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Old 05-11-2015, 04:21 PM   #41
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Originally Posted by wingfooted View Post
I am planning to retire in 2016 at age 60

According to actuarial tables, the probability of me living to 90 is 2 in 10, to 95 is about 1 in 20.

According to simulations (FIRECALC) , the probability of a starting portfolio with 4.5% SWR having a balance greater than zero - for a period of 30 years (until age 90) is 90%

Shrouds have no pockets

YMMV
Depends on which actuarial table you use.

The table recently developed for individual annuities, which seems like a good fit for upper income people in excellent health, says that a male turning age 60 in 2016 would have a 47% chance of surviving to 90.
A female would have a 54% chance.
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Old 05-11-2015, 04:45 PM   #42
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we have been gaining one year of life every 4 years since 2000. here is an updated chart.

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Old 05-11-2015, 06:23 PM   #43
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One thing I usually (always) see being ignored is-"what is our starting point?" Is a portfolio of stocks and bonds with a price of $1 mm at todays PE10 of ca.27 the same value to a retiree as a portfolio valued at about 7 in 2080, or 15 in 2009?

To me it is impossible that it is. And this single fact invalidates everything based on past comparisons with nothing more than the market value of the portfolio. Anybody can do anything they want, but making reasonable justifications for some of these actions is not so easy.

Anyway, this will be clear enough in due time, unless Dame Janet is a lot more clever and lucky too than she appears to be so far..

Ha

So I'll bite, how would you suggest one answer the question "How do I know if I have enough to retire?"
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Old 05-11-2015, 06:40 PM   #44
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in numbers we can relate to , the common denominator to all failures is they maintained less than a 2% average real return the first 15 years and with out spending adjustments made ran out of money before they ran out of time.
I'm curious where the common denominator comes from. Makes sense. I just don't remember reading this anywhere.
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Old 05-11-2015, 06:44 PM   #45
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Or we're simply being conservative.

I began retirement with a 2.5% WR, which is now standing at 2% of my current portfolio value. I am expecting to increase my withdrawals later on in my retirement, and being conservative now suits me fine - it's what I need to make me feel comfortable early on in what I hope will be a long retirement period. I may continue with the current WR for a while - who knows?

We are not all looking to maximize the income from our portfolios. Some of us like the comfort that a conservative WR gives us. There are plenty of people and causes I can leave my money to when I go.
I am torn between the comfort of being conservative and absoulte zero desire to have a ton of money left when I go.
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Old 05-11-2015, 07:11 PM   #46
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I am torn between the comfort of being conservative and absoulte zero desire to have a ton of money left when I go.
Unfortunately, unless you can predict exactly when you'll die (or commit suicide once you run out of money), those goals are somewhat at odds with each other.

If I'm lucky enough to have my savings outlast me, I'm leaving majority of what's left to my former alma mater. I was on full academic scholarship with stipend for high school and college so I'd be quite happy to "pay it forward" and help deserving students.
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Old 05-11-2015, 07:49 PM   #47
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I am not so sure 100 years of investing past for a single country accurately predicts 50 years of the future, which personally brings me back to the Triumph of the Optimists multi-country conclusions (a country has one past and many possible futures), a liability matching strategy and continuing to live below my means in retirement.
It would be interesting to put together a time series for Germany from 1871 (which coincidentally was when it was unified) to the present. Give that there were several wipeouts of the market (WWI/the post war inflation) and WWII. I wonder what a german based firecalc would do.
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Old 05-11-2015, 07:55 PM   #48
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Unfortunately, unless you can predict exactly when you'll die (or commit suicide once you run out of money), those goals are somewhat at odds with each other.

If I'm lucky enough to have my savings outlast me, I'm leaving majority of what's left to my former alma mater. I was on full academic scholarship with stipend for high school and college so I'd be quite happy to "pay it forward" and help deserving students.
Agree those thoughts are at odds. That's the challenge.

No kids and paid my own way through school. So, besides a good no kill shelter, can't think of a place I would want to leave a ton of money.

Obviously one can't run it down to zero. It does not need to keep growing either. We will see.
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Old 05-11-2015, 08:01 PM   #49
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Agree those thoughts are at odds.

