How long to plan for?

[Brat]

Look at the bottom of this month's commentary for links to llife expectancy calculators.

http://www.fundalarm.com/hilights.htm

[Martha]

Well that was kind of fun. I always was resistant to trying these kind of calculators because my parents died young. I tried a couple and came out with a pretty hefty life expectancy. Maybe I have to work a few more years.

Lessons to learn:

-floss your teeth to reduce risks of heart attack.
-women who have children after 40 (without drugs) live longer

I suppose 49 is too late.

[Jane]

Another thing I learned from taking that quiz is that taking aspirin daily may decrease the risk of heart attack. The quiz recommends you take aspirin everyday unless you have a condition that prevent you from doing so.

Weird. I always thought that if you have a risk of heart disease you may want to take aspirin daily but if you are healthy, you probably shouldn't.

Jane

[Michael]

Aspirin increases the risk of hemorrhagic stroke, so you should ask your doctor before taking it.

[Hyperborea]

I think that once you plan for a retirement time of about 50-60 years that you are close to the "steady-state" infinite withdrawal rate (using historical data and assuming no great collapse, alien invasion, religious dictatorsip, etc. yadda, yadda, yadda). *That's the time frame I'm using - I'm going to be mid-40's when I retire with a wife in her early 40's and I've got a history of long lived ancestors. *So, 50-60 years is a real possibility and as medical technology advances perhaps even a real likelihood.

As for the aspirin, I thought that it was for males over 40 and only a half an aspirin or a children's aspirin per day.

[Jane]

Quote:

Aspirin increases the risk of hemorrhagic stroke, so you should ask your doctor before taking it.

Good to know.

Hyper: I entered 30 and female and in the quiz result there was a blurb about aspirin (which confused me too). Maybe I did something wrong.

No matter though I am not about to take aspirin daily. I try not take any drug unless I really, really need it.

Jane

[oldcrowcall]

what if you don't have any teeth?

[ESRBob]

Quote:

I think that once you plan for a retirement time of about 50-60 years that you are close to the "steady-state" infinite withdrawal rate .

Hyper,
I agree, and unfortunately little of the SWR literature ever wants to posit a 'perpetual' SWR based on limited history. Every study wants to give you a 20- or 30- or 40-year max.

I've sought out a different approach to SWR which is done by a researcher at Zunna, named Keith Marbach. His work has generally been applied to foundations who need to operate and withdraw in perpetuity. Keith's unique approach is to look for the percent likelihood that the Portfolio will not decline in real terms under the SWR regimen, and aims for 90%. Coincidentally (?) the 10% 'failures' in these studies seem to result in a real value of the Portfolio no less than 90% of the original (at least in the scenarios I was looking at).

http://www.zunna.com/Research/LCBT4600InfAdj.pdf

If we were a regular retirement Board, I could see us accepting the regular 20-, 30-, 40- year methodologies. But as an Early Retirement Board, (with all the facts on how we can live to be 100), I think we need something better and longer, in spite of the difficulty with straight historical series on these long cycles. Anyone found any ideas/methodologies/studies they like a lot?

My only though on aspirin is that I was always told it would burn holes in the lining of your stomach, so that, unpleasant as it may sound, you should crunch the thing in your teeth just prior to swallowing to give it a better dispersion. Don't ever take the things myself, anymore, though.

ESRBob

[Bob_Smith]

I have ball-parked the early 90's for my exit and feel that's close enough for $ planning. And my assets are only part of the equation - I also plan to have SS and a modest pension - so I doubt I'll ever be living under a bridge. If I get desperate enough, I can always load up on pain-killers and go take a stroll on the ice when I'm in my 90's. I have a paid up LTC policy, so a broken hip should yield a warm bed and three squares.

Edit: I completed all four calculators and none of them gives me 40 years. I got 73, 74.8, 80, and 85.

[Jarhead*]

[quote]I have ball-parked the early 90's for my exit and feel that's close enough for $ planning. And my assets are only part of the equation - I also plan to have SS and a modest pension - so I doubt I'll ever be living under a bridge. If I get desperate enough, I can always load up on pain-killers and go take a stroll on the ice when I'm in my 90's. I have a paid up LTC policy, so a broken hip should yield a warm bed and three squares.

Bob: When you're taking a stroll on the ice, don't count on me for rescue work.
I remember about 20 years ago while I was in my late 40's, my wife and I took a test on TV, and she came out alright, but I am supposed to be dead now.

Every day is a bonus now as far as I am concerned, and even though my wife keeps telling me that I am going to outlive her, I know it's bull----.
I have already told my kids that if by some strange stroke of fate, I actually live longer than my wife, they probably should come up to my property and roll me down the canyon, because I would make their life unbearable.
But in the mean time, I try to spend my "bonus" time playing golf and fly fishing as much as possible
Aint life great?
Regards, Jarhead

I have done these calculators before and they all put me around age 95. But, I think we are missing a few points here.

Point 1

I heard an excerpt from MPR today that was discussing life expectancy back in the days of Washington, Jefferson, Hamilton etc. - The guest pointed out that if you were over 21, white and fairly well to do that you had a great chance to a fairly ripe old age - 80-95.

Life expectancy has been increased in modern days by Safety Laws in the Workplace, less infant mortality, *etc. etc. - People did live to their 90's 200 years ago! - The average however was much less. I have heard people here that we should plan on living to age 120-130! - I doubt it. Yes we have increased our Average
lifespans, but this speaker pointed out we really are not living longer. The Maximums have not changed at all.

