Post by iraconfused »

Dottie57 wrote: Sun Jan 12, 2020 8:48 pm What are your expense and do they include healthcare and income tax?

25 x expenses = 25 year retirement
50 x expenses = 50 year retirement

Hopefully your portfolio is structured to keep up with inflation after taking your yearly allotment.

I am tired an not making sense of what you wrote.
It would be easier to read in a more tabular format, instead of narrative.
Dottie57, I am turn 45 in Feb. Home paid for. Owe 44k on truck. Will be paid off in 3 years. Wife and I spend 1k a month right now. She has dis. pension & ssdi = 45k per year. I make 70k+ per year until retirement. Plan on retirement at 60-65. ROTH is tax free money and have taxes taken out of T401k. Index fund is for inflation
Topic Author
iraconfused
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Re: 25x-50x living expenses?

Post by iraconfused »

WoodSpinner wrote: Sun Jan 12, 2020 8:52 pm OP,

I think the big thing you are missing is what your AA will be after you have exhausted the CDs....

Probably better to decide on this Allocation and then decide how to fund your expenses. Take from either the CDs or stocks to keep you AA in line.



If I did the math right, you are looking for a 4% withdrawal rate which is fine. Suggest you look at other approaches including Variable Portfolio Withdrawal or Time Value of Money for alternate ways of coming up to spending targets.

WoodSpinner
WoodSpinner, If I am taking 40k from matured cd ladder per year and letting equities grow for 20 years after 10-15 years I can buy more cds. Expenses are 1k per month. Wife makes 45k a year. I just need to replace my pay
Topic Author
iraconfused
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Re: 25x-50x living expenses?

Post by iraconfused »

KlangFool wrote: Sun Jan 12, 2020 8:55 pm OP,

You are simply wrong. What you choose to spend every year does not have to be the same as what you withdraw from the accounts.

For example, if your annual expense is 60K but you can withdraw/convert your account of 100K at 0% taxes, why won't you do it?

How much you withdraw/convert is dependent on how much taxes you want to pay each year. It has nothing to do with how much you spend each year.

viewtopic.php?t=87471
<<How to pay ZERO taxes in retirement with 6-figure expenses>>


KlangFool
KlangFool, I get your point on taxes but shouldn't have high taxes for one. If my wife pays 15% tithe & offering on her 45k and I pay 15% on my 40k Roth money and 15% on tIRA money(40k+3% cost of living) per year should get money back. I thought about doing conversions on some of the money when I retire but read on here to keep some of it in tIRA. I prefer ALL Roth money
KlangFool
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Re: 25x-50x living expenses?

Post by KlangFool »

iraconfused wrote: Sun Jan 12, 2020 10:01 pm
KlangFool wrote: Sun Jan 12, 2020 8:55 pm OP,

You are simply wrong. What you choose to spend every year does not have to be the same as what you withdraw from the accounts.

For example, if your annual expense is 60K but you can withdraw/convert your account of 100K at 0% taxes, why won't you do it?

How much you withdraw/convert is dependent on how much taxes you want to pay each year. It has nothing to do with how much you spend each year.

viewtopic.php?t=87471
<<How to pay ZERO taxes in retirement with 6-figure expenses>>


KlangFool
KlangFool, I get your point on taxes but shouldn't have high taxes for one. If my wife pays 15% tithe & offering on her 45k and I pay 15% on my 40k Roth money and 15% on tIRA money(40k+3% cost of living) per year should get money back. I thought about doing conversions on some of the money when I retire but read on here to keep some of it in tIRA. I prefer ALL Roth money
iraconfused,

Roth IRA's contribution is not counted as income. Roth 401K can be rolled into Roth IRA and taken out with zero taxes.

Have you read this article?

https://www.madfientist.com/how-to-acce ... nds-early/

KlangFool
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iraconfused
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Re: 25x-50x living expenses?

Post by iraconfused »

KlangFool wrote: Sun Jan 12, 2020 10:12 pm
iraconfused wrote: Sun Jan 12, 2020 10:01 pm
KlangFool wrote: Sun Jan 12, 2020 8:55 pm OP,

You are simply wrong. What you choose to spend every year does not have to be the same as what you withdraw from the accounts.

For example, if your annual expense is 60K but you can withdraw/convert your account of 100K at 0% taxes, why won't you do it?

How much you withdraw/convert is dependent on how much taxes you want to pay each year. It has nothing to do with how much you spend each year.

viewtopic.php?t=87471
<<How to pay ZERO taxes in retirement with 6-figure expenses>>


KlangFool
KlangFool, I get your point on taxes but shouldn't have high taxes for one. If my wife pays 15% tithe & offering on her 45k and I pay 15% on my 40k Roth money and 15% on tIRA money(40k+3% cost of living) per year should get money back. I thought about doing conversions on some of the money when I retire but read on here to keep some of it in tIRA. I prefer ALL Roth money
iraconfused,

Roth IRA's contribution is not counted as income. Roth 401K can be rolled into Roth IRA and taken out with zero taxes.

Have you read this article?

https://www.madfientist.com/how-to-acce ... nds-early/

KlangFool
KlangFool, I know I will not pay taxes on Roth money. But I will pay tithe and offerings in Roth money which I can deduct on taxes. Will read article. Thank you
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willthrill81
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Re: 25x-50x living expenses?

Post by willthrill81 »

KlangFool wrote: Sun Jan 12, 2020 10:12 pm Roth IRA's contribution is not counted as income.
I believe that you meant to say that Roth rollovers are not counted as income. Taxes are paid on contributions to Roth accounts.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
Dottie57
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Re: 25x-50x living expenses?

Post by Dottie57 »

I am confused. If your expenses are 1k and wife’s income is 45k, does she save 33k? How much do you with an income f 70k save/invest?

I am having trouble understanding 1k expenses.

You have a home. Is there no property tax? What about insurance and cost f maintenance?
Food?
Utilities?
Truck loan?
Gas?
Truck insurance?
Clothing?
Healthcare?
Tithing?
Any entertainment?
Travel?
Last edited by Dottie57 on Sun Jan 12, 2020 10:47 pm, edited 1 time in total.
KlangFool
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Re: 25x-50x living expenses?

Post by KlangFool »

willthrill81 wrote: Sun Jan 12, 2020 10:35 pm
KlangFool wrote: Sun Jan 12, 2020 10:12 pm Roth IRA's contribution is not counted as income.
I believe that you meant to say that Roth rollovers are not counted as income. Taxes are paid on contributions to Roth accounts.
Our discussion is about the withdrawal from those accounts. Withdrawal of Roth IRA's contribution is not counted as income.

KlangFool
Topic Author
iraconfused
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Re: 25x-50x living expenses?

Post by iraconfused »

Dottie57 wrote: Sun Jan 12, 2020 10:38 pm I am confused. If your expenses are 1k and wife’s income is 45k, does she save 33k? How much do you save/invest?
I am 45. I put in 15% traditional and 5% Roth per week. Max out Roth IRA . House paid for. Only debt is 44k for truck. I pay 200 per week on until paid. Monthly expenses are 1k. Wife is disabled making 45k per year from disability pension and ssdi. I make 70k+ per year. I am just trying to figure out what I read about 25X+ living expenses and how people decide which to take from. Stocks or Bonds? Or Both? I think if I retire at 65 and have 20 years in CDs at 40k per year and take inflation money from stock on a yearly basis stock grows for 20 years. Rest of what I need take from Roth
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Re: 25x-50x living expenses?

Post by willthrill81 »

KlangFool wrote: Sun Jan 12, 2020 10:45 pm
willthrill81 wrote: Sun Jan 12, 2020 10:35 pm
KlangFool wrote: Sun Jan 12, 2020 10:12 pm Roth IRA's contribution is not counted as income.
I believe that you meant to say that Roth rollovers are not counted as income. Taxes are paid on contributions to Roth accounts.
Our discussion is about the withdrawal from those accounts. Withdrawal of Roth IRA's contribution is not counted as income.

KlangFool
I see. You mean to say that the withdrawal of contributions to a Roth IRA is not counted as income.

However, this is not true of contributions to Roth 401k plans if withdrawn prior to age 59.5.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
KlangFool
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Re: 25x-50x living expenses?

Post by KlangFool »

willthrill81 wrote: Sun Jan 12, 2020 10:52 pm
KlangFool wrote: Sun Jan 12, 2020 10:45 pm
willthrill81 wrote: Sun Jan 12, 2020 10:35 pm
KlangFool wrote: Sun Jan 12, 2020 10:12 pm Roth IRA's contribution is not counted as income.
I believe that you meant to say that Roth rollovers are not counted as income. Taxes are paid on contributions to Roth accounts.
Our discussion is about the withdrawal from those accounts. Withdrawal of Roth IRA's contribution is not counted as income.

KlangFool
I see. You mean to say that the withdrawal of contributions to a Roth IRA is not counted as income.

However, this is not true of contributions to Roth 401k plans if withdrawn prior to age 59.5.
willthrill81,

Come on. All the person has to do is roll over that Roth 401K into Roth IRA and the restriction goes away.

KlangFool
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willthrill81
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Re: 25x-50x living expenses?

Post by willthrill81 »

KlangFool wrote: Sun Jan 12, 2020 10:54 pm
willthrill81 wrote: Sun Jan 12, 2020 10:52 pm
KlangFool wrote: Sun Jan 12, 2020 10:45 pm
willthrill81 wrote: Sun Jan 12, 2020 10:35 pm
KlangFool wrote: Sun Jan 12, 2020 10:12 pm Roth IRA's contribution is not counted as income.
I believe that you meant to say that Roth rollovers are not counted as income. Taxes are paid on contributions to Roth accounts.
Our discussion is about the withdrawal from those accounts. Withdrawal of Roth IRA's contribution is not counted as income.

KlangFool
I see. You mean to say that the withdrawal of contributions to a Roth IRA is not counted as income.

However, this is not true of contributions to Roth 401k plans if withdrawn prior to age 59.5.
willthrill81,

Come on. All the person has to do is roll over that Roth 401K into Roth IRA and the restriction goes away.

KlangFool
So when you rollover a Roth 401k to a Roth IRA, does the custodian of the Roth 401k alert the new custodian as to how much of the account is the holder's contributions? If not, do you have to keep records of all of your Roth 401k contributions so that you can withdraw them after the funds are rolled over to a Roth IRA and so you can withdraw those contributions before 59.5?
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
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iraconfused
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Re: 25x-50x living expenses?

Post by iraconfused »

willthrill81 wrote: Sun Jan 12, 2020 11:01 pm
KlangFool wrote: Sun Jan 12, 2020 10:54 pm
willthrill81 wrote: Sun Jan 12, 2020 10:52 pm
KlangFool wrote: Sun Jan 12, 2020 10:45 pm
willthrill81 wrote: Sun Jan 12, 2020 10:35 pm

I believe that you meant to say that Roth rollovers are not counted as income. Taxes are paid on contributions to Roth accounts.
Our discussion is about the withdrawal from those accounts. Withdrawal of Roth IRA's contribution is not counted as income.

KlangFool
I see. You mean to say that the withdrawal of contributions to a Roth IRA is not counted as income.

However, this is not true of contributions to Roth 401k plans if withdrawn prior to age 59.5.
willthrill81,

Come on. All the person has to do is roll over that Roth 401K into Roth IRA and the restriction goes away.

KlangFool
So when you rollover a Roth 401k to a Roth IRA, does the custodian of the Roth 401k alert the new custodian as to how much of the account is the holder's contributions? If not, do you have to keep records of all of your Roth 401k contributions so that you can withdraw them after the funds are rolled over to a Roth IRA and so you can withdraw those contributions before 59.5?
KlangFool, Correct me if I am wrong but if Roth IRA has been opened for 5 years when Roth 401k rolled in yes you get it without 5 year waiting window willthrill81
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willthrill81
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Re: 25x-50x living expenses?

Post by willthrill81 »

iraconfused wrote: Sun Jan 12, 2020 11:06 pm
willthrill81 wrote: Sun Jan 12, 2020 11:01 pm
KlangFool wrote: Sun Jan 12, 2020 10:54 pm
willthrill81 wrote: Sun Jan 12, 2020 10:52 pm
KlangFool wrote: Sun Jan 12, 2020 10:45 pm

Our discussion is about the withdrawal from those accounts. Withdrawal of Roth IRA's contribution is not counted as income.

KlangFool
I see. You mean to say that the withdrawal of contributions to a Roth IRA is not counted as income.

However, this is not true of contributions to Roth 401k plans if withdrawn prior to age 59.5.
willthrill81,

Come on. All the person has to do is roll over that Roth 401K into Roth IRA and the restriction goes away.

KlangFool
So when you rollover a Roth 401k to a Roth IRA, does the custodian of the Roth 401k alert the new custodian as to how much of the account is the holder's contributions? If not, do you have to keep records of all of your Roth 401k contributions so that you can withdraw them after the funds are rolled over to a Roth IRA and so you can withdraw those contributions before 59.5?
KlangFool, Correct me if I am wrong but if Roth IRA has been opened for 5 years when Roth 401k rolled in yes you get it without 5 year waiting window willthrill81
So you could withdraw all of the Roth 401k funds prior to age 59.5 just by first rolling them over to a Roth IRA that had been opened for five years? I don't think that's possible.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
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iraconfused
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Re: 25x-50x living expenses?

Post by iraconfused »

willthrill81 wrote: Sun Jan 12, 2020 11:18 pm
iraconfused wrote: Sun Jan 12, 2020 11:06 pm
willthrill81 wrote: Sun Jan 12, 2020 11:01 pm
KlangFool wrote: Sun Jan 12, 2020 10:54 pm
willthrill81 wrote: Sun Jan 12, 2020 10:52 pm

I see. You mean to say that the withdrawal of contributions to a Roth IRA is not counted as income.

However, this is not true of contributions to Roth 401k plans if withdrawn prior to age 59.5.
willthrill81,

Come on. All the person has to do is roll over that Roth 401K into Roth IRA and the restriction goes away.

KlangFool
So when you rollover a Roth 401k to a Roth IRA, does the custodian of the Roth 401k alert the new custodian as to how much of the account is the holder's contributions? If not, do you have to keep records of all of your Roth 401k contributions so that you can withdraw them after the funds are rolled over to a Roth IRA and so you can withdraw those contributions before 59.5?
KlangFool, Correct me if I am wrong but if Roth IRA has been opened for 5 years when Roth 401k rolled in yes you get it without 5 year waiting window willthrill81
So you could withdraw all of the Roth 401k funds prior to age 59.5 just by first rolling them over to a Roth IRA that had been opened for five years? I don't think that's possible.
What I put in. Not earnings. Think that is how it works
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willthrill81
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Re: 25x-50x living expenses?

Post by willthrill81 »

iraconfused wrote: Sun Jan 12, 2020 11:25 pm
willthrill81 wrote: Sun Jan 12, 2020 11:18 pm
iraconfused wrote: Sun Jan 12, 2020 11:06 pm
willthrill81 wrote: Sun Jan 12, 2020 11:01 pm
KlangFool wrote: Sun Jan 12, 2020 10:54 pm

willthrill81,

Come on. All the person has to do is roll over that Roth 401K into Roth IRA and the restriction goes away.

