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Author: thegreatdane Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75339  
Subject: *Retirement Amt. Needed* Date: 1/5/2000 9:04 PM
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Greetings,
Isn't 20x annual expenses a quick and rough estimate of what one will need in retirement? Seems to me Robert Sheard posted this some time back. Thoughts?
Thanks,
thegreatdane
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Author: messerb One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17409 of 75339
Subject: Re: *Retirement Amt. Needed* Date: 1/5/2000 10:07 PM
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thegreatdane said:Isn't 20x annual expenses a quick and rough estimate of what one will need in retirement?

Many of those who have booted working life early and are living in retirement now would say that 5% withdrawl (Nest Egg = 20x Expenses) is high. Many would recommend having a 4% withdrawl rate (NestEgg = 25x annual expenses) to ensure that you don't outlive your money.

Check out the Retire Early Home Page for more detail on safe withdrawl rates:
http://www.geocities.com/WallStreet/8257/restud1.html

Fool on!
messerb


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Author: thegreatdane Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17460 of 75339
Subject: Re: *Retirement Amt. Needed* Date: 1/6/2000 7:57 PM
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Does that 5% withdrawal, 20x expenses leave anything at the end of, say, forty years? I couldn't download the chart to run my own numbers.

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Author: intercst Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17462 of 75339
Subject: Re: *Retirement Amt. Needed* Date: 1/6/2000 8:24 PM
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thegreatdane asks,

Does that 5% withdrawal, 20x expenses leave anything at the end of, say, forty years? I couldn't download the chart to run my own numbers.

Using the Retire Early Safe Withdrawal Calculator, 77% stock, and a 0.20% investment expense ratio I calculated that a 5% inflation adjusted withdrawal rate is 85% survivable. That means that in 15% of the 40 year pay out periods between 1871 and 1998 you would have run out of money in less than 40 years. There is a 50/50 chance that a retiree starting with $1 million and a 5% withdrawal would have at least $3.65 million at the end of 40 years. In the best 40 year period (the maximum Terminal value), you would have had more than $30 million in the account at the end of 40 years.

intercst

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Author: thegreatdane Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17464 of 75339
Subject: Re: *Retirement Amt. Needed* Date: 1/6/2000 8:34 PM
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Whoah! Wanna loan me $1 million?

Actually, I was thinking of spending all the principal down by the time I'm old and dieing, with my one remaining investment dollar clenched in my fist. That day may come sooner than I think!

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Author: intercst Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17465 of 75339
Subject: Re: *Retirement Amt. Needed* Date: 1/6/2000 8:51 PM
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thegreatdane wrote,

Actually, I was thinking of spending all the principal down by the time I'm old and dieing, with my one remaining investment dollar clenched in my fist. That day may come sooner than I think!

<laughing>

Those of us whose estate plan is to "spend it while we're alive" would all like to be so efficient that "by the time I'm old and dieing, my one remaining investment dollar [will be] clenched in my fist."

Unfortunately, unless you have a smoking pistol in the other hand, it's unlikely to happen. That's why low, "safe" withdrawal rates give you such a high probability of dying with a large net worth.

intercst

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Author: thegreatdane Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17481 of 75339
Subject: Re: *Retirement Amt. Needed* Date: 1/7/2000 9:49 AM
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I'm not likely to go the smoking gun route, so I guess the worst that could happen is my daughter makes out like a bandit. The cutest bandit this side of the Mississippi.


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