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Author: 0x6a74 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19380  
Subject: which reminds me -- Date: 8/9/2008 7:38 PM
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iirc, it's "conventional TMF wisdom" that a SAFE withdrawal rate is 3.x%


but i don't recall what the 'suggested' investment allocation is.

and whether it depends on taxable account vs tax-deferred account.


anyone?




=b
...... famous Spendthrift living on 3.7% withdrawal
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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13871 of 19380
Subject: Re: which reminds me -- Date: 8/10/2008 12:19 AM
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The conventional wisdom is that 4% will probably last at least 30 years.

Others have very sophisticated answers and there are even calculators that will calculate exact numbers for you based on whatever.

To me it makes sense that 4% will last you if your investment portfolio is intended to earn you 8% pretax in a typical year. That 4% includes any income taxes you pay.

So if you are invested very conservatively in T-bills earning say 2%, I don't think you can expect 4% to last you.

But if you earn 8% and spend 4%, your net worth increases every year because you are saving half of what you are earning.

And if 11% is a typical yield of an S&P 500 Index fund and you have say 30% invested in fixed income securities, the numbers seem to work. An 8% total return seems a reasonably acheivable target.

If you have tax free bonds in the mix, their income is tax free, so the calculation is the same, but your expenses are lower because your income taxes are lower.

If your investments are in 401Ks and IRAs that are taxable on distribution, I think you have to base your calculations on a higher tax rate than otherwise. Or you reduce the value of those holdings by the percentage taxes to be paid on distribution when you calculate your assets to do the 4% on.

One size does not fit all. These are all approximate calculations. None of these calcs are likely to be a precise predictor. But they are guidelines that can cause you to do more detailed calculations. Treat them not as a law but as a blinking yellow light.

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Author: 0x6a74 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13872 of 19380
Subject: Re: which reminds me -- Date: 8/10/2008 1:17 AM
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Thanks.

The conventional wisdom is that 4% will probably last at least 30 years.

Others have very sophisticated answers and there are even calculators that will calculate exact numbers for you based on whatever.
</I<

thought there was a number for 'forever' ..30yrs isn't very long for some.

..makes sense it wouldn't be that simple



=

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Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13873 of 19380
Subject: Re: which reminds me -- Date: 8/10/2008 1:56 PM
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If you know Excel or spreadsheets, it is easy enough to set up a model to see how long things will last.

The tough part is the stock market returns. People use various simulation systems to model what your returns will be over the years based on historical data, and assuming you make no adjustments in expenses, how long your money will last. That part is for the experts; difficult for individuals to duplicate.

Of course if your assets are such to allow all fixed income investments, then the calculations are easy and spreadsheet models serve very well.

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Author: 0x6a74 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13874 of 19380
Subject: Re: which reminds me -- Date: 8/10/2008 2:15 PM
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If you know Excel or spreadsheets, it is easy enough to set up a model to see how long things will last.

The tough part is the stock market returns. People use various simulation systems to model what your returns will be over the years based on historical data, and assuming you make no adjustments in expenses, how long your money will last. That part is for the experts; difficult for individuals to duplicate.


yup.
i consider myself Excel Wizard ..but getting the data and the model ..



Of course if your assets are such to allow all fixed income investments, then the calculations are easy and spreadsheet models serve very well.


and if your assets are such that you can just leave everything in checking acct ..even easier

o well ....thanks for the info.



=

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Author: vickifool Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13882 of 19380
Subject: Re: which reminds me -- Date: 8/12/2008 4:10 PM
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iirc, it's "conventional TMF wisdom" that a SAFE withdrawal rate is 3.x%


but i don't recall what the 'suggested' investment allocation is.

and whether it depends on taxable account vs tax-deferred account.


anyone?


Here it is. Up to 60 years of withdrawals which takes 85% stocks. Your withdrawals have to cover your taxes.


http://retireearlyhomepage.com/restud1.html


Vickifool

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Author: 0x6a74 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 13883 of 19380
Subject: Re: which reminds me -- Date: 8/12/2008 4:30 PM
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anyone?

Here it is. Up to 60 years of withdrawals which takes 85% stocks. Your withdrawals have to cover your taxes.


http://retireearlyhomepage.com/restud1.html



thanks.

looks complicated .....i'll have to try again when i'm awake <g>



=b

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