how about 14% SWR

[CyclingInvestor]

Experts say retirees can spend about four percent of their assets each year.
But more than a-third of respondents thought retirees could spend up to 14
percent a year.

http://news.moneycentral.msn.com/provider/providerarticle.asp?feed=AP&Date=20060515&ID=5722022

 

[maddythebeagle]

Isnt that what credit cards are for : To bad JG isnt here anymore to share his side of the story.

 

[Dawg52]

Cool! It's steak and lobster every night for me.  8)

 

[yakers]

Fourteen percent, no problem. Just pick the stocks that go up.

 

[brewer12345]

Fourteen percent, no problem. Just pick the stocks that go up.

And gold, gold!, GOLD!!!!!!!!!!!!

 

[doushioukanaa]

Experts say retirees can spend about four percent of their assets each year.
But more than a-third of respondents thought retirees could spend up to 14
percent a year.

http://news.moneycentral.msn.com/provider/providerarticle.asp?feed=AP&Date=20060515&ID=5722022

My read of the article says that 28% of respondents (who are not experts) thought retirees could spend 10% or more of their retirement per year.  11% of were delusional in thinking they could do 15% or more.  A very large chunk (40%) had no idea.

Here is the excerpt -

When asked what percentage of their nest eggs they could safely withdraw each year in retirement, study participants responded:


Less than 5% – 10%
5% to 9% – 19%
10% to 14% – 17%
15% to 24% – 6%
25% to 49% – 2%
50% or more – 3%
Don’t know – 40%

 

[cj]

14% - maybe if you're 90.

 

[wabmester]

14% - maybe if you're 90.

And plan to die by 97.

 

[lazygood4nothinbum]

before discovering this forum and not knowing much about inflation effects, i thought withdrawal would be 6%. a few different scenarios on firecalc shows me safe at 4.76 to 5.11%. but i'm not a spender and could easily live on much less than 4%.

fortunately i found you guys just months after quitting.

 

[modlair]

before discovering this forum and not knowing much about inflation effects, i thought withdrawal would be 6%. a few different scenarios on firecalc shows me safe at 4.76 to 5.11%. but i'm not a spender and could easily live on much less than 4%.

I confess I'm having a lot of trouble getting the new firecalc to come within even 0.5% SWR of the old firecalc and I can't figure out why.

There is a lot of talk about 4% and it's gotten embedded in psyches, but the NORM is very likely to be people who will get at least some Social Security and that reality drives a 30 yr number well above 4%.

 

[lazygood4nothinbum]

drives a 30 yr number well above 4%.

i got the 5.11% when i plugged in future income from a reverse mortgage later in life. likely not something i'll spend, was just curious to see how that would effect spending if i wanted it.

 

[retire@40]

There is a lot of talk about 4% and it's gotten embedded in psyches, but the NORM is very likely to be people who will get at least some Social Security and that reality drives a 30 yr number well above 4%.

Take out from the equation the Depression in 1929 and the sideways market from the late 60's to 70's, and you'll have a 5% or better SWR.  Or give yourself a 95% success rate and you might get the same results.

I would rather keep those periods in my equation just in case.

 

[audreyh1]

I think a lot of people "assume" that their retirement portfolios can be safely invested to yield 8 to 10% per year, and they can withdraw all of that. No thought at all about inflation.

The American public is very poorly informed. I predict interviews of shock and horror on CNN and other stations when people finally realize what it takes! (maybe about 10 years from now). Just like today's shock about gas prices and sheer refusal to believe that gas prices will naturally go up.

Audrey

 

[youbet]

I think a lot of people "assume" that their retirement portfolios can be safely invested to yield 8 to 10% per year, and they can withdraw all of that.  No thought at all about inflation.
Audrey

Yep. The greatest and most consistent misunderstanding I hear from acquaintances regarding retirement funding is that if you don't touch the principal, just spend the earnings, you'll be OK forever.

 

[yakers]

Yep. The greatest and most consistent misunderstanding I hear from acquaintances regarding retirement funding is that if you don't touch the principal, just spend the earnings, you'll be OK forever.

Hey, if someone had diversified dividend paying stocks and can live on the dividends (maybe 2-4% of the portfolio) then they should be able to go on just about forever. Gotta have a big portfolio to do that.

 

[modlair]

I confess I'm having a lot of trouble getting the new firecalc to come within even 0.5% SWR of the old firecalc and I can't figure out why.

There is a lot of talk about 4% and it's gotten embedded in psyches, but the NORM is very likely to be people who will get at least some Social Security and that reality drives a 30 yr number well above 4%.

