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A different way to think about retirement planning

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    A different way to think about retirement planning

    This stems from a comment that was made over on the early retirement forum.

    Our current nest egg could support our pre-COVID spending for 20 years. That's not including SS and assuming a 0% return on our portfolio (but not factoring in inflation).

    Once I have received the inheritance that I'll be getting within the next year, and assuming no market crash, our nest egg at that point would support our spending for at least 30 years. Again, not counting SS or any return over time.

    Seems to me that based on that, we should be set for retirement. Even if I factor in taxes, our post-inheritance numbers should cover us for 25 years. Add in SS and even a modest 4% average annual return going forward and we should certainly have enough for the rest of our lives.

    Does that make sense? Is there anything faulty about my logic here? If looking at the numbers this way makes sense, it seems a much easier way to tell when you're ready than a lot of other methods.
    Steve

    * Despite the high cost of living, it remains very popular.
    * Why should I pay for my daughter's education when she already knows everything?
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    #2
    Originally posted by disneysteve View Post
    Seems to me that based on that, we should be set for retirement. Even if I factor in taxes, our post-inheritance numbers should cover us for 25 years. Add in SS and even a modest 4% average annual return going forward and we should certainly have enough for the rest of our lives.

    Does that make sense? Is there anything faulty about my logic here? If looking at the numbers this way makes sense, it seems a much easier way to tell when you're ready than a lot of other methods.
    Nothing faulty at all and makes sense. 25x expenses is a solid rule of thumb for a retirement nest egg and becomes the 4% rule as an initial withdrawal rate 100%/4% = 25.

    Recognizing of course that inflation will cause expenses to rise year over year, and with a 4% withdrawal rate, hopefully you'll earn more than a 4% annual return!

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      #3
      Sounds like you’re fixed up fatty style.
      Never underestimate the power of stupid people in large groups.

      -George Carlin

      Comment


        #4
        I like the simplicity in thinking about it that way.
        LivingAlmostLarge Blog

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          #5
          Very exciting! Your hard work has really paid off.

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