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I have another stupid question
Old 06-27-2018, 05:29 PM   #1
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I have another stupid question

There has been a few topics that has brought this question to mind. So I have a very low WR and my thoughts all along when or if I reach my 80's or even 90's I would have more money then I do now.

So when RMD start I actually have less because of taxes and my portfolio be less then today. Of course we don't know what the markets hold etc..

So my question is would you think a portfolio will increase or go down in the 25 to 30 years till death. Keep in mind that with a 1% WR through this time period. I also will be in the upper 20% tax bracket as it stands today.

Thanks
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Old 06-27-2018, 05:34 PM   #2
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... would you think a portfolio will increase or go down in the 25 to 30 years till death. ...
Yes.
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Old 06-27-2018, 05:35 PM   #3
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Wait, you want to try and guess what's going to happen with a portfolio (that we do not know the asset allocation or w hat's in it) in the next 30 years??

so it's either going to go up or it's going to go down.
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Old 06-27-2018, 05:46 PM   #4
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I would wager that with a 1% withdrawal rate your portfolio will increase during your remaining years.
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Old 06-27-2018, 05:50 PM   #5
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Yes.
I had to think about it a while, run some computer simulations, then consult a Ouija Board and a Magic 8-Ball, but in the end - I agree with you.

Might want to ask W2R if her Crystal Ball can provide some confirmation, maybe check with bogleheads as well?

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Old 06-27-2018, 06:12 PM   #6
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The surest way to make an accurate prediction would be to significantly increase your WR. Start blowing that dough as fast as you can, and odds are the portfolio will go down in value over time.
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Old 06-27-2018, 06:17 PM   #7
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Okay I know it was a stupid question but when you think about it taxes will take a junk and may reverse the way I have always thought about my wealth.

Thanks for the honest reply I do know that a lot of variables in the next 25 to 30 years.
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Old 06-27-2018, 06:20 PM   #8
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I would wager that with a 1% withdrawal rate your portfolio will increase during your remaining years.

+1
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Old 06-27-2018, 06:22 PM   #9
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Isn't a 4% WR supposed to last 30 years before going down to zero in over 90% of cases? I would think a 1% WR would be 100% success that you don't run out of money and a high probability you will have more then than now in actual dollars, not necessarily spending power.
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Old 06-27-2018, 06:55 PM   #10
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Okay I know it was a stupid question but when you think about it taxes will take a junk and may reverse the way I have always thought about my wealth.

Thanks for the honest reply I do know that a lot of variables in the next 25 to 30 years.
So more seriously, you can try to estimate your taxes, and taxes are an expense, they are always part of your withdrawal calculation.

Tax rules can change, but make a rough estimate on current rules and your withdraw expectations. So yes, if RMDs are higher than what you need to live on, your taxes will be higher than just based on your spending. But if you are at an actual expected 1% WR, wow, that's really safe. Relax.

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Old 06-27-2018, 07:02 PM   #11
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And why are you worried about taxes anyway?
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Old 06-27-2018, 07:10 PM   #12
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Again thanks for your honest opinion like I said it is something I really never thought about before. LOL

My goal is to have a legacy for charity so yes it is very important to me and I hope for that to happen.

Thanks
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Old 06-27-2018, 07:16 PM   #13
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So my question is would you think a portfolio will increase or go down in the 25 to 30 years till death. Keep in mind that with a 1% WR through this time period. I also will be in the upper 20% tax bracket as it stands today.
Of course no one can >know< what will happen in the future, but if you put your present situation into FIRECalc, it will tell you wht would hve happened in the past.


In general, if you have a 30 year time window, if the future is not worse than the worst situation we've seen in the US during modern times, if you are withdrawing just 1% or 2%, and you have anything close to a "normal" investment allocation, it is >very< likely you won't run out of money, and your spending power probably won't decrease.
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Old 06-27-2018, 08:04 PM   #14
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samclem >>>> I thank you and I will run those numbers by FIRECalc. My equity percent is and will be 70 to 75 percent for that time frame. I have no intentions to lower that percent.
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Old 06-28-2018, 05:11 PM   #15
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Isn't a 4% WR supposed to last 30 years before going down to zero in over 90% of cases? I would think a 1% WR would be 100% success that you don't run out of money and a high probability you will have more then than now in actual dollars, not necessarily spending power.
That is the idea behind using a 4% WR.

Personally, I would never take 4%. I feel that 1% or even 2% is much safer.
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Old 06-29-2018, 12:05 AM   #16
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samclem >>>> I thank you and I will run those numbers by FIRECalc. My equity percent is and will be 70 to 75 percent for that time frame. I have no intentions to lower that percent.


If thatís the case, I think itís highly likely your portfolio will be worth far more in 30 years if your WR is 1%.
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Old 06-29-2018, 04:03 AM   #17
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I believe historically a 4% WR is associated with a portfolio that is numerically 2X larger after 30 years, 2/3 of the time. Hence I would wager that with a 1% WR, your portfolio will be NUMERiCALLY larger. What it's real value will be is less clear to me.
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Old 06-29-2018, 05:13 AM   #18
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.... So my question is would you think a portfolio will increase or go down in the 25 to 30 years till death. Keep in mind that with a 1% WR through this time period. I also will be in the upper 20% tax bracket as it stands today.

Thanks
Increase... it only has to return more than 1%/year to stay level.

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Old 06-29-2018, 06:21 AM   #19
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^ >>> LOL! I really do appreciate your thoughts and I totally know that we don't know what the future will be in markets etc.. My charity is important for it to be funded for years after I'm gone. Thanks
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Old 07-01-2018, 02:38 AM   #20
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There has been a few topics that has brought this question to mind. So I have a very low WR and my thoughts all along when or if I reach my 80's or even 90's I would have more money then I do now.

So when RMD start I actually have less because of taxes and my portfolio be less then today. Of course we don't know what the markets hold etc..

So my question is would you think a portfolio will increase or go down in the 25 to 30 years till death. Keep in mind that with a 1% WR through this time period. I also will be in the upper 20% tax bracket as it stands today.

Thanks

the global fascination for inflation rather than actual growth , suggests long term the portfolio value would rise ,,, BUT would your purchasing power improve ??

that i fear would be rather uncertain .

obviously many twists and turns could affect this outcome , including your ability to continue to monitor the portfolio ( would a trustee hekp or harm ?? )

things like health-care costs blowout , or aged care costs ( some on them don't wait for you to die before they start stealing )

also unknown are future tax changes

cheers !
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