Go Back   AnandTech Forums > Social > Off Topic

Forums
· Hardware and Technology
· CPUs and Overclocking
· Motherboards
· Video Cards and Graphics
· Memory and Storage
· Power Supplies
· Cases & Cooling
· SFF, Notebooks, Pre-Built/Barebones PCs
· Networking
· Peripherals
· General Hardware
· Highly Technical
· Computer Help
· Home Theater PCs
· Consumer Electronics
· Digital and Video Cameras
· Mobile Devices & Gadgets
· Audio/Video & Home Theater
· Software
· Software for Windows
· All Things Apple
· *nix Software
· Operating Systems
· Programming
· PC Gaming
· Console Gaming
· Distributed Computing
· Security
· Social
· Off Topic
· Politics and News
· Discussion Club
· Love and Relationships
· The Garage
· Health and Fitness
· Merchandise and Shopping
· For Sale/Trade
· Hot Deals
· Free Stuff
· Contests and Sweepstakes
· Black Friday 2013
· Forum Issues
· Technical Forum Issues
· Personal Forum Issues
· Suggestion Box
· Moderator Resources
· Moderator Discussions
   

Reply
 
Thread Tools
Old 11-07-2010, 07:52 AM   #1
JEDI
Lifer
 
JEDI's Avatar
 
Join Date: Sep 2001
Location: Somewhere between hare . . . . . & their
Posts: 18,918
Default How much $ do i need to live to age 80 w/expenses = $30k/yr?

At age 60 i can withdraw from my 401k w/o penalty.

Expenses = $30k/yr
Interest rate = 4% (for simplicity, compounded annually)

How much $ do i need at age 60 so that at age 80, i have $0?

And whats the formula?
__________________
Quote:
Irony: The new Virgin Mary aborted the 2nd coming of Christ in 2000
Happy 50th anniversay of JFK's assassination: I was there & saw the other Lone Gunmen on the Grassy Knoll. Elvis!!
-He got away with the kill but Marilyn Monroe got her revenge in a murder/suicide.
Proof God exists: https://scontent-b-iad.xx.fbcdn.net/...06913729_n.png I blame Bush!

Last edited by JEDI; 11-07-2010 at 10:43 AM.
JEDI is offline   Reply With Quote
Old 11-07-2010, 07:55 AM   #2
rcpratt
Diamond Member
 
rcpratt's Avatar
 
Join Date: Jul 2009
Posts: 9,535
Default

(P/A, 20, 4%)

P=A(((1+i)^n-1)/(i(1+i)^n))

P=$30000*13.590

P = $407,709.79

Keep in mind that your expenses are likely to increase with inflation...

Also, that money is going to be taxed.

Last edited by rcpratt; 11-07-2010 at 08:03 AM.
rcpratt is online now   Reply With Quote
Old 11-07-2010, 07:56 AM   #3
Fear No Evil
Banned
 
Fear No Evil's Avatar
 
Join Date: Nov 2008
Posts: 5,922
Default

...

Last edited by Fear No Evil; 11-07-2010 at 08:34 AM.
Fear No Evil is offline   Reply With Quote
Old 11-07-2010, 08:22 AM   #4
JEDI
Lifer
 
JEDI's Avatar
 
Join Date: Sep 2001
Location: Somewhere between hare . . . . . & their
Posts: 18,918
Default

Quote:
Originally Posted by rcpratt View Post
(P/A, 20, 4%)

P=A(((1+i)^n-1)/(i(1+i)^n))

P=$30000*13.590

P = $407,709.79

Keep in mind that your expenses are likely to increase with inflation...

Also, that money is going to be taxed.
wow..THX! cant believe i forgot about that!

25% fed + 5% state = 30% tax

408k/.7 = 583k

as for inflation... hm.. i could just assume inflation = 4% to negate the 4% rate of return

so $30k/yr * 20yrs = 600k

600k/.7 = $857k is about what i need in my 401k at age 60 to last me 20yrs
__________________
Quote:
Irony: The new Virgin Mary aborted the 2nd coming of Christ in 2000
Happy 50th anniversay of JFK's assassination: I was there & saw the other Lone Gunmen on the Grassy Knoll. Elvis!!
-He got away with the kill but Marilyn Monroe got her revenge in a murder/suicide.
Proof God exists: https://scontent-b-iad.xx.fbcdn.net/...06913729_n.png I blame Bush!

Last edited by JEDI; 11-07-2010 at 08:30 AM.
JEDI is offline   Reply With Quote
Old 11-07-2010, 08:29 AM   #5
JTsyo
Diamond Member
 
JTsyo's Avatar
 
Join Date: Nov 2007
Location: NJ
Posts: 8,845
Default

how about if I want to retire and need H/B once a week. How much extra do I need to save?
JTsyo is offline   Reply With Quote
Old 11-07-2010, 08:29 AM   #6
dud
Diamond Member
 
dud's Avatar
 
Join Date: Feb 2001
Posts: 6,435
Default

Quote:
Originally Posted by JEDI View Post
wow..THX! cant believe i forgot about that!

25% fed + 5% state = 30% tax

408k/.7 = 583k

as for inflation... hm.. i could just assume inflation = 4% to negate the 4% rate of return

so $30k/yr * 20yrs = 600k

600k/.7 = $857k is about what i need in my 401k at age 60



Suggest you revisit your estimate of 25% Federal tax. Unless you have other (significant) sources of income and expect to gross well over $100K a year OR the Government significantly raises the tax rates in the future ... the 25% rate is too high.
__________________
Talking about politics on the AT forums is like sticking your hand in a Fire Ant mound. The ants enjoy it while you endure painful stings.
dud is online now   Reply With Quote
Old 11-07-2010, 08:43 AM   #7
rcpratt
Diamond Member
 
rcpratt's Avatar
 
Join Date: Jul 2009
Posts: 9,535
Default

25% is definitely too high, 20% is probably a better starting point unless there is a bunch of other income you haven't mentioned.

Inflation is something like 3% on average. With conservative investments on your 401k after you retire you should still be able to pull 5% average or so. We can call it +2%/yr and probably be fairly accurate.

$30,000(P/A, 2%, 20)

P = $30,000*16.351

P = $490,543

After tax = $490,543/.75 = $654,057

All we've shown is that these calculations vary widely based on the assumptions you use and you should try to have more than any of these numbers to be safe. Also, 20 years is a seriously short assumption and that has a huge effect.
rcpratt is online now   Reply With Quote
Old 11-07-2010, 08:50 AM   #8
911paramedic
Diamond Member
 
911paramedic's Avatar
 
Join Date: Jan 2002
Location: Sonoma County, CA
Posts: 9,448
Default

That sounds exactly like one of the questions my sister was going over back when she was getting her CFP at the bank. If you need med calculations done I can help, however this is not in my scope of practice.
__________________
911paramedic is offline   Reply With Quote
Old 11-07-2010, 08:55 AM   #9
blinblue
Senior Member
 
Join Date: Jul 2006
Posts: 875
Default

You could use a Roth IRA and not have to worry about paying taxes on it at retirement. Depending on how much you make now, and if you are willing to bet that you'll pay more in taxes later, its probably a good idea to open one up.
And there's a missing "k' in the title, $30/yr would be very easy
blinblue is offline   Reply With Quote
Old 11-07-2010, 08:55 AM   #10
Bignate603
Lifer
 
Bignate603's Avatar
 
Join Date: Sep 2000
Location: Tempe, AZ
Posts: 13,900
Default

Quote:
Originally Posted by rcpratt View Post
All we've shown is that these calculations vary widely based on the assumptions you use and you should try to have more than any of these numbers to be safe. Also, 20 years is a seriously short assumption and that has a huge effect.
Beyond 20 years being relatively short you probably will have at least a few large expenses over that time. That could be medical expenses above what is covered by medicare, a large home repair if you own a home, or even something fun like deciding to go on a big trip. Don't plan your retirement based on a budget that only covers the bare minimum living expenses, something will happen and you'll chew through a year's worth all at once.
__________________
Ugly can be fixed,stupid is forever.
AnandTech Moderator
Bignate603 is offline   Reply With Quote
Old 11-07-2010, 09:22 AM   #11
bignateyk
Lifer
 
Join Date: Apr 2002
Posts: 11,275
Default

What happens if you live past 80? Just gonna off yourself?
bignateyk is offline   Reply With Quote
Old 11-07-2010, 10:42 AM   #12
Binarycow
Golden Member
 
Binarycow's Avatar
 
Join Date: Jan 2010
Posts: 1,172
Default

Quote:
Originally Posted by bignateyk View Post
What happens if you live past 80? Just gonna off yourself?
if that's the case then you need to add in the expenses of buying a gun and ammo.
Binarycow is offline   Reply With Quote
Old 11-07-2010, 10:45 AM   #13
JEDI
Lifer
 
JEDI's Avatar
 
Join Date: Sep 2001
Location: Somewhere between hare . . . . . & their
Posts: 18,918
Default

Quote:
Originally Posted by rcpratt View Post
25% is definitely too high, 20% is probably a better starting point unless there is a bunch of other income you haven't mentioned.

