I finally signed up

[2B]

I've been a regular board reader but I finally decided to join to get some more input on SWR based on the Guyton article (take up to 6.2% with rules).

I was ER'ed involuntarily in early 2002 but I unfortunately wasted most of my time looking for another job. Fear from two kids in college and another about to start colored my thinking. Things wouldn't have ever become desperate but I found "something." I moved through varying improvements in my employment situation (if that isn't an oxymoron).

About two years ago I achieved stability in a boring but secure job. I figured out I was almost able to ER using the 4% SWR. I just needed "a couple of more years."

I took another position recently that pays better and is much more interesting. They also have a policy that allows extensive unpaid time off (within limits) that still allows benefits to continue. That seemed ideal since I could take off 30% of the time and still be making more money.

Unfortunately, the company is busy, busy, busy right now and taking significant UPTO would be considered discourteous to my fellow workers. That only bothers me because everyone has been wonderful to me. I am planning a two week UPTO jaunt to a fishing lodge in Alaska to celebrate my new job so I don't think I'm too bothered.

That's my story. I could probably retire seemlessly in a couple of years with the 4% rule. Using the Guyton model, I could have ERed in 2002. I just need to decide what I want to be when I grow up.

 

[Nords]

Welcome to the board, Soon2B.

I've been a regular board reader but I finally decided to join to get some more input on SWR based on the Guyton article (take up to 6.2% with rules).

Lately we all seem to be too conservative on our withdrawals.  I'm not sure if this is a result of new research or just a symptom of the times ("it's different this time").

I would say that if your spending gives you the flexibility to cut back in years when the market is down, or if you're able to (*shudder*) consider the possibility of returning to work in really ugly years, then the Guyton system would probably work out OK.  The problem is that it's pretty aggressive, especially in the early years when you might be about to walk into a bear market and hurt your portfolio too severely for it to recover.  None of us want to be apologizing to you when you're 88 for talking you into this system in the first place.

I took another position recently that pays better and is much more interesting.  They also have a policy that allows extensive unpaid time off (within limits) that still allows benefits to continue.  That seemed ideal since I could take off 30% of the time and still be making more money.

Unfortunately, the company is busy, busy, busy right now and taking significant UPTO would be considered discourteous to my fellow workers.  That only bothers me because everyone has been wonderful to me.  I am planning a two week UPTO jaunt to a fishing lodge in Alaska to celebrate my new job so I don't think I'm too bothered.

That's interesting.  The company rules allow UPTO but taking it is somehow considered to be your fault.  It sounds to me like it's management's problem.

Frankly I'd take as much UPTO as the rules allow with and figure out which you enjoy more-- ER'd at 6.2% on the bleeding edge, or ER'd at 4% after a couple more years of work.

 

[rs0460a]

Soon2B

Let me add my welcome, even though I'm a "newcomer" to this board (but very "old" in preparing for retirement :.

Just a couple of thoughts on what both you and Nords mentioned, related to withdrawals.

I'm planning on retiring the end of '07 (age 60). A lot of my co-workers are in the same "target" age and retirement goal, and it seems that most are just "waking up" to the idea that they will need $$$ beyond SS and their own meager savings to "make the trip".

I'll give an example of one fellow, who will turn 59 this year. He wanted to go at age 60, and has spoken to a few "investment consultants". While I'm not going to talk about that subject at this time, the one thing that happened after he had his last visit (this week) is that he made two "adjustments" to his plan. The first was the fact that his plan did not "work" with the adviser's target age of 99. That wasn’t a problem; he just told the adviser that he didn't think (based upon family and his current heath) that he would live beyond 75. Adjust the age, first problem solved!

Second problem was that his plan did not work with his target retirement age. However, it did "work" if he stayed on the job one more year. Wow - just one year to guarantee income for the next (forecast) 15 years!

What I'm getting at is that we seem to "change our story" to fit the needs of our personal plan. If we're short on income, reduce our end-time of the plan, reduce our withdrawals, or increase our return % (can't tell you of all the people who expect to withdraw 10-15% of their portfolio in retirement).

Your comment of " I could probably retire seamlessly in a couple of years with the 4% rule. Using the Guyton model, I could have ERed in 2002" seems to follow that thinking.

What I'm trying to say is, set your plan (target) and work toward that target. Don't "change the plan to fit the current status". That seems too risky, to me.

- Ron

 

[RETIRE_TINGLE!]

that is excellent advice and stated very well. I have been trying to do as you suggest and work within a framework of the plan target and not making small adjustments here and there to "make it fit" a perceived reality.

Thanks for the words of wisdom

 

[obryanjf]

Gosh, It seems everytime the Guyton model is brought up (on a couple of threads), it is 'generally' dismissed becasue it offers different conclusions that most here have come to accept as the gospel. I imagine there are a number of FIRE'd people using the 4% model and do not want to hear there might be a better alternative.

I have worked the numbers using my models and i think both models are pretty close using their criteria. I get about 4% using a fixed initial, about 5% using a variable withdrawl scheme (i do not intend to patent it and forgot from gore that scheme was a bad word) and using my interpretation of Guyton's model about 6% with no failures. With Guyton, the downside is one needs to accept some budget adjustments (good and bad) along the way.

I liken the 4% model as autopilot. Once set, I may be fine but might also slam into a mountian. Most say, Oh! I would adjust to not let that happen. So now the Guyton model attempts to model some reasonable human behavior that could help make the 'right' adjustments. I for one believe it 'could' offer an alternative to the 4% fixed inflation adjusted withdrawal model with more scrutiny. I'm not trying to dis any model, but think Guyton's could and should be studied more, put thru the ringer to get a wider body to make sure it works and perhaps see if there are other decisions rules that might improve it.

I'll let you know if I find any.

job

Start with 1MM, 10% bills, 25% 5yr bonds, and 65% equity mixture

WD% NPV of WD Adj AVe WD adj Failures

3.0% 2,470,889 61,772 0
3.5% 2,668,836 66,721 0
4.0% 2,802,855 70,071 0
4.5% 2,874,311 71,858 0
5.0% 2,939,513 73,488 0
5.5% 2,950,080 73,752 0
6.0% 2,939,018 73,475 0
6.5% 2,895,172 72,379 2
7.0% 2,806,363 70,159 7
7.5% 2,699,146 67,479 12
8.0% 2,584,709 64,618 20

 

[AltaRed]

And Don't even think about going to the Great  Alaskan Bush Company in Anchorage (Without me )

Shame on you. However, I have tipped back my share of beer there while being entertained by pleasent scenery.

 

[Maximillion]

C-T, when you get serious about Fishing, try New Brunswick, Ted Williams did..

 

[Texas Proud]

Soon2B....

Tell us where you work!!!! I would love to have a job like that right now...

I still have about 8 years until I retire, but would not mind working more years if I can get a benefit right now and be able to take time off....

 

[Jarhead*]

C-T, when you get serious about Fishing, try New Brunswick, Ted Williams did..

The "Splendid Splinter" was an outstanding fly-fisherman, so that would probably be a pretty good endorsement for New Brunswick.

Teddy Ballgame served in WW2 as a Marine Fighter pilot, and was recalled in his prime to participate in the Korean Conflict. Never a peep of complaint out of him regarding missing all those years of his prime ball-playing days.

Nothing one demensional about Ted. He was the real "John Wayne". The other guy sat out the war in Newport Beach, making propaganda movies. 8)

 

[Maximillion]

CT , before you do that, try the Adams in BC, the Salmon are so plentiful you can walk across their backs.

My town has a river that runs through that is used by Salmon for spawning, 40 pounders are the norm, hundreds of them, few weeks later the river is full of carcasses and racoons feeding on them.

http://www. thetownofthebluemountains.com

 

[Maximillion]

I prefer Pacific, I find the Atlantic too fatty, but for Lobster, the reverse.

CT, sounds like you need to visit Newfoundland

http://www.newfoundlandandlabradortourism.com

 

[Nords]

Nothing one demensional about Ted.  He was the real "John Wayne".  The other guy sat out the war in Newport Beach, making propaganda movies. 8)

Marion was just afraid that he'd have to compete for promotion with Don Adams. Or maybe it was Jonathon Winters. Or Bob Keeshan...

And wasn't Art Buchwald a Marine too?

 

[Zipper]

Daddy O, my 5% draw based on the year end portfolio looks good with your figures.

My allocation is similar, but I didn't start with $1 000 000.

 

[2B]

So now the Guyton model attempts to model some reasonable human behavior that could help make the 'right' adjustments.  I for one believe it 'could' offer an alternative to the 4% fixed inflation adjusted withdrawal model with more scrutiny. 

Thanks Daddy O for your input.  I saw the posting about the Guyton article a few weeks ago but it never went anywhere.  It seems my post has gotten some more interest.

Did you ever test his more aggressive 80% stock portfolio?

 

[obryanjf]

I just ran with 80% Eq
wdper total NPV ave WD failures
3.0% 2,804,655 70,116 0
3.5% 3,096,567 77,414 0
4.0% 3,372,690 84,317 0
4.5% 3,543,772 88,594 0
5.0% 3,643,043 91,076 0
5.5% 3,678,139 91,953 0
6.0% 3,657,472 91,437 0
6.5% 3,609,233 90,231 7
7.0% 3,516,680 87,917 10
7.5% 3,381,450 84,536 15
8.0% 3,181,297 79,532 26

Looks like higher total draws and higher average inf adj draws. SD was also higher and as can be seen more failures.

I am still working the model and adding enhancements: extras, failure on low inf adj draw as a percent of initial (fail at <=50%). I'm still not sure I have his model exactly right, but I think it is close. I'm excited about it and will continue to work it till I think I have it right. My problem is I usually keep adding 'enhancements' till my model becomes too complex for me to remember all the details. I'll try to KISS.