Comments on: Sneak Peak http://www.joetaxpayer.com/sneak-peak/ Financial Commentary For The Average Joe Mon, 06 Feb 2012 21:56:17 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: JOE http://www.joetaxpayer.com/sneak-peak/comment-page-1/#comment-35 JOE Fri, 26 Oct 2007 22:10:29 +0000 http://www.blog.joetaxpayer.com/?p=62#comment-35 Actually, the 4% safe rate of withdrawal has its own origins, from my Retirement Links you can read <a href="http://www.bobsfinancialwebsite.com/Trinity/trinity.htm" rel="nofollow">Scott Burns on The Trinity Study</a>. This, and further studies using <a href="http://www.businessweek.com/2001/01_04/b3716156.htm" rel="nofollow">Monte Carlo simulation</a> all point to the 4% being the safe rate of withdrawal to not outlive your savings. The studies use overall inflation rates, so I'd trust that the items you mention are componants of the CPI already, built in to the 3% average I suggest. If you feel that actual inflation is higher than government stated inflation, then the 4% needs to be brought down, of course. I have another article I'm working on, "Retirement Needs" which takes a look at percent of pre-retirement income one needs for post-retirement living. I'm pulling data for that article, and will try to address your health care cost concerns. Again, thanks for reading my blog. JOE Actually, the 4% safe rate of withdrawal has its own origins, from my Retirement Links you can read Scott Burns on The Trinity Study. This, and further studies using Monte Carlo simulation all point to the 4% being the safe rate of withdrawal to not outlive your savings. The studies use overall inflation rates, so I’d trust that the items you mention are componants of the CPI already, built in to the 3% average I suggest.
If you feel that actual inflation is higher than government stated inflation, then the 4% needs to be brought down, of course.
I have another article I’m working on, “Retirement Needs” which takes a look at percent of pre-retirement income one needs for post-retirement living. I’m pulling data for that article, and will try to address your health care cost concerns.
Again, thanks for reading my blog.
JOE

]]> By: erich http://www.joetaxpayer.com/sneak-peak/comment-page-1/#comment-33 erich Fri, 26 Oct 2007 13:57:54 +0000 http://www.blog.joetaxpayer.com/?p=62#comment-33 If I follow, you are proposing that a couple with a 100k annual income can live comfortably in retirement with a $2M portfolio, drawing 4% of principle per year assuming 3% inflation and 7% annual appreciation. Considering medical expenses, food, fuel, and housing are (and have been) experiencing price inflations in excess of CPI, can you comment on the impact to your model of using more realistic price inflation numbers? If I follow, you are proposing that a couple with a 100k annual income can live comfortably in retirement with a $2M portfolio, drawing 4% of principle per year assuming 3% inflation and 7% annual appreciation.

Considering medical expenses, food, fuel, and housing are (and have been) experiencing price inflations in excess of CPI, can you comment on the impact to your model of using more realistic price inflation numbers?

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