Quote from: Wary on August 05, 2014, 08:49:23 AM

Quote from: Mobius on August 05, 2014, 06:26:34 AM

Quote from: Crindon on August 03, 2014, 07:48:05 PM

Assume average North American, requiring $30,000 per year of today's purchasing power, no other debt.

This is by no means average. $30k is well under the average income that most people in the US have. Unfortunately most people also have debt so this would also not be "average"

You need to add how old you are. It would take a lot more money to retire if you are 30 then if you are 70 as your money would need to last a lot longer. If you want your money to last forever then you would need enough to purchase an immediate annuity that pays "forever"; I would say that the long term expected rate of return for conservative investments would be no more then 5% so you would need ~~$6 million~~ $600K to get $30k every year forever, however this would not be in today's dollars but rather a fixed amount.

You would need to say what you expect the long term inflation rate would be in order to accurately calculate how much you would need to keep your draws indexed to inflation.

FTFY

Thanks for that correction Wary...... I do think that if a person wants to protect for lower purchasing power of the dollar in the coming years, then will need to add an extra amount upon the withdrawal amount - such as 3-5% per year (let's say 4% for the purpose of argument). Therefore, in 6 years, would have needed 4% extra per year, just to maintain $30k purchasing power in today's dollars.

Assuming a 4% inflation rate:

Savings year 1 (2015) = $30k = $31,200
Savings year 2 (2016) = $30k = $32,448
Savings year 3 (2017) = $30k = $33,746
Savings year 4 (2018) = $30k = $35,906
Savings year 5 (2019) = $30k = $36,500
Savings year 6 (2020) = $30k = $37,959

Continuing to assume a 4% inflation rate:

Withdrawal year 1 (2021) = $30k = $39,478
Withdrawal year 2 (2022) = $30k = $41,057
Withdrawal year 3 (2023) = $30k = $42,699
Withdrawal year 4 (2024) = $30k = $44,407
Withdrawal year 5 (2025) = $30k = $46,184
Withdrawal year 6 (2026) = $30k = $48,031

Maybe we can assume that BTC will appreciate in value, greater than the amount that the dollar depreciates in value; however, by 2021, we would need $39,478 per year just to start out... which would imply that in 2020, we would need approximately a $789,560 dollar equivalent value in our BTC portfolio (assuming a 5% withdrawal rate) to accomplish an adequate $30k in today's dollars withdrawal rate per annual.

Of course, if we have a known or anticipated period of time that we know that we are going to live or that we are going to be withdrawing from those funds (such as 10 years or 20 years), then we can draw into the principle during that period which would reduce the amount that we would need to have accumulated in order to sustain the same level of income off of the accumulated funds.

Difficult, but NOT impossible, to project these kinds of things... We may be wrong about how many years we actually live, but we could still project a number of years that we would like to be able to anticipate drawing upon the accumulated funds.... and in this regard, in my thinking it is frequently better to overproject rather than to underproject... so we would have a bit of a cushion, just in case all the variables to NOT play out, as we had projected.