- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
2
Posted on 6/4/23 at 11:04 am to makersmark1
quote:
Healthcare is a big cost.
Many work until Medicare kicks in.
Start a Roth ladder. That is, convert money from traditional IRA to Roth every year for five years, then you can start withdrawing those conversions tax free at any age as long as they have been in your Roth at least five years. Use Roth assets to keep your taxable income low enough to qualify for a larger Obamacare subsidy.
Keep in mind dividends and capital gains in your taxable accounts get very favorable tax treatment if you have a low income. They do count towards MAGI, which is what Obamacare subsidies are based on, but Roth withdrawals do not. In a scenario like this, if you can plan for it, it might be better to put off drawing your tax deferred assets until later when medicare changes the math.
Posted on 6/4/23 at 11:54 am to PhiTiger1764
quote:
5% is a pretty risky assumption for a withdrawal rate. Especially at just 50 where you’d need to plan for 40+ years of retirement.
I’d think you’d need at absolute minimum $2M. Probably $2.5M+ especially considering health insurance costs..
Down voters please explain why you down voted. OP brings up very good points and is correct about 5% being risky. Sequence of return risk over 40 years is a huge concern. So is inflation and health care cost(this includes premiums).
Posted on 6/4/23 at 12:09 pm to La Place Mike
quote:
Sequence of return risk
That's always the part which never gets spoken aloud.
And it is one of the biggest determinants of a good budget and bad.
Posted on 6/4/23 at 3:16 pm to meansonny
quote:
That's always the part which never gets spoken aloud.
It never gets spoken aloud because this board is dominated by DIY guys that only listen to AUM guys.
Posted on 6/4/23 at 4:26 pm to BabyTac
quote:
I forgot about healthcare and taxes. Plus the lump sum property tax in Texas is quite a chunk. Guess I’ll be running the miserable rat race until 60.
Looks like the Moneyboard saved you. Imagine had you retired at 50 and forgot about healthcare and taxes.
Posted on 6/4/23 at 4:43 pm to La Place Mike
quote:
Down voters please explain why you down voted.
Perhaps because while you're correct 5% is aggressive and increases risk of failure beyond what many would think acceptable, $1.5M is enough to fund OP's $50-60k lifestyle at a 4% SWR which is a common rule of thumb 90+% success rate. Heck, even the 4% rule originator Bill Bengen has updated his numbers and suggested 4.7%.
But if OP didnt consider taxes or HC, your #s are probably closer to what he'll require to meet his actual needs.
This post was edited on 6/4/23 at 5:10 pm
Posted on 6/4/23 at 4:51 pm to BabyTac
OP, did you take into account inflation? If not, how many years from now are you talking because you may need much more than $50-60k adjusted for inflation.
Take your inflation adjusted annual projected annual spend (including taxes and health care this time). Multiply that by 25 and it will give you a good estimate of how much you'll need at a 4% safe withdrawal rate including annual inflation increase. You can add some cushion if you are flexible and can reduce spending in a down market and/or return to work.
Take your inflation adjusted annual projected annual spend (including taxes and health care this time). Multiply that by 25 and it will give you a good estimate of how much you'll need at a 4% safe withdrawal rate including annual inflation increase. You can add some cushion if you are flexible and can reduce spending in a down market and/or return to work.
Posted on 6/5/23 at 7:48 am to TorchtheFlyingTiger
quote:
Perhaps because while you're correct 5% is aggressive and increases risk of failure beyond what many would think acceptable, $1.5M is enough to fund OP's $50-60k lifestyle at a 4% SWR which is a common rule of thumb 90+% success rate. Heck, even the 4% rule originator Bill Bengen has updated his numbers and suggested 4.7%.
Good points but still not a good reason to down vote a post that brought up good points to consider.
Bengen based his SWR on 30 years not 40. Based on a simulation posted on the previous page the success rate for 40 years drops to 76% with 100% stock allocation. That may be be fine for some but not for others.
As far as I know you are the first person to bring up Bengen. Do read any of Wade Pfau's work?
Posted on 6/5/23 at 4:14 pm to La Place Mike
Never heard of Pfau. I'll do some reading. I listen to a lot of FIRE and retirement podcasts and read blogs and dont recall hearing that name. A quick search looks like he is pitching advisor services and annuities to traditional retirees.
Posted on 6/5/23 at 9:08 pm to TorchtheFlyingTiger
quote:
quick search looks like he is pitching advisor services and annuities to traditional retirees.
Nope, he doesn't sell annuities or life insurance but he is an advisor with a PhD in Economics from Princeton. He is very methodical in his research and can back up everything he says with hard numbers.
