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Old 12-17-2014, 08:54 PM   #61
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A bad event will not hurt 100% of the people. And also one bad event every 40 years certainly does not mean one HAS to occur every 40 years.

But how can we claim 0% probability? Zero probability means a certainty that absolutely nothing bad will happen, and even if it does happen absolutely nobody will get hurt. The only things certain in life are death and taxes, right?

What Bernstein is trying to convey is that we should not be fixated on the 100% certainty with something like FIRECalc. It is to be used as a guide, but we cannot count on it as a guardian angel to protect us. Don't get too hung up on it.

And more than what Bernstein says, I have said that even if one's financial resources dwindle, it does not mean personal doomsday. People have always been able to adapt.

And on the other hand, people get hit by unexpected health problems or accidents all the time. That's a bigger concern for me personally. Compared to that, potential money problems do not scare me as much.

I was not talking probability but actual results.... if an event happened and you did not fail then your failure rate is 0%.... if you did fail your failure rate is 100%.... no in between...
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Old 12-17-2014, 09:40 PM   #62
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Sure. Once the winning number for the lottery is announced, you know with 100% certainty whether you have the winning ticket or not. But before it is announced, we can only talk about probabilities, and I can bet that your chance of winning the grand prize is very close to 0.

One gets actual results from past experience, such as what your mother lived through. But we do not know about actual results for ourselves 40 years down the road, hence we talk probabilities. And no matter what we do or how we plan, there's always uncertainty. The less we spend out of our stash, the more likely we will die rich, but it is not a guarantee.

But I need to point out again that the success rate as shown by FIRECalc does not really apply to past retirees such as your mother, even though FIRECalc is based on past market performance. It is simply because most people do not blindly spend a fix preplanned amount in their retirement while turning a blind eye to their portfolio performance. When their stash shrinks, they cut back on spending, drive less, stop shopping. The result is a reduction in living standard, but it's not a failure.

If a retiree does not have to live under a bridge and merely has to cut back discretionary spending, I would not call it a failure. FIRECalc on the other hand would say that it's a failure. Conversely, if you follow FIRECalc or some retirement calculators to the letter to plan your spending, 100% success rate does not really mean 100%, unless the future is going to be exactly like some part of the past.

The future is still unknown, and the past is used as a guide because we have nothing better to work with. Planning makes it more likely that we can maintain our living standard, but it cannot make anything certain. And since I am not so rigid to demand the same living standard no matter what, I do not really worry about 100% or 95% success rates, as there are other unknowns that are more important. I still like to spend less in order to see my stash grow, but it is because I love counting money.
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Old 12-18-2014, 01:19 PM   #63
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NW...

I agree 100% (I can do that can't I?)...


All I was trying to point out is that a major event will not be felt the same by everybody.... that it will result in some failing and some not failing... so the 1200 year number thrown out is pure BS to me... I just used my mom to show past history and the results it has had on her..

So, yes, for use we need to look at probabilities for our future..... and as you mention smart people will adjust long before failure to try and prevent it from happening....

BTW, her withdrawal rate has been less than 1% (almost 0%) for many years (she does have very small RMD).... she has a small pension and SS when she lives on... I am surprised how little she spends.... even when she was more active a decade or so ago...
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Old 12-18-2014, 01:35 PM   #64
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They did, but they're still pretty good engines.:what: What is a rocket engine? A bomb that doesn't explode. Guess it's about expectations.

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Or more precisely, a controlled explosion.
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Old 12-18-2014, 02:40 PM   #65
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That is a better description, thanks!

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Old 12-18-2014, 02:44 PM   #66
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This made me laugh! Stuart Varney showing he knows nothing about the oil industry.

We have been fraccing wells in the U.S. since the 1940's....how else do you think oil drillers break up the oil-rich rock formations to get the oil and gas out?
yes, but most of the progress in the completion techniques have occurred in the last ten years as well as the amount of production obtained. The glut of oil in this country is largely caused by many of the mid level companies such as Devon, EOG, CHK, Anadarko, etc. on top of what the bigger oil companies such as Exxon and BP already produce.

Exxon bought XTO a few years back to get into the game but largely were unimpressed with the shale plays or it was such a small part of their business that it didn't interest them.
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Old 12-18-2014, 02:50 PM   #67
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Recent years "fracked" oil production is piddling compared to other traditional extraction practices.
That maybe true, but the amount of shale oil is greatly increasing year to year on top of traditional wells production and that is what is causing the glut.

Conventional oil production in this country is for the most part flat, the shale oil is the growth.
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Old 12-18-2014, 02:57 PM   #68
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That maybe true, but the amount of shale oil is greatly increasing year to year on top of traditional wells production and that is what is causing the glut.

Conventional oil production in this country is for the most part flat, the shale oil is the growth.
Agreed, and the new(er) fracturing methods are certainly a improved method to fracture formations that have horizontal runs of a mile or so. It is also more precise, monitored and controlled than ways in the past. I have been on several of those frac jobs this year.
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Old 12-18-2014, 03:43 PM   #69
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BTW, her withdrawal rate has been less than 1% (almost 0%) for many years (she does have very small RMD).... she has a small pension and SS when she lives on... I am surprised how little she spends.... even when she was more active a decade or so ago...
Ah hah! With that low WR rate, she's golden, and in fact may even survive in an economic catastrophe like the Russians are experiencing right now with their currency dropping 50% since 6 months ago, while the interest rate goes up to 17%.

But, but, but if her pension or SS gets cut or does not get adjusted for inflation, she would be in a lot worse hardship like the Russian retirees endure ever since the collapse of the Soviet. Yet, we do not see them crowding under bridges, do we? It's amazing how resilient people can be.
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