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  • How much do I need for retirement?

    Age early 40s. 2016 expenses were 230K (was a little overboard).

    I saved 37% of my gross salary in 2016. My current net worth is around 2.3M. 1.6 in market while rest in equity in house and cash.

    How much do I need to retire?

     

  • #2




    Age early 40s. 2016 expenses were 230K (was a little overboard).

    I saved 37% of my salary in 2016. My current net worth is around 2.3M. 1.6 in stocks while rest in equity in house and cash.

    How much do I need to retire?

     
    Click to expand...



    1. When do you plan to retire?

    2. Will you continue to work in retirement?

    3. What kind of lifestyle will you have in retirement?

    4. How much do you want to leave as a bequest at your death (children, other relatives, charities)?

    5. How is your portfolio allocated? How will it be allocated after retirement?

    6. Will you have more children?

    7. Will you continue to support your children after they reach adulthood?

    8. Is there any chance you will get divorced?

    9. If you divorce and remarry, how will your plans change?

    10. How long will you live?


     
    Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

    Comment


    • #3
      A basic rule of thumb is that you'll want 25 to 33.3 years worth of anticipated retirement expenses (including taxes) saved up for a 3% to 4% withdrawal rate.

      Let's say you pay off the mortgage and are able to live well on about $150,000 a year. You'll want $3.75M to $5M to retire with that level of spending.

      Your savings rate is excellent, particularly if that's 37% of gross salary. I challenge physicians to live on half their takehome pay to reach financial independence in a reasonable timeframe (15 to 20 years). You may be exceeding that and well on your way.

      If the Great Transition arrives, remember to grab the can opener before you head down the tunnel into the Nuclear Winter bunker.

      Cheers!
      -PoF

      Comment


      • #4




        I don’t see how anybody can determine their “number” now when we have this Great Transition awaiting us. People simply don’t realize that what they consider wealth is actually a claim check on wealth. There is simply no way all these claim checks can be honored at present value. Most of what people have in their portfolios are actually ghost assets.
        Click to expand...


        Isn't it a bit early in the morning to be hitting the bottle.  

        Comment


        • #5







          Age early 40s. 2016 expenses were 230K (was a little overboard).

          I saved 37% of my salary in 2016. My current net worth is around 2.3M. 1.6 in stocks while rest in equity in house and cash.

          How much do I need to retire?

           
          Click to expand…



          1. When do you plan to retire?

          2. Will you continue to work in retirement?

          3. What kind of lifestyle will you have in retirement?

          4. How much do you want to leave as a bequest at your death (children, other relatives, charities)?

          5. How is your portfolio allocated? How will it be allocated after retirement?

          6. Will you have more children?

          7. Will you continue to support your children after they reach adulthood?

          8. Is there any chance you will get divorced?

          9. If you divorce and remarry, how will your plans change?

          10. How long will you live?


           
          Click to expand...


          Dont know all the answers but

          1. Looking at current expenses and money saved cant retire full time before 55

          2. My thinking was to reduce work around 55 to maybe 60-70% of current work, maybe go half time at 60

          3. Probably similar lifestyle that I have currently

          4. I would like to leave around a million each to two of my kids when I die.

          5. Portfolio is pretty aggressive. Out of 1.6M Bonds are like 12%, US stocks around 55%, international: 25%, real state 6% (have an investment real state property as well beside that). 2% other stuff. Beside the 1.6M in market I have a investment real state property, cash and personal residence equity worth 600K. In retirement I plan to increase bond exposure maybe 5-10 years before I retire build a CD ladder to reduce risk of bad returns early on and 5-10 years into retirement increase my stocks again.

          6. Two kids only right now. Hopefully I can gift some money to them starting around age 18 (long ways from there) and teach about saving and investments, or do it early if by chance I get to 11 million a little earlier.

          7. If they are trying to do something and I have free time I may invest my time with them beside few dollars (dont know  right now)

          8. Hopefully no chance for divorce but you cant predict these things

          9. If I remarry or divorce may have to work till 70

          10. Dont know how long but planning till 85 or so

           

          Comment


          • #6
            Funny, PoF and I think a lot alike.

            The ballpark numbers I use are:

            5M desired to retire (cash/investments/rental property, NOT primary home, you gotta live somewhere)

            I figure roughly 150k/year in estimated spending/expenses in today's dollars for annual spending (could live off half that if I wanted/needed and be fine), but some will be giving to kids while still living for weddings, house down payments, & the like.

