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Bear,

warrl hit a lot of good touch points. Lifestyle has a lot to do with it.

The most important point for us pulling the plug 13 year ago was expenses.

We saved every receipt from everything we spent money on. for stuff with no receipt, I made a slip with what it was and an amount. I used a little cardboard box. After the 1st each month, I dumped out last month's slip and sorted them out. I did a rough categorization and put the numbers into a spreadsheet.

I used 2 main areas:

1. Expenses that would continue like food utilities, taxes, etc.

2. Expenses that would stop like work expenses, coffee and lunch, etc

Beyond those 2, I made another column where I knew some things like real estate taxes and food cost would go down.

The categories I used in the 2 areas above were just what you would think: food, clothing, gas and maintenance, utilities, all taxes by type, etc.

This didn't really take much time at all. It wasn't exact but it didn't need to be. However it was surprisingly accurate!

The expense estimates I made are still holding true today. Yes, 13 years later.

IMPORTANT POINT: Knowing a realistic expense level made our decision for us. We built this house, sold the other one and that was it.

We had talked with a planner in 1996 and was disappointed with the approach he gave us. The standard of 75% of wages that he proposed would have delayed our retirement significantly.

If you know your expenses, and I mean KNOW them, you can do this simple math:

Expenses - (SSA, pension) = Shortfall

If 4% of your portfolio will cover the shortfall, you should be Ok.

The more accurate the expenses number is the more confidence you should have for deciding to retire or not.

Remember, retirement is financial independence, not withdrawing from like or even work. Make sure you have a plan for your time. I know people that went gang-busters for 6 months then ran out of things to do.

Does that help you?

Gene
All holdings and some stats on my profile page
http://my.fool.com/profile/gdett2/info.aspx
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