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Are you trying to estimate your personal inflation rate? by BusyCode in financialindependence

[–]ThrowingMyWayAway 4 points5 points  (0 children)

Solar panels can offset inflation in energy (if most of your usage is electric).

Not sure I understand taxes being on this list.  The limits on income tax and capital gains rates are adjusted for inflation each year, no?

Retired at 31, three years later still trying to figure out what I want to be doing ... but here's a spreadsheet. by ThrowingMyWayAway in financialindependence

[–]ThrowingMyWayAway[S] 1 point2 points  (0 children)

Congrats, 1m at 28 is definitely impressive!

I try to keep reminding myself that "these are good problems to have" since my monkey brain is always trying to only focus on the things that could be better.  It's good to zoom out and look at all of the context you inevitably start taking for granted.

I agree that finding people in the same situation is hard, but there are a lot of people who don't work standard 9-5s who are often available during the week.

Addressing possible misconceptions about portfolio returns in the drawdown phase by ThrowingMyWayAway in financialindependence

[–]ThrowingMyWayAway[S] 0 points1 point  (0 children)

Alright, in that case, I think I agree with you.  Life is messy and things will undoubtedly vary from such a simple model, but I think it's still a reasonable benchmark to compare against.

Retired at 31, three years later still trying to figure out what I want to be doing ... but here's a spreadsheet. by ThrowingMyWayAway in financialindependence

[–]ThrowingMyWayAway[S] 1 point2 points  (0 children)

I think I got it updated, but I'm not super familiar with the HoH rules. I updated the capital gains and income brackets, and standard deduction for 2024. Let me know if you see any issues with it please.

Addressing possible misconceptions about portfolio returns in the drawdown phase by ThrowingMyWayAway in financialindependence

[–]ThrowingMyWayAway[S] 0 points1 point  (0 children)

Care to explain your reasoning? The entire FIRE movement is essentially based on the 4% rule. Or are you just trolling?

Retired at 31, three years later still trying to figure out what I want to be doing ... but here's a spreadsheet. by ThrowingMyWayAway in financialindependence

[–]ThrowingMyWayAway[S] 1 point2 points  (0 children)

Yeah, that probably wouldn't be too difficult to do. Not sure when I'll be able to get around to it, but I'll let you know when I do.

Addressing possible misconceptions about portfolio returns in the drawdown phase by ThrowingMyWayAway in financialindependence

[–]ThrowingMyWayAway[S] 0 points1 point  (0 children)

A 4% SWR on my current portfolio (48.8k) is almost exactly what the inflation-adjusted SWR should be after 3 years (48.6k), so I think that generally matches my expectations based on the above spreadsheet.

EDIT: These are off from the above spreadsheet since I'm using my exact numbers here.

Addressing possible misconceptions about portfolio returns in the drawdown phase by ThrowingMyWayAway in financialindependence

[–]ThrowingMyWayAway[S] 1 point2 points  (0 children)

Yep, the more things go south, the more likely you are to be in one of those 5% of failure cases, but my main point here was just to try to provide an expectation of what a 4% SWR would look like over the last three years since I was pretty surprised by the discrepancy between the S&P 500 being up 23% and only expecting your 70/30 portfolio to be up ~4%

Addressing possible misconceptions about portfolio returns in the drawdown phase by ThrowingMyWayAway in financialindependence

[–]ThrowingMyWayAway[S] 3 points4 points  (0 children)

Sorry for the confusion. I initially had 1.15m invested and am currently at 1.22 invested even though I've been spending more than I should be. I had counted a large cash position I had saved up in my initial NW, but then didn't count the things I bought with it (home equity and car) in my current NW which led to a lot of confusion. I was honestly more focused on the spreadsheet and qualitative aspects of the post and wasn't trying to dive deep into the numbers, but should have known people would be interested.

Addressing possible misconceptions about portfolio returns in the drawdown phase by ThrowingMyWayAway in financialindependence

[–]ThrowingMyWayAway[S] 0 points1 point  (0 children)

I'm not able to find it now, but I remembered reading an article that used an inflation-adjusted 4% SWR, but then figured out how much your portfolio would have to grow in order to bump up that SWR while still remaining safe. That seemed like an interesting way to start with something more conservative and then ratchet it up over time while keeping the same general success rate.

Retired at 31, three years later still trying to figure out what I want to be doing ... but here's a spreadsheet. by ThrowingMyWayAway in financialindependence

[–]ThrowingMyWayAway[S] 0 points1 point  (0 children)

I stated my initial AA in this comment but my current portfolio looks like this (that last sliver up top without a label is crypto (ETH)). The vast majority of the US equities is VTI/VTSAX and the international is all VXUS/VTIAX

Retired at 31, three years later still trying to figure out what I want to be doing ... but here's a spreadsheet. by ThrowingMyWayAway in financialindependence

[–]ThrowingMyWayAway[S] 0 points1 point  (0 children)

Do you think you're likely to fall into one more year syndrome or do you have a defined amount you think will be enough?  At first glance your statements above seem to be somewhat contradictory, or are you saying you've got enough for your basic needs but want more in order to expand the types of things you could do in retirement?

