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Old 01-05-2013, 08:59 PM   #41
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It doesn't take very high inflation to hurt retirees' portfolios. Example,
inflation = 4%
spending = 4%
portfolio return = -4%

Then your portfolio would be down about -12% for that year. Just two years of that and a retiree would be very upset. And at that point the news would probably be a bit bleak too, leading to anxiety and loss of sleep.
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Old 01-05-2013, 10:49 PM   #42
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Suppose a set of assumptions show a 100% success rate in FIRECalc. What could still be an issue in your mind (that could derail your retirement financial success) - especially for early retiree's (late 40's in my case)?
A few things come to mind:
1. Health / Health insurance - Would my (or my spouse's) health fail leading to a huge out of pocket expenses? What will health insurance premiums be in the future? Certainly higher than in the past, which is what FIRECalc is based on.
2. Market returns outside of historical results - Suppose the market SEVERELY tanked and stayed down for a LONG period of time. Would your now reduced assets produce enough income?
3. Disease, famine, epidemics, civil war, etc. - No way to predict these so I suppose we just ignore the risks.....right?
Are there other potential issues that might undermine a 100% success rate?
Thanks.
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C'mon, you guys, Jarts asks good questions and you've supplied 39 40 answers with 40 41 different perspectives.

Gee, this seems to be a frequently asked question among the board's posters. If only there was a place where frequently-asked questions could be collected into a single location for reference.

Oh wait.

(FAQ archive): Bernstein's "Retirement Calculator from Hell" articles
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Old 01-06-2013, 02:35 AM   #43
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C'mon, you guys, Jarts asks good questions and you've supplied 39 40 answers with 40 41 different perspectives.

Gee, this seems to be a frequently asked question among the board's posters. If only there was a place where frequently-asked questions could be collected into a single location for reference.

Oh wait.

(FAQ archive): Bernstein's "Retirement Calculator from Hell" articles
So FIRE me, already.
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Old 01-06-2013, 08:51 AM   #44
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And just because I love this quote:" Dogs and cats, living together! Mass hysteria!"

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That, and, "Sometimes you've just gotta roll the dice." -- Paul (for which I couldn't find a clip, but the movie still leaves me in stitches.)
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Old 01-06-2013, 09:11 AM   #45
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Seriously, I think the single biggest risk we all face is early death. What we can do about that is care for our health, save and retire as early as possible, and enjoy what life we have.
+.... a really big number.

Jarts, I've used FIRECalc and a slew of similar tools for verification, all coming out saying about the same thing. Thing is, they're all based on the past, which as we all know, is no guarantee of future results. It's a plan, and plans can change, need to be flexible, and we all need to stay vigilant. It'd be nice if we could implement a plan and go to sleep enjoy life without concern for the next umpteen years, but.... (If only, if only..." -- Holes)

As others have observed, it's prudent to have plans B, C, D, etc. waiting in the wings.
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Old 01-06-2013, 09:17 AM   #46
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Seriously, I think the single biggest risk we all face is early death. What we can do about that is care for our health, save and retire as early as possible, and enjoy what life we have.
While it will happen to a minority of retirees unfortunately, I am curious what makes you say it's the 'single biggest risk we all face is an early death.' The saddest maybe, but the "biggest?" I'd guess the biggest risks are inadequate income (which includes a lot of factors), inflation erosion and/or long term care.
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Old 01-06-2013, 09:27 AM   #47
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The "biggest risk" I worry about is related to the amount of gracelessness in death, and that will relate to health more than age: I feel a shorter retirement relatively healthy will be superior to a longer retirement relatively unhealthy.
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Old 01-06-2013, 09:31 AM   #48
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While it will happen to a minority of retirees unfortunately, I am curious what makes you say it's the 'single biggest risk we all face is an early death.' The saddest maybe, but the "biggest?" I'd guess the biggest risks are inadequate income (which includes a lot of factors), inflation erosion and/or long term care.
If you run low on money you can cut back or get more money. If you run out of life - game over.
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Old 01-06-2013, 09:41 AM   #49
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If you run low on money you can cut back or get more money. If you run out of life - game over.
I was asking about 'single biggest' which I (maybe mistakenly) read as most likely. You're talking about options to adjust, which I recognized as "saddest." Not really debating, trying to understand what he meant, evidently some perspective other than what's probable...
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Old 01-06-2013, 09:55 AM   #50
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While it will happen to a minority of retirees unfortunately, I am curious what makes you say it's the 'single biggest risk we all face is an early death.' The saddest maybe, but the "biggest?" I'd guess the biggest risks are inadequate income (which includes a lot of factors), inflation erosion and/or long term care.
We split hairs over 4% vs 3% withdrawal rates, but the reality is, at age 50 we are far more likely to die than run out of money.
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Old 01-06-2013, 10:07 AM   #51
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We split hairs over 4% vs 3% withdrawal rates, but the reality is, at age 50 we are far more likely to die than run out of money.
Yikes. I really have a hard time with this sort of thought.

So I looked up "Likelihood of dieing by age" and found this: Actuarial Life Table

For me the stats say:
death probability = 1.7%
years left = 17

I know this is a statistical thing and am hoping to game the system -- as usual I want my cake and want to eat it too. Am going to do a run today, for sure.
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Old 01-06-2013, 10:43 AM   #52
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People plan their retirement like they are going to live forever. Using up the very years they could be in retirement to build up assets they probably won't need.
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Old 01-06-2013, 11:24 AM   #53
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We split hairs over 4% vs 3% withdrawal rates, but the reality is, at age 50 we are far more likely to die than run out of money.
I sure wish I could use this as an argument to bump my WR up to 4% but at the age of 49, I feel a lot safer at 2.5%.

I could do all kinds of things with the extra dosh though.
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Old 01-06-2013, 11:57 AM   #54
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People plan their retirement like they are going to live forever. Using up the very years they could be in retirement to build up assets they probably won't need.

Right on, Lazarus. I'm not afraid of dying; I'm afraid of not living. I come from a line of short livers (life, not the organ!) and I'm determined to make the most of life before I kick the bucket. I spent 30 years taking relatively good care of myself and saved like Dickens to be able to ER -this year. This my plan...and I'm sticking to it!!!
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Old 01-06-2013, 02:52 PM   #55
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... I'm not afraid of dying; I'm afraid of not living. ...
Well said!
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