Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
7% SWR - te DIESEL system
Old 09-25-2006, 09:55 PM   #1
Moderator Emeritus
Rich_by_the_Bay's Avatar
 
Join Date: Feb 2006
Location: San Francisco
Posts: 8,827
7% SWR - te DIESEL system

This article in the Journal of Financial Planning says a diversified portfolio not too different from many of those around here can generate 7% safely, including 3% COLA

My take is that he is self-annuitizing your portfolio to accomplish this. Not necessarily an irrational approach if you don't plan a big estate, but I am curious what my smarter friends here think about this approach.
__________________

__________________
Rich
San Francisco Area
ESR'd March 2010. FIRE'd January 2011.

As if you didn't know..If the above message contains medical content, it's NOT intended as advice, and may not be accurate, applicable or sufficient. Don't rely on it for any purpose. Consult your own doctor for all medical advice.
Rich_by_the_Bay is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Re: 7% SWR - te DIESEL system
Old 09-25-2006, 10:04 PM   #2
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,074
Re: 7% SWR - te DIESEL system

Doc, there was a thread a couple of days ago about that article...

http://early-retirement.org/forums/i...p?topic=9635.0

__________________

__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Re: 7% SWR - te DIESEL system
Old 09-25-2006, 10:56 PM   #3
Moderator Emeritus
Rich_by_the_Bay's Avatar
 
Join Date: Feb 2006
Location: San Francisco
Posts: 8,827
Re: 7% SWR - te DIESEL system

Quote:
Originally Posted by REWahoo!
Doc, there was a thread a couple of days ago about that article...
http://early-retirement.org/forums/i...p?topic=9635.0
Oops, sorry. I was so busy drawing up my retirement letter at 7% a year that I missed it.

Never mind.
__________________
Rich
San Francisco Area
ESR'd March 2010. FIRE'd January 2011.

As if you didn't know..If the above message contains medical content, it's NOT intended as advice, and may not be accurate, applicable or sufficient. Don't rely on it for any purpose. Consult your own doctor for all medical advice.
Rich_by_the_Bay is offline   Reply With Quote
Re: 7% SWR - te DIESEL system
Old 09-26-2006, 09:06 AM   #4
Thinks s/he gets paid by the post
MasterBlaster's Avatar
 
Join Date: Jun 2005
Posts: 4,359
Re: 7% SWR - te DIESEL system

If others haven't pointed it out already. The 3 percent COLA is less than the CPI inflation over the time period measured.

Therefore the withdrawals do not keep up with inflation and your spending lifestyle would go down over time.

However,
Some statistics show that retirees spend less in inflation adjusted terms in their later retirement years than in their early years. So just maybe a front loaded withdrawal scheme is appropriate for some people.

on the other hand, many people (myself included) never want to be in a position where later in their retirement they have to cut back on their spending. So for these people, regardless of their actual spending pattern as their retirement progresses, the front loaded spending scheme would not sit well with them.

In my opinion (of which you all are entitled* ), The best scheme is to start with the normal 4 percent safe withdrawal rate from a diversified portfolio. If by chance or skill your (inflation adjusted) portfolio grows faster than the (inflation adjusted) withdrawals then you could reset the withdrawals to reflect the larger balance of your stash.
__________________
MasterBlaster is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
DIESEL article in FPA Journal magellan_nh FIRE and Money 5 09-26-2006 10:27 AM
Is the S&P 500 the best data set to base our 4% SWR on? Dorus FIRECalc support 9 08-12-2006 02:12 AM
Another SWR Question? mb FIRE and Money 14 01-06-2006 08:55 AM
Implications of SWR GDH FIRE and Money 13 10-26-2004 07:53 AM
SWR, terminal values, TIPS, I-bnds & comm paper sgeeeee FIRE and Money 144 02-25-2004 04:35 PM

 

 
All times are GMT -6. The time now is 12:52 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.