Take out from the equation the Depression in 1929 and the sideways market from the late 60's to 70's, and you'll have a 5% or better SWR. Or give yourself a 95% success rate and you might get the same results.

Yeah, that would be data mining, though. It's not fair to do that.

I can't get it to yield the old firecalc numbers with the same inputs. There is a blurb that says the most recent 30 yrs is not considered (or something like that) in the new one, and that would maybe explain it since it includes the crush of the early 70's but excludes the boom of the 80's and 90's.

Most curious though. I'm doing pretty normal stuff. Lump sum at the start, an annual withdraw with the default inflation increase per year and the result is consistently 0.5% worse than the old one.

Shrug.

 

[Nords]

Hey, if someone had diversified dividend paying stocks and can live on the dividends (maybe 2-4% of the portfolio) then they should be able to go on just about forever. Gotta have a big portfolio to do that.

Works great as long as the dividends rise with one's expenses over the next 5-6-7-8 decades.

But according to anecdotal financial advisor's reports, if we're in our eighties then it won't matter if the dividends stay flat.

I think it'll all work out fine. People will believe Ken Dychtwald's crap about not wanting to rot in retirement, so they'll be quite happy to keep working for food fulfillment. And their payroll taxes will bail out both Social Security & Medicare...

 

[Cb]

Most curious though.  I'm doing pretty normal stuff.  Lump sum at the start, an annual withdraw with the default inflation increase per year and the result is consistently 0.5% worse than the old one. 

I reported the same thing as I exercised the new version. I can understand saomewhat different results between the two when you target SWR's of less than 100% (because the new version drops the incomplete periods), but it seems to me like the results from the two versions ought to be a bit closer when modeling 100% safe scenarios.

Cb

 

[cute fuzzy bunny]

It also works to just take the dividends if the NAV on the fund or the price on the stocks rises at least at the rate of inflation...the dividend rate doesnt have to rise...

 

[youbet]

CFB,

The problem is that that doesn't always happen.  The worse time to start retirement in history, the early 70's, saw inflation skyrocket while NAV's actually dropped year after year.  Firecalc tests that, no problem.  But Firecalc assumes you stay at the same withdrawal rate even during fabulous years when you'd be tempted to harvest much more thereby building up your portfolio to help carry through such tough times.

 

[modlair]

RE: new firecalc

Most curious though. I'm doing pretty normal stuff. Lump sum at the start, an annual withdraw with the default inflation increase per year and the result is consistently 0.5% worse than the old one.

I reported the same thing as I exercised the new version. I can understand saomewhat different results between the two when you target SWR's of less than 100% (because the new version drops the incomplete periods), but it seems to me like the results from the two versions ought to be a bit closer when modeling 100% safe scenarios.

Well, I wasn't specifying 100%, but I'm relieved to hear someone else is seeing the same effect.

I think the issue may be that it's not so much there are incomplete periods that are ignored . . . it's that the periods ignored were the 80's and 90's that were so strong. In terms of a historical profile, this would seem to mildly data mine negative years years/decades from history. But I'm only speculating as to the cause and the guy doing the work has thought about this stuff carefully. It would just be nice to have a mode available to precisely reproduce the old result, so that when results differ one knows exactly why.

 

[MJ]

14% - maybe if you're 90.

If inflation and medical expenses continue to spiral, my forcasted swr on my reduced budget will be at;

85 8%
90 10%
95 17%
99 72%

At 100, i'll have to settle for cheap dog food and a comfortable cardboard box, if I can find some.

I am looking forward to a comfortable retirement in my older years.

 

[astromeria]

I know several people who retired on too little, and yet they all manage. They mostly got part-time jobs and seem content:

--Former mechanical engineer, now a barista at Starbucks after being a stock-boy at a Piggly Wiggly supermarket. His wife does some sort of office work.
--Former small businessman started a lawn-mowing service.
--Former insurance VP went into customer service at an Edward-Jones brokerage (just retired for the second time as he's 18 months from Medicare and can now COBRA his health insurance) after being an elected town official, and his wife temped
--Former paralegal now does clerical work for a big church
--Former programmer does occasional computer contracts (upgrading a copmpany's software and such)

The people who tend to sink when they retire on too little are those who can't work due to less than good health or perhaps not atttractive/thin/outgoing/smiley enough to be hired to do a public-interfacing job--and have no spouse/inheritance to pick up the slack.

 

[Nords]

I know several people who retired on too little, and yet they all manage. They mostly got part-time jobs and seem content:

I'm just glad that I'm not depending on my professional longboarder's skills.