resolution
Junior Associate
Joined: Dec 20, 2010 13:09:56 GMT -5
Posts: 6,975
Mini-Profile Name Color: 305b2b
|
Post by resolution on Aug 31, 2021 8:07:51 GMT -5
I think when I did it yesterday, I cut off her Rukh Inc income at some point, under the theory that she may not want to be running her business in her 80s. The main thing is she can get in there and play with all the variables to see what scenarios will work for her.
|
|
Lizard Queen
Senior Associate
103/2024
Joined: Jan 17, 2011 22:19:13 GMT -5
Posts: 14,659
|
Post by Lizard Queen on Aug 31, 2021 8:21:19 GMT -5
That's always the case, though, unless you need all your money to live on. Or, I guess if it's all in cash, but then you have inflation risk. I've heard of firecalc and kinda know what it looks at, but something isn't adding up if she only needs to withdraw $50k out of a $1.6M portfolio. That's around a 3% WDR, The 4% withdrawal "rule" isn't a guarantee though, neither is 3.5%. Especially when you extend it from it's intended 30 years to up to 45 which is more what Rukh is looking at. You could end up with 10's of millions at death or could end up destitute. You just have to play the odds a little and ideally adjust as you go. Worst case is market tanking in your first few years of retirement.
For a 64K withdrawal
For a 56K withdrawal
No, but it's a good rule of thumb, and 3.5% is pretty solid. If you go below that, you're being incredibly risk averse.
|
|
Lizard Queen
Senior Associate
103/2024
Joined: Jan 17, 2011 22:19:13 GMT -5
Posts: 14,659
|
Post by Lizard Queen on Aug 31, 2021 8:22:17 GMT -5
I think when I did it yesterday, I cut off her Rukh Inc income at some point, under the theory that she may not want to be running her business in her 80s. The main thing is she can get in there and play with all the variables to see what scenarios will work for her. But she'll also be getting social security and Medicare at 65, so her spending needs will decrease.
|
|
Deleted
Joined: Apr 24, 2024 6:25:26 GMT -5
Posts: 0
|
Post by Deleted on Aug 31, 2021 8:54:07 GMT -5
No, but it's a good rule of thumb, and 3.5% is pretty solid. If you go below that, you're being incredibly risk averse. That's what I've used for the last 7 years (on average) and it's worked very well. Invested assets keep increasing. Future markets- who knows?
|
|
Rukh O'Rorke
Senior Associate
Joined: Jul 4, 2016 13:31:15 GMT -5
Posts: 10,030
|
Post by Rukh O'Rorke on Aug 31, 2021 9:02:27 GMT -5
But even if they give you what you are owed, would you want to stay on? Are you 59 and a 1/2 yet or close to it? That would make it easier to access retirement accounts without penalties. If I were in your shoes, I'd go for it. I wouldn't burn my bridges and it doesn't sound like you will. You can access 401k without penalty at 55 but only in the account of the job you leave after 55 (most plans allow this). My plan is that my RI plus current employer 401k carry me through to 59.5. That is 2.5 years, and it might be tight. About 125 in the 401k, so 50/year for 2.5 ears. Could be a motivator to push RI! Or trim expenses? But I think that is unlikely as I will definitely trim some but will up others. Also Roth contributions could be used to supplement, but I'd hate that! And it likely isn't much - years when contriubute was like 2.5k.
|
|
|
Post by minnesotapaintlady on Aug 31, 2021 9:06:16 GMT -5
No, but it's a good rule of thumb, and 3.5% is pretty solid. If you go below that, you're being incredibly risk averse. That's what I've used for the last 7 years (on average) and it's worked very well. Invested assets keep increasing. Future markets- who knows? Well, yeah. Who hasn't done well in stocks in that time frame? But what if you'd retired in 2000 instead of 2014? There was basically a 0% return from 2000 to 2007.
|
|
Rukh O'Rorke
Senior Associate
Joined: Jul 4, 2016 13:31:15 GMT -5
Posts: 10,030
|
Post by Rukh O'Rorke on Aug 31, 2021 9:07:46 GMT -5
How does that work? I've got $64000 just on the $1.6M @ 4% WD, add $25k is $89000. A 3.5%WD should be golden, adding $25k is $81000. It makes an assumption that part of her money remains in the market so it includes added risk. I think she is good as long as she doesn't have a bunch of large expenses coming up that would deplete her principal. I do have some anticipated large expenses, but I have 100k to take care of the house-related stuff. I may be buying a new car as DD is taking the toyota when she leaves. I had gifted it to her at graduation. I'll go as long as I can without a car, see how that may work out. Save a few bucks while I experiment. Maybe I could do it long term?
|
|
Lizard Queen
Senior Associate
103/2024
Joined: Jan 17, 2011 22:19:13 GMT -5
Posts: 14,659
|
Post by Lizard Queen on Aug 31, 2021 9:14:53 GMT -5
That's what I've used for the last 7 years (on average) and it's worked very well. Invested assets keep increasing. Future markets- who knows? Well, yeah. Who hasn't done well in stocks in that time frame? But what if you'd retired in 2000 instead of 2014? There was basically a 0% return from 2000 to 2007. She'd probably be skipping the plane rides/stays in hotels with grands just for fun.
|
|
Rukh O'Rorke
Senior Associate
Joined: Jul 4, 2016 13:31:15 GMT -5
Posts: 10,030
|
Post by Rukh O'Rorke on Aug 31, 2021 9:14:59 GMT -5
You can access 401k without penalty at 55 but only in the account of the job you leave after 55 (most plans allow this). Yes. I've been doing it for years. I did not see where she specified how the retirement funds were allocated, so I assumed a portion is in IRAs, although there are ways to withdraw those early without penalty, too. When we first retired, I figured if we started running out of money we could get jobs. I keep our expenses low, so it hasn't been an issue. If I were retiring right now, I would be a bit concerned the markets might drop on me. How long can they keep going up, up, up? I guess Phil would say forever? 122k current employer (anticipate 125 by the time I'd leave) 1,348k in ira rollovers of old emploeyr 401ks 189k in roth you guys know a lot! Thank you all so much for tearing this apart and building it up!
|
|
Rukh O'Rorke
Senior Associate
Joined: Jul 4, 2016 13:31:15 GMT -5
Posts: 10,030
|
Post by Rukh O'Rorke on Aug 31, 2021 9:16:13 GMT -5
You can access 401k without penalty at 55 but only in the account of the job you leave after 55 (most plans allow this). If I were retiring right now, I would be a bit concerned the markets might drop on me. How long can they keep going up, up, up? I guess Phil would say forever? I certainly do have concerns about this!
|
|
Rukh O'Rorke
Senior Associate
Joined: Jul 4, 2016 13:31:15 GMT -5
Posts: 10,030
|
Post by Rukh O'Rorke on Aug 31, 2021 9:18:50 GMT -5
That's what I've used for the last 7 years (on average) and it's worked very well. Invested assets keep increasing. Future markets- who knows? Well, yeah. Who hasn't done well in stocks in that time frame? But what if you'd retired in 2000 instead of 2014? There was basically a 0% return from 2000 to 2007. and quite a huge negative if you were withdrawing regularly for living expenses.
|
|
Lizard Queen
Senior Associate
103/2024
Joined: Jan 17, 2011 22:19:13 GMT -5
Posts: 14,659
|
Post by Lizard Queen on Aug 31, 2021 9:21:00 GMT -5
What do you expect to get from SS?
|
|
|
Post by minnesotapaintlady on Aug 31, 2021 9:24:07 GMT -5
Well, yeah. Who hasn't done well in stocks in that time frame? But what if you'd retired in 2000 instead of 2014? There was basically a 0% return from 2000 to 2007. She'd probably be skipping the plane rides/stays in hotels with grands just for fun. You can't tell me it wouldn't be a little stressful to have your 1.6M go to 760K in your first three years of retirement (37% market drop and three years of pulling 56K). Remember Rukh needs 30K just for her mortgage.
|
|
|
Post by minnesotapaintlady on Aug 31, 2021 9:27:05 GMT -5
If I were retiring right now, I would be a bit concerned the markets might drop on me. How long can they keep going up, up, up? I guess Phil would say forever? I certainly do have concerns about this! Personally, I think you'll be fine as long as you are prepared to pivot back to working if the market doesn't cooperate.
|
|
Lizard Queen
Senior Associate
103/2024
Joined: Jan 17, 2011 22:19:13 GMT -5
Posts: 14,659
|
Post by Lizard Queen on Aug 31, 2021 9:32:33 GMT -5
She'd probably be skipping the plane rides/stays in hotels with grands just for fun. You can't tell me it wouldn't be a little stressful to have your 1.6M go to 760K in your first three years of retirement (37% market drop and three years of pulling 56K). Remember Rukh needs 30K just for her mortgage.
I think Rukh has a lot of options to make up the difference if that were to happen, especially with the job market as it is. I think Athena has way more than she needs for her frugal lifestyle coupled with her indulgent travel, which she could easily cut back on if she needed to.
|
|
|
Post by minnesotapaintlady on Aug 31, 2021 9:46:09 GMT -5
You can't tell me it wouldn't be a little stressful to have your 1.6M go to 760K in your first three years of retirement (37% market drop and three years of pulling 56K). Remember Rukh needs 30K just for her mortgage.
