Originally Posted by tomz
Plugging numbers into a retirement calculator may give you a false sense of security. In retirement, you still have to make the decisions about rebalancing and allocations when the market is down. If you guess wrong, your 100% success rate can drop very fast.
I think the point is not to "guess about the decisions about rebalancing and allocations"
(that is market timing !) but rather to have hard and fast rules and stick to them.
The most basic rule is to maintain allocations with periodic rebalancing. The buckets
idea requires more guessing, unless rules are given and shown to back-test better;
but so far that hasn't happened, and I'm starting to lean away from buckets.
But you make a great point, which is that massive amounts of research is done (and
calculator tools written) to determine a good SWR, but not that much is said about
how to insure that you manage the draw-down so that this WR really IS safe.
One thing that I rarely see addressed is the issue of growth vs value investments
in a retiree's portfolio. Total return is total return. But people seem to imply it's
a good thing if the yield part of total return covers your WR and the growth part
covers inflation. But, at least recently, value funds seem to dramatically out-perform
growth funds, so, since total return is all that matters, why have growth funds ?
Is this outperforming of value over grwoth just a recent phenomenon, or what ?