Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 06-20-2015, 10:42 AM   #61
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 16,515
Quote:
Originally Posted by David1961 View Post
I have noticed this as well. Plus, after a real good year, if you end up owing taxes the following April, somehow I feel like I should add this to the previous years expenses, not this years. Although if you track your distributions and pay estimated taxes accordingly, it should not be a big surprise.
Yeah, most of it gets paid ahead in estimated taxes - at least for 3 quarters. But the remainder, plus set aside for current year's estimated taxes is the first thing that gets pulled out after I take the withdrawal. What remains is what we get to spend.
__________________

__________________
Well, I thought I was retired. But it seems that now I'm working as a travel agent instead!
audreyh1 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!

Old 06-20-2015, 10:45 AM   #62
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 16,515
Quote:
Originally Posted by GTFan View Post
How do you factor in taking divs and cap gains throughout the year instead of reinvesting? Your WR % calc is then a little more complicated because you don't know how much of that % will be in your distributions. I guess you're simply deducting what you got this year from the % when you withdraw in January of next year?

For me it's going to be a fair bit more complicated anyway because I'm trying to limit my cap gains to stay under the 200% FPL threshold to maximize ACA subsidies. Subject to the Supremes letting me take advantage of them, of course. I don't think I'll ever be using a standard WR % of port as long as that's the case.
No factor. Any distributions paid out during the year remain part of the portfolio until Jan 1(2) so they are included in the Dec 31 portfolio value. They usually aren't reinvested and sit in cash, but they aren't withdrawn either. No portfolio withdrawals during the year.
__________________

__________________
Well, I thought I was retired. But it seems that now I'm working as a travel agent instead!
audreyh1 is offline   Reply With Quote
Old 06-20-2015, 11:42 AM   #63
Thinks s/he gets paid by the post
 
Join Date: Jan 2008
Posts: 1,495
Quote:
Originally Posted by Independent View Post
I posted an example of using SWR with a deferred income stream. See (B) here:

Laurence Kotlikoff - Maximize my SS.com
Yes, I saw that and I should have added YMMV to my post. In my case SWR is useless as I have enough assets today with another lump sum income increase in around 5 years to delay SS until 70. I am using a suggestion I saw elsewhere to monitor WR until 70 via FIDO. Will also use ESPlanner monte carlo mode and upside modes to monitor PF health as well. Could change/might change depending on circumstances. At this point, not far enough into decumulation to firmly commit to any path. SWR will probably become more relevant after last income stream of SS at 70 comes online.
__________________
Options is offline   Reply With Quote
Old 06-20-2015, 04:32 PM   #64
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 7,451
Quote:
Originally Posted by Independent View Post
Yes, my comments assume the regular, inflation adjusted SWR.

I should have said "The greater of 4% of your inflation-adjusted initial fund or 4% of your current fund"
That does seem like a pretty reasonable rule. I'm curious how often the excess withdrawal early on would hurt the long term sustainability.
So for instance somebody retiring in 98 would have a two years of increased spending followed by three years significantly decreased spending I wonder if they'd be almost as bad off as the Y2K retiree?

If have been toying with this idea.
Withdrawal rate (WR)= 4% of current portfolio.
IF WR > 110%* last years WR THEN WR= 110% of last year WR
IF WR < 95% * last years WR THEN WR = 95% of last years WR

Now this requires some significant belt tightening early on if you retire into a bear market, but also recognize that not many of us need/want to increase spend say 25% year over year like we would have seen in 2013.

Comments?
__________________
clifp is online now   Reply With Quote
Old 06-20-2015, 05:57 PM   #65
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 16,515
Quote:
Originally Posted by clifp View Post
That does seem like a pretty reasonable rule. I'm curious how often the excess withdrawal early on would hurt the long term sustainability.
So for instance somebody retiring in 98 would have a two years of increased spending followed by three years significantly decreased spending I wonder if they'd be almost as bad off as the Y2K retiree?