I think Rukh has a lot of options to make up the difference if that were to happen, especially with the job market as it is. I think Athena has way more than she needs for her frugal lifestyle coupled with her indulgent travel, which she could easily cut back on if she needed to. Yes, I get that Athena has way more than she needs and could probably weather a 50% drop in account values.
|
|
CCL
Junior Associate
Joined: Jan 4, 2011 19:34:47 GMT -5
Posts: 7,591
|
Post by CCL on Aug 31, 2021 10:04:16 GMT -5
Well, yeah. Who hasn't done well in stocks in that time frame? But what if you'd retired in 2000 instead of 2014? There was basically a 0% return from 2000 to 2007. and quite a huge negative if you were withdrawing regularly for living expenses. Again - keep you expenses low!
|
|
CCL
Junior Associate
Joined: Jan 4, 2011 19:34:47 GMT -5
Posts: 7,591
|
Post by CCL on Aug 31, 2021 10:14:31 GMT -5
You can access 401k without penalty at 55 but only in the account of the job you leave after 55 (most plans allow this). My plan is that my RI plus current employer 401k carry me through to 59.5. That is 2.5 years, and it might be tight. About 125 in the 401k, so 50/year for 2.5 ears. Could be a motivator to push RI! Or trim expenses? But I think that is unlikely as I will definitely trim some but will up others. Also Roth contributions could be used to supplement, but I'd hate that! And it likely isn't much - years when contriubute was like 2.5k. Start thinking about converting to your Roth, not about spending it.
|
|
Deleted
Joined: Apr 24, 2024 6:25:26 GMT -5
Posts: 0
|
Post by Deleted on Aug 31, 2021 10:27:33 GMT -5
Well, yeah. Who hasn't done well in stocks in that time frame? But what if you'd retired in 2000 instead of 2014? There was basically a 0% return from 2000 to 2007. She'd probably be skipping the plane rides/stays in hotels with grands just for fun. I agree- the market conditions following my retirement were partly the grace of God (or luck, depending on your beliefs) and I know that's a major factor in long-term retirement security. And yes, there's a lot I could have cut back. Another safety valve: DH died 2 years after I retired and I was 63 and not collecting SS on my own record. I've been able to let my benefit grow but if needed I could have increased my income by filing for benefits on my own record. At age 67 it would have been another $900/month before taxes. I'm going to start collecting on my own record early next year at age 69- I've waited long enough.
|
|
Rukh O'Rorke
Senior Associate
Joined: Jul 4, 2016 13:31:15 GMT -5
Posts: 10,030
|
Post by Rukh O'Rorke on Aug 31, 2021 12:23:38 GMT -5
What do you expect to get from SS? About 20k at 62, 30k at 65.
|
|
jerseygirl
Senior Member
Joined: May 13, 2018 7:43:08 GMT -5
Posts: 4,764
Member is Online
|
Post by jerseygirl on Aug 31, 2021 13:05:50 GMT -5
That’s a big mortgage payment! Can you downsize? Seems downsizing would decrease stressing about funds
|
|
NoNamePerson
Distinguished Associate
Is There Anybody OUT There?
Joined: Dec 17, 2010 17:03:17 GMT -5
Posts: 25,684
Location: WITNESS PROTECTION
|
Post by NoNamePerson on Aug 31, 2021 14:29:08 GMT -5
What do you expect to get from SS? About 20k at 62, 30k at 65. Why not wait till you can draw full benefits if you don’t need SS for any living expenses? I don’t know your age but guessing you were born after after 43! They keep changing full benefits so I have lost track. Now having said that I did draw early mainly because they kept moving the goal post on full benefits. Figured they would keep moving them so if I got close they would move again till SS just went into my coffin with me. And I should say I was debt free mostly and didn’t have anyone else to consider but myself. My one child was on his own and doing just fine!
|
|
Deleted
Joined: Apr 24, 2024 6:25:26 GMT -5
Posts: 0
|
Post by Deleted on Aug 31, 2021 15:02:35 GMT -5
That’s a big mortgage payment! Can you downsize? Seems downsizing would decrease stressing about funds Yeah, I went back and looked- $30K/year! I lived in NNJ- I know that you may be in an area where a $200K house has structural defects and black mold, but downsizing would help. DH and I did that and while the front-end costs were higher than expected (fixing up current place including a surprise bill for $5K to unclog a pipe in the basement, enclosing back deck and replacing some leaky windows in current place) and we spent more than we'd planned, the ongoing costs are far lower- not just the mortgage of course, but property taxes and utilities. One caveat- we had a heck of a time getting a mortgage despite investments worth 10 X the new house cost. I swear all they looked at was DH's SS (he'd been retired for years) and my $900/month pension since I was one year post-retirement. We wanted to borrow $150K and all they'd lend us was $100K. You either need an asset-based loan (which I didn't know about at the time) or you need to have a regular draw set up from a brokerage so they can count it as income. Apparently my transferring $$ every few months in irregular amounts didn't count even though the totals were sustainable. Banks can be silly sometimes.