KlangFool
So when you rollover a Roth 401k to a Roth IRA, does the custodian of the Roth 401k alert the new custodian as to how much of the account is the holder's contributions? If not, do you have to keep records of all of your Roth 401k contributions so that you can withdraw them after the funds are rolled over to a Roth IRA and so you can withdraw those contributions before 59.5?
KlangFool, Correct me if I am wrong but if Roth IRA has been opened for 5 years when Roth 401k rolled in yes you get it without 5 year waiting window willthrill81
So you could withdraw all of the Roth 401k funds prior to age 59.5 just by first rolling them over to a Roth IRA that had been opened for five years? I don't think that's possible.
What I put in. Not earnings. Think that is how it works
But how does the Roth IRA custodian know what your contributions to the Roth 401k were? I didn't think that custodians transferred that information when you did a rollover.

EDIT: I've found one person, not a credible source, who has said that your contribution basis in your Roth 401k is maintained if you do a rollover to a Roth IRA. However, I'm not sure if this contribution basis information is transferred when the rollover is done or whether you must keep your own records and provide those to the Roth IRA custodian before you withdraw your contributions.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
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Re: 25x-50x living expenses?

Post by geerhardusvos »

Dottie57 wrote: Sun Jan 12, 2020 8:48 pm What are your expense and do they include healthcare and income tax?

25 x expenses = 25 year retirement
50 x expenses = 50 year retirement

Hopefully your portfolio is structured to keep up with inflation after taking your yearly allotment.

I am tired an not making sense of what you wrote.
It would be easier to read in a more tabular format, instead of narrative.
45-50x expenses in 70/30 will likely last forever, not just 50 years
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Re: 25x-50x living expenses?

Post by KlangFool »

iraconfused wrote: Sun Jan 12, 2020 11:25 pm
willthrill81 wrote: Sun Jan 12, 2020 11:18 pm
iraconfused wrote: Sun Jan 12, 2020 11:06 pm
willthrill81 wrote: Sun Jan 12, 2020 11:01 pm
KlangFool wrote: Sun Jan 12, 2020 10:54 pm

willthrill81,

Come on. All the person has to do is roll over that Roth 401K into Roth IRA and the restriction goes away.

KlangFool
So when you rollover a Roth 401k to a Roth IRA, does the custodian of the Roth 401k alert the new custodian as to how much of the account is the holder's contributions? If not, do you have to keep records of all of your Roth 401k contributions so that you can withdraw them after the funds are rolled over to a Roth IRA and so you can withdraw those contributions before 59.5?
KlangFool, Correct me if I am wrong but if Roth IRA has been opened for 5 years when Roth 401k rolled in yes you get it without 5 year waiting window willthrill81
So you could withdraw all of the Roth 401k funds prior to age 59.5 just by first rolling them over to a Roth IRA that had been opened for five years? I don't think that's possible.
What I put in. Not earnings. Think that is how it works
I don't know. You may want to start a new topic and ask.

KlangFool
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Re: 25x-50x living expenses?

Post by Dottie57 »

geerhardusvos wrote: Mon Jan 13, 2020 12:56 am
Dottie57 wrote: Sun Jan 12, 2020 8:48 pm What are your expense and do they include healthcare and income tax?

25 x expenses = 25 year retirement
50 x expenses = 50 year retirement

Hopefully your portfolio is structured to keep up with inflation after taking your yearly allotment.

I am tired an not making sense of what you wrote.
It would be easier to read in a more tabular format, instead of narrative.
45-50x expenses in 70/30 will likely last forever, not just 50 years
If the future is like the past- yes. If significantly worse - no. I think when people say expenses for a number of years they are basically talking liability matching for a given number of years.
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geerhardusvos
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Re: 25x-50x living expenses?

Post by geerhardusvos »

Dottie57 wrote: Mon Jan 13, 2020 8:29 am
geerhardusvos wrote: Mon Jan 13, 2020 12:56 am
Dottie57 wrote: Sun Jan 12, 2020 8:48 pm What are your expense and do they include healthcare and income tax?

25 x expenses = 25 year retirement
50 x expenses = 50 year retirement

Hopefully your portfolio is structured to keep up with inflation after taking your yearly allotment.

I am tired an not making sense of what you wrote.
It would be easier to read in a more tabular format, instead of narrative.
45-50x expenses in 70/30 will likely last forever, not just 50 years
If the future is like the past- yes. If significantly worse - no. I think when people say expenses for a number of years they are basically talking liability matching for a given number of years.
Even with meager growth above inflation (extremely likely), if you have 25x expenses it will last you 30+ years, and with a 70/30 portfolio, 80% chance of still having money after 30 years... 50x is even more likely to last... in fact, their money will probably increase or even double... no one knows the future, but this fear mongering isn't the information our readers need despite the potential difficult periods we will face in the coming decades.
VTSAX and chill
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Sandtrap
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Re: 25x-50x living expenses?

Post by Sandtrap »

Dottie57 wrote: Sun Jan 12, 2020 8:48 pm What are your expense and do they include healthcare and income tax?

25 x expenses = 25 year retirement
50 x expenses = 50 year retirement

Hopefully your portfolio is structured to keep up with inflation after taking your yearly allotment.

I am tired an not making sense of what you wrote.
It would be easier to read in a more tabular format, instead of narrative.
+1
I also can't make sense of your data and infer what is missing from it.

OP: Please edit your original post in this type of format. Missing data to comprehensively answer your questions are: age, years to retirement, etc.
Use the "pencil icon" to edit your original post as a list this way:
Portfolio Review Request
https://www.bogleheads.org/forum/viewt ... =1&t=6212

Also, search the forum "wiki" for "25x" for a wealth of previously posted data on the subject.
j :happy
Wiki Bogleheads Wiki: Everything You Need to Know
Dottie57
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Re: 25x-50x living expenses?

Post by Dottie57 »

geerhardusvos wrote: Mon Jan 13, 2020 10:30 am
Dottie57 wrote: Mon Jan 13, 2020 8:29 am
geerhardusvos wrote: Mon Jan 13, 2020 12:56 am
Dottie57 wrote: Sun Jan 12, 2020 8:48 pm What are your expense and do they include healthcare and income tax?

25 x expenses = 25 year retirement
50 x expenses = 50 year retirement

Hopefully your portfolio is structured to keep up with inflation after taking your yearly allotment.

I am tired an not making sense of what you wrote.
It would be easier to read in a more tabular format, instead of narrative.
45-50x expenses in 70/30 will likely last forever, not just 50 years
If the future is like the past- yes. If significantly worse - no. I think when people say expenses for a number of years they are basically talking liability matching for a given number of years.
Even with meager growth above inflation (extremely likely), if you have 25x expenses it will last you 30+ years, and with a 70/30 portfolio, 80% chance of still having money after 30 years... 50x is even more likely to last... in fact, their money will probably increase or even double... no one knows the future, but this fear mongering isn't the information our readers need despite the potential difficult periods we will face in the coming decades.
It is not fear mongering. I myself have 30 times basic expenses for 25 to 30 yr retirement. The trinity study was based on either a 25 or 30 year retirement. I don’t want FIRE people in their 30’s or 40’s thinking they are set for life with 30 times expenses.
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willthrill81
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Re: 25x-50x living expenses?

Post by willthrill81 »

Dottie57 wrote: Mon Jan 13, 2020 11:02 am
geerhardusvos wrote: Mon Jan 13, 2020 10:30 am
Dottie57 wrote: Mon Jan 13, 2020 8:29 am
geerhardusvos wrote: Mon Jan 13, 2020 12:56 am
Dottie57 wrote: Sun Jan 12, 2020 8:48 pm What are your expense and do they include healthcare and income tax?

25 x expenses = 25 year retirement
50 x expenses = 50 year retirement

Hopefully your portfolio is structured to keep up with inflation after taking your yearly allotment.

