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Old 02-05-2017, 03:47 AM
 
71,762 posts, read 71,853,273 times
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Quote:
Originally Posted by goodlife36 View Post
I do not understand the table. I am just trying to get a ball park figure of what I can draw monthly on $220,000.


I got an estimation of between $600 and $800. Thank you G.

That is such a small monthly return for that sum of money. Thank God for pensions. It is really worth a pretty penny. It is good to listen to your elders. I did even know what a pension was back in the day. I was just told to stay put for at least 5 years. I ended up doubling my time. Wow!
what you can draw is a function of what your investment allocation is and for how many years . if you are using no equity's than about 2 to 2-1/2% is safe inflation adjusted every year .

a 50/50 mix of stocks and bonds and other stuff should safely do 3-`1/2 to 4%

this is all pall park .

you simply take your allocation and look on the chart at the draw rates . you want to get at least a 90% success rate at what you want to draw in order for that amount to be considered a "safe withdrawal rate "

90% means that in the laboratory stress testing your draw and allocation would have stood up to 90% of the worst combinations of sequences of returns , market returns ,interest rates and inflation the past has thrown at retirees .

the less equity's you use once you get below 40% the more risk you are taking unless you drop from 4% draws . trying to draw 4% with no equity's would be likely committing financial suicide .

retirement planning is the opposite of what you think . the less in equity's below a certain point you have the bigger the risk to your retirement failing
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Old 02-05-2017, 04:32 AM
 
Location: Central Massachusetts
4,800 posts, read 4,853,880 times
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Quote:
Originally Posted by mathjak107 View Post
what you can draw is a function of what your investment allocation is and for how many years . if you are using no equity's than about 2 to 2-1/2% is safe inflation adjusted every year .

a 50/50 mix of stocks and bonds and other stuff should safely do 3-`1/2 to 4%

this is all pall park .

you simply take your allocation and look on the chart at the draw rates . you want to get at least a 90% success rate at what you want to draw in order for that amount to be considered a "safe withdrawal rate "

90% means that in the laboratory stress testing your draw and allocation would have stood up to 90% of the worst combinations of sequences of returns , market returns ,interest rates and inflation the past has thrown at retirees .

the less equity's you use once you get below 40% the more risk you are taking unless you drop from 4% draws . trying to draw 4% with no equity's would be likely committing financial suicide .

retirement planning is the opposite of what you think . the less in equity's below a certain point you have the bigger the risk to your retirement failing
mathjak that is a good point but the gloom and doom of your statement should be mollified a bit. Instead just add one more word to that statement "plan" and it won't sound like goodlife need jump off the Tapanzee.

goodlife it is complicated until you break it down a bit. If you are currently working you have time to refine the plan. Even into retirement you can make adjustments. Bottom line here is now that you are seriously looking at it you can have a greater impact on the outcome. You do have a good base with a pension I think you said. That will go a long way in helping fund what you will have. Also think on this your take home pay in retirement will be more of a percentage of your gross pay than it was while working. Just about 30% more. That is an important number to remember when planning.
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Old 02-05-2017, 04:39 AM
 
26,145 posts, read 28,535,783 times
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Quote:
Originally Posted by goodlife36 View Post
I have heard great things about the Wellington but I could only afford the Star. I made $200 bucks.

I am leaning towards a Roth target fund.
I'd suggest starting with STAR and then moving to Wellington when you have $3000. The target date funds are ok, though.
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Old 02-05-2017, 04:41 AM
 
71,762 posts, read 71,853,273 times
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Quote:
Originally Posted by golfingduo View Post
mathjak that is a good point but the gloom and doom of your statement should be mollified a bit. Instead just add one more word to that statement "plan" and it won't sound like goodlife need jump off the Tapanzee.

goodlife it is complicated until you break it down a bit. If you are currently working you have time to refine the plan. Even into retirement you can make adjustments. Bottom line here is now that you are seriously looking at it you can have a greater impact on the outcome. You do have a good base with a pension I think you said. That will go a long way in helping fund what you will have. Also think on this your take home pay in retirement will be more of a percentage of your gross pay than it was while working. Just about 30% more. That is an important number to remember when planning.
ha ha ha ha good point - "plan"
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Old 02-05-2017, 05:13 AM
 
Location: Central Massachusetts
4,800 posts, read 4,853,880 times
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Quote:
Originally Posted by goodlife36 View Post
I have heard great things about the Wellington but I could only afford the Star. I made $200 bucks.

