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Old 01-23-2013, 10:15 AM   #41
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Yes, growing_older has a very valid point that more people are likely to retire in good years than in bad ones. During bad years, if one has the option for "just one more year", he would exercise it. Whether that intention was explicitly declared or not, hanging around here since 2008, I did not see too many posters retiring in 2008 and 2009, but more since 2010.

There were some posters who retired a couple of years before 2008 and ran into trouble. It was before my time, and I did not know what WR they stated, but a few have dropped out. So, I strongly suspect that there's survivorship bias among remaining posters who still stick around. However, it may not have to do with WR but with people panicking and selling out at the bottom too. We certainly have been through an interesting time.

And then, there are also posters who either retired shortly before and during the crash, and they stated how they went into survival mode by cutting expenses, or taking a part-time job. They are still around to tell their stories.

In my case, as I have the option of "just one more year", and my children were still in school as I came to this forum in mid 2008, right in the midst of the banking crisis, I would be crazy to pull the plug then.

Anyway, I think I'd better remember that I started my ER after a couple of good years, and must rein in my desire to spend and must keep some for bad years. I think the risk of me going crazy and ruin myself financially is slim because I would not commit to any debt or additional on-going expenses at this point. I will only indulge in discretionary expenses like travel, which will be cut back in bad years.
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Old 01-23-2013, 10:19 AM   #42
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Very interesting - I think what's important to me is that each of those graphs assume static situations and then let them run out over time. Most pople would adjust their behavior in some way and then would end up somewhere in between the lines. In your case, you were only relying on your portfolio 100% for a short amount of the time, so you could take the risk as you had a high probability of receiving the SS in time to then reduce the amount of income you would require form your portfolio.

This is similar to my situation....I would only need to rely upon other streams until my other streams due to pensions or other aspects kick. I.e. my eggs were not all in one basket.

As it is, I don't even count SS in my income calculations as I believe there will be some serious curtailment of that if you have some other means of income coming from the government (my Reserve pension and my husband's active duty pension). This is even if you've paid the full boat (I am self-employed). Interesting times ahead.

As for the one more year syndrome, count my husband and I in that camp now---this is our first year or so of his active retirement and we are using only his pension income to pay for all of our living expenses --- so far, we are fine and then some. However, we are struggling with the 'what do you do all day' syndrome, so are both working part-time as consultants in different industries....I waver between I like the intellectual challenge and interaction to I hate having deadlines and keeping track of all of the changes. He gets tired of being in 'crap holes' for weeks at a time. But, but, but the money is crazy....if we just do this for a few more years - sheesh....and then one never knows what will happen in the future - I wonder where we will be in five years..

In any case - congrats for weathering the fiscal roller-coaster - although most who post here or make it where you are will not fail in their goals.
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Old 01-23-2013, 10:34 AM   #43
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In your case, you were only relying on your portfolio 100% for a short amount of the time, so you could take the risk as you had a high probability of receiving the SS in time to then reduce the amount of income you would require form your portfolio.
+1

Had I retired in mid-2004 as originally planned instead of mid-2005 I think my story would be different. I would have likely gone back to work, at least part-time, and may have been less willing to stay the course with our investments during the downturn.

My individual bout of "one more yearitis" involved not only added savings and investment returns, it also involved me re-thinking the payoff the mortgage early question. Delaying a year and paying it off allowed me to go into retirement with ~$12k less in annual expenses but with a portfolio of approximately the same size as originally planned due to the unexpected and very fortunate payout of stock options the month before I retired.

As previously mentioned, 90% of my success in achieving that black line was due to luck, and 50% due to "psst - Wellesley"...
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Old 01-23-2013, 10:59 AM   #44
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As previously mentioned, 90% of my success in achieving that black line was due to luck, and 50% due to "psst - Wellesley"...
90% + 50% = 140%.

Where does that extra 40% go? Into the RV?
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Old 01-23-2013, 11:02 AM   #45
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...(snip)...
As previously mentioned, 90% of my success in achieving that black line was due to luck, and 50% due to "psst - Wellesley"...
... and a good bond market (declining rates) from mid-2005 to now.
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Old 01-23-2013, 11:05 AM   #46
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90% + 50% = 140%.
Please see my sig line...
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Old 01-23-2013, 11:07 AM   #47
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... and a good bond market (declining rates) from mid-2005 to now.
+1

That's included in that 90% I attribute to luck.
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Old 01-23-2013, 11:40 AM   #48
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Had I retired in mid-2004 as originally planned instead of mid-2005 I think my story would be different. I would have likely gone back to work, at least part-time, and may have been less willing to stay the course with our investments during the downturn.
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With no pension or SS during the first three years of retirement, our withdrawal rate averaged 7.9% of our initial portfolio value. With both DW and I now on SS our withdrawal rate declined to 3.9% of our initial portfolio value in year seven.
From 1/2005 to the top value in late 2007, Wellesley rose by 23%. Not wow, but not too shabby, and could certainly support the 7.9% WR.

