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Hi dsemmler,

"Can you please clarify that statement for me? If I am not mistaken, you indicated that you wanted to have an income of \$70k annually. If you put 5 years worth of that into laddered CDs, that would be a rather large percentage of the \$800k - \$1million portfolio you were looking to have, would it not?"

Good point. You are correct, it would be a large percentage of \$800k - \$1 million. I switched trains of thought mid stream. Here is my logic, when I think of retirement savings, I try and consider all sources of income into one big pot. Therefore, I would quantify the value of the \$20k+ pension to be worth over \$500k since it would take \$500,000 to generate \$20k annually at the 4% withdrawl rate. Social Security would also generate about \$20k per year between my partner and I (the real numbers from SS are \$26k per year but I'm going conservative. This is if we stop working at 56 and start collecting at 62).

Between the ages of 56 - 62 we will need to draw \$50k per year to supplement the \$20k+ pension. So, 5 years times 50k = 250k.

If I count SS + pension + \$1 million in savings I would have roughly \$2 million dollars.

So 250k / 2,000,000 = 12.5%

250k / 850k = 30%

If I plug the numbers into FIRECALC at:

http://www.fireseeker.com

This is what I get for a 40 year survival, with 70% of \$850k in the stock market and 30% in commercial paper:

*****

You have proposed a withdrawal of 8.24% of your starting portfolio.

We looked at the 91 possible 40 year periods from 1871 until 2002, and the 40 partial periods from 1962 until 2002, starting with a portfolio of \$850,000 and taking out \$70,000 the first year, and the same amount after adjustments for inflation (PPI) each year except as follows:

Starting in year 6, the withdrawal was decreased by \$13,000 (your Social Security; adjusted for inflation).

Starting in year 6, the withdrawal was decreased by \$7,000 (spouse's Social Security; adjusted for inflation).

Starting in year 0, the withdrawal was decreased by \$23,000 (adjusted for inflation).

******

The interesting thing is that the outcome from FIRECALC doesn't vary if I use 250k/2 million for 88% in the stock market and 12% in commercial paper. Either way I get 99.2% a success rate.

Thank you for asking this question. I hadn't tried FIRECALC with different percentages of a stock/paper mix.

-helen