I am tired an not making sense of what you wrote.
It would be easier to read in a more tabular format, instead of narrative.
45-50x expenses in 70/30 will likely last forever, not just 50 years
If the future is like the past- yes. If significantly worse - no. I think when people say expenses for a number of years they are basically talking liability matching for a given number of years.
Even with meager growth above inflation (extremely likely), if you have 25x expenses it will last you 30+ years, and with a 70/30 portfolio, 80% chance of still having money after 30 years... 50x is even more likely to last... in fact, their money will probably increase or even double... no one knows the future, but this fear mongering isn't the information our readers need despite the potential difficult periods we will face in the coming decades.
It is not fear mongering. I myself have 30 times basic expenses for 25 to 30 yr retirement. The trinity study was based on either a 25 or 30 year retirement. I don’t want FIRE people in their 30’s or 40’s thinking they are set for life with 30 times expenses.
3% (33x) has been, more or less, the historic perpetual withdrawal rate (i.e. leaving retirees with at least their inflation-adjusted starting portfolio after 20+ years of withdrawals), so there's been no need for a larger portfolio than that, certainly not 40x or 50x, unless the retiree wanted the portfolio for something other than regular withdrawals (e.g. big bequest, other spending needs).
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
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Re: 25x-50x living expenses?

Post by BanquetBeer »

Dottie57 wrote: Mon Jan 13, 2020 11:02 am It is not fear mongering. I myself have 30 times basic expenses for 25 to 30 yr retirement. The trinity study was based on either a 25 or 30 year retirement. I don’t want FIRE people in their 30’s or 40’s thinking they are set for life with 30 times expenses.
I believe the trinity study was conducted estimating what the SWR was and they came up with around 4% -> that translates to the 25x number.

If one has 30x and they believe the trinity study represents the future (or worse than the future) - they then have the 25x for 30 years and they have an additional 5x that can grow for 30 years to yield some large number.

Long story short, 30x is roughly forever. There are also studies on this - I believe it’s somewhere around 3.25% will never fail the analysis based on past data.

As to the original question. Most people set an asset allocation and withdraw as part of that balancing act (if stocks grow, take from stocks. If bonds grow, take from bonds.) many have a cash buffer for the year, some dont.

As for tithing, the church doesn’t need to know about your conversions - you can decide if you want to pay a portion of that or just pay whatever you take out for spending. That is an entirely personal decision and not based on financial rules.

Edit - makes me wonder, do you tithe on coupons amounts also? 😂 getting a bit into the weeds
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Re: 25x-50x living expenses?

Post by Admiral »

iraconfused wrote: Sun Jan 12, 2020 10:52 pm
Dottie57 wrote: Sun Jan 12, 2020 10:38 pm I am confused. If your expenses are 1k and wife’s income is 45k, does she save 33k? How much do you save/invest?
I am 45. I put in 15% traditional and 5% Roth per week. Max out Roth IRA . House paid for. Only debt is 44k for truck. I pay 200 per week on until paid. Monthly expenses are 1k. Wife is disabled making 45k per year from disability pension and ssdi. I make 70k+ per year. I am just trying to figure out what I read about 25X+ living expenses and how people decide which to take from. Stocks or Bonds? Or Both? I think if I retire at 65 and have 20 years in CDs at 40k per year and take inflation money from stock on a yearly basis stock grows for 20 years. Rest of what I need take from Roth
I still am not understanding your "1k monthly expense." If you "pay 200 per week on" your truck, that alone is $800/month. So all your other expenses (utils, re tax, food, cell phone) = $200??

This is not complicated. Once you have a true estimate of your ACTUAL yearly expense, you subtract out your income (whether that's SSDI, SS, pension, or something else) and the remainder is what needs to be covered by investments.

For example, if your TRUE yearly expense was $12,000, and you had SSDI of $45k, you would need $0 from your portfolio.

On the other hand, if your yearly expense was $100,000, you would need $100k-$45k = $55k per year. For a 25 year retirement, you would need $1,375,000 @ 4% withdrawal rate (ignoring taxes for simplicity).

In terms of WHERE (i.e what type) of investment from which to draw one, that's dependent on many things: taxes, whether you want to leave a large estate (i.e. let stocks grow and live off bond income), your other sources of income and how they are taxed, your ability to emotionally withstand severe market downturns while still selling stocks, et cetera.
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Re: 25x-50x living expenses?

Post by geerhardusvos »

Dottie57 wrote: Mon Jan 13, 2020 11:02 am
geerhardusvos wrote: Mon Jan 13, 2020 10:30 am
Dottie57 wrote: Mon Jan 13, 2020 8:29 am
geerhardusvos wrote: Mon Jan 13, 2020 12:56 am
Dottie57 wrote: Sun Jan 12, 2020 8:48 pm What are your expense and do they include healthcare and income tax?

25 x expenses = 25 year retirement
50 x expenses = 50 year retirement

Hopefully your portfolio is structured to keep up with inflation after taking your yearly allotment.

I am tired an not making sense of what you wrote.
It would be easier to read in a more tabular format, instead of narrative.
45-50x expenses in 70/30 will likely last forever, not just 50 years
If the future is like the past- yes. If significantly worse - no. I think when people say expenses for a number of years they are basically talking liability matching for a given number of years.
Even with meager growth above inflation (extremely likely), if you have 25x expenses it will last you 30+ years, and with a 70/30 portfolio, 80% chance of still having money after 30 years... 50x is even more likely to last... in fact, their money will probably increase or even double... no one knows the future, but this fear mongering isn't the information our readers need despite the potential difficult periods we will face in the coming decades.
It is not fear mongering. I myself have 30 times basic expenses for 25 to 30 yr retirement. The trinity study was based on either a 25 or 30 year retirement. I don’t want FIRE people in their 30’s or 40’s thinking they are set for life with 30 times expenses.
There is a strong likelihood that someone with 30x expenses invested (meaning they have $1M and spend ~$33k/year) in a 70/30 portfolio will be able to live on that money in perpetuity. 40x and 50x is well enough to pass down all the money (even inflation adjusted) to the next generation, and you will probably double your money. I'm 29 years old. When I hit ~30x expenses in my 80/20 portfolio by age ~40, I will be completely free and clear until age 90 (I might work longer, but likely won't be needed). If you have 30x today and you are above age 50, you will never run out of money if you stay within your 3-3.3% SWR and invest in a 70/30. Anything is possible, but it's more likely to get struck by lightening than a 40-50x running out of money in 30 years. Because of the truth in this math, I consider your initial comment fear mongering and unfounded.

https://retirementplans.vanguard.com/VG ... ggCalc.jsf
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Re: 25x-50x living expenses?

Post by geerhardusvos »

willthrill81 wrote: Mon Jan 13, 2020 11:13 am
Dottie57 wrote: Mon Jan 13, 2020 11:02 am
geerhardusvos wrote: Mon Jan 13, 2020 10:30 am
Dottie57 wrote: Mon Jan 13, 2020 8:29 am
geerhardusvos wrote: Mon Jan 13, 2020 12:56 am

45-50x expenses in 70/30 will likely last forever, not just 50 years
If the future is like the past- yes. If significantly worse - no. I think when people say expenses for a number of years they are basically talking liability matching for a given number of years.
Even with meager growth above inflation (extremely likely), if you have 25x expenses it will last you 30+ years, and with a 70/30 portfolio, 80% chance of still having money after 30 years... 50x is even more likely to last... in fact, their money will probably increase or even double... no one knows the future, but this fear mongering isn't the information our readers need despite the potential difficult periods we will face in the coming decades.
It is not fear mongering. I myself have 30 times basic expenses for 25 to 30 yr retirement. The trinity study was based on either a 25 or 30 year retirement. I don’t want FIRE people in their 30’s or 40’s thinking they are set for life with 30 times expenses.
3% (33x) has been, more or less, the historic perpetual withdrawal rate (i.e. leaving retirees with at least their inflation-adjusted starting portfolio after 20+ years of withdrawals), so there's been no need for a larger portfolio than that, certainly not 40x or 50x, unless the retiree wanted the portfolio for something other than regular withdrawals (e.g. big bequest, other spending needs).
I'm not retiring until I have at least 100x expenses!!!! :twisted: :wink: :beer
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Re: 25x-50x living expenses?