Last year, I got 12+% return, and if that continues for another year or two, man, it's party time!

PS. I hope the market god did not take the above as a Wh***. And nobody but the Oracle of NO can issue a Wh*** decree.
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Old 05-10-2014, 04:08 PM   #49
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It has been more than a year since I updated my "FIRECalc vs. REW" graph. I started this thread early last year to track how I was holding up when compared the the 1973, 1974 and 1975 retirees Dory36 used as examples on his FIRECalc intro page.

I'm very happy to report this 2005 retiree (and his DW) are doing well.



The black line represents the value of our portfolio over the first nine years of our retirement, scaled to show an apples-to-apples comparison to Dory's three retirees. Once again I'm happy to be able to say "so far, so good".

For reference, we have a 45/45/10 AA, with the equity and bond component largely invested in Wellington and Wellesley funds. We lived entirely off the portfolio the first four years of retirement before my SS kicked in, DW's SS started in year five and she began drawing a small pension (~8% of our annual expenses) in year seven.

Our withdrawal rate was significantly higher the first few years because we had no other source of income other than withdrawals and in year two we paid for the purchase an RV with a cost roughly equal to a full year of living expenses. That purchase, combined with the 'market unpleasantness' in 2008/2009 caused more than a few sleepless nights and a change in plans regarding waiting until FRA or later on SS. I began drawing SS in year five (2009) at age 62 at what turned out to be the market (and portfolio value) bottom.

Our calendar year withdrawal rates to date shown as a percentage of our initial portfolio value the day we retired in 2005:

Year 1: 4.8%
Year 2: 9.8%
Year 3: 7.9%
Year 4: 6.1%
Year 5: 5.4%
Year 6: 4.2%
Year 7: 3.9%
Year 8: 3.5%
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Old 05-10-2014, 04:29 PM   #50
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Thanks, I hope things continue to go up!
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Old 05-10-2014, 04:56 PM   #51
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Quite inspiring REW.

Actually, scratch that - very inspiring.
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Old 05-10-2014, 05:04 PM   #52
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Yes, very inspiring. Does the green line represent the best 30 year scenario in FireCalc?
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Old 05-10-2014, 05:08 PM   #53
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David, no it doesn't. You'll find a description of the graph here: FIRECalc: A different kind of retirement calculator
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Old 05-10-2014, 05:09 PM   #54
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Year 1: 4.8%
Year 2: 9.8%
Year 3: 7.9%
Year 4: 6.1%
Year 5: 5.4%
Year 6: 4.2%
Year 7: 3.9%
Year 8: 3.5%
Total = 45.6% or an average of 5.7%/yr. Yet, REW's principal remains intact.

Forget about 4%SWR. The new normal is 5.7%. Take that, the Trinity study's authors!

Or is it that 5.7%SWR is reserved for Wellesley share holders, while the rest will have to be happy with 4%? Hmm... I have to look into this.
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Old 05-10-2014, 05:14 PM   #55
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Yes, very inspiring. Does the green line represent the best 30 year scenario in FireCalc?
1975 I think.

Ha
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Old 05-10-2014, 05:38 PM   #56
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Great job! That green line is a tough competitor. By my calculation Wellesley's annual rate of return from 12/31/2005 to 12/31/2013 has been about 7.6%. Considering this includes about 3-4 years of very low bond returns - quite encouraging.
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Old 05-10-2014, 08:54 PM   #57
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Nice presentation Rewahoo. Our experiences were quite similar with a current portfolio value 6% above the starting one. Took SS at 64, earlier then planned. No regrets either. Now on vacation trip in the Utah canyon lands. 😊
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Old 05-10-2014, 09:16 PM   #58
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Thanks for updating your original post which I had not seen.

I am looking at retiring this year at 58 & I am going to be in a very similar position as you were starting out. I am looking to take SS at 62 also. (This drives many of the financial planner people I have talked to crazy). It's very comforting to see you prosper on a similar withdrawal rate glide slope I am planning on taking - and during a very tough market.

Thanks again for sharing!
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Old 05-11-2014, 08:56 AM   #59
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Thank you for sharing such good and useful info. I always read your posts for the info and humor.
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Old 05-11-2014, 09:02 AM   #60
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Thank you for sharing such good and useful info.
Happy to do it. I'm hoping seeing some real-world experiences (warts and all) will be educational, especially for those who suffer from chronic OMY symptoms.
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