            That means I'm spending 3% of my portfolio, which should be safe in pretty much any era or stock market valuation.

            A bazillion things could make your situation different (social security, potential/desire to work part time, health, spouse's health, divorce).

            I highly recommened reading Darrow Kirkpatrick's "Can I retire yet?"  Excellent way to start thinking about it, especially what your expenses are likely to be.  May have to soon replace early retirement healthcare strategies from Obamacare income based subsidies to Trumpcare age and income based tax credits or whatever else our health system morphs into in the next few decades.

            Comment


            • #7




              A basic rule of thumb is that you’ll want 25 to 33.3 years worth of anticipated retirement expenses (including taxes) saved up for a 3% to 4% withdrawal rate.

              Let’s say you pay off the mortgage and are able to live well on about $150,000 a year. You’ll want $3.75M to $5M to retire with that level of spending.

              Your savings rate is excellent, particularly if that’s 37% of gross salary. I challenge physicians to live on half their takehome pay to reach financial independence in a reasonable timeframe (15 to 20 years). You may be exceeding that and well on your way.

              If the Great Transition arrives, remember to grab the can opener before you head down the tunnel into the Nuclear Winter bunker.

              Cheers!
              -PoF
              Click to expand...


              Thank you for your number. Yes 37% is of the gross. I thought I would need at least 6 Million but I forgot house paid off, no disability, maybe rental paid off and have not included any Social security in it

              Comment


              • #8




                A basic rule of thumb is that you’ll want 25 to 33.3 years worth of anticipated retirement expenses (including taxes) saved up for a 3% to 4% withdrawal rate.

                Let’s say you pay off the mortgage and are able to live well on about $150,000 a year. You’ll want $3.75M to $5M to retire with that level of spending.

                Your savings rate is excellent, particularly if that’s 37% of gross salary. I challenge physicians to live on half their takehome pay to reach financial independence in a reasonable timeframe (15 to 20 years). You may be exceeding that and well on your way.

                If the Great Transition arrives, remember to grab the can opener before you head down the tunnel into the Nuclear Winter bunker.

                Cheers!
                -PoF
                Click to expand...


                Also how do I calculate taxes in it? if half of my market investments is in taxable and half in tax deferred?

                Comment


                • #9
                  Many don't bother with the hastle, but I do. After all, you have much less if all your wealth is in tax-deferred vs Roth/taxable.  The government actually owns a chunk of it.  Seems dumb to ignore.

                  My tax adjustment factors are:

                  Roth 1.0

                  tIRA/401k/PSP 0.8 (I'm guessing/hoping, I can get it out at an average effective lifetime tax rate of 20%, even with large Roth conversions, we'll see.  Perhaps I should use 0.75.  Clearly if you have a very large tax-deferred account (ie 10M) it's going to be closer to 0.65-0.7%)

                  457b 0.7 (10 year withdrawal scehdule)

                  taxable 0.9 (estimated based on annual tax-drag/dividends and eventual capital gains.  i'll admit i could be way off on this one).

                  457f 0.65 (annoyingly will be paid to my spouse at age 55, lump sum)

                  I note the Boglehead Wiki uses much harsher tax adjustment factors, approaching marginal tax rates, but I think they are wrong.  We'll see.

                   

                  Comment


                  • #10


                    Also how do I calculate taxes in it? if half of my market investments is in taxable and half in tax deferred?
                    Click to expand...


                    Many factors will affect your future taxes, but you can very likely plan on being in a lower tax bracket as a retiree as compared to now. If you don't touch the tax deferred money and live off taxable without taking major capital gains, taxes (federal income taxes, anyway) can be close to zero for a number of years. For a variety of scenarios, see The Taxman Leaveth.

                    You may choose to do some Roth conversions between the day you retire and when you're forced to draw from the tax deferred account(s) at age 70.5 to keep RMDs from being massive. You'll owe taxes at your marginal tax bracket, but may avoid paying higher taxes if you end up with millions in tax deferred eventually.

                    Comment


                    • #11










                      Age early 40s. 2016 expenses were 230K (was a little overboard).

                      I saved 37% of my salary in 2016. My current net worth is around 2.3M. 1.6 in stocks while rest in equity in house and cash.

                      How much do I need to retire?

