Retired from Wall Street; mountain climber, RIA, and real estate investor

[Marquette]

grfiv, I've enjoyed your site immensely.

 

[Disappointed]

International REIT, I own some AWP (Alpine Dynamic).

mP

 

[Alan]

grfiv, welcome. I enjoyed your links very much - thank you for posting them.

 

[grfiv]

I understand why you have 1/2 your money at FIDO, if your online info is correct, you were CIO there for 5 years..........

Anyway, nice to know a Wall Street vet.........share some knowledge with us about things really work.........

I did work at Fidelity and while I did I was required to keep all my non-retirement, non-mutual-fund assets with them (as is true of most financial firms).

But the reason I use and recommend them now is because I believe them to be very good. Cost-basis accounting is a particularly strong point which is weak at most other brokerages; and not sufficiently appreciated by most investors.

 

[grfiv]

Insurance

I've put up another article, Insurance.

While not bearing directly on Early Retirement, it is an important aspect of the planning process that leads to Early Retirement ... and most people are inappropriately insured: too much of some and too little of other, often resulting in inadvertent risk taking.

"Pure" insurance (term life, home owner's, etc.) is not particularly exciting and people tend to ignore it but it provides indispensable risk management.

Insurance-based "products" are often as sold as investments and should be analyzed as such.

Social Security and Medicare are important components of retirement, post age 62.

 

[LOL!]

George,

Very nice set of work presented in all your links. Thanks for posting here.

 

[retire@40]

These are great articles. I make a motion to put them on FAQ here.

 

[Alan]

These are great articles. I make a motion to put them on FAQ here.

I second that idea. I've bookmarked them for personal use but think they are good reading material for visitors and users of this forum.

 

[clifp]

I think the difference in reception between grfiv website and Millionaire Mom Next Door's website is remarkable.

We must all be a bunch of male chauvinist pigs.

 

[FinanceDude]

I think the difference in reception between grfiv website and Millionaire Mom Next Door's website is remarkable.

We must all be a bunch of male chauvinist pigs.

I don't see grfiv putting in a bunch of links to get ad revenue and brag on his career.........just helpful info. I am sure grfiv made many appearances on CNBC and others, which to me is much more substantive than being on Montel..........

 

[travelover]

The wait continues for the coming of the true MillionaireDaddy............

 

[REWahoo]

Until we get a financial guru posting here who has appeared on Jerry Springer, I'm not going to be impressed...

 

[nickel]

So... I clicked through to some of George's articles and eventually found my way here:

Capital Needs Analysis spreadsheet

This is a capital needs calculator that helps you figure (in a purely deterministic way) how much money you'll need to safely retire given a set of assumption about various factors. In playing with the calculator, something struck me as odd and I was hoping you guys could help.

If I assume that I have, say, 60 years remaining in my life, and I run the calculator for 30 years until retirement/30 years after retirement,
20/40, or 10/50 but I hold all other variables the same, then... The projected nest egg that I need *decreases* with earlier retirement/long post-retirement.

Sure, you need to save more per month to get there given the shorter timeframe, but still... This seems wrong to me. Shouldn't you need *more* money to retire sooner?

Is the calculator wrong? Or am I missing something?

 

[grfiv]

So... I clicked through to some of George's articles and eventually found my way here:

Capital Needs Analysis spreadsheet

This is a capital needs calculator that helps you figure (in a purely deterministic way) how much money you'll need to safely retire given a set of assumption about various factors. In playing with the calculator, something struck me as odd and I was hoping you guys could help.

If I assume that I have, say, 60 years remaining in my life, and I run the calculator for 30 years until retirement/30 years after retirement,
20/40, or 10/50 but I hold all other variables the same, then... The projected nest egg that I need *decreases* with earlier retirement/long post-retirement.

Sure, you need to save more per month to get there given the shorter timeframe, but still... This seems wrong to me. Shouldn't you need *more* money to retire sooner?

Is the calculator wrong? Or am I missing something?

The answer is a bit longer than can easily fit here; please have a look here: Capital Needs Analysis Spreadsheet Explanation and see if it answers your question.

Thanks,
George Fisher

 

[haha]

So... I clicked through to some of George's articles and eventually found my way here:

Capital Needs Analysis spreadsheet

This is a capital needs calculator that helps you figure (in a purely deterministic way) how much money you'll need to safely retire given a set of assumption about various factors. In playing with the calculator, something struck me as odd and I was hoping you guys could help.

If I assume that I have, say, 60 years remaining in my life, and I run the calculator for 30 years until retirement/30 years after retirement,
20/40, or 10/50 but I hold all other variables the same, then... The projected nest egg that I need *decreases* with earlier retirement/long post-retirement.

Sure, you need to save more per month to get there given the shorter timeframe, but still... This seems wrong to me. Shouldn't you need *more* money to retire sooner?

Is the calculator wrong? Or am I missing something?

Since we know that a determinsitic scenario is also an unrealistic one, why not try these different scenarios, just as they are presented, in FireCalc?

Ha

 

[grfiv]

Since we know that a determinsitic scenario is also an unrealistic one, why not try these different scenarios, just as they are presented, in FireCalc?

