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Old 10-06-2011, 08:26 AM   #21
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Here is another article (this month) by Pfau that focuses on accumulation for retirement.

Getting on Track for a Sustainable Retirement: A Reality Check on Savings and Work
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Old 10-06-2011, 09:49 AM   #22
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pb4uski,

There are so many unknown variables in the mix that you really need to decide when the time is right and then live with the risk. William Bernstein talks about some of this in his Investor's Manifesto book.

Wars, revolutions, coups, major disasters have reguarly swept the world. We have one of the few financial markets in the world with over a hundred years of unbroken history. Think of the people that lost their wealth and maybe their lives in the Russian Revolution, Nazi Germany, French Revolution, etc.

People talk about 2008 as a "black swan" but it's not. That type of market collapse is normal or, at least, seems to happen every so often. A true "black swan" would be something like nationalization of American industries, cancellation of all debt, losing a war, etc.

Bottom line -- you have to buy your ticket and take your chances. Don't worry. You won't get out of this life alive anyway.
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Old 10-06-2011, 10:54 AM   #23
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Here is some historical perspective on the recent stock market declines :
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Old 10-06-2011, 11:20 AM   #24
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We'll be at 8% WR for another couple of years and then start tapering down to 1% as college costs and last DS disappear, other income streams come online, and the mortgage winds down. If DW actually retires soon. We'll spend the majority of that time in the 3% to 4% range. Until then I try to be careful to raise cash early for near-term expenses and let DW know she can w*rk as long as she feels like.
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Old 10-06-2011, 11:30 AM   #25
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A few mitigating ideas:
1) We've already been through some big declines including the last 2 months which were quite bad historically. So looking at your portfolio right now (assuming a healthy equity percentage), you should not assume a 1966 scenario going forward. I think that is adding too many bad periods together. No guarantees of course.

2) Adding some international (maybe not right now though) and emerging markets could help in the growth area. I'm talking about broad international + EM to really spread the risk.

3) We may well have low real rate periods going forward. My own studies indicate one could have achieved modest real yields over the 1954 to 1971 period even though 5yr Treasuries yields went up by around 3.7%.

4) If we are heading into a rising rate period (and rising taxes) then deferring Social Security until you really need it (to get the max benefits) might be a good idea for some.
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Old 10-06-2011, 01:12 PM   #26
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4) If we are heading into a rising rate period (and rising taxes) then deferring Social Security until you really need it (to get the max benefits) might be a good idea for some.
If you don't "need" the cash flow, it benefits almost every healthy individual to defer to age 70. It's the cheapest annuity you can buy especially at these low interest rates. Plus, it's backed by the US government which I trust more than a cash flow promised by an insurance company.

For high earning males married to low earning females, it's the best way to increase to payout for waiting.
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Old 10-07-2011, 07:02 AM   #27
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Here is some historical perspective on the recent stock market declines :
I think if you adjusted the chart for inflation it would make it a more linear increase.
TJ
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Old 10-07-2011, 08:06 AM   #28
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If you don't "need" the cash flow, it benefits almost every healthy individual to defer to age 70. It's the cheapest annuity you can buy especially at these low interest rates. Plus, it's backed by the US government which I trust more than a cash flow promised by an insurance company.

For high earning males married to low earning females, it's the best way to increase to payout for waiting.
yep.
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Old 10-07-2011, 09:30 AM   #29
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I think if you adjusted the chart for inflation it would make it a more linear increase.
TJ
I agree. I would have liked one that corrected for inflation and dividends, but could not find one covering a long time period (in the 1 minute I searched).
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