Point 2

I have friends of mine that are approching age 80. Most have enough health issues that money is not! - It's not real pretty. - Face it - If you have not done something by age 80, it's probably not going to get done, and if it does get done, it's not going to be as much fun as it would have been 25 years earlier! - Remember how excited you were Christmas morning when you were 9 years old? - How about this Christmas? If you think you are going to be driving around in a Convertable chasing Blondes at age 90, you are mostly deluding yourself.

Point 3

We have not figured out how to die properly in this society. If you are over age 80 and require large amounts of money for LTC, prescription drugs or hospital stays - Are you having fun? - There are smarter and easier alternatives than waiting for a technological barrier to call it quits. Bottom line - If it takes a lot more money to stay alive after age 80, do you want to be alive?

[GDH]

Hooray! I'm going to live to be 83, or 69, or 77, or 65.5

Or maybe I'll get run over by a truck tomorrow.

[REWahoo]

Quote:

If you think you are going to be driving around in a Convertable chasing Blondes at age 90, you are mostly deluding yourself.

"Mostly"? Probably so. But I'm going to hang on to that little bit that isn't delusional.

Bet I can get one of my grandson's to drive for me!

REW

[retire@40]

Quote:

If I get desperate enough, I can always load up on pain-killers and go take a stroll on the ice when I'm in my 90's.

My plan is to be killed at age 95 by a jealous husband.

[gwix98]

As I have told my kids....enjoy each and every day, and try to do something you enjoy each day.
Working in the health care field for 20 years, you see
a lot of people who don't even get to make it to an
ER situation.
If there is something you want to do in your life, try to
do it before you"retire", as none of us is promised a
tomorrow, much less any retirement years.

gwix

[MJ]

Darn, I can't afford to live til the ripe or should I say, rotting old age of 103.9 years.
With a long lifespan of 90+, maybe it pays to begin collecting SS payments at 66 or even 70.
MJ

[Michael]

Quote:

With a long lifespan of 90+, maybe it pays to begin collecting SS payments at 66 or even 70.

I don't know how long I will live, but I am thinking of waiting until SS maxes out at 70 before collecting. I am thinking of SS as sort of an emergency back up plan in case all else fails.

[mark]

With me and my wife both having grandparents who lived into their 90's, if I plan on retiring at 62 with SS, pension and investments, I have a 30 year minimum to worry about.

[intercst]

Quote:

Hyper, I agree, and unfortunately little of the SWR literature ever wants to posit a 'perpetual' SWR based on limited history. *Every study wants to give you a 20- or 30- or 40-year max. I've sought out a different approach to SWR which is done by a researcher at Zunna, named Keith Marbach. *His work has generally been applied to foundations who need to operate and withdraw in perpetuity. *Keith's unique approach is to look for the percent likelihood that the Portfolio will not decline in real terms under the SWR regimen, and aims for 90%. *Coincidentally (?) the 10% 'failures' in these studies seem to result in a real value of the Portfolio no less than 90% of the original (at least in the scenarios I was looking at). http://www.zunna.com/Research/LCBT4600InfAdj.pdf If we were a regular retirement Board, I could see us accepting the regular 20-, 30-, 40- year methodologies. *But as an Early Retirement Board, (with all the facts on how we can live to be 100), I think we need something better and longer, in spite of the difficulty with straight historical series on these long cycles. *Anyone found any ideas/methodologies/studies *they like a lot? My only though on aspirin is that I was always told it would burn holes in the lining of your stomach, so that, unpleasant as it may sound, you should crunch the thing in your teeth just prior to swallowing to give it a better dispersion. *Don't ever take the things myself, anymore, though. ESRBob

Historically, the worst time to retire was Sept 1929 -- the market top just before the October 1929 Crash and the Great Depression. For 60% S&P500 portfolio you get a 3.26% SWR for 50 years and 3.11% for the 60 year period ending in Sept 1989.

intercst

[amt]

Quote:

Hyper, I agree, and unfortunately little of the SWR literature ever wants to posit a 'perpetual' SWR based on limited history. *Every study wants to give you a 20- or 30- or 40-year max. I've sought out a different approach to SWR which is done by a researcher at Zunna, named Keith Marbach. *His work has generally been applied to foundations who need to operate and withdraw in perpetuity. *Keith's unique approach is to look for the percent likelihood that the Portfolio will not decline in real terms under the SWR regimen, and aims for 90%. *Coincidentally (?) the 10% 'failures' in these studies seem to result in a real value of the Portfolio no less than 90% of the original (at least in the scenarios I was looking at). http://www.zunna.com/Research/LCBT4600InfAdj.pdf If we were a regular retirement Board, I could see us accepting the regular 20-, 30-, 40- year methodologies. *But as an Early Retirement Board, (with all the facts on how we can live to be 100), I think we need something better and longer, in spite of the difficulty with straight historical series on these long cycles. *Anyone found any ideas/methodologies/studies *they like a lot? ESRBob

My solution to plan for perpetuality is to use intercst's RE spreadsheet, and adjust the SWR so that at the end of the worst 30-year period, you would still have the initial capital, inflation-adjusted. This gotta be one of the most conservative ways. It gives SWR of about 2.75%.