Ha

The research I cite in Withdrawal limits from a fixed portfolio addresses the issue of determinism as does the spreadsheet.

 

[haha]

I hope no one is making plans based on the odd idea that you need less money to fund a 50 year retirement than you would to fund a 20 year one. Just isn't so, folks.

These spreadsheets and the anti-intuitive result are based on a fallacy- the use of nominal rather than real amounts at the various withdrawal starting dates. Of course you will need more nominal dollars to fund the nominally larger year one withdrawal at time t+30 than you would at time t+10. Absolutely. But your savings, and your annual income neded to create this fund will also be much larger.

To make this clear, just imagine that you decided to trick the charts. You will tell them, at age 40, "I am retiring", and you will start taking your annual draw just as the chart tells you to do. But secretely you keep working, and with your earnings you set up a whole new savings program, putting 100% of it after taxes into this program also at 7%. Then 20 years down the road at age 60 you decide to really retire, and start to draw from your new fund, as well to continue drawing from the old fund.

Who do you think will have a greater income at this point? You, or the guy who actually retired 20 years earlier?

Ha

 

[grfiv]

I hope no one is making plans based on the odd idea that you need less money to fund a 50 year retirement than you would to fund a 20 year one. Just isn't so, folks.

These spreadsheets and the anti-intuitive result are based on a fallacy- the use of nominal rather than real amounts at the various withdrawal starting dates. Of course you will need more nominal dollars to fund the nominally larger year one withdrawal at time t+30 than you would at time t+10. Absolutely. But your savings, and your annual income neded to create this fund will also be much larger.

To make this clear, just imagine that you decided to trick the charts. You will tell them, at age 40, "I am retiring", and you will start taking your annual draw just as the chart tells you to do. But secretely you keep working, and with your earnings you set up a whole new savings program, putting 100% of it after taxes into this program also at 7%. Then 20 years down the road at age 60 you decide to really retire, and start to draw from your new fund, as well to continue drawing from the old fund.

Who do you think will have a greater income at this point? You, or the guy who actually retired 20 years earlier?

Ha

I think you are more interested in posting than in reading.

It's obviously true that the amount you need TODAY for a 40-year retirement is larger than for a 20-year one. But that's not what's being said.

What IS being said does not depend on nominal or real or whatever else; it merely depends on math.

 

[ChrisC]

I think you are more interested in posting than in reading.

I think that's about one of the best one-liners I've seen here to deflate a "one-upper" post.

 

[haha]

I think you are more interested in posting than in reading.

Well, I am not interested enough in taking you by the hand to spend any more time on this. I read enough of your stuff to know I am not interested in reading any more.

But as an old debater, I recognize your ad hominem attack above as a sign of weakness.

If you have nothing valid to say, attack the opponent!

Ha

 

[haha]

I think that's about one of the best one-liners I've seen here to deflate a "one-upper" post.

I think so too, Chris C.

Good going big guy!

Ha

 

[travelover]

Well, I am not interested enough in taking you by the hand to spend any more time on this. I read enough of your stuff to know I am not interested in reading any more.

But as an old debater, I recognize your ad hominem attack above as a sign of weakness.

If you have nothing valid to say, attack the opponent!

Ha

Boy, this forum is going to get a bad rep after the MommyMillionaire debacle and now this dust up.

 

[Medit8]

Thanks for sharing your web pages, George. I have found the information incredibly useful and lucid.

 

[friar1610]

I think my thoughts were more along the lines of volunteer teacher. Showing people how to understand the choices and make decisions themselves. No way I want to be a volunteer account manager or expect anyone to have me make decisions on their behalf. Too much like w*rk. Too much like liability. I'd think a volunteer teacher with real world experience would be a valued helper.

I looked into financial planning as a second career. A couple of the universities in the area where I was living at the time had courses which tracked the CFP curriculum (which you can also do outside the classroom as a correspondence course.) I thought it would be interesting to take the courses and then, perhaps, go into the field as a fee-only planner. When I looked further into it I found that once you complete the curriculum and pass the tests, you need to have 3 years of real experience before you are officially a CFP. Looking at what I would need to do during those 3 years (work a lot of evenings, build a clientele, etc., etc.) I decided it wasn't worth it to me.

What I then tried to do was incorporate financial education into adult literacy tutoring I was doing. At two separate adult literacy centers in two different states I tried to launch a basic financial literacy course using curriculum which is available for free from the FDIC/NCUA. In both cases, the course did not get many takers and attendance dwindled after the first couple of sessions. (I hope it was the subject matter, not the instructor, since I seem to get very good reviews for my reading and basic math tutoring.) I'm still interested in doing something along these lines, but haven't found the venue yet.

 

[bongo2]

The projected nest egg that I need *decreases* with earlier retirement/long post-retirement.

Is the calculator wrong? Or am I missing something?

This answer may have already came through in what haha and grfiv were saying. The nest egg increases with the later retirement, but at less than the rate of inflation, so it shows up as a larger nominal dollar amount. Using the default numbers you need $3.5m. Changing it to a 20 year retirement you need 19% less, but putting the retirmeent 10 years later gives you 34% inflation = 13% more nominally.