Post by Admiral »

geerhardusvos wrote: Mon Jan 13, 2020 11:31 am
Dottie57 wrote: Mon Jan 13, 2020 11:02 am
geerhardusvos wrote: Mon Jan 13, 2020 10:30 am
Dottie57 wrote: Mon Jan 13, 2020 8:29 am
geerhardusvos wrote: Mon Jan 13, 2020 12:56 am

45-50x expenses in 70/30 will likely last forever, not just 50 years
If the future is like the past- yes. If significantly worse - no. I think when people say expenses for a number of years they are basically talking liability matching for a given number of years.
Even with meager growth above inflation (extremely likely), if you have 25x expenses it will last you 30+ years, and with a 70/30 portfolio, 80% chance of still having money after 30 years... 50x is even more likely to last... in fact, their money will probably increase or even double... no one knows the future, but this fear mongering isn't the information our readers need despite the potential difficult periods we will face in the coming decades.
It is not fear mongering. I myself have 30 times basic expenses for 25 to 30 yr retirement. The trinity study was based on either a 25 or 30 year retirement. I don’t want FIRE people in their 30’s or 40’s thinking they are set for life with 30 times expenses.
There is a strong likelihood that someone with 30x expenses invested (meaning they have $1M and spend ~$33k/year) in a 70/30 portfolio will be able to live on that money in perpetuity. 40x and 50x is well enough to pass down all the money (even inflation adjusted) to the next generation, and you will probably double your money. I'm 29 years old. When I hit ~30x expenses in my 80/20 portfolio by age ~40, I will be completely free and clear until age 90 (I might work longer, but likely won't be needed). If you have 30x today and you are above age 50, you will never run out of money if you stay within your 3-3.3% SWR and invest in a 70/30. Anything is possible, but it's more likely to get struck by lightening than a 40-50x running out of money in 30 years. Because of the truth in this math, I consider your initial comment fear mongering and unfounded.

https://retirementplans.vanguard.com/VG ... ggCalc.jsf
"Fear mongering" is a bit harsh. While I tend to agree with you (and am an optimist about the future economy) I don't think it's necessarily irrational for someone who retires at a very young age (say 30-35, even 40) to want to have AT LEAST 30x expenses. You could live to 90 or 95, and you likely will not have max SS with only 20-25 years of SS-taxed earnings.

For normal early retirement (age 50-60) , I believe 30x is extra safe, but not outrageous. Once your into your 60s, it's likely unnecessary unless there are estate issues.
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Re: 25x-50x living expenses?

Post by KlangFool »

geerhardusvos wrote: Mon Jan 13, 2020 11:35 am
I'm not retiring until I have at least 100x expenses!!!! :twisted: :wink: :beer
geerhardusvos,

You would change your mind as soon as you attended too many funerals. My 49 years old healthy ex-coworker died from a fall during X'mas.

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Re: 25x-50x living expenses?

Post by geerhardusvos »

Admiral wrote: Mon Jan 13, 2020 11:39 am
geerhardusvos wrote: Mon Jan 13, 2020 11:31 am
Dottie57 wrote: Mon Jan 13, 2020 11:02 am
geerhardusvos wrote: Mon Jan 13, 2020 10:30 am
Dottie57 wrote: Mon Jan 13, 2020 8:29 am

If the future is like the past- yes. If significantly worse - no. I think when people say expenses for a number of years they are basically talking liability matching for a given number of years.
Even with meager growth above inflation (extremely likely), if you have 25x expenses it will last you 30+ years, and with a 70/30 portfolio, 80% chance of still having money after 30 years... 50x is even more likely to last... in fact, their money will probably increase or even double... no one knows the future, but this fear mongering isn't the information our readers need despite the potential difficult periods we will face in the coming decades.
It is not fear mongering. I myself have 30 times basic expenses for 25 to 30 yr retirement. The trinity study was based on either a 25 or 30 year retirement. I don’t want FIRE people in their 30’s or 40’s thinking they are set for life with 30 times expenses.
There is a strong likelihood that someone with 30x expenses invested (meaning they have $1M and spend ~$33k/year) in a 70/30 portfolio will be able to live on that money in perpetuity. 40x and 50x is well enough to pass down all the money (even inflation adjusted) to the next generation, and you will probably double your money. I'm 29 years old. When I hit ~30x expenses in my 80/20 portfolio by age ~40, I will be completely free and clear until age 90 (I might work longer, but likely won't be needed). If you have 30x today and you are above age 50, you will never run out of money if you stay within your 3-3.3% SWR and invest in a 70/30. Anything is possible, but it's more likely to get struck by lightening than a 40-50x running out of money in 30 years. Because of the truth in this math, I consider your initial comment fear mongering and unfounded.

https://retirementplans.vanguard.com/VG ... ggCalc.jsf
"Fear mongering" is a bit harsh. While I tend to agree with you (and am an optimist about the future economy) I don't think it's necessarily irrational for someone who retires at a very young age (say 30-35, even 40) to want to have AT LEAST 30x expenses. You could live to 90 or 95, and you likely will not have max SS with only 20-25 years of SS-taxed earnings.

For normal early retirement (age 50-60) , I believe 30x is extra safe, but not outrageous. Once your into your 60s, it's likely unnecessary unless there are estate issues.
if you add in social security allowances to the picture for the current 50-60 year old crowd, 30x invested is actually outrageously safe. Nothing wrong with being that safe, just don't need to be scaring other people who have less. The 25x = 25 years just doesn't line up with 100 years of data. You never know... Be diversified, keep some in equities, and if you are 50+ and have a 30 year horizon, sleep easy with 25x+ especially with SS benefits considered.
Last edited by geerhardusvos on Mon Jan 13, 2020 11:55 am, edited 1 time in total.
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Re: 25x-50x living expenses?

Post by geerhardusvos »

KlangFool wrote: Mon Jan 13, 2020 11:51 am
geerhardusvos wrote: Mon Jan 13, 2020 11:35 am
I'm not retiring until I have at least 100x expenses!!!! :twisted: :wink: :beer
geerhardusvos,

You would change your mind as soon as you attended too many funerals. My 49 years old healthy ex-coworker died from a fall during X'mas.

KlangFool
I'm sorry, KF, it was sarcasm; will keep that to a minimum in the future.
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Re: 25x-50x living expenses?

Post by iraconfused »

Admiral wrote: Mon Jan 13, 2020 11:28 am
iraconfused wrote: Sun Jan 12, 2020 10:52 pm
Dottie57 wrote: Sun Jan 12, 2020 10:38 pm I am confused. If your expenses are 1k and wife’s income is 45k, does she save 33k? How much do you save/invest?
I am 45. I put in 15% traditional and 5% Roth per week. Max out Roth IRA . House paid for. Only debt is 44k for truck. I pay 200 per week on until paid. Monthly expenses are 1k. Wife is disabled making 45k per year from disability pension and ssdi. I make 70k+ per year. I am just trying to figure out what I read about 25X+ living expenses and how people decide which to take from. Stocks or Bonds? Or Both? I think if I retire at 65 and have 20 years in CDs at 40k per year and take inflation money from stock on a yearly basis stock grows for 20 years. Rest of what I need take from Roth
I still am not understanding your "1k monthly expense." If you "pay 200 per week on" your truck, that alone is $800/month. So all your other expenses (utils, re tax, food, cell phone) = $200??

This is not complicated. Once you have a true estimate of your ACTUAL yearly expense, you subtract out your income (whether that's SSDI, SS, pension, or something else) and the remainder is what needs to be covered by investments.

For example, if your TRUE yearly expense was $12,000, and you had SSDI of $45k, you would need $0 from your portfolio.

On the other hand, if your yearly expense was $100,000, you would need $100k-$45k = $55k per year. For a 25 year retirement, you would need $1,375,000 @ 4% withdrawal rate (ignoring taxes for simplicity).

In terms of WHERE (i.e what type) of investment from which to draw one, that's dependent on many things: taxes, whether you want to leave a large estate (i.e. let stocks grow and live off bond income), your other sources of income and how they are taxed, your ability to emotionally withstand severe market downturns while still selling stocks, et cetera.
Admiral,

Sorry, I do not count truck payment. When I retire I will pay cash for anything I need. So monthly expenses (food, utilities, ins) are 1k per month. Most of my retirement money will go to travelling. Wife makes over and above for expenses. I question HOW to take the money so I do not run out. If taking 40k from ROTH per year and want 40k from tIRA it seems I could put 800k in cd ladder with 40k coming due every year. Rest of money in S&P 500 index and take yearly inflation from that. Sorry that I may not have worded things so not so confusing
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Re: 25x-50x living expenses?

Post by KlangFool »

geerhardusvos wrote: Mon Jan 13, 2020 11:54 am
KlangFool wrote: Mon Jan 13, 2020 11:51 am
geerhardusvos wrote: Mon Jan 13, 2020 11:35 am
I'm not retiring until I have at least 100x expenses!!!! :twisted: :wink: :beer
geerhardusvos,

You would change your mind as soon as you attended too many funerals. My 49 years old healthy ex-coworker died from a fall during X'mas.

KlangFool
I'm sorry, KF, it was sarcasm; will keep that to a minimum in the future.
geerhardusvos,

No problem. I just wanted to point out that there is a risk of delaying retirement too. I had too many first-hand observations of how it went bad.

My older brother retired and passed the full physical exam cleanly. A few months later, he fainted in the bathroom and they found an inoperable brain tumor in his head. He died a few months later. In summary, he retired for less than two years.

KlangFool
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Re: 25x-50x living expenses?

Post by Admiral »

iraconfused wrote: Mon Jan 13, 2020 11:55 am
Admiral wrote: Mon Jan 13, 2020 11:28 am
iraconfused wrote: Sun Jan 12, 2020 10:52 pm
Dottie57 wrote: Sun Jan 12, 2020 10:38 pm I am confused. If your expenses are 1k and wife’s income is 45k, does she save 33k? How much do you save/invest?
I am 45. I put in 15% traditional and 5% Roth per week. Max out Roth IRA . House paid for. Only debt is 44k for truck. I pay 200 per week on until paid. Monthly expenses are 1k. Wife is disabled making 45k per year from disability pension and ssdi. I make 70k+ per year. I am just trying to figure out what I read about 25X+ living expenses and how people decide which to take from. Stocks or Bonds? Or Both? I think if I retire at 65 and have 20 years in CDs at 40k per year and take inflation money from stock on a yearly basis stock grows for 20 years. Rest of what I need take from Roth
I still am not understanding your "1k monthly expense." If you "pay 200 per week on" your truck, that alone is $800/month. So all your other expenses (utils, re tax, food, cell phone) = $200??

This is not complicated. Once you have a true estimate of your ACTUAL yearly expense, you subtract out your income (whether that's SSDI, SS, pension, or something else) and the remainder is what needs to be covered by investments.

For example, if your TRUE yearly expense was $12,000, and you had SSDI of $45k, you would need $0 from your portfolio.

On the other hand, if your yearly expense was $100,000, you would need $100k-$45k = $55k per year. For a 25 year retirement, you would need $1,375,000 @ 4% withdrawal rate (ignoring taxes for simplicity).

In terms of WHERE (i.e what type) of investment from which to draw one, that's dependent on many things: taxes, whether you want to leave a large estate (i.e. let stocks grow and live off bond income), your other sources of income and how they are taxed, your ability to emotionally withstand severe market downturns while still selling stocks, et cetera.
Admiral,

Sorry, I do not count truck payment. When I retire I will pay cash for anything I need. So monthly expenses (food, utilities, ins) are 1k per month. Most of my retirement money will go to travelling. Wife makes over and above for expenses. I question HOW to take the money so I do not run out. If taking 40k from ROTH per year and want 40k from tIRA it seems I could put 800k in cd ladder with 40k coming due every year. Rest of money in S&P 500 index and take yearly inflation from that. Sorry that I may not have worded things so not so confusing
Travelling is part of your budget/expenses. What's above is a lof of "ifs" about taking $80k per year out divided in various ways.

Until you post what you truly expect to spend in retirement (assuming it is not covered by SSDI) there's no way we can help with with either how much or from where to withdraw your money.
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Re: 25x-50x living expenses?

Post by ohai »

30x expenses for early retirement does not sound unreasonably conservative at all.

25x expenses (4% withdrawal rate) is based on a study of 30y retirement. This is the level where no 30y retirement portfolios have failed in some 100 year history of US assets.

Now consider this chain of thought:

Since the 4% withdrawal rate is where some 30y portfolios begin to fail, by definition, the marginal 30y portfolio (the first 30y portfolio to fail) reached 0% in year 30. Therefore, the marginal 31y portfolio must have a withdrawal rate of less than 4%

Now, extend this to more and more years. The marginal 31y portfolio must have had a withdrawal rate of less than 4% (from above). The marginal 32y portfolio must have had a withdrawal rate that is lower still. Even further on... the marginal 50y portfolio must have a withdrawal rate substantially lower than 4%. 3.33% even sounds aggressive!

One could argue that the historical test of "no failures in history" is too conservative. However, if you subscribe to the "4% rule" for normal retirement, rationally, you must believe in a much lower withdrawal rate for early retirement.
Last edited by ohai on Mon Jan 13, 2020 12:04 pm, edited 1 time in total.
aerosurfer
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Re: 25x-50x living expenses?

Post by aerosurfer »

iraconfused wrote: Mon Jan 13, 2020 11:55 am
Admiral wrote: Mon Jan 13, 2020 11:28 am
iraconfused wrote: Sun Jan 12, 2020 10:52 pm
Dottie57 wrote: Sun Jan 12, 2020 10:38 pm I am confused. If your expenses are 1k and wife’s income is 45k, does she save 33k? How much do you save/invest?
I am 45. I put in 15% traditional and 5% Roth per week. Max out Roth IRA . House paid for. Only debt is 44k for truck. I pay 200 per week on until paid. Monthly expenses are 1k. Wife is disabled making 45k per year from disability pension and ssdi. I make 70k+ per year. I am just trying to figure out what I read about 25X+ living expenses and how people decide which to take from. Stocks or Bonds? Or Both? I think if I retire at 65 and have 20 years in CDs at 40k per year and take inflation money from stock on a yearly basis stock grows for 20 years. Rest of what I need take from Roth
I still am not understanding your "1k monthly expense." If you "pay 200 per week on" your truck, that alone is $800/month. So all your other expenses (utils, re tax, food, cell phone) = $200??

This is not complicated. Once you have a true estimate of your ACTUAL yearly expense, you subtract out your income (whether that's SSDI, SS, pension, or something else) and the remainder is what needs to be covered by investments.

For example, if your TRUE yearly expense was $12,000, and you had SSDI of $45k, you would need $0 from your portfolio.

On the other hand, if your yearly expense was $100,000, you would need $100k-$45k = $55k per year. For a 25 year retirement, you would need $1,375,000 @ 4% withdrawal rate (ignoring taxes for simplicity).