This post was edited on 6/5/23 at 9:21 pm
Posted on 6/5/23 at 10:09 pm to makersmark1
quote:
Healthcare is a big cost.
This is what keeps everyone I know in their mid to late 50’s still working full time.
It stinks that there is not a better low cost option for people in this area of life to make things easier to retire
Posted on 6/6/23 at 9:00 am to meansonny
quote:
quote:
Sequence of return risk
That's always the part which never gets spoken aloud.
And it is one of the biggest determinants of a good budget and bad.
While it is extremely critical to the success of a retirement plan, it can also be planned for as well. The one benefit is that the most critical years for sequence of return risk are the first few years after retiring. A well developed plan could have contingencies if the returns are bad the first few years (cut back on spending or go earn some more money). Of course this is not ideal but saving enough to eliminate the sequence of return risk simply causes you to work much longer than you would otherwise need to work.
Posted on 6/6/23 at 9:40 am to bod312
quote:
The one benefit is that the most critical years for sequence of return risk are the first few years after retiring.
I would say the first 5 years before and after retirment are the most critical.
quote:
A well developed plan could have contingencies if the returns are bad the first few years (cut back on spending or go earn some more money).
Not much of a contingency plan.
Posted on 6/6/23 at 10:38 am to BabyTac
I RETIRED AT 56 WITH MUCH LESS. I clear about 7 grand a month an d live well. Travel all over the country and enjoy life. Can't take it with you. Everything I own is paid off.
Posted on 6/6/23 at 11:58 am to Armymann50
Tricare is cheating :)
Thank you for your service.
Much deserved.
Thank you for your service.
Much deserved.
Posted on 6/6/23 at 12:34 pm to meansonny
quote:
Tricare is cheating :)
So is having an Army Pension. He doesn't run the risk of running out of funds. He also said he retired with much less but then said he clears 7K a month which would be 84K a year. The OP was talking about retiring with 50K to 60K.
I am not begrudging Armymann50. Our Armed Services people desreve more than they get.
I too thank him for his service!
Posted on 6/6/23 at 1:02 pm to La Place Mike
I've tried to influence my "free spirited" kids that a military career ironically offers the most freedom out of any citizen.
Tricare is the best coverage in the country today.
Pensions with early retirement (by age).
"Imagine being wanderlust at age 45". Or imagine going into business for yourself with your base pay and insurance already covered.
These are earned benefits. But it is tough to get 14-19 year olds to look that far ahead.
Tricare is the best coverage in the country today.
Pensions with early retirement (by age).
"Imagine being wanderlust at age 45". Or imagine going into business for yourself with your base pay and insurance already covered.
These are earned benefits. But it is tough to get 14-19 year olds to look that far ahead.
Posted on 6/6/23 at 1:49 pm to BabyTac
quote:
I forgot about healthcare and taxes. Plus the lump sum property tax in Texas is quite a chunk. Guess I’ll be running the miserable rat race until 60.
You might be surprised how many ex-Texans I have met here in Santa Fe and most moved here to get out from under TX property tax, there is no way to reduce or eliminate it when you retire. I early retired just before I hit 48 after a significant health scare but my wife loved her job and kept working, she retired 4 years ago. We lived mostly off our taxable investments as she was maxing out 401k/Roth 401k > 50 yr old bump, 2 Roths and HSA. ACA insurance is cheap if your investments are positioned for low taxation before you retire and you would likely need significant assets in tax efficient post-tax brokerage investments with accumulated tax loss carry forwards to offset sale of equities if needed. You might want to start saving at a much higher percentage than what you are currently saving/investing to retire at 50. We lived in GA for almost 30 years, that can be a tax efficient state if you are over 62 - 65 regarding property tax and it excludes a lot of retiree income, but that won't help you at 50. We have significantly more monetary assets than when I retired and can pull approximately $190k/year at current values without reaching 4% withdrawal rate and that is before social security and her pension kicks in. Good luck.
Posted on 6/6/23 at 3:33 pm to meansonny
quote:
But it is tough to get 14-19 year olds to look that far ahead.
Perhaps harder still is convincing high caliber 25-35 year olds to stick with it when years of high ops tempo, frequent moves, increasing career pressure, larger responsibilities and family obligations start piling up. Meanwhile squared away civilians peers are often making significantly higher pay. Not to mention lost earning potential for spouses due to frequent moves and added responsibilities during deployments. There were some times in the middle years when it was almost too much but glad I persevered and retired at 45 w/ 24 years (thanks in part to this board convincing me my math was a bit tight at 21 yrs.) Without that pension and Tricare I would have punched before 20.
Page 2 of 3
Popular
Back to top
Follow TigerDroppings for LSU Football News