UnThreaded | Threaded | Whole Thread (11) | Ignore Thread Prev | Next
Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76418  
Subject: Re: Burn Rate Date: 8/20/1999 4:55 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
Greetings, Wayne, and welcome. You wrote:

<<I am impressed with the idea of 1 years expenses in a MMF and another 3-5 years of expenses in laddered CD's/T Bills,notes.
However,all of the scenarios discussed assume leaving a hefty estate to heirs.My situation is somewhat different and I am asking for advice from this board and it's excellant contributors.If I start with 1million and follow the above for the MMF and CD's/T Bills,notes,what burn rate can I use as a percentage for annual withdrawals so that all but about 40-50K is used up in 35 years?
Obviously this situation is somewhat unusual.If I also assume a 4% inflation rate will this help the figsures to be more conservative?What rate should I use for a return on port?9% given the stats re the S&P?
In discussing adjusting the withdrawal percentagesfor inflation,would I add or subtract the inflation percentage number from the annual withdrawal percentage?
My health/physical condition is not all that great so I am obviously concerned about this topic and the results since my primary concern is with my wife and not myself.>>


Well, there are a lotta "ifs" in your questions. IF you average 9% per year return, IF inflation averages 4% per year, IF you want the portfolio to last 35 years, and IF you want $50K left at that time, THEN you may take $56,313 dollars the first year, and then increase each succeeding year's withdrawal by 4%. At the end of 35 years there will be $50K left. BUT -- An average rate of return is far different than actual rates from year to year, so your results may vary. For that reason, you must look at your results on an annual basis to ensure you don't hit a bad patch of returns that will deplete that portfolio far faster than planned. Increasing withdrawals in times of declining returns are a sure prescription for disaster.

Regards..Pixy
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (11) | Ignore Thread Prev | Next

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Foolanthropy 2014!
By working with young, first-time moms, Nurse-Family Partnership is able to truly change lives – for generations to come.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Macro Economics

Looking at Currency Ratios
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement