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Author: Imaginistics Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 1492  
Subject: Re: Others with un-retirement? Your ratio? Date: 11/11/2007 7:28 PM
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Thanks for sharing Salecat :-)

Sounds like you have thought things out well, including the belt-tightening you're mentally ready and willing to make if that becomes necessary..I hope to be in similar boat to yours, when I reach 59..

Your 23-25 times annual expenses sounds great, very solid, particularly given that you're still a few years from retirement (if you are including things that Soc Sec checks will cover, then youre actual ratio will be even better when you retire..as telegraph said, it's only those expenses not covered by pension, soc sec, annuities, that one has to look at "what percent do I take out per year?")

As for what to do when in retirement, there are at least two areas...we probably should start a thread on each of them..feel free to do so :-) One relates to how to invest and how to withdraw, during retirement. The other set of questions relate to quality of life, having enough social contact despite not working FT (or not working at all), finding meaning and even passion in life..those kinds of issues that are very important and often dont' get the attention they deserve in personal finance articles.

When I gave the RIC calculator a spin, they only let you chose certain levels of certainty..how certain do you want to be not to run out of money while alive? There was 90%, and 99%, and numbers less than 90%..I would have chosen 95% or 97% but those were not available...if you want to be able to be in retirement for 45 years and be 99% sure you won't run out, then (at least for the other numbers I put in..I imagine it shouldn't make a difference the nest egg you have since we are talking about percents) they recommended I have more...and calculator showed they want 2.52% taken out per year, to get that "99% sure that your nest egg will last you for 45 years" But I think that's misleading. Because depending on your age and health when you retire, you're not going to just sit there for 45 years doing nothing but taking out 2.5%.

Many of us would take part time work, consult, cut back expenses, or even possibly relocate or otherwise look for less expensive housing, and so on. They are just trying to be conservative and say if you are just going to sit there and do nothing, then their Monte Carlo simulations say take out 2.5% or so every year, or even less, if you weant to be 99% sure for 45 years you'll still not starve..but most of us aren't going to just sit there..

What I wish T Rowe Price did was tell you WHAT their bad scenarios look like. If you wanted 99 out of 100 casees to be ones where you don't run out of money and their calculator says, "nope, you need more savings" because not 99% but only 95% of those scenerios were ok, then I wish they'd show you the 5% of those casese where you ran out of money in their simulation..what happened? long term market downturn plus low yields on bonds I suppose..but they don't give details..

Anyway would love to see any tips on actively managing one's nest egg during retirement, and would likewise be great if anyone knows of websites to post links to, websites about frugal but high quality life during retirement. The website for the "your money or your life" book I know of, would be great to find others...

Imag
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