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Old 04-22-2013, 08:28 PM   #21
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This is a good point. We may all differ in what we think are the acceptable drawdowns, but I think it's obvious that if even a "successful" run took us within a hair's width of failing before recovering, the stress we felt in fearing the money was about to run out before my lifespan ran out would feel like anything but a "successful" retirement. If we realized we had (say) only about 3 years left of needed expenses left to our name, even if it later recovered to (say) 10 years we'd live pretty freaked out.
Unlikely to happen. I suspect that most folks at this forum would not blindly follow a set % drawdown into the ground. In all likelihood we would start cutting back on spending as soon as our individual "feel safe" threshold was breached.
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Old 04-22-2013, 11:09 PM   #22
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I'm having a difficult time understanding the drive to have the capacity of very large drawdowns latter in life (say after age 95) by dramatically reducing drawdowns early on. I don't personally know any 95+ age people that spend much on anything beyond simple life maintenance. My parents are both in that category. My mother has had dementia for some time and all the money in the world wouldn't make one bit of difference. My father's world now consists of reading, family and an occasional glass of wine. He traveled and wined and dined most excellently but come the very early 90's the desire for such just vanished.
This has been my experience. I just recently had a relative die at around 96 and he lived very quietly. He was all there mentally and still drove until recently, but just didn't really go out that much and didn't spend much.

My mother is 89 and she spends less very little. House paid for, low maintenance and she just doesn't have the desire to get out all that much. She does have some increased expenses now. She finally broke down and hired someone to clean her house, for example. Still her overall spending is just very low. There is no comparison in her level of activity in her late 80s versus say my husband who is 65 or even her own level of activity when she was in her 70s.
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Old 04-23-2013, 05:45 AM   #23
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OP - the basic answer is "no one knows".

You have tolook at your assests and your life, decide on the minimum expenses you can live with, and when you reach a position you personally are comfortable with - basically - give it a try. Monitor your investments and investments and make adjustments when necessary. Have a backup plan in case you need to go back to work.

We've decide we can live enjoyable retirement lives with a 2% WD. We also have pensions to fall back on, so that's within my personal comfort zone. I alsowant to leave an inheritance, so that's in my game plan. Might not be in yours. DW has a family history of long life and Alzheimers. Another planning consideration for us.

You have to look at your own situation and decide what's important to you. I would not not be comfortable with a 4% WD in most conditions, and especially with today's. I am also a financially conservative and prefer a nice safety net for the family.

What's important to you, and where's your comfort level?
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Old 04-23-2013, 06:36 AM   #24
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I'm planning for my WR in years with gains greater than inflation to be one that keeps the inflation adjusted value of my portfolio constant.
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Old 04-23-2013, 08:06 AM   #25
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I've run these calculations a few times, and for my needs I budget out to the year 2070, which would be when I turn 100. Statistically that's probably overkill, but I do have one grandfather who's 98 1/2 and still surprisingly healthy, and a grandmother who recently turned 89 and still kicking.

Anyway, for a 57 year time horizon, it looks like the following withdrawal rates yield the the following results...
3.0%: 100.0%
3.3%: 100.0%
3.4%: 98.8%
3.5%: 98.8%
3.6%: 97.6%
3.7%: 92.9%
3.8%: 86.9%
3.9%: 84.5%
4.0%: 82.1%

Now, I just did this quick and simple, plugging in a starting portfolio of $1M, end year of 2070, and annual withdrawals of $30K, 35K, etc. No taking into account social security, other retirement, the still working page, etc.

And, as they tend to say on those investment commercials, past performance is no guarantee of future results.
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Old 04-23-2013, 08:13 AM   #26
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I've run these calculations a few times, and for my needs I budget out to the year 2070, which would be when I turn 100. Statistically that's probably overkill, but I do have one grandfather who's 98 1/2 and still surprisingly healthy, and a grandmother who recently turned 89 and still kicking.

Anyway, for a 57 year time horizon, it looks like the following withdrawal rates yield the the following results...
3.0%: 100.0%
3.3%: 100.0%
3.4%: 98.8%
3.5%: 98.8%
3.6%: 97.6%
3.7%: 92.9%
3.8%: 86.9%
3.9%: 84.5%
4.0%: 82.1%

Now, I just did this quick and simple, plugging in a starting portfolio of $1M, end year of 2070, and annual withdrawals of $30K, 35K, etc. No taking into account social security, other retirement, the still working page, etc.

