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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: oldtoyota on August 01, 2013, 07:15:39 PM

Title: How to Calculate RE Date?
Post by: oldtoyota on August 01, 2013, 07:15:39 PM
Hey there!

I've asked a bunch of questions about calculating my RE date before. I'm getting closer to a final answer. Often, I find more items I need to take into account. Here are two questions I have:

1. I plan to retire in 7-9 years (5 years could be possible but let's just say 7-9 for now). SO plans to keep working--maybe for 10-15 years after me for a total of 17 to 24 years from now.
QUESTION: How do I add SO's continued work income into the calculation? I am thinking it's as simple as saying he brings in X. We need to X or Y to live. If X, then we do not need to dip into investments. If Y, then I either need to bring in additional income or have enough for it to be okay to dip into interest.

Considerations and Further Questions:

--I may have a side business, but I don't want to count on it. I calculate conservatively.
--What is best way to calculate SO's taxes after I stop working? Will Fed tax percentage go down or up as a result of me not working?

2. Is it more advisable to calculate using SWR or the assumption of living off of interest?
2a. To calculate living off of interest, where would I go about making assumptions of how much interest I would have?
2b. How would I make sure I'm investing in the right places to *have* a good amount of interest? I use Vanguard and invest in VTSAX, a bond fund and other funds.

This is a lot, I know! I'd appreciate any feedback or help.
Title: Re: How to Calculate RE Date?
Post by: matchewed on August 01, 2013, 07:36:40 PM
So my take -
1) Yes if you spend Y to live and your SO brings X home from work and Y>X then you need to provide Y-X or whatever other sort of agreement you come to.

Taxes will be based on if you're married. If you are then you can still file jointly, your taxes a couple will significantly lower with you stopping work (I'm making many assumptions here the best thing to do is just check the tax tables as you near FIRE).

2) I would use SWR; your interest will fluctuate based on returns and the market, the concept of SWR is regardless of returns but has a certain amount of flexibility to it due to that SWR being adjusted to a personal CPI rather than returns or actual inflation.

2a) As above I don't recommend interest as being the benchmark for withdrawals.

2b) Can I rephrase your question since it doesn't really jive with 2)? - What stock/bond mix will provide a return which will allow me to adjust my SWR based off of a personal CPI? Take a look at this topic ( which was covered last week. Go to the first link in it. Table 3 outlines some potential mixes which may help you come to a conclusion.


*edit for url fail
Title: Re: How to Calculate RE Date?
Post by: oldtoyota on August 01, 2013, 07:38:17 PM
Thanks! Yes, you can rephrase my question. Your link doesn't seem to work though. Could you fix or repost? =-)
Title: Re: How to Calculate RE Date?
Post by: oldtoyota on August 03, 2013, 08:00:09 PM
To add to this, how do you all plan for expensive health issues?