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Author: GusSmed Big gold star, 5000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 60467  
Subject: Re: Here's A Good Question Date: 2/2/2007 1:32 PM
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I've often wondered how much is enough. And when do you know if you have enough. And if you survive the first 10 years.... you've already lived through appx. half your retirement! I had heard that if you survive the first 4 to 5 years of retirement without a major downturn in the market you should be ok, but maybe I heard wrong.

You really need to play with Intercst's calculator, which models retirement in all years from 1871-1991, and determines what would happen in the next 10-60 years.

http://www.retireearlyhomepage.com/re2002i.zip

Generally, when I talk about withdrawal, rates, I'm thinking in terms of 40+ years. Since that's what applies to me. But if you see your life expectancy as being no more than, say, 20 years at this point, your safe withdrawal rate is rather higher.

Not sure about this one.
Right now I'm making more money on investments than I would by paying off the mortgage. It's a tough decision on this one.


It's always a better idea to invest than pay off a mortgage when times are good. Or if you're in the accumulation phase, and you are living on a salary, rather than money from your investments. It's when times are bad that the 4% rule is important. The additional fixed overhead of the mortgage forces you to sell stocks at the worst possible time if the market takes a big downturn.

Keeping a mortgage in retirement only makes sense if you believe you're good enough at choosing stocks that you won't have any big negative years. Intercst's spreadsheet assumes no particular investment expertise, that your investment performance mirrors that of the S&P 500, and that you don't have any special ability to predict bad years.

- Gus
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