In terms of WHERE (i.e what type) of investment from which to draw one, that's dependent on many things: taxes, whether you want to leave a large estate (i.e. let stocks grow and live off bond income), your other sources of income and how they are taxed, your ability to emotionally withstand severe market downturns while still selling stocks, et cetera.
Admiral,

Sorry, I do not count truck payment. When I retire I will pay cash for anything I need. So monthly expenses (food, utilities, ins) are 1k per month. Most of my retirement money will go to travelling. Wife makes over and above for expenses. I question HOW to take the money so I do not run out. If taking 40k from ROTH per year and want 40k from tIRA it seems I could put 800k in cd ladder with 40k coming due every year. Rest of money in S&P 500 index and take yearly inflation from that. Sorry that I may not have worded things so not so confusing
Still seems like you more overly complicating things, as well as not strategizing your tax planning.

If your expenses are that low and you already have 7 figures you can do whatever you want at retirement age. It supports it.

Why are you paying into a Roth 401k instead of traditional? You are locking in your taxes now. What's your tax rate now and would you expect it to be higher or lower in retirement? Do you live in an income tax free state now or do you plan to in the future? Just because its tax free doesnt mean it's more money at the end. Gotta run the math.

As far a tithing, that's a portion of your expenses, either give it tax free via a DAF or simply factor it in when calculating your yearly costs
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Re: 25x-50x living expenses?

Post by smitcat »

KlangFool wrote: Mon Jan 13, 2020 12:01 pm
geerhardusvos wrote: Mon Jan 13, 2020 11:54 am
KlangFool wrote: Mon Jan 13, 2020 11:51 am
geerhardusvos wrote: Mon Jan 13, 2020 11:35 am
I'm not retiring until I have at least 100x expenses!!!! :twisted: :wink: :beer
geerhardusvos,

You would change your mind as soon as you attended too many funerals. My 49 years old healthy ex-coworker died from a fall during X'mas.

KlangFool
I'm sorry, KF, it was sarcasm; will keep that to a minimum in the future.
geerhardusvos,

No problem. I just wanted to point out that there is a risk of delaying retirement too. I had too many first-hand observations of how it went bad.

My older brother retired and passed the full physical exam cleanly. A few months later, he fainted in the bathroom and they found an inoperable brain tumor in his head. He died a few months later. In summary, he retired for less than two years.

KlangFool
"My older brother retired and passed the full physical exam cleanly. A few months later, he fainted in the bathroom and they found an inoperable brain tumor in his head. He died a few months later. In summary, he retired for less than two years."

Sorry for you loss.
Never wait for retirement to live you life.
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Re: 25x-50x living expenses?

Post by KlangFool »

smitcat wrote: Mon Jan 13, 2020 12:05 pm
KlangFool wrote: Mon Jan 13, 2020 12:01 pm
geerhardusvos wrote: Mon Jan 13, 2020 11:54 am
KlangFool wrote: Mon Jan 13, 2020 11:51 am
geerhardusvos wrote: Mon Jan 13, 2020 11:35 am
I'm not retiring until I have at least 100x expenses!!!! :twisted: :wink: :beer
geerhardusvos,

You would change your mind as soon as you attended too many funerals. My 49 years old healthy ex-coworker died from a fall during X'mas.

KlangFool
I'm sorry, KF, it was sarcasm; will keep that to a minimum in the future.
geerhardusvos,

No problem. I just wanted to point out that there is a risk of delaying retirement too. I had too many first-hand observations of how it went bad.

My older brother retired and passed the full physical exam cleanly. A few months later, he fainted in the bathroom and they found an inoperable brain tumor in his head. He died a few months later. In summary, he retired for less than two years.

KlangFool
"My older brother retired and passed the full physical exam cleanly. A few months later, he fainted in the bathroom and they found an inoperable brain tumor in his head. He died a few months later. In summary, he retired for less than two years."

Sorry for you loss.
Never wait for retirement to live you life.
smitcat,

Thanks.

<<Never wait for retirement to live you life.>>

So true!! I try to achieve a balance between saving and spending. I save as much as I spend every year. I save 1 year of expense every year. But, I am not frugal. I spent 50K to 60K per year. With the kids leaving the nest, that is a lot of spending for two persons.

KlangFool
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geerhardusvos
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Re: 25x-50x living expenses?

Post by geerhardusvos »

KlangFool wrote: Mon Jan 13, 2020 12:01 pm
geerhardusvos wrote: Mon Jan 13, 2020 11:54 am
KlangFool wrote: Mon Jan 13, 2020 11:51 am
geerhardusvos wrote: Mon Jan 13, 2020 11:35 am
I'm not retiring until I have at least 100x expenses!!!! :twisted: :wink: :beer
geerhardusvos,

You would change your mind as soon as you attended too many funerals. My 49 years old healthy ex-coworker died from a fall during X'mas.

KlangFool
I'm sorry, KF, it was sarcasm; will keep that to a minimum in the future.
geerhardusvos,

No problem. I just wanted to point out that there is a risk of delaying retirement too. I had too many first-hand observations of how it went bad.

My older brother retired and passed the full physical exam cleanly. A few months later, he fainted in the bathroom and they found an inoperable brain tumor in his head. He died a few months later. In summary, he retired for less than two years.

KlangFool
Oh wow, I’m so sorry. Sobering reminder and a good perspective that life is fragile and to focus on what matters
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iraconfused
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Re: 25x-50x living expenses?

Post by iraconfused »

aerosurfer wrote: Mon Jan 13, 2020 12:03 pm
iraconfused wrote: Mon Jan 13, 2020 11:55 am
Admiral wrote: Mon Jan 13, 2020 11:28 am
iraconfused wrote: Sun Jan 12, 2020 10:52 pm
Dottie57 wrote: Sun Jan 12, 2020 10:38 pm I am confused. If your expenses are 1k and wife’s income is 45k, does she save 33k? How much do you save/invest?
I am 45. I put in 15% traditional and 5% Roth per week. Max out Roth IRA . House paid for. Only debt is 44k for truck. I pay 200 per week on until paid. Monthly expenses are 1k. Wife is disabled making 45k per year from disability pension and ssdi. I make 70k+ per year. I am just trying to figure out what I read about 25X+ living expenses and how people decide which to take from. Stocks or Bonds? Or Both? I think if I retire at 65 and have 20 years in CDs at 40k per year and take inflation money from stock on a yearly basis stock grows for 20 years. Rest of what I need take from Roth
I still am not understanding your "1k monthly expense." If you "pay 200 per week on" your truck, that alone is $800/month. So all your other expenses (utils, re tax, food, cell phone) = $200??

This is not complicated. Once you have a true estimate of your ACTUAL yearly expense, you subtract out your income (whether that's SSDI, SS, pension, or something else) and the remainder is what needs to be covered by investments.

For example, if your TRUE yearly expense was $12,000, and you had SSDI of $45k, you would need $0 from your portfolio.

On the other hand, if your yearly expense was $100,000, you would need $100k-$45k = $55k per year. For a 25 year retirement, you would need $1,375,000 @ 4% withdrawal rate (ignoring taxes for simplicity).

In terms of WHERE (i.e what type) of investment from which to draw one, that's dependent on many things: taxes, whether you want to leave a large estate (i.e. let stocks grow and live off bond income), your other sources of income and how they are taxed, your ability to emotionally withstand severe market downturns while still selling stocks, et cetera.
Admiral,

Sorry, I do not count truck payment. When I retire I will pay cash for anything I need. So monthly expenses (food, utilities, ins) are 1k per month. Most of my retirement money will go to travelling. Wife makes over and above for expenses. I question HOW to take the money so I do not run out. If taking 40k from ROTH per year and want 40k from tIRA it seems I could put 800k in cd ladder with 40k coming due every year. Rest of money in S&P 500 index and take yearly inflation from that. Sorry that I may not have worded things so not so confusing
Still seems like you more overly complicating things, as well as not strategizing your tax planning.