Inflation is something like 3% on average. With conservative investments on your 401k after you retire you should still be able to pull 5% average or so. We can call it +2%/yr and probably be fairly accurate.

$30,000(P/A, 2%, 20)

P = $30,000*16.351

P = $490,543

After tax = $490,543/.75 = $654,057

All we've shown is that these calculations vary widely based on the assumptions you use and you should try to have more than any of these numbers to be safe. Also, 20 years is a seriously short assumption and that has a huge effect.
thx! 20yrs to age 80 is too short? Avg life span of a US male is 74?


Quote:
Originally Posted by blinblue View Post
And there's a missing "k' in the title, $30/yr would be very easy
Fixed. :blush:
__________________
Quote:
Irony: The new Virgin Mary aborted the 2nd coming of Christ in 2000
Happy 50th anniversay of JFK's assassination: I was there & saw the other Lone Gunmen on the Grassy Knoll. Elvis!!
-He got away with the kill but Marilyn Monroe got her revenge in a murder/suicide.
Proof God exists: https://scontent-b-iad.xx.fbcdn.net/...06913729_n.png I blame Bush!
JEDI is offline   Reply With Quote
Old 11-07-2010, 11:32 AM   #14
techs
Lifer
 
techs's Avatar
 
Join Date: Sep 2000
Posts: 28,144
Default

Have you figured in the increasing cost of health insurance? It's averaging 10 percent a year. AND it compounds.
__________________
Imagine a really good sig is here.
techs is online now   Reply With Quote
Old 11-07-2010, 11:41 AM   #15
Kroze
Diamond Member
 
Kroze's Avatar
 
Join Date: Apr 2001
Location: Somewhere
Posts: 4,052
Default

Yea at that age, take into account of medical care.

You're better off living in another country where it's cheaper and easier to live with less money.
Kroze is offline   Reply With Quote
Old 11-07-2010, 11:55 AM   #16
rcpratt
Diamond Member
 
rcpratt's Avatar
 
Join Date: Jul 2009
Posts: 9,535
Default

Quote:
Originally Posted by techs View Post
Have you figured in the increasing cost of health insurance? It's averaging 10 percent a year. AND it compounds.
Pretty much everything compounds...

And yes, you need to plan beyond 80. You can't just plan for the average (or slightly higher), you pretty much have to plan for the worst case with these kinds of things. Depending on your personal health and family history, I suppose. Most planners will recommend you plan to at least 90.
rcpratt is online now   Reply With Quote
Old 11-07-2010, 12:14 PM   #17
Fmr12B
Diamond Member
 
Fmr12B's Avatar
 
Join Date: Sep 2004
Location: Bay Area, CA
Posts: 6,541
Default

My theory on retirment:

Traditional 401K and IRA over ROTH: Most likely you will be paying a higher tax rate today than you would in the future. You can put in more today based on the tax savings and that 20+yrs of compounding interest will more than outdo your duture tax payments.

And - you can move to some 3rd world H&B country like Thailand or Panama and never pay US taxes again. Sure you'dd be a fugitive and never come back without penalty but hey - not paying the tax man will be well worth it.

Retirment to age 59.5 - gotta survive on cash
59.5 - 72 - gotta surivie on 401K & IRA
72 - and onward you gotta surivive on SSI

SSI will be trimmed down by the time you retire but it will still be paying out so factor it in.
Fmr12B is offline   Reply With Quote
Old 11-07-2010, 12:28 PM   #18
kranky
Elite Member
 
kranky's Avatar
 
Join Date: Oct 1999
Location: Swissvale, PA
Posts: 19,795
Default

Plan for living to age 90. Assume a tax rate of about 15-20%. Add in expected income from Social Security (you can get an estimate from their site).

And I would plan for more than $30K/year income. That seems pretty low.

Worth spending a little time with a good retirement calculator. There's one on this page. http://individual.troweprice.com/pub...ement-Planning
__________________
Asus P7P55D EVO i7-860 PNY 1GB 9600GT 12GB 2x WD 640GB Black Corsair HX650 PSU Lian Li PC-B10
kranky is online now   Reply With Quote
Old 11-07-2010, 03:08 PM   #19
DaveSimmons
Elite Member
 
Join Date: Aug 2001
Location: Bellevue, WA
Posts: 36,849
Default

At some point during retirement you can put money into an immediate annuity and "earn" more than 5% on it.

