Join Early Retirement Today
Thread Tools Search this Thread Display Modes
Old 03-07-2014, 06:23 AM   #21
Thinks s/he gets paid by the post
timo2's Avatar
Join Date: Jul 2011
Location: Rio Rancho
Posts: 1,528
Originally Posted by mathjak107 View Post
it may have more utility when your alive but the ramifications of running out as far worse than dying with to much.
A reasonable backup plan to prevent running out of money totally is having the primary SS recipient wait to collect SS at 70, that's the best longevity insurance I & DW can afford.

"We live the lives we lead because of the thoughts we think" Michael O’Neill
timo2 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 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 03-07-2014, 11:49 AM   #22
Thinks s/he gets paid by the post
Finance Dave's Avatar
Join Date: Mar 2007
Posts: 1,088
Originally Posted by photoguy View Post
It's a sales piece loaded with jargon.
I agree, but here is basically what they are saying I think...

If you are willing and able to adjust your lifestyle annually based on performance of the prior year, you may be able to take more out in the early years. The thing they throw in about utility decreases at higher income levels may be true from a textbook perspective, but I think it really clouds the issue. What they fail to note is that so many people have so many "needs" that they'll not be able to adjust annually in spending on their "wants".

DW and are planning to follow a similar strategy whereby we have two for wants and one for needs. The needs are invested very conservatively and we'll basically follow the 4% rule on those.

For the wants, we'll look at our returns for the prior 12 months in, say, June...and then set our budget for the upcoming year based on that performance. In other words, if we have market declines, we take one vacation instead of 3 and go out to eat 2x a week instead of 3.

"Live every day as if it were your last, and one day you'll be right" - unknown
Finance Dave is offline   Reply With Quote
Old 03-07-2014, 06:49 PM   #23
Thinks s/he gets paid by the post
Join Date: Oct 2006
Posts: 3,961
Originally Posted by gcgang View Post

Above link to a JP Morgan " white paper" advocating a " dynamic" approach to withdrawal rates.

Not sure I understand it all. Would be interested in others opinions.

Makes some interesting points, among them:
Money has more "utility" when you are younger than when you are older.
Focusing exclusively on possibility of failure causes one to overlook how you may best utilize your money over your remaining one life to live.
The conventional Bengen 4-4.5% withdrawal rate, set when you retire and to be followed for the rest of your life, does not correspond to how people actually behave.
The ideas in the paper are fine. I'd call them mathematical methods of getting at things that most of us do intuitively. I have at least a little knowledge of utility theory, "fat tailed" distributions, and varying life expectancy. I'm not sure how much precise formulas add.

Almost everyone here will say that it makes sense to stop and review our situations periodically. When we do, we'll recognize that life doesn't go according to plan.
We may have had unexpected changes in health since we retired.
We almost certainly will have had some pattern of investment returns that wasn't perfectly "average".
We may have changes in our definitions of "needs" and "wants".
We may find ourselves more or less concerned about helping family members.

We'll take all those things into account, and change our spending if it seems we should.

If we know that we're starting out with a lot of cushion (room to adjust spending down), we might be more aggressive in the early years. If we're cutting it pretty close, we will probably be pretty conservative at the beginning. (One of the points in the paper.)

Of course "everyone here" is mostly DIYers. For people who aren't, it may be wise to have somebody else prod them into this review. But, I'm skeptical that value of the computer runs Fidelity can provide exceed the fees Fidelity is likely to charge. Maybe if I saw their fee structure I'd change my mind.
Independent is offline   Reply With Quote
Old 03-07-2014, 07:04 PM   #24
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Jul 2005
Posts: 5,464
Originally Posted by Midpack View Post
Too bad the statement below from the JPM paper isn't true in the first place.

Withdrawals are supposed to be dynamic! What the 4% SWR authors said all along...

Safe withdrawal rates - Bogleheads
They were wrong about the part about the 4% rule being based on long term averages. It is not ,it is based on worst case scenerios.

mathjak107 is offline   Reply With Quote

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
A different spin on SWR, question. verygoodthings FIRE and Money 47 02-13-2011 01:54 PM
Property Tax Rates: Different States, Different Strokes? Orchidflower FIRE and Money 39 10-28-2007 01:41 PM
A different way to look at the 4% SWR Sam FIRE and Money 21 07-27-2007 06:05 AM
A Decision Analysis approach to SWR choices Rich_by_the_Bay FIRE and Money 27 03-09-2006 08:18 AM


All times are GMT -6. The time now is 10:42 AM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2018, vBulletin Solutions, Inc.