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Re: new retire early home page article
Old 01-04-2005, 07:33 PM   #21
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Re: new retire early home page article

oops - started *****. My sincere apologies to everyone. I left the board for a few months last time he got started, and am sorry if this causes others to do the same. Mea Culpa.


Also did anyone actually read the end of the article:
Quote:
Should I be using a 2% retirement withdrawal?

Probably not. You'll find few reputable analysts suggesting that a retiree limit his or her withdrawals to 2% from an adequately diversifed retirement portfolio. Indeed, few Americans could amass enough capital to support a 2% withdrawal even if they worked well into their 70's.

William J. Bernstein (author of The Efficient Asset Allocator and The Four Pillars) points out that aiming for a portfolio survivablity of more than 80% (based on Monte Carlo analysis) really doesn't improve your overall safety. In his article The Retirement Calculator from Hell, Part III: Eat, Drink, and Be Merry Bernstein says this:

"The historically na´ve investor (or academic) might consider reducing his monthly withdrawals to a very low level to maximize his chances of success. But history teaches us that depriving ourselves to boost our 40-year success probability much beyond 80% is a fool's errand, since all you are doing is increasing the probability of failure for political, economic, and military reasons relative to the failure of banal financial planning."
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Re: new retire early home page article
Old 01-05-2005, 02:53 AM   #22
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Re: new retire early home page article

As a matter of fact, when people ask me if there is any downside to retiring early, I refer them to your robust collection of ravings on "the 2% SWR" as an example of the demons that can possess those who attempt early retirement with a half-a$$ plan and a limited understanding of arithmetic.

It is a fact that you have said such things on numerous occasions. You should stop. You demean yourself by putting forward such arguments. You also demean the board community that is exposed to them when you put them forward.

re: Bernstein This question has been answered for ***** so many times on the various retire early boards, that it only confirms "Hoco-mania"

When I have been asked to provide cites to my quotations of Bernstein, I have done so. You have claimed that I have "misquoted" Bernstein. You have never given a single example of any wording that I misquoted. You have never given any reasoned explanation of why Bernstein says that the SWR at the top of the bubble was 2 percent if, as you say, anyone who thinks that it can ever go below 4 percent is "mentally ill."

***** continues to be unable to differentiate between future stock market returns (which we don't know) and historical stock market returns (which we can calculate to three or more significant figures of precision.)

I asked for an explanation of why Bernstein says that your numbers are "highly misleading," intercst. Please try to forget about ***** for the time-being. Please tell us why Bernstein says that your numbers are "highly misleading" and please tell us why Bernstein says that anyone using your numbers to plan a retirement today would be well-advised to "forgeddaboutit."
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Re: new retire early home page article
Old 01-05-2005, 03:07 AM   #23
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Re: new retire early home page article

Depends on the pattern of returns over the 30-year pay out period. It [the "it" being referred to here is the failure of a plan with a withdrawal rate of greater than 2 percent] could happen when combined with a 3.5% real return (which is much less than the historical average.) "

This sentence sums up the entire debate in a nutshell. Intercst is acknowledging here that a high-stock portfolio with a withdrawal rate greater than 2 percent may fail if valuation levels do indeed continue to affect long-term returns (as they always have in the past and as Bernstein says they must as a matter of "mathematical certainty"). It is not correct to say that such plans must fail. It depends on what sort of returns sequence pops up, and we don't know today what sort of returns sequences are going to pop up in the future.

What we know is that it was not "100 percent" safe to to take a 4 percent withdrawal from a high-stock portfolio for a retirement beginning at the top of the bubble. Intercst was telling community members in January 2000 that a 4 percent take-out was "100 percent safe." There are a number of posts in the archives in which community members said that, since 4 percent was 100 percent safe, they thought it was safe enough to go with 5 percent. JWR1945's research shows that, in January 2000, the SWR for stocks was 1.6 percent and the Unsafe Withdrawal Rate (the take-out number that has only a 5 percent chance of working) was 4.8.

The REHP study has put a number of retirements at great risk of going bust. It was an honest mistake back in January 2000. It is not an honest mistake today. Today, we know about Bernstein's findings, we know about raddr's findings, and we know about JWR1945's findings. To not allow community members to hear accurate reports on what the historical data says today is wrong.

That's why Bernstein doesn't recommend that anyