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That effective rate seems to high to me; how did you calculate it?

80000-68500 = 11500 * .28 = 3220 + 13295 = 16515

Got these numbers from the Federal 2004 Withholding Tax Tables - Annual, Single, 1. So, the rate's actually closer to 20%. $16515/$80000 = 20.64

50k/2.5% = $2M, so 75k would be $3M.

I used numbers from a Vanguard table. Here's the link to the Vanguard article dated 2/26/04 titled, "Why saving isn't enough" which included the table:

I am not sure that I follow. All the "Safe Withdrawal Rate" (SWR) studies I have seen show the curve of the SWR going asymptotic somewhere near 3% (depending upon exactly which study you are reviewing) and in many instances the principal amount still gorws. Call it 2.5% to include a margin of safety.

Sounds OK to me, and pretty much in line with my quote from the professors study. But you said you'd retire at 34 on $2M--at 2.5% that would net you a PRE-tax of $50K, and you'd still have to absorb the medical premiums and expenses. How could you do that when you're now 'living comfortably' on $50K POST-tax without the medical expenses?

Have you ever investigated the Retire Early Home Page board on TMF? Or, even more importantly, intercst's actual Retire Early Home Page (link provided in the other board)? Lots of discussion about SWRs.

Yes, I have visited the Retire Early board. Unfortunately there's so much junk on it that's totally unrelated to retirement in any way, it makes it quite difficult to find anything that might be of real value there. For the most part I avoid that board, because I don't have the time to wade through all the OT posts, particularly the ones that aren't marked OT, but are. This board is much better, IMHO.

JAFO, all I'm really saying is that I think when planning for retirement it's best to estimate conservatively--better safe than sorry. I'm much closer to retirement age than you are. Perhaps some of the differences in our perspective is based on our age difference. I hate to pull the 'experience' card, but when you've lived through more recessions, more layoffs, more stock market disasters, etc., I think one can't help but become a tad more conservative in estimations. The people I know that I would consider 'moneysmart' who are retiring today (ages 60-66) have at least $1M in their portfolios, plus some paid-in-full real estate. I know one 49 year old who intends to retire within one year--she has almost $3M in her portfolio, plus the real estate. That's not to say there aren't plenty of folks I know retiring with MUCH LESS than that ($275K-$500K), but for the most part these are folks that I never considered 'moneysmart', and based on their past spending habits, I believe I can reasonably predict that, unless they die soon, they're going to be in trouble somewhere down the line.

Isn't it better to be safe than sorry?


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