If have been toying with this idea.
Withdrawal rate (WR)= 4% of current portfolio.
IF WR > 110%* last years WR THEN WR= 110% of last year WR
IF WR < 95% * last years WR THEN WR = 95% of last years WR

Now this requires some significant belt tightening early on if you retire into a bear market, but also recognize that not many of us need/want to increase spend say 25% year over year like we would have seen in 2013.

Comments?
you don't have to spend the "raise" all in one year.
__________________
Well, I thought I was retired. But it seems that now I'm working as a travel agent instead!
audreyh1 is offline   Reply With Quote
Old 06-21-2015, 03:21 AM   #66
Recycles dryer sheets
 
Join Date: Nov 2014
Posts: 381
Quote:
Originally Posted by Independent View Post
I may not have interpreted the rule correctly, but this is what I think he's saying.

Suppose my portfolio at the end of year 8 is 140% of the inflation-adjusted original portfolio.
And, my portfolio at the end of year 9 is 150% of the inflation-adjusted original portfolio.
Then I take a bonus of X% of the 10% growth. If X=10, I'll get a bonus equal to 1% of my original portfolio. A nice bonus compared to my 4% SWR.

Now suppose that at the end of year 10, my portfolio is again 150% of the inflation-adjusted original portfolio.
I get no bonus, because there is no growth.

But, it seems to me that 150% is enough cushion to justify a bonus. For example, if my portfolio just happens to stay at 150% in each following year, I'll never get another bonus.
Basing the extra payouts on one-year growth creates (IMO) unnecessary volatility in the extra payouts.

But, I'd have to build a model to compare carefully.
Built a model a while back (time to revisit it), but for Gummy's I don't think it was based on the growth relative to the original portfolio - just the last year's growth. Here's a quote from the site:

"I'm suggesting that after we've withdrawn, say 3% for example (to pay the bills), we check to see if our portfolio has increased since a year ago (even after withdrawing that 3%) and, if it has increased by at least the inflation rate, we withdraw some more ... "

Now I think what you described above is a nice buffer, especially if you want to start with a higher withdrawal rate than what Gummy suggested - that is, you don't start even applying the bonus calculation until/if your portfolio has grown for a few years. I think Gummy's method started off with the lower withdrawal rate instead. He treated it as a bonus, much like some of us who are still w*rking have. You (portfolio) do well you get a bonus. If not, wait till next year. The idea is to never count on the bonus as being necessary to cover basic expenses, but to truly treat it as some extra cash to do with as you will (including not withdrawing it).
__________________
big-papa is offline   Reply With Quote
Old 06-21-2015, 03:27 AM   #67
Recycles dryer sheets
 
Join Date: Nov 2014
Posts: 381
Quote:
Originally Posted by clifp View Post
Reading this interesting paper did remind me a lot of the twins paradox. Especially because if your assets have increased year over year, your life expectancy has also decreased. So if 62 year with 1 million dollars in assets and 4% (40K) withdrawal who find herself with 1.1 million at age 63 logically should be more likely to be able to withdraw 4% (44k) without running out of money in her life than a 62 year old taking 4%.

I suspect that 50% figure before adjusting the withdrawal is almost certainly much too conservative.

The more I think about withdrawals and observe how real world retirees react, the less important I think your initial starting portfolio should be on your current withdrawal.

I am curious how many people who have been retired lets 5+ actually based their current withdrawal on their initial portfolio? Heck I don't even have records of what my portfolio was until 2 years after I retired.
You touched on something I've always wondered about in the retire again and again method. Say you're looking at a 30 year retirement. If you go through the calculation and decide you want to "reset" why would you end up with the same % withdrawal vs. something slightly higher. After all, you now have 29 years because you're one year closer to death. I don't mean that literally because few of us know exactly how many years we have left. But the point is all else being equal, shorter withdrawal periods should result in higher safe withdrawal rates.
__________________
big-papa is offline   Reply With Quote
Old 06-21-2015, 03:34 AM   #68
Recycles dryer sheets
 
Join Date: Nov 2014
Posts: 381
Quote:
Originally Posted by audreyh1 View Post
For this reason I prefer the simple approach of % of remaining portfolio. So easy - X% of Dec 31 value each year.