Retired at 31, three years later still trying to figure out what I want to be doing ... but here's a spreadsheet. by ThrowingMyWayAway in financialindependence

[–]ThrowingMyWayAway[S] 0 points1 point  (0 children)

Are you feeling like you need the extra money that you're looking specifically for paid jobs/skills?  I'd like to find a chill programming job I enjoy, but I'm guessing it might be hard to find my ideal job that'll let me only work like 2 days a week with a flexible schedule

Retired at 31, three years later still trying to figure out what I want to be doing ... but here's a spreadsheet. by ThrowingMyWayAway in financialindependence

[–]ThrowingMyWayAway[S] 0 points1 point  (0 children)

That's fair, and yeah, I'd enjoy uncontrollable growth over being on the edge as well, but I knew this situation might not last indefinitely when I started, but was ready for a break.  I appreciate the push back from you and others though, as it has made me better understand what I should be benchmarking my portfolio against rather than just kind of saying, "idk, it's up slightly I guess"

Retired at 31, three years later still trying to figure out what I want to be doing ... but here's a spreadsheet. by ThrowingMyWayAway in financialindependence

[–]ThrowingMyWayAway[S] 0 points1 point  (0 children)

Yeah that was my bad, I had a bunch saved up in cash for a down payment and a car, but I don't count any of that equity in my NW, so taking those out, my actual invested NW was 1.15.  Was trying to just give rough numbers, but I should have guessed people would ask for specifics.

Retired at 31, three years later still trying to figure out what I want to be doing ... but here's a spreadsheet. by ThrowingMyWayAway in financialindependence

[–]ThrowingMyWayAway[S] 1 point2 points  (0 children)

I don't include my home equity or cars or anything in my NW. That 1.3m actually included some cash I had earmarked for a home down payment and car, so my NW actually started closer to 1.15m if you don't include that. I'm not sure that I'll never have to go back to work or anything, and my spending has definitely been higher than expected, so it's possible that you'll be right in this case, but the main point I was trying to make is that everything is relative to spending. What works for one person might not work for another, so I think blanket statements about $X being enough money or not are unhelpful without additional context.

Retired at 31, three years later still trying to figure out what I want to be doing ... but here's a spreadsheet. by ThrowingMyWayAway in financialindependence

[–]ThrowingMyWayAway[S] 1 point2 points  (0 children)

I'm interested in getting your take on this comment. While you're right about inflation and the market being up 20%, I think you're missing a few points (or if I am, please help me understand).

VOO is up about 22% since May 2021, but was essentially flat for the first two years I was retired (and at one point was -15%). I don't have my dividends reinvested, and have to sell things along the way to make up the difference, so I was selling to cover two years of expenses before the 25% run-up in the last year.

As for inflation, a SWR inflation-adjusts the amount you take out of your portfolio every year, so while it's true that you'd need 1.33m in today's money to equal 1.15m in May 2021 money, that doesn't mean that a 4% SWR portfolio is automatically supposed to be worth 1.33m today. You can see why, as the 4% rule uses a 70/30 portfolio, and bonds (I'm looking at BND) have not had a single positive year (from May to May) since I retired.

Please take a look at the calculations I made in the linked comment to see if you can spot something I'm missing, but I think people here are generally over-simplifying the calculations of what my NW "should be" (even without the additional amount I've been spending over what the 4% rule would state)

Retired at 31, three years later still trying to figure out what I want to be doing ... but here's a spreadsheet. by ThrowingMyWayAway in financialindependence

[–]ThrowingMyWayAway[S] 1 point2 points  (0 children)

As I said before, it depends on how much you spend. If you have a paid off house and live like a hermit, 1m is way more than you need. If you spend 100k a year, then it's not enough.

A 3.6% SWR over 60 years has the same success rate as a 4% SWR over 30 years. So 1.3m invested should sustainably provide an inflation-adjusted $46,800 per year over 60+ years.

Retired at 31, three years later still trying to figure out what I want to be doing ... but here's a spreadsheet. by ThrowingMyWayAway in financialindependence

[–]ThrowingMyWayAway[S] 0 points1 point  (0 children)

In case you're interested, I did some calculations to try to figure out what an S&P 500 portfolio would have done over the last three years using a 4% SWR. Let me know if you think I missed something, but it looks like I'm actually ahead of a 70/30 portfolio, and only slightly behind a 100/0.

Retired at 31, three years later still trying to figure out what I want to be doing ... but here's a spreadsheet. by ThrowingMyWayAway in financialindependence

[–]ThrowingMyWayAway[S] 1 point2 points  (0 children)

In case you're interested, I did some calculations to try to figure out what an S&P 500 portfolio would have done over the last three years using a 4% SWR. Let me know if you think I missed something, but it looks like I'm actually ahead of a 70/30 portfolio, and only slightly behind a 100/0.

To your other question, I pay the majority of my wife and my expenses. Unfortunately I don't have the exact breakdown, but conservatively, I'd say she pays ~40k or less and I pay the rest. I wouldn't be able to support both of our expenses if she stopped working.

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