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orv - I think you are where I was a couple of years before retirement. The scariest thing is cutting the cord.

is it more important to focus on HOW TO ACCURATELY ESTIMATE your annual budgetary needs?

Not everyone approaches this problem in the same way, but I kept a budget a la "Your Money or Your Life" for years before retiring (Excel spreadsheet). By doing so, I immediately saw places to reduce costs with little or no diminuation in my lifestyle. The first thing I stopped was the daily Starbucks on the way to work. That doesn't mean I never indulge, but when I do I really enjoy it. And you can make the same thing much cheaper without standing in line! Through this gradual reduction of spending before I retired, I ended up with a budget that was easier to cover with a reasonable SWR. You never get everything, and I have since added things (like presents for grandchildren) but because I padded, every year (so far) the total comes within shouting distance of how I set it up for the year. This year, it's going to be close to what I spent (before taxes) in 1999, which I don't quite understand (I'll have to compare), but I'm pleased.

I track my budget by keeping all my receipts. This way I really know what I spent. Some people can't do this (they aren't sufficiently anal :), but can certainly keep some sort of running total in Quicken or something. Won't pick up the little stuff, but should give you some idea.

if you are able to w/d at your planned SWR, the SWR plan will give you a long and happy retirement. But if you annual needs are underestimated, you don't fail because of the SWR.

I like this. I think, in many cases, people do underestimate their needs, mainly because they haven't thought about them. We know property taxes are going up by double digit percentages. We factor that in. I know old cats cost more than young ones (usually). Most import - there ought to be a big pad in the budget for just in case. Disability or tripling food prices. Whatever can't be predicted. Starting with a completely pared-down budget that matches you withdrawal rate leaves with no wiggle room. But you are absolutely right - the fault is often a budget growing out of bounds rather than the initial SWR.

THe thought of having to cut my spending year over year to stay within a pre-planned SWR is not my idea of early retirement. Kind of defeats the whole reason to quit working early.

If you plan carefully to have adequately funded your retirement, and are comfortable with your lifestyle, you've done all you can. You will worry at first, because it's a new experience. But I bet that goes away. And I bet your costs go down without your noticing - just like mine did.

Be happy - don't worry.


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