If your expenses are that low and you already have 7 figures you can do whatever you want at retirement age. It supports it.

Why are you paying into a Roth 401k instead of traditional? You are locking in your taxes now. What's your tax rate now and would you expect it to be higher or lower in retirement? Do you live in an income tax free state now or do you plan to in the future? Just because its tax free doesnt mean it's more money at the end. Gotta run the math.

As far a tithing, that's a portion of your expenses, either give it tax free via a DAF or simply factor it in when calculating your yearly costs
Admiral,

I do 15% Traditional and 5% Roth. I get a profit share check yearly that is minimum 6k. Goes in pretax. I am high end 22% bracket. I max out Roth IRA that we be separate when I retire that my daughter will get. When truck paid off that 200 per week will be after tax rollover to Roth 401k. I am trying to keep my 401k 30-35% Roth minimum so when I retire I have 3 sources of income. Tithe money is not expenses. GOD's money. Comes out first thing. I set aside weekly money for monthly bills and live off the rest. If I do not need it it gets invested
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Re: 25x-50x living expenses?

Post by geerhardusvos »

ohai wrote: Mon Jan 13, 2020 12:03 pm One could argue that the historical test of "no failures in history" is too conservative. However, if you subscribe to the "4% rule" for normal retirement, rationally, you must believe in a much lower withdrawal rate for early retirement.
I agree with this, and we are planning on very early retirement ~40-45 years old and we are budgeting for a <3% SWR especially in the first 3-5 years of retirement to be careful of sequence of returns risk. But keep in mind, a withdraw rate of <3.5% SWR has a very high likelihood to last more than 50 years, and 4% SWR has a high likelihood of lasting 50+ years
Last edited by geerhardusvos on Mon Jan 13, 2020 6:15 pm, edited 2 times in total.
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Dottie57
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Re: 25x-50x living expenses?

Post by Dottie57 »

geerhardusvos wrote: Mon Jan 13, 2020 11:35 am
willthrill81 wrote: Mon Jan 13, 2020 11:13 am
Dottie57 wrote: Mon Jan 13, 2020 11:02 am
geerhardusvos wrote: Mon Jan 13, 2020 10:30 am
Dottie57 wrote: Mon Jan 13, 2020 8:29 am

If the future is like the past- yes. If significantly worse - no. I think when people say expenses for a number of years they are basically talking liability matching for a given number of years.
Even with meager growth above inflation (extremely likely), if you have 25x expenses it will last you 30+ years, and with a 70/30 portfolio, 80% chance of still having money after 30 years... 50x is even more likely to last... in fact, their money will probably increase or even double... no one knows the future, but this fear mongering isn't the information our readers need despite the potential difficult periods we will face in the coming decades.
It is not fear mongering. I myself have 30 times basic expenses for 25 to 30 yr retirement. The trinity study was based on either a 25 or 30 year retirement. I don’t want FIRE people in their 30’s or 40’s thinking they are set for life with 30 times expenses.
3% (33x) has been, more or less, the historic perpetual withdrawal rate (i.e. leaving retirees with at least their inflation-adjusted starting portfolio after 20+ years of withdrawals), so there's been no need for a larger portfolio than that, certainly not 40x or 50x, unless the retiree wanted the portfolio for something other than regular withdrawals (e.g. big bequest, other spending needs).
I'm not retiring until I have at least 100x expenses!!!! :twisted: :wink: :beer
So you plan a 100 year retirement?! Exceedingly OPTIMISTIC of you!
EddyB
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Re: 25x-50x living expenses?

Post by EddyB »

ohai wrote: Mon Jan 13, 2020 12:03 pm 30x expenses for early retirement does not sound unreasonably conservative at all.

25x expenses (4% withdrawal rate) is based on a study of 30y retirement. This is the level where no 30y retirement portfolios have failed in some 100 year history of US assets.

Now consider this chain of thought:

Since the 4% withdrawal rate is where some 30y portfolios begin to fail, by definition, the marginal 30y portfolio (the first 30y portfolio to fail) reached 0% in year 30. Therefore, the marginal 31y portfolio must have a withdrawal rate of less than 4%

Now, extend this to more and more years. The marginal 31y portfolio must have had a withdrawal rate of less than 4% (from above). The marginal 32y portfolio must have had a withdrawal rate that is lower still. Even further on... the marginal 50y portfolio must have a withdrawal rate substantially lower than 4%. 3.33% even sounds aggressive!

One could argue that the historical test of "no failures in history" is too conservative. However, if you subscribe to the "4% rule" for normal retirement, rationally, you must believe in a much lower withdrawal rate for early retirement.
I'm not sure what you mean by "much lower," but you haven'r "rationally" proven your point. It's sort of like someone saying that the perpetual withdrawal rate has been X%, and 50 years is short than perpetual, so the SWR must be higher than X%, forty years must be higher still, and 30 years even higher, so the SWR for thirty years must "rationally" be much higher than the perpetual withdrawal rate. Admittedly, "much lower" and "much higher" are loose terms, but there's nothing "rational" about either approach. Sadly, the past SWRs for 30, 40 or 50 year retirements haven't been radically different.
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Re: 25x-50x living expenses?

Post by geerhardusvos »

Dottie57 wrote: Mon Jan 13, 2020 1:20 pm
geerhardusvos wrote: Mon Jan 13, 2020 11:35 am I'm not retiring until I have at least 100x expenses!!!! :twisted: :wink: :beer
So you plan a 100 year retirement?! Exceedingly OPTIMISTIC of you!
you mean 300 years right? 8-)

100x+ is a generational wealth machine :moneybag
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Re: 25x-50x living expenses?

Post by ohai »

EddyB wrote: Mon Jan 13, 2020 1:30 pm
ohai wrote: Mon Jan 13, 2020 12:03 pm 30x expenses for early retirement does not sound unreasonably conservative at all.

25x expenses (4% withdrawal rate) is based on a study of 30y retirement. This is the level where no 30y retirement portfolios have failed in some 100 year history of US assets.

Now consider this chain of thought:

Since the 4% withdrawal rate is where some 30y portfolios begin to fail, by definition, the marginal 30y portfolio (the first 30y portfolio to fail) reached 0% in year 30. Therefore, the marginal 31y portfolio must have a withdrawal rate of less than 4%

Now, extend this to more and more years. The marginal 31y portfolio must have had a withdrawal rate of less than 4% (from above). The marginal 32y portfolio must have had a withdrawal rate that is lower still. Even further on... the marginal 50y portfolio must have a withdrawal rate substantially lower than 4%. 3.33% even sounds aggressive!

One could argue that the historical test of "no failures in history" is too conservative. However, if you subscribe to the "4% rule" for normal retirement, rationally, you must believe in a much lower withdrawal rate for early retirement.
I'm not sure what you mean by "much lower," but you haven'r "rationally" proven your point. It's sort of like someone saying that the perpetual withdrawal rate has been X%, and 50 years is short than perpetual, so the SWR must be higher than X%, forty years must be higher still, and 30 years even higher, so the SWR for thirty years must "rationally" be much higher than the perpetual withdrawal rate. Admittedly, "much lower" and "much higher" are loose terms, but there's nothing "rational" about either approach. Sadly, the past SWRs for 30, 40 or 50 year retirements haven't been radically different.
From the 4% study, we can/must reasonably conclude that some 31y portfolios will fail under 4% withdrawal. Otherwise, we'd be assuming 0% volatility between years 30 and 31. Extend that - again this is just math - and the conclusion is declining withdrawal rates by length of retirement. This is both intuitive (others above suggest the same thing without referring to this math) and mathematically necessary if we accept the 4% withdrawal rate conclusion for 30y.
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Re: 25x-50x living expenses?

Post by jubby288 »

FWIW I believe the Trinity Study has been updated through 50 years
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