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Old 05-27-2015, 10:48 AM
 
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this is discussed on the early retirement forum all the time. the majority seem to be in the 3 to 3-1/2% range as far as actual draw rates.

not because of formula but just because that Is how things just work out.
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Old 05-27-2015, 12:27 PM
 
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Originally Posted by Perryinva View Post
This would make an EXCELLENT thread! Who has used a Retirement calculator and where are they in reality after retirement vs what the calculator predicted!!! I would LOVE to hear some more real examples. Congrats jrkliny!! Awesome.
I used a calculator probably over ten years before retiring. Now seven years in and it has been right on spot. However in all fairness the variables it had to deal with were not that variable and much of what was in the form of a statement with future payouts included. The investment and expense sides were variable but this was during a up market after the first couple of years. The first three years were a nightmare as we retired Jan 1, 2008. However it all came around back to original projections and was even ahead of as a result of market performance. So while it was a challenge waiting for income streams to kick in and needing to draw from the portfolio it got better real soon and it enabled us to take some chances that FireCalc said we could. Glad we did.
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Old 05-27-2015, 02:33 PM
 
Location: RVA
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Great stuff! I love hearing it! "I love it when a plan comes together ".......

MJ, what early retirement forum are you referring to?
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Old 05-27-2015, 04:27 PM
 
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i will d/m you
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Old 05-27-2015, 04:32 PM
 
29,782 posts, read 34,880,403 times
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Originally Posted by Perryinva View Post
Great stuff! I love hearing it! "I love it when a plan comes together ".......

MJ, what early retirement forum are you referring to?
Great forum you will like
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Old 05-27-2015, 04:37 PM
 
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Originally Posted by jrkliny View Post
I like the Fidelity calculator and have an electronic print out that is my guide to spending. I like the Fidelity calculator because it seems to consider all of the important variables, but mainly because I liked the format of the output. When it comes to actual SWA determinations, I think the 4% rule is as good as any.

The 4% rule and all of the calculators are just guesses based on past history. None of them will tell you what you need to spend, what will happen with inflation and what will happen that could alter the size of your portfolio and the returns. The first few years of retirement are by far the most important in shaping your future ability to spend. I have been fortunate that my first 4 years in retirement have been good. Even so I have been conservative in spending and although I am well ahead of my Fidelity income tables, I plan to remain conservative and spend less than 4%. Personally I think conditions are also good for someone starting retirement now. We have an economy that is in midcycle and recovering. Corporate profits and stock prices are very likely to continue to grow. Inflation is low and looks like it will remain that way for a number of years. It is pretty easy to out earn inflation by a couple of percent which is all that is required to maintain the 4% rule.
if you wanted to get more dynamic you could use a real time spending plan like i will use.

each year you can take 4% of that years balance. if it is a down year you take 5% less or 4% which ever is higher.

what is nice is you can never almost run out of money since it is based on real time , you get rewarded a bit when you are ahead and inflation adjusting is built in because it is dynamic.

it is bob clyatt's 95/5 method. he is the author of work less live more.

bob is also active on that forum.
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Old 05-27-2015, 05:10 PM
 
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Originally Posted by mathjak107 View Post
...

there is no need for predicting the future because we now know 4% inflation adjusted can't survive unless we see that 2% real return our first 15 years ..
MJ, I am loathe to accept the BLS "official" CPI numbers because I distrust the way their derivation. When the series approaches some level of political incorrectness, it is re-baselined. The BLS CPI does not agree with what I witness with my own eyes. What I witness is the number I trust.

BUT - once my time is my own, I just plumb don't want to be calculating the "jane_smith73 adjusted CPI number" every month. It takes time and represents overhead.

What is your opinion on a realistic rule of thumb with which to measure inflation rate? "NOMINAL MINUS CPI (per BLS) = REAL RETURN" just does not cut it for me. I DO want an ez way to measure.

Everybody else feel free to respond, I did not intend to cut off discussion by addressing my question only to MJ!!

Thanks, Jane
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Old 05-27-2015, 05:16 PM
 
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I only go by my own personal rate of inflation. The cpi index's are just measures of price changes.

They really do not apply much most of the time to us personally. Some of us feel things more than others because we use more of certain things, none of other things and less of others.
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Old 05-27-2015, 06:26 PM
 
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Originally Posted by mathjak107 View Post
if you wanted to get more dynamic you could use a real time spending plan like i will use.......
Thanks, but a "spending plan" sounds like a budget. I don't do those. I barely track expenses. My wife handles all the bills. Once in a while she will mention it was a good month or a bad month for expenses, but I rarely ask or want to hear the details. I am responsible for pulling money out of the portfolio and adjusting allocations and investments. I don't even like to do that on a regular basis so I just transfer the equivalent of 6 or so months of expenses into the checking account at a single time. A couple of times a year especially at tax time, I look at all the accounts and track our assets on a spreadsheet.
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Old 05-27-2015, 07:31 PM
 
29,782 posts, read 34,880,403 times
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Originally Posted by mathjak107 View Post
I only go by my own personal rate of inflation. The cpi index's are just measures of price changes.

They really do not apply much most of the time to us personally. Some of us feel things more than others because we use more of certain things, none of other things and less of others.
Market conditions may cause you to rethink your notions on inflation and its impact on your budget. There is a aging factor which you are well aware of. Other than medical much of your spending on leisure etc will decline as you age and become less mobile etc. That is a counter balance to inflation and along with a market like we have been experiencing a lot of assumptions can go out the window for good reasons. FireCalc so often gets discussed now a days in the context of managing a declining portfolio. When in reality many are seeing their portfolio increase ahead of projected inflation and market downturns. You may remember a thread discussion in either ER or Bog on how much is enough. It was done in the context of taking a large market hit as in real large market hit and still being ok. The assumption being that twice the minimal amount was enough. You have things constructed to have income streams kick in as you age. That along with a bull market can wreck previous assumptions and make you tingle all over with your calculated results. Others have and will find this same impact depending on the time frame of their first seven-ten or so retirement years. The great recession and market tumble has been an eye opener about the power of markets coming back and retirement.
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