How are you gonna implement whatever safe withdrawal rate?

Financial Independence/Retire Early -- Learn How!
peteyperson
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Post by peteyperson »

Ken,

Met a Brit-expat who has lived in Aussieland for the past 30 years and was 69. He said that living in Aussieland was a problem in that he liked to travel and the distance to other places made that difficult. He took extended trips once every 4 years for 3 months at a time and took as many package holiday deals as he could find.

He was thinking of relocating to Greece because it would place him more centrally in Europe. Just something to consider.
KenM wrote: For the scenario where I might eventually return to Europe or get a retirement visa in Australia with 30% tax rates etc etc, then I probably need to withdraw from financial assets at about a 2% SWR.


I forget. How heavily diversified are you beyond the various properties, Ken? What sort of dividends/income and growth do you get from such a mixed port?

P.S. You sure you can live off £6,000 ($10,000) in the UK? Doesn't leave you much wriggle room at all.
KenM wrote: For absolute basic contingency planning (assuming a very major catastrophy in my personal finances - but as I'm so diversified that seems almost impossible) I will always retain a small house in the UK. With free medical care there I know that I can live on US$10,000 a year - basic but not starving.


Petey
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Re: How are you gonna implement whatever safe withdrawal rat

Post by peteyperson »

Hi Ben,

I stopped using variable budgets simply because it was a timedrain to keep updating them when my regular budget changed and that reflected a change I needed to make in three other budgets each time too. I now just have a single personal budget and one for FIRE.

My budget is comfortable, rather than bare bones or luxury. It is essentially the same as now, sans mortgage, more for medical (drugs and long term care insurance) and less for clothing. Everything else is roughly the same.

Within the budget I know that I would have the flexibility during FIRE to cut out vacations, put off redecorating the home, replacing applianced etc if I needed to reduce the budget because the market was down for an extended period of time. I plan to have a sizable cash buffer to avoid selling shares when they are below their intrinsic value, but I would still want to adopt some of gummy's approach in reducing spending during bad periods just for peace of mind.

One variable on that could be accounting for that possibility just after FIRE and putting aside an extra amount of cash to privately fund travel over the first five years whether you've hit a bad spot or not. Keeping it completely seperate. This would of course require that you have more for retirement but might avoid the need to cut travel to nothing just at the point where you've quit work with grand plans. Of course, on the other hand, you would have to work extra years to build up such a fund in the first place, so it is a bit of a crap shoot!

Petey
ben wrote: Some of you are already retired, and some of us are on our way to FIRE.
No matter what it would be interesting to see have you are planning to implement your decided SWR/your best guess (no formulas needed!) on RANGE(no specifics! :lol:) of same.

Personally I believe I will use 3 budgets (basic 2-3% w/r, good 4%, very good 5%) being very flexible as to adjusting same for actual market results on my nest egg. Maybe in line with Gummy's Sensible w/r method, and for sure directly related to the market results/w. upper limits.

I am currently practicing LBYM (live below your means) fairly well, and at FIRE I believe I will be able to adjust up/down with in a resonable range without affecting my happiness too much. As I and Ken have mentioned before; I actually feel BETTER spending less when markets are down, than just blindly pulling a set % + inflation every year. :shock:

LBYM is easier than I first expected - the main thing for me is to stop thinking in "wants" and instead in "needs". Added benefit is less "stuff" cluttering my life/needing maintenance Etc. Big expenses are re-considered more than before (do I have something covering my need already? old 25 Inch TV OK rather than new flat screen?/will the new purchase make me happier?).

Naturally the above implies that one would need room to maneuvre spending down to 2% - and further I will have to re-calculate size of nest egg should family/children suddenly appear :idea: but that is a different story.