No kids and paid my own way through school. So, besides a good no kill shelter, can't think of a place I would want to leave a ton of money.
Isn't a no kill shelter enough? We got our dog from one. He is the sweetest little guy and was due to be euthanized if our local shelter had not taken him in from the pound.
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Old 05-11-2015, 11:14 PM   #50
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Is a portfolio of stocks and bonds with a price of $1 mm at todays PE10 of ca.27 the same value to a retiree as a portfolio valued at about 7 in 2080, or 15 in 2009?

To me it is impossible that it is. And this single fact invalidates everything based on past comparisons with nothing more than the market value of the portfolio. Anybody can do anything they want, but making reasonable justifications for some of these actions is not so easy.

Anyway, this will be clear enough in due time, unless Dame Janet is a lot more clever and lucky too than she appears to be so far..

Ha
But if you really are convinced we are on the eve of destruction (market) why not design a portfolio that is short the market and short bonds? Then your 1mm would be worth a lot more than 1mm.

Or you could hedge and sell calls against your stocks, betting that at best we see minimal gains over the next several years. The call premium + dividends might still net you 4% real returns in a flat market.

If you don't want to do either of the above, then admit that you really don't know if the market is overvalued. We may see DOW 30,000 before the party ends.
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Old 05-11-2015, 11:17 PM   #51
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Remember that 4% is a 'Worst Case' historical number.
+2
Even during the 2000's you could have taken out more than 4%.
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Old 05-12-2015, 02:44 AM   #52
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except those who retired in 2000 . that year only is a problem so far.
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Old 05-12-2015, 02:45 AM   #53
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I'm curious where the common denominator comes from. Makes sense. I just don't remember reading this anywhere.
michael kitces looked in to this.

https://www.kitces.com/blog/what-ret...ly-based-upon/
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Old 05-12-2015, 08:18 AM   #54
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This is a very well written post and insightful article. I only wish there were similar articles on x% for 50 years given life expectancies are increasing and we on this forum are EARLY retirees and hopefully we live 50 rather than 30 more years from retirement. ( retiring at 65 and making it another 50 is unlikely....retiring at 45 and making it another 50 is also not super high probability but the odds are that at least some will hit 95...).
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Old 05-12-2015, 08:28 AM   #55
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This is a very well written post and insightful article. I only wish there were similar articles on x% for 50 years given life expectancies are increasing and we on this forum are EARLY retirees and hopefully we live 50 rather than 30 more years from retirement. ( retiring at 65 and making it another 50 is unlikely....retiring at 45 and making it another 50 is also not super high probability but the odds are that at least some will hit 95...).
+1. The article lists 1966 as one of the worst times (if not the worst time) to retire. Since we are at about the 50 year mark, it'd be interesting to see what the 50 year SWR would have been for someone retiring in 1966. I imagine that's built into Firecalc, though.
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Old 05-12-2015, 08:34 AM   #56
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I imagine that's built into Firecalc, though.
Yes it is.
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Old 05-12-2015, 10:16 AM   #57
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I am torn between the comfort of being conservative and absoulte zero desire to have a ton of money left when I go.
If you're in excellent health, you're a good candidate for a Single Premium Immediate Annuity.
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Old 05-12-2015, 11:00 AM   #58
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If you're in excellent health, you're a good candidate for a Single Premium Immediate Annuity.
I have looked at that in the past and will take another look.
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Old 05-12-2015, 02:01 PM   #59
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This is a very well written post and insightful article. I only wish there were similar articles on x% for 50 years given life expectancies are increasing and we on this forum are EARLY retirees and hopefully we live 50 rather than 30 more years from retirement. ( retiring at 65 and making it another 50 is unlikely....retiring at 45 and making it another 50 is also not super high probability but the odds are that at least some will hit 95...).
The problem is there are far fewer 50 year periods so the statistical sample is much smaller.
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Old 05-12-2015, 02:13 PM   #60
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If you're in excellent health, you're a good candidate for a Single Premium Immediate Annuity.
Plus you have a higher chance of out living an average life, so need to prepare for more years out of the kitty.
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