I am leaning towards a Roth target fund.
the longer you take in deciding the shorter your time gets. Take the steps and use the target fund. You might find it works the entire way or not but it will work. Since you are doing this outside of work (not a 401k) you should do the deposit as a single deposit. All of your money in at once. Fees will be less than if you made installments over the course of the year. You loose some of the dollar cost averaging that comes with weekly/bi-weekly/monthly installments but that is only one aspect of the retirement savings puzzle.

Quote:
Originally Posted by mathjak107 View Post
ha ha ha ha good point - "plan"


I just didn't want anyone taking a leap of that bridge. Traffic is horrendous as it is going there. No sense in blocking traffic on one lane as they try to piece together the scene.

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Old 02-05-2017, 07:46 AM
Status: "Gaining Stability." (set 16 days ago)
 
5,685 posts, read 5,942,394 times
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I am going to get the ball rolling next Friday.

I am still going back and forth between Traditional vs. Roth. Does it pay to forgo a tax deduction for 24 years? I do not know. Wait! Mathjak said it is possible to draw money on a traditional IRA and not pay taxes. If a single person draws between $700 and $800 per month, is there are way to get around the taxes? If not, how much would my tax liability be? This investing stuff is cool. It just occurred to me the money I amass is not fixed. It will continue to grow. I never thought about the 50/50 split between stocks and bonds. I think I am actually starting to get this. I hope.

I looked at the funds a little closer. The Star expense ratio is pretty high. It is .34. As I stated before, the Target fund 40 expense ration is .16. (Stocks 87.5) It is a balanced fund and has performed at a rate of 5.35% over the past ten years. The performance since its inception is 6.39%. Isn't that a little low? Some of the calculators use 7.00%. Why is it a balance fund when most of the investments are in stocks? The Wellington expense ratio is .26 and has performed at 6.92 over the past 10 years. I think the Target Fund is the better of the two options. What do you think?

I am not sure if I will be able to make annual deposits. It is so much easier to have the money taken out once a month. I may deposit extra money annually if there is a surplus at the end of the year. If I make annual deposits, how will I benefit from gains during the year?

Last edited by goodlife36; 02-05-2017 at 08:36 AM..
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Old 02-05-2017, 07:55 AM
 
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i would spend the money and consult a good planner . if you think getting a planner for a few hours is expensive for advice -you can't afford free .
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Old 02-05-2017, 08:12 AM
Status: "Gaining Stability." (set 16 days ago)
 
5,685 posts, read 5,942,394 times
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Quote:
Originally Posted by mathjak107 View Post
it depends what you have it in . you want at least a 90% success rate
I think I got it. Equity means having stocks in your portfolio. If I have a 50/50 split, I should be okay if I draw 4% annually for up to 35 years. It drops to 85 after 40 years. If the success rate for 35 years is 96, what does that actually mean? Will I still have money? If I draw 4% annually and the rate of return is over 5%, shouldn't my money continue to grow? Why does it drop to 86 after 40 years?

I do not think the average person knows this. I have always heard people should be more conservative as they approach retirement.

This table has taken in to account the great depression as well as the other recessions. Who knew?

Thank you very much!
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Old 02-05-2017, 08:23 AM
Status: "Gaining Stability." (set 16 days ago)
 
5,685 posts, read 5,942,394 times
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Quote:
Originally Posted by hellob View Post
If you expect your income to be the near same in retirement then Roth is best. Are you sure your pension is 100% taxable? My dad is a retired NYC CO and iirc, it's not all subject to federal taxes.
I do not know. I did confirm with my former employer that it is taxable income which sucks. I anticipate my income will drop between $25,000 and $30,000. Based on today's tax bracket, I will still be in the 25% range. I think people on the lower range tax rate would drop to 15%.
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Old 02-05-2017, 08:25 AM
 
71,762 posts, read 71,853,273 times
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Quote:
Originally Posted by goodlife36 View Post
I think I got it. Equity means having stocks in your portfolio. If I have a 50/50 split, I should be okay if I draw 4% annually for up to 35 years. It drops to 85 after 40 years. If the success rate for 35 years is 96, what does that actually mean? Will I still have money? If I draw 4% annually and the rate of return is over 5%, shouldn't my money continue to grow? Why does it drop to 86 after 40 years?

I do not think the average person knows this. I have always heard people should be more conservative as they approach retirement.

This table has taken in to account the great depression as well as the other recessions. Who knew?

Thank you very much!


sequence risk , the order the gains and losses come in play a major role when spending down , not your returns .

the same average return while spending down can vary by 15 years as far as what is left just by moving the losing years to the front instead of the back .

that is the same average return but world of difference in how long the money lasts .
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