                       
                      Click to expand…



                      1. When do you plan to retire?

                      2. Will you continue to work in retirement?

                      3. What kind of lifestyle will you have in retirement?

                      4. How much do you want to leave as a bequest at your death (children, other relatives, charities)?

                      5. How is your portfolio allocated? How will it be allocated after retirement?

                      6. Will you have more children?

                      7. Will you continue to support your children after they reach adulthood?

                      8. Is there any chance you will get divorced?

                      9. If you divorce and remarry, how will your plans change?

                      10. How long will you live?


                       
                      Click to expand…


                      Dont know all the answers but

                      1. Looking at current expenses and money saved cant retire full time before 55

                      2. My thinking was to reduce work around 55 to maybe 60-70% of current work, maybe go half time at 60

                      3. Probably similar lifestyle that I have currently

                      4. I would like to leave around a million each to two of my kids when I die.

                      5. Portfolio is pretty aggressive. Out of 1.6M Bonds are like 12%, US stocks around 55%, international: 25%, real state 6% (have an investment real state property as well beside that). 2% other stuff. Beside the 1.6M in market I have a investment real state property, cash and personal residence equity worth 600K. In retirement I plan to increase bond exposure maybe 5-10 years before I retire build a CD ladder to reduce risk of bad returns early on and 5-10 years into retirement increase my stocks again.

                      6. Two kids only right now. Hopefully I can gift some money to them starting around age 18 (long ways from there) and teach about saving and investments, or do it early if by chance I get to 11 million a little earlier.

                      7. If they are trying to do something and I have free time I may invest my time with them beside few dollars (dont know  right now)

                      8. Hopefully no chance for divorce but you cant predict these things

                      9. If I remarry or divorce may have to work till 70

                      10. Dont know how long but planning till 85 or so

                       
                      Click to expand...


                      hmmm - you've gotten some decent advice and your current net worth with no mortgage is admirable. If you completely retire at 55, your expenses may rise for a few years after retirement until age 65 with health insurance costs, college (didn't ask about the kids' ages) and the cost of enjoying your freedom. If you can work just enough to stay insured (or your spouse plans to), that will help.

                      Leaving $$ to your kids will depend upon how you draw down your portfolio, diversification and, most important, how you react to market stressors such as bears, corrections, and irrational exuberance. Cashing in during the 2007 bear meant a lot of pre-retirees either had to dial back their COL or put off retirement. At the same time, you can accomplish that bit by bit by starting early with a trust. My preference, though, would be to leave appreciated assets and the Roth IRA. Of course, that is now and we don't know how the tax code will change over the next 40 years. And, of course, $1M is in today's money.

                      Whatever you decide is your "number" today will change by the time you hit your 50s, but having a target is still important, albeit without a plan. If you're going to do it without financial planning, I'd recommend saving as much as possible until your early 50s and then taking stock of your situation. A target of $6M will give you a goal to work toward. Then it will be much easier to see the trees when you're standing next to them than it is from this distance.

                      Invest in your marriage. Doing so may have the biggest payoff of all and I'm sure you don't want to work until 70 and/or support a 2nd household.
                      Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

                      Comment


                      • #12
                        Crixus, your posts are my new favorite thing.

                        Comment


                        • #13




                          Crixus, your posts are my new favorite thing.
                          Click to expand...


                          Really?!?

                          Comment


                          • #14




                            There’s another issue. Demographics and mandated withdrawals. The Millennial accumulation won’t be enough to compensate for Boomer distribution.

                             

                            Also the Eurodollar won’t be what it used to be as the system becomes more multipolar. RMB denominated assets will gain market share as One Belt One Road takes off.

                             

                            And the petrodollar recycling scam ended in 2014. Oil will sell for gold via the physical gold exchanges. Look no farther than the increases in Russian gold reserves. They’ve been selling oil for dollars for gold since 2014.

                            http://russia-insider.com/en/russia-china-lay-groundwork-transactions-gold/ri19355

                             

                            Of course, you won’t hear this on CNN or CNBC…Fake News.
                            Click to expand...


                            What do you mean that the millennial accumulation won't be enough to compensate for Boomer distribution?

                             

                            Agree re: fake news BTW.

                            Comment


                            • #15




                              Age early 40s. 2016 expenses were 230K (was a little overboard).

                              I saved 37% of my gross salary in 2016. My current net worth is around 2.3M. 1.6 in market while rest in equity in house and cash.

                              How much do I need to retire?

                               
                              Click to expand...


                              You need exactly $3,712,235.23.

                              Do not exceed that number.
                              An alt-brown look at medicine, money, faith, & family
                              www.RogueDadMD.com

                              Comment

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