As to the inflation adjustment I also believe that on a personal basis it is easier to keep same low as long as willing to compromise a bit (E.g. to stay on the basic budget). Orange Juice to expensive; get Tang instead, new Pocket PC double price? buy last year model, beef price gone through the roof?, make chicken steaks instead. You get the picture... :wink:

As discussed before I could also move to another country to ensure lower cost of living - extreme me! 8)
Cut-Throat
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Post by Cut-Throat »

Chips,

Oh Yes indeed, I factored in a gain of 6% on the money taken from Social Security. I don't think this is 'gumming' things up, it's reality.

My spending is not going to change whether I take SS at 62 or 66. So I have run the calculations with 6% return on the income and you only make out if you live past 95!

- Quite a bit longer than any life expectancy tables I've ever seen.
[KenM]
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Post by [KenM] »

petey
he liked to travel
........been there - done that (a lot) ....... Australia would be one of the great places to spend the rest of my life (except for the tax)....... depends on which hemisphere my kids might end up in (at present Hong Kong, Taiwan and UK)
What sort of dividends/income and growth do you get from such a mixed port?
I've got a couple of frozen pensions (reasonably inflation adjusted) that come due in the next 2 years. Plus real estate income. Plus withdrawals from financial assets if necessary. If absolutely necessary I could live reasonably comfortably from just one of those three. Of course 2 out of 3 will be more comfortable :)
You sure you can live off £6,000 ($10,000) in the UK? Doesn't leave you much wriggle room at all.
As I say, the very, very basic contingency, fall-back scenario - no wriggle room - but not starving either - and I'm assuming I would be 65 older so no fancy nite clubs etc :cry:
KenM
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Post by wanderer »

My spending is not going to change whether I take SS at 62 or 66. So I have run the calculations with 6% return on the income and you only make out if you live past 95!

- Quite a bit longer than any life expectancy tables I've ever seen.


cutthroat -

revenue ruling 2002-62 (http://www.treasury.gov/press/releases/ ... 200262.pdf ) used mortality tables that predicted my demise at the age of 96+.

i saw a factoid the other day that said every other girl born in 2003 in the US would live to 100+.
regards,

wanderer

The field has eyes / the wood has ears / I will see / be silent and hear
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Post by Cut-Throat »

wanderer,

You must be about 90 years old then!

Here is the more common figues. Yours must have been put together by Bob the Iraqi Information minister.

Numbers here are a bit hard to read. Age listed in 3 colums followed by the years left to live. A US male is not projected to live past 95 until age 92. At age 62 a US male is projected to live to 79!

Nothing I would bet on! Just check your Obit's in the local paper and count the percentage that live past 95.


LIFE EXPECTANCY TABLE - MALES



Age Life
Expectancy

0 71.80 40 35.05 80 6.98
1 71.53 41 34.15 81 6.59
2 70.58 42 33.26 82 6.21
3 69.62 43 32.37 83 5.85
4 68.65 44 31.49 84 5.51
5 67.67 45 30.61 85 5.19
6 66.69 46 29.74 86 4.89
7 65.71 47 28.88 87 4.61
8 64.73 48 28.02 88 4.34
9 63.74 49 27.17 89 4.09
10 62.75 50 26.32 90 3.86
11 61.76 51 25.48 91 3.64
12 60.78 52 24.65 92 3.43
13 59.79 53 23.82 93 3.24
14 58.82 54 23.01 94 3.06
15 57.85 55 22.21 95 2.90
16 56.91 56 21.43 96 2.74
17 55.97 57 20.66 97 2.60
18 55.05 58 19.90 98 2.47
19 54.13 59 19.15 99 2.34
20 53.21 60 18.42 100 2.22
21 52.29 61 17.70 101 2.11
22 51.38 62 16.99 102 1.99
23 50.46 63 16.30 103 1.89
24 49.55 64 15.62 104 1.78
25 48.63 65 14.96 105 1.68
26 47.72 66 14.32 106 1.59
27 46.80 67 13.70 107 1.50
28 45.88 68 13.09 108 1.41
29 44.97 69 12.50 109 1.33
30 44.06 70 11.92 110 1.25
31 43.15 71 11.35 111 1.17
32 42.24 72 10.80 112 1.10
33 41.33 73 10.27 113 1.02
34 40.23 74 9.27 114 0.96
35 39.52 75 9.24 115 0.89
36 38.62 76 8.76 116 0.83
37 37.73 77 8.29 117 0.77
38 36.83 78 7.83 118 0.71
39 35.94 79 7.40 119 0.66
peteyperson
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Post by peteyperson »

Source?


Cut-Throat wrote: wanderer,

You must be about 90 years old then!

Here is the more common figues. Yours must have been put together by Bob the Iraqi Information minister.

Numbers here are a bit hard to read. Age listed in 3 colums followed by the years left to live. A US male is not projected to live past 95 until age 92. At age 62 a US male is projected to live to 79!

Nothing I would bet on! Just check your Obit's in the local paper and count the percentage that live past 95.


LIFE EXPECTANCY TABLE - MALES



Age Life
Expectancy

0 71.80 40 35.05 80 6.98
1 71.53 41 34.15 81 6.59
2 70.58 42 33.26 82 6.21
3 69.62 43 32.37 83 5.85
4 68.65 44 31.49 84 5.51
5 67.67 45 30.61 85 5.19
6 66.69 46 29.74 86 4.89
7 65.71 47 28.88 87 4.61
8 64.73 48 28.02 88 4.34
9 63.74 49 27.17 89 4.09
10 62.75 50 26.32 90 3.86
11 61.76 51 25.48 91 3.64
12 60.78 52 24.65 92 3.43
13 59.79 53 23.82 93 3.24
14 58.82 54 23.01 94 3.06
15 57.85 55 22.21 95 2.90
16 56.91 56 21.43 96 2.74
17 55.97 57 20.66 97 2.60
18 55.05 58 19.90 98 2.47
19 54.13 59 19.15 99 2.34
20 53.21 60 18.42 100 2.22
21 52.29 61 17.70 101 2.11
22 51.38 62 16.99 102 1.99
23 50.46 63 16.30 103 1.89
24 49.55 64 15.62 104 1.78
25 48.63 65 14.96 105 1.68
26 47.72 66 14.32 106 1.59
27 46.80 67 13.70 107 1.50
28 45.88 68 13.09 108 1.41
29 44.97 69 12.50 109 1.33
30 44.06 70 11.92 110 1.25
31 43.15 71 11.35 111 1.17
32 42.24 72 10.80 112 1.10
33 41.33 73 10.27 113 1.02
34 40.23 74 9.27 114 0.96
35 39.52 75 9.24 115 0.89
36 38.62 76 8.76 116 0.83
37 37.73 77 8.29 117 0.77
38 36.83 78 7.83 118 0.71
39 35.94 79 7.40 119 0.66
PainInTheAS
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Post by PainInTheAS »

Cut-Throat wrote: Numbers here are a bit hard to read. Age listed in 3 colums followed by the years left to live. A US male is not projected to live past 95 until age 92. At age 62 a US male is projected to live to 79!


Cut-Throat,

This seem like a misapplication of life-expectancy figures.

If you are an insurance company underwriting lots of life insurance policies, then there may be some utility in the figures quoted (even then, I imagine the distribution of decedents' ages would play a much larger role than just the average/median which is what the "life-expectancy" likely is [i.e., the "expected value"]).

Looking at your data, and using your verbiage, nobody younger than 66 "is projected to live" to 80--I don't think so!

I would consider the table almost useless for telling me anything about how long I (or you, or any other individual) am going to live, given that I made it this far. For me, this seems particularly true with respect to trying to gauge a realistic potential timeframe for my own retirement plan, and/or where some conservatism might be in order.
Nothing I would bet on!


Indeed!

PITA
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Post by Cut-Throat »

PainInTheAS wrote:

I would consider the table almost useless for telling me anything about how long I (or you, or any other individual) am going to live, given that I made it this far.

PITA



Yeah. - This is what life expectancy tables are all about. -

You were'nt thinking of consulting a palm reader. were you?
Looking at your data, and using your verbiage, nobody younger than 66 "is projected to live" to 80--I don't think so!



These numbers are averages, it does not mean anybody - It is the average. Look in the Obits, if you don't believe this number. Plenty of people in their 20s, 30s, 40s, 50s, 60s, 70's that die every day
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Post by wanderer »

LOL. ataloss, can you handle this one? (I thought mortality tables at least had the redeeming quality of not getting any one's hackles up.) :wink:
regards,

wanderer

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Post by MaiPenRai »

I think the answer lies between what the two sides are saying.

Those mortality tables are fine to use as an average but I think most people can look at themselves and throw some adjustments in.

If I see the average male lives to 75, but I know I drink a 12 pack of beer every day, smoke 2 packs of cigarettes, have had my father, grandfather, and great grandfather die of heart failure in their 50s, mother die of cancer at age 41, am 86 pounds overweight, and am an elephant trainer then yes I'd probably think it a reasonable idea to say the odds are I won't live to the age that the average male in my country lives.

It doesn't mean I won't, but without getting into piles of mortality data with graphs showing the bell curve around the age of croakage it's a fair assumption.

Same if you're a water drinking, plenty of fruit eating, cross-training, never-stressed out freak of nature who's grandparents are still alive at age 107... you're probably wiser planning for a longer financial horizon.
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ataloss
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Post by ataloss »

LOL. ataloss, can you handle this one? (I thought mortality tables at least had the redeeming quality of not getting any one's hackles up.)


I have been quiet so far. I am afraid hocus will discover that smoking affects mortality and declare that all mortality tables prior to that discovery are invalid. :)
Have fun.

Ataloss
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Post by wanderer »

bloated troglodyte or "freak of nature", 75 or 96, perhaps a goal all of us can share is being comfortably ensconced here

http://www.cnn.com/2003/TRAVEL/DESTINAT ... index.html

when we are finally put out to pasture. :wink:

maipenrai/ben - have you visited this place yet?
regards,

wanderer

The field has eyes / the wood has ears / I will see / be silent and hear
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Post by kathyet »

Speak for yourself Wanderer, I'll take a pasture any day and only when I dead. :lol::lol:


Kathyet
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ben
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Post by ben »

Nah - have not had time as too many cool night clubs, cinemas and other things too do so well let THAT pleasure forego... :wink:
Normal; to put on clothes bought for work, go to work in car bought to get to work needed to pay for the clothes, the car and the home left empty all day in order to afford to live in it...
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Post by MaiPenRai »

I've not been, but sure want to go now. To think I was impressed with a snake farm and $5 hour foot massage....
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Post by ben »

Ok "Nevermind",
you go, pick me up at Starbucks at Central when done - no pictures from you visit please :wink:
Normal; to put on clothes bought for work, go to work in car bought to get to work needed to pay for the clothes, the car and the home left empty all day in order to afford to live in it...
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Post by [KenM] »

Those mortality tables are fine to use as an average

I think I've said it before, but I continue to find it a nice paradox that the older I get, the longer the tables say I'm going to live :)
KenM
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Post by Cut-Throat »

think I've said it before, but I continue to find it a nice paradox that the older I get, the longer the tables say I'm going to live


This reminds me of the weather forecasts here in Minnesota in the winter. When they say we will get 2-4 inches of snow, after we have gotten 4 inches, the forecast becomes 4-6 inches.

Soon we are up to our necks in snow! :roll:
[KenM]
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Post by [KenM] »

I always think the weather makes a good analogy for stocks. I haven't experienced snow for 30 years - I have reasonably pleasant memories of snow.
If I'd been up to my neck in it last winter my memories might not be so pleasant. A sign of 'recency' ???
KenM
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