|
|
gs11rmb
Senior Member
Joined: Dec 21, 2010 12:43:39 GMT -5
Posts: 3,303
|
Post by gs11rmb on Aug 31, 2021 15:24:26 GMT -5
I don't think $30K a year in Chicago is ridiculous. I don't know about Rukh O'Rorke's house but downsizing might not save her a lot of money. It's all very well to sell in Chicago and then buy somewhere in Podunk, IL but that means leaving her 'life' behind. If money becomes tight then Podunk absolutely becomes an option but until that time then I think Rukh O'Rorke's mortgage is just a necessary part of her living the life she wants to live.
|
|
NomoreDramaQ1015
Community Leader
Joined: Dec 20, 2010 14:26:32 GMT -5
Posts: 47,216
|
Post by NomoreDramaQ1015 on Aug 31, 2021 15:29:10 GMT -5
I don't think $30K a year in Chicago is ridiculous. I don't know about Rukh O'Rorke 's house but downsizing might not save her a lot of money. It's all very well to sell in Chicago and then buy somewhere in Podunk, IL but that means leaving her 'life' behind. If money becomes tight then Podunk absolutely becomes an option but until that time then I think Rukh O'Rorke 's mortgage is just a necessary part of her living the life she wants to live. Not to mention depending on where Podunk is it may have saved you on housing but what are you giving up for the reduced cost in housing? We're dealing with this with my grandma. She lives in Podunk, IA because the property taxes and mortgage were so much cheaper. Yeah well the reason for that is there is NOTHING in that town. NOTHING, they don't even have a grocery store. Which is fine when you are younger like me and can drive yourself the 45 minutes into CB/Omaha for your needs. Not so great when you are a 78 year old widow who can't drive in a place with zero public transportation and even freaking uber doesn't service the area (not that we could probably get her to use it anyhow). So I've kinda lost my taste for the advice to immediately downsize and move to a cheaper area. Not without doing a shit ton of homework first and having a plan for what if you need to move back.
|
|
Lizard Queen
Senior Associate
103/2024
Joined: Jan 17, 2011 22:19:13 GMT -5
Posts: 14,659
|
Post by Lizard Queen on Aug 31, 2021 15:45:49 GMT -5
There's a huge amount of in-between for Chicago and BFE.
|
|
NomoreDramaQ1015
Community Leader
Joined: Dec 20, 2010 14:26:32 GMT -5
Posts: 47,216
|
Post by NomoreDramaQ1015 on Aug 31, 2021 15:52:24 GMT -5
There's a huge amount of in-between for Chicago and BFE. That's why I said not without homework beyond how cheap it is to live someplace. Phil liked to post listings touting how cheap it is to buy as a smart move. I know the area for one of the posts he shared. There is a reason why that house was only $40k and it ain't because it's so much cheaper to live in the Midwest. If someone moved here on that advice and couldn't afford to move back or elsewhere they'd be screwed.
|
|
|
Post by minnesotapaintlady on Aug 31, 2021 15:53:12 GMT -5
There's a huge amount of in-between for Chicago and BFE. I would think just moving from a large house that needs 100K of work to a condo still in a good part of Chicago would be a big savings.
|
|
CCL
Junior Associate
Joined: Jan 4, 2011 19:34:47 GMT -5
Posts: 7,591
|
Post by CCL on Aug 31, 2021 15:56:09 GMT -5
Downsizing doesn't have to mean moving to another area. Maybe just a more manageable/smaller place. There's nothing wrong with staying where you are, either. If you have a high house payment, high car payments, high student loan payments, high credit card bills, high taxes and high utilities, it's gonna be tougher to make ends meet in retirement. Nothing wrong with those things by themselves, but if you (in general, noone specific) have many of these, you may need to make a few changes.
|
|
gs11rmb
Senior Member
Joined: Dec 21, 2010 12:43:39 GMT -5
Posts: 3,303
|
Post by gs11rmb on Aug 31, 2021 15:57:20 GMT -5
There's a huge amount of in-between for Chicago and BFE. That's certainly true. But leaving Chicago for anywhere cheaper means leaving friends, family, roots, etc. I just don't think that 'downsizing' should be an automatic part of retirement planning. We live in a small house in in-town Atlanta. We could really really really use one more bedroom. But, if we sold our house and bought somewhere larger then we'd have to move farther out. We may still be inside the perimeter (which technically separates the city from the suburbs) but it's going to be very different. The problem is that once our girls have left home and it's time to downsize then we'll never be able to afford to move back into the city proper. So, if all goes to plan, we'll not sell this house and never benefit from the equity we've built.
|
|