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Old 01-02-2014, 07:36 AM   #41
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Our approach and strategy.

1. WGD (wide global diversification)
2. CMM (cost matters most)
3. KISS (keep it simple stupid)

We set our asset allocation to balance sleeping well (volatility risk) and eating well (inflation risk).
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AA = 60/35/5. Expected CAGR = 5.7%. GSD (5y) = 7.8%. USD inflation (10 y) = 1.8%. AWR = 3.0%. TER = 0.5%. Net Port Yield = 1.7%. Term = 36 yr. FI Duration = 4.9 yr. Portfolio survival probability = 86%.
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Old 01-02-2014, 10:17 AM   #42
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I retired in 2000 and up until 2008 had kept up with inflation despite withdrawing more than 4% of my portfolio each year. Since 2008 I have recovered in nominal dollars however in real dollars I have not even though I now have a pension and SS and withdraw 4% or less.

While I'm not happy about the above results, I'm not concerned as I have a fair amount of fluff in my portfolio. This example merely points out how difficult it is to recover from a major market downturn while continually making withdrawals.
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Old 01-02-2014, 11:01 AM   #43
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Hi Bikerdude, it looks like you had one of those unlucky retirement years in terms of financial history. Who would have guessed it would be like that in 2000 with all the upbeat stories of a new millennium?

We went through a great year in 2013. At least the news is not unduly rosy and expectations are much more realistic then 2000.
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Old 01-02-2014, 01:18 PM   #44
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I have experienced a bit of a decrease since retirement, around a 3% loss in spending power when inflation is accounted for. My wife is still working but spends quite a lot more than I do, mainly on consumer goods. Around 40% of what I spend is on travel. In the next 10 years I plan to go to all the places in the world I have always wanted to see, even if it takes half my portfolio to do it. I realize it is risky but for me the greater risk is to lose my health before I do everything on my bucket list. The travel I do is adventure type travel and keeps me in great physical condition. I take a few chances when traveling and sometimes go to dangerous countries if I want to do something there. Why not take some risk with your portfolio? After all, what is "old age" for most Americans, another game of bingo in the assisted living recreation room and then a slow death in the nursing home? What kind of "life" is that?
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Old 01-02-2014, 01:50 PM   #45
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Originally Posted by qxky27 View Post
I have experienced a bit of a decrease since retirement, around a 3% loss in spending power when inflation is accounted for. My wife is still working but spends quite a lot more than I do, mainly on consumer goods. Around 40% of what I spend is on travel. In the next 10 years I plan to go to all the places in the world I have always wanted to see, even if it takes half my portfolio to do it. I realize it is risky but for me the greater risk is to lose my health before I do everything on my bucket list. The travel I do is adventure type travel and keeps me in great physical condition. I take a few chances when traveling and sometimes go to dangerous countries if I want to do something there. Why not take some risk with your portfolio? After all, what is "old age" for most Americans, another game of bingo in the assisted living recreation room and then a slow death in the nursing home? What kind of "life" is that?
interesting viwpoint; but these extreme scenarios are known as straw men and are usually not very convincing to sophisticated readers.

Ha
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Old 01-04-2014, 05:44 PM   #46
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Interesting discussion and opinions. I think I fall in the expect to deplete my savings over time philosophy. The hard part is to get used to withdrawl mode vs investing mode. Not quite at withdrawl mode yet, but I think about retirement every day!

I agree completely with the best planning is to die the day you go broke. No plans at all to leave any legacy. Worked hard to get what I have and intend to use it for my benefit. Call it selfish, but since it is mine I can decide what to do with it. I donate a lot to charity and what I have is mostly a result of my hard work.
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Old 01-04-2014, 07:51 PM   #47
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I've been gone for more than 2 years and still ahead but had planned a significant reduction at the time I retired. Effectively I am $100,000 ahead of where my plan called for me to be. Dumb luck, to a degree, because of the stock market rise.

My positions are heavily in corporate bonds that were acquired at significant discount in 08 and 09 and are producing a combined >7% annual return (not calculating discount) and have long term maturities (so I feel comfortable taking more than 4%).
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Old 01-04-2014, 08:56 PM   #48
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I agree completely with the best planning is to die the day you go broke.
I have a feeling that if, as a frail old man, I were to check my balances and find them all to be zero, it might just kill me. That's not what you meant though is it?
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Old 01-05-2014, 06:11 AM   #49
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Remember - that retiree was not likely to be 100% invested in the S&P500 but also had a big chunk in fixed income which had some really good years much since 2000.

1.9% per year real return for S&P500 is not horrible. I think it was 4.68% per year nominal.

I retired in 1999/2000 and my portfolio is up 3% in real terms since I retired.
A well time moved from tech into bonds in Jan 2000, helped a lot. A move from bonds from 2009 through 2013 into stocks sure didn't hurt.

Also as we have been discovering there were better choices for both equities and fixed income than benchmarks/calculations we have been using.
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Old 01-05-2014, 08:12 AM   #50
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I have a feeling that if, as a frail old man, I were to check my balances and find them all to be zero, it might just kill me. That's not what you meant though is it?
I think that, before that Tom, you would take out a reverse mortgage and live on the combination of payments including social security. Once and always an LBYMer!
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Old 01-05-2014, 08:30 AM   #51
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I retired in 1999/2000 and my portfolio is up 3% in real terms since I retired. A well time moved from tech into bonds in Jan 2000, helped a lot. A move from bonds from 2009 through 2013 into stocks sure didn't hurt. Also as we have been discovering there were better choices for both equities and fixed income than benchmarks/calculations we have been using.
In another thread you were championing Firecalc as a retirement tool which I stated was better for entertainment. Perhaps I'm not using the "timing" function of Firecalc properly.
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