I never liked the idea of inflation adjusting from the initial portfolio value. If the portfolio keeps up with inflation, great, if not, annual withdraw will stay behind until the portfolio catches up. If the portfolio zooms ahead of inflation, then I'd like to withdraw the increase sooner rather than later.

I have no problem at all with variability in annual income. IMO this issue is way blown out of proportion and makes the withdrawal calcs much more complex for early retirees. If someone's budget is so tight that they can't handle the variability, then early retirement may not be the best choice. If someone is retiring at a normal age and the budget is tight, then I can see opting for the Trinity Study method to avoid variability.
Yep, I know a lot of people who use % of remaining portfolio. An easy twist to that one was discussed here a while back and which showed up in a Scott Burns article last year. His specific example was 6% of your portfolio or 90% of last year's withdrawal, whichever was largest. The 90% helps reduce how far your withdrawal can drop year to year. You can even modify that slightly by changing the 90% to be 90% after inflation if you like, which will can reduce the "effective" year-to-year drops even further. You can of course play around with both the 6% or 90% number and see what would have happened historically.
__________________
big-papa is offline   Reply With Quote
Old 06-21-2015, 05:07 AM   #69
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 7,451
So I played around with this idea a bit. CFireSIM has some but not all of the capabilities to model, so I had to use a spreadsheet.
I took data from Raddr poor Y2K retiree (same as me) with 75% of his assets in the S&P 500 index in 25% in 3 month tbills. This is is someways a worse case analysis, 75% in Vanguard Total Stock Market and say 20% in Total Bond 5% in T-bills would significantly better although probably not good enough to avoid running out of money in 30 years (much less 40 years for an early retiree)


The withdrawals were calculated to be the 4% of the end of year portfolio value, with a floor of 95% of the previous years+ inflation and ceiling of 10% of the previous years withdrawal. (I probably should add inflation)
Note that your initial start portfolio value is irrelevant to your withdrawal.

This table shows the nominal withdrawals and portfolio values.


PHP Code:
1999   0  $1,000,000 
2000 
$40,000   $909,360       
2001 
$39,292   $799,375 
2002 
$38,373   $637,340       
2003 
$37,037   $730,118
2004 
$35,995   $752,256 
2005 
$35,118   $748,871
2006 
$34,497   $806,886 
2007 
$33,820   $813,265       
2008 
$35,207   $564,870       
2009 
$33,480   $637,269       
2010 
$32,665   $672,320       
2011 
$31,373   $647,677
2012 
$30,818   $690,204 
2013 
$29,804   $825,005       
2014 
$32,784   $873,760 
As you can see the Y2K retiree starts withdrawing less and less money before getting a pay raise in 2008, and then 2014. The low point 2013 is 26% below 40K in nominal terms..

Including inflation the 2013 withdrawal is only $22,038 which is significant drop from 40K. The portfolio value at the beginning of 2015 is $636K in 2000 $. Which is a big improvement from $390K real for the Retiree blindly following the Trinity study methodology, a withdrawal rate of >10% for the next 16 years seems very likely that blindly following the 4% SWR methodology you'd go broke in the next dozen years.
__________________
clifp is online now   Reply With Quote
Old 06-21-2015, 06:45 AM   #70
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 16,515
Quote:
Originally Posted by big-papa View Post
Yep, I know a lot of people who use % of remaining portfolio. An easy twist to that one was discussed here a while back and which showed up in a Scott Burns article last year. His specific example was 6% of your portfolio or 90% of last year's withdrawal, whichever was largest. The 90% helps reduce how far your withdrawal can drop year to year. You can even modify that slightly by changing the 90% to be 90% after inflation if you like, which will can reduce the "effective" year-to-year drops even further. You can of course play around with both the 6% or 90% number and see what would have happened historically.
I am comfortable with an occasional big drop in income. We already don't spend all we withdraw, so the excess is set aside for that rainy day or a splurge, etc.
__________________
Well, I thought I was retired. But it seems that now I'm working as a travel agent instead!
audreyh1 is offline   Reply With Quote
Old 06-21-2015, 08:45 AM   #71
Thinks s/he gets paid by the post
David1961's Avatar
 
Join Date: Jul 2007
Posts: 1,076
Quote:
Originally Posted by audreyh1 View Post
I am comfortable with an occasional big drop in income. We already don't spend all we withdraw, so the excess is set aside for that rainy day or a splurge, etc.
Audrey, I apologize if I have asked you this before. Say at the end of the year, you spend $10k less than you withdraw. Is that $10k not counted as part of your portfolio anymore? I have always thought of the withdraw as the money that you spend, so if you spend less in a certain year, your withdraw is lower.
__________________
David1961 is offline   Reply With Quote
Old 06-21-2015, 10:38 AM   #72
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,288
Quote:
Originally Posted by clifp View Post
So I played around with this idea a bit. CFireSIM has some but not all of the capabilities to model, so I had to use a spreadsheet.
I took data from Raddr poor Y2K retiree (same as me) with 75% of his assets in the S&P 500 index in 25% in 3 month tbills. This is is someways a worse case analysis, 75% in Vanguard Total Stock Market and say 20% in Total Bond 5% in T-bills would significantly better although probably not good enough to avoid running out of money in 30 years (much less 40 years for an early retiree)


The withdrawals were calculated to be the 4% of the end of year portfolio value, with a floor of 95% of the previous years+ inflation and ceiling of 10% of the previous years withdrawal. (I probably should add inflation)
Note that your initial start portfolio value is irrelevant to your withdrawal.

This table shows the nominal withdrawals and portfolio values.


PHP Code:
1999   0  $1,000,000 
2000 
$40,000   $909,360       
2001 
$39,292   $799,375 
2002 
$38,373   $637,340       
2003 
$37,037   $730,118
2004 
$35,995   $752,256 
2005 
$35,118   $748,871
2006 
$34,497   $806,886 
2007 
$33,820   $813,265       
2008 
$35,207   $564,870       
2009 
$33,480   $637,269       
2010 
$32,665   $672,320       
2011 
$31,373   $647,677
2012 
$30,818   $690,204 
2013 
$29,804   $825,005       
2014 
$32,784   $873,760 
As you can see the Y2K retiree starts withdrawing less and less money before getting a pay raise in 2008, and then 2014. The low point 2013 is 26% below 40K in nominal terms..

Including inflation the 2013 withdrawal is only $22,038 which is significant drop from 40K. The portfolio value at the beginning of 2015 is $636K in 2000 $. Which is a big improvement from $390K real for the Retiree blindly following the Trinity study methodology, a withdrawal rate of >10% for the next 16 years seems very likely that blindly following the 4% SWR methodology you'd go broke in the next dozen years.
Interesting, but a couple points -

A) It's not apples to apples, as you draw significantly less with this plan - so of course your portfolio does better! Average $34,684 versus $40,000.

B) The 4% WR fails 5% of historic periods, so the speculation that the Y2K period will end up looking like one of the 5% failures isn't that unexpected. And cutting your withdraw amount obviously helps - but is a variable cut significantly better/worse than starting at a lower amount?

I'd be more interested in comparing a 100% Historically Safe Withdraw Rate (HSWR) with an adjustment method. If you went with HSWR and the 'retire again & again' plan, you would be able to increase spending if things turn around, but if this truly a very-bad-case period, probably no increase.

It just seems to me that anyone who can cut up to 25% of their budget, and cut by over 17% on average for a full ten years must have a lot of discretionary spending planned, and is willing to give up that discretionary spending for a very long time. Of course, anything above basic food, water, shelter is discretionary, so this is all a matter of degrees.

Of course the flip side is starting with the lower HSWR is taking a cut right from the start. No magic, just numbers. I personally prefer to look at the lower HSWR amount, budget for that with a higher confidence that I will likely never need to figure out what to cut. But that's just me.

-ERD50
__________________
ERD50 is offline   Reply With Quote
Old 06-21-2015, 11:05 AM   #73
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 16,515
Quote:
Originally Posted by David1961 View Post


Audrey, I apologize if I have asked you this before. Say at the end of the year, you spend $10k less than you withdraw. Is that $10k not counted as part of your portfolio anymore? I have always thought of the withdraw as the money that you spend, so if you spend less in a certain year, your withdraw is lower.
Once money is is withdrawn it no longer counts as part of the portfolio, regardless of whether I spend it that year.
__________________
Well, I thought I was retired. But it seems that now I'm working as a travel agent instead!
audreyh1 is offline   Reply With Quote
Old 06-21-2015, 11:14 AM   #74
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2006
Posts: 11,019
Quote:
Originally Posted by audreyh1 View Post
I am comfortable with an occasional big drop in income. We already don't spend all we withdraw, so the excess is set aside for that rainy day or a splurge, etc.
If you set aside the excess outside your portfolio, isn't that sort of a bucket? Or at least a bowl?

I had an excess from last year. It is in a HISA and I am applying it to this year's expenses. But I still consider it part of my portfolio, just part of the cash allocation.
__________________
Meadbh is offline   Reply With Quote
Old 06-21-2015, 11:20 AM   #75
Thinks s/he gets paid by the post
 
Join Date: Jan 2008
Posts: 1,495
I'm no longer as comfortable basing retirement calculations on any historical safe withdrawal rates as a result of current research such as this:

Safe Withdrawal Rates for Retirement and the Trinity Study

Yes, history is all we basically have to go on, but given the current investing environment it's a good idea to be conservative. According to Firecalc/Cfiresim I'll die very rich. Maybe. Maybe not. I'm certainly going to assume the worst case scenario in all planning.
__________________
Options is offline   Reply With Quote
Old 06-21-2015, 11:24 AM   #76
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 16,515
Quote:
Originally Posted by Meadbh View Post
If you set aside the excess outside your portfolio, isn't that sort of a bucket? Or at least a bowl?

I had an excess from last year. It is in a HISA and I am applying it to this year's expenses. But I still consider it part of my portfolio, just part of the cash allocation.
Is there a benefit to giving it a label? It's just extra we can make use of however we want, whenever we want, and it is no longer exposed to the market risks of our retirement portfolio. It is kept out computing the withdrawal, the AA and the rebalancing.

We have quite a few liquid assets apart from our retirement portfolio, so this is seamless for us.

Jan 2 - withdraw X% of Dec 31 value of retirement portfolio. Rebalance remaining portfolio to the target AA.

That's it, until the next Jan 2, unless the portfolio really needs rebalancing, but it usually doesn't.
__________________
Well, I thought I was retired. But it seems that now I'm working as a travel agent instead!
audreyh1 is offline   Reply With Quote
Old 06-21-2015, 01:29 PM   #77
Thinks s/he gets paid by the post
 
Join Date: Jun 2014
Posts: 1,035
Quote:
Originally Posted by Options View Post
given the current investing environment it's a good idea to be conservative.

Will you please list the date or dates in which the environment didn't demand conservativeness?



Sent from my iPhone using Early Retirement Forum
__________________
dallas27 is offline   Reply With Quote
Old 06-21-2015, 02:19 PM   #78
Full time employment: Posting here.
 
Join Date: Sep 2007
Posts: 718
Quote:
Originally Posted by big-papa View Post
Say you're looking at a 30 year retirement. If you go through the calculation and decide you want to "reset" why would you end up with the same % withdrawal vs. something slightly higher. After all, you now have 29 years because you're one year closer to death. ... But the point is all else being equal, shorter withdrawal periods should result in higher safe withdrawal rates.
It doesn't work that way. I fiddled with a lot of retirement scenarios before that realization hit me.

A portfolio value has only two states: 1) climbing up to the sky, or 2) glide-slope to zero. There is *not* a steady state where it remains flat forever.

When we talk about the 30 year portfolio, we are talking about the 2nd state, glide-slope toward zero, and trying to arrange things so that it doesn't hit zero until sometime after 30 years. It's going to zero, unquestionably. We're just trying to push that out to beyond our lifetime. Similar to the old joke, we know where it's going, we're just trying to negotiate the price.

It's not that, say, reducing the SWR to 2.5% or 3% pushes it out from 30 years to 40. It's that reducing the SWR flips the portfolio into the "grow to the sky" regime.
__________________
rayvt is offline   Reply With Quote
Old 06-21-2015, 02:25 PM   #79
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,386
Quote:
Originally Posted by dallas27 View Post
Will you please list the date or dates in which the environment didn't demand conservativeness?



Sent from my iPhone using Early Retirement Forum
Easily. Dec 1974; August 1982. There are many others, but these are the most beautiful in my investing lifetime. Interestingly, these were clearly not times to be careful prospectively as well as retrospectively.


We mustn't forget, just because the market bottomed at a given time such as March 2009 that this was a very safe entry. Likely a good speculative entry, due to the monetary plans that were afoot, but not in the class with those earlier ones I mentioned.


Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 06-21-2015, 03:54 PM   #80
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 7,451
Quote:
Originally Posted by ERD50 View Post
Interesting, but a couple points -

A) It's not apples to apples, as you draw significantly less with this plan - so of course your portfolio does better! Average $34,684 versus $40,000.

B) The 4% WR fails 5% of historic periods, so the speculation that the Y2K period will end up looking like one of the 5% failures isn't that unexpected. And cutting your withdraw amount obviously helps - but is a variable cut significantly better/worse than starting at a lower amount?

I'd be more interested in comparing a 100% Historically Safe Withdraw Rate (HSWR) with an adjustment method. If you went with HSWR and the 'retire again & again' plan, you would be able to increase spending if things turn around, but if this truly a very-bad-case period, probably no increase.

It just seems to me that anyone who can cut up to 25% of their budget, and cut by over 17% on average for a full ten years must have a lot of discretionary spending planned, and is willing to give up that discretionary spending for a very long time. Of course, anything above basic food, water, shelter is discretionary, so this is all a matter of degrees.

Of course the flip side is starting with the lower HSWR is taking a cut right from the start. No magic, just numbers. I personally prefer to look at the lower HSWR amount, budget for that with a higher confidence that I will likely never need to figure out what to cut. But that's just me.

-ERD50
Good points.

Fundamentally, I reject that money I retired with 5 years much less 15 years should be the dominate factor in determining how much I spend today.

My entire "I only spend my interest and dividends that way I can't run out of money", works for me because I'm able to create a portfolio that is skewed toward higher income and I had to plan on a much longer than 30 years retirement. But it is really just a way of basing my spending on the current "value" of my assets.

Especially in today interest rate and dividend environment, I don't think my approach is very practical way for the vast majority of people.

If we look at the goals of retirement spending. I suspect that for virtually everyone the priorities are as follows.

1. Don't run out of money before I die
2. Maintain my lifestyle
3. Let me spend more if things go well.

The Trinity approach does an ok job at #1. Actually it is very good for a 65 year old retiree, but I see a lot of 20 and 30 something in Mr. Mustache forum talk about using the 4% rule and retiring at 40 or even younger. They plug a 60 year retirement into a calculator with 100% equities and get a good to go sign. Which as you well know riskier than they think.

It does a fantastic job at #2 and awful job at #3.

The spend a percentage of your current portfolio does a fantastic job of #1, a lousy job at #2 (as my chart illustrates), and ok job at #3.

I just am wondering if there isn't a withdrawal approach which provides a more predictable stream of income of the Trinity approach with the safety of a percentage of current portfolio and the upside of it.
__________________

__________________
clifp is online now   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
Kitces & Guyton on SWR, Buckets & Essential/discretionary methods of withdrawals walkinwood FIRE and Money 10 10-24-2014 09:51 PM
Kitces: Phrases That Should Be Banished From Retirement Planning Htown Harry FIRE and Money 16 10-22-2014 04:37 PM
Ratcheting up the pension buyout offer ziggy29 FIRE and Money 9 10-07-2014 06:04 AM
Michael Kitces on the 4% rule mathjak107 FIRE and Money 31 03-29-2014 05:42 AM
Kitces article on roth conversions & cap gains harvesting walkinwood FIRE and Money 4 12-13-2013 09:14 PM

 

 
All times are GMT -6. The time now is 02:34 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.