It pays much more interest than a CD, but it does so because your principal is gone and your estate gets nothing. It's like buying a pension. They bet you die when the actuary tables say you will, you bet that you'll live longer.

http://www.immediateannuities.com/
70 year old male, currently paying about 7.8%
DaveSimmons is offline   Reply With Quote
Old 11-07-2010, 03:17 PM   #20
Lifted
Diamond Member
 
Lifted's Avatar
 
Join Date: Nov 2004
Posts: 5,665
Default

Quote:
Originally Posted by Fmr12B View Post
My theory on retirment:

Traditional 401K and IRA over ROTH: Most likely you will be paying a higher tax rate today than you would in the future.
This is assuming public health care and SS don't cause a large increase in taxes in 20 or 30 years.

If you want to play it safe max out the ROTH and then put into the 401k (401k is about 3x ROTH at the moment?). If your employer matches the 401k, you should be able to get more into the 401k than the ROTH, ideally maxing it out.
Lifted is offline   Reply With Quote
Old 11-07-2010, 03:45 PM   #21
Engineer
Elite Member
 
Engineer's Avatar
 
Join Date: Oct 1999
Location: Lexington, KY
Posts: 35,605
Default

Quote:
Originally Posted by Fmr12B View Post
My theory on retirment:

Traditional 401K and IRA over ROTH:
Depends on how much money you (or household) makes. IRA's are phased out after a certain income level (starting at $89,000 for household IIRC).
__________________
University of Kentucky Wildcats!

Go Big Blue...Go Big Blue...Go Big Blue!!!

"Opportunities look a lot like work" - Ashton Kutcher
Engineer is offline   Reply With Quote
Old 11-07-2010, 04:03 PM   #22
Zee
Diamond Member
 
Zee's Avatar
 
Join Date: Nov 1999
Posts: 4,855
Default

Quote:
Originally Posted by Binarycow View Post
Quote:
Originally Posted by bignateyk View Post
What happens if you live past 80? Just gonna off yourself?
if that's the case then you need to add in the expenses of buying a gun and ammo.
live on your credit cards
Zee is offline   Reply With Quote
Old 11-07-2010, 04:08 PM   #23
Engineer
Elite Member
 
Engineer's Avatar
 
Join Date: Oct 1999
Location: Lexington, KY
Posts: 35,605
Default

Quote:
Originally Posted by Zee View Post
live on your credit cards
Shit, move in with the kids and live off of them and their credit cards.
__________________
University of Kentucky Wildcats!

Go Big Blue...Go Big Blue...Go Big Blue!!!

"Opportunities look a lot like work" - Ashton Kutcher
Engineer is offline   Reply With Quote
Old 11-07-2010, 04:32 PM   #24
dud
Diamond Member
 
dud's Avatar
 
Join Date: Feb 2001
Posts: 6,435
Default

Quote:
Originally Posted by Engineer View Post
Shit, move in with the kids and live off of them and their credit cards.


How the hell do you move in with your kids (and live off of them) when they haven't finished living with you?

There is a large number of the "boomerang" generation that are just now coming home after finding out that the world is not the rosy place they were told it was ...
__________________
Talking about politics on the AT forums is like sticking your hand in a Fire Ant mound. The ants enjoy it while you endure painful stings.
dud is online now   Reply With Quote
Old 11-07-2010, 04:43 PM   #25
Engineer
Elite Member
 
Engineer's Avatar
 
Join Date: Oct 1999
Location: Lexington, KY
Posts: 35,605
Default

Quote:
Originally Posted by dud View Post
How the hell do you move in with your kids (and live off of them) when they haven't finished living with you?

There is a large number of the "boomerang" generation that are just now coming home after finding out that the world is not the rosy place they were told it was ...
Well, I guess you have a point. Generation Y might be the first generation in US history that lives a lower standard of living then their parents....and I'll be damned if I'm not the parent of two of them. Doh!
__________________
University of Kentucky Wildcats!

Go Big Blue...Go Big Blue...Go Big Blue!!!

"Opportunities look a lot like work" - Ashton Kutcher
Engineer is offline   Reply With Quote
Reply

Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

Forum Jump


All times are GMT -5. The time now is 10:45 AM.


Powered by vBulletin® Version 3.8.7
Copyright ©2000 - 2014, vBulletin Solutions, Inc.