And, as they tend to say on those investment commercials, past performance is no guarantee of future results.
It doesn't discount your point at all, but several of us haved noted that something potentially hinkey happens with FIRECALC out around 45-50 years and beyond. If you input the same info over 5 year increments starting at 30 for example, the SWR decreases as expected, but then "turns up" out at 45 or 50 years. Seems counterintuitive, but I don't understand why it happens...FWIW
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Old 04-23-2013, 08:14 AM   #27
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Unlikely to happen. I suspect that most folks at this forum would not blindly follow a set % drawdown into the ground. In all likelihood we would start cutting back on spending as soon as our individual "feel safe" threshold was breached.
True, but the real point is that as we reduced our drawdowns, we'd start to increasingly worry about outliving our money, would we not? Or that we'd soon reach a point where the reduction in spending became a near impossibility while spending only carefully on essentials? And that's why merely "succeeding" in FIRECalc isn't enough just as we'd probably stop for gas on a long trip even though the gauge told us we'd make it home without doing so, even if running on fumes near the end.
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Old 04-23-2013, 08:20 AM   #28
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I'm having a difficult time understanding the drive to have the capacity of very large drawdowns latter in life (say after age 95) by dramatically reducing drawdowns early on.

To deprive oneself over a long retirement for the very remote chance of such a situation seems an interesting choice.
I don't get the impression that most people reduce drawdowns early on to have the capacity of very large drawdowns later in life. I think they do it to protect against having little or nothing left later in life.

Undoubtedly you've seen the very wide range of results on a FIRECALC chart (default result below). For those facing 30-40 years in retirement, and a potential final portfolio value at the outset ranging from -300K to +$4.3M, it only makes sense to some of us to be conservative with withdrawals early on. I assume those who start out conservative, will adjust up or down as the decades pass and real returns allow, and withdraw more aggressively well before age 95. I may be wrong, but that's my take...


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FIRECalc looked at the 111 possible 30 year periods in the available data, starting with a portfolio of $750,000 and spending your specified amounts each year thereafter.

Here is how your portfolio would have fared in each of the 111 cycles. The lowest and highest portfolio balance throughout your retirement was $-300,739 to $4,259,606, with an average of $1,323,668. (Note: values are in terms of the dollars as of the beginning of the retirement period for each cycle.)

For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 6 cycles failed, for a success rate of 94.6%.
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Old 04-23-2013, 08:44 AM   #29
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It doesn't discount your point at all, but several of us haved noted that something potentially hinkey happens with FIRECALC out around 45-50 years and beyond. If you input the same info over 5 year increments starting at 30 for example, the SWR decreases as expected, but then "turns up" out at 45 or 50 years. Seems counterintuitive, but I don't understand why it happens...FWIW
Actually, I think I've noticed that as well. If I only plot it out to, say age 90 or 95 rather than 100, the success rate often drops. I think it has something to do with the fact that, FireCalc has more shorter-duration past periods to draw its calculations from than it does longer periods. For instance, FireCalc has 111 30 year periods to pull from, but only 91 50 year periods. Or in my case, 84 57 year periods.
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Old 04-23-2013, 08:47 AM   #30
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I think they do it to protect against little or having nothing left later in life.
Exactly, and a much more succinct way to say what I was trying to say. It's not that people want to start partying hardy at age 90. It's that they don't want to get (say) into their 80s and start seeing their capital shrink to the point where outliving their money feels like a *very* real possibility, one that causes their life to be cloaked in worry rather than enjoying the time they have left.
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Old 04-23-2013, 09:05 AM   #31
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I don't get the impression that most people reduce drawdowns early on to have the capacity of very large drawdowns later in life. I think they do it to protect against having little or nothing left later in life.

Undoubtedly you've seen the very wide range of results on a FIRECALC chart (default result below). For those facing 30-40 years in retirement, and a potential final portfolio value at the outset ranging from -300K to +$4.3M, it only makes sense to some of us to be conservative with withdrawals early on. I assume those who start out conservative, will adjust up or down as the decades pass and real returns allow, and withdraw more aggressively well before age 95. I may be wrong, but that's my take...
Good points. And yet, the sequence of early returns seems to be a prime determinant of portfolio success. I guess having been conservative during my first 10 years of ER I'm ready to let go a little since my starting NW has nearly doubled.
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Old 04-26-2013, 06:44 PM   #32
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To answer the OP's question, I am planning for a 47 year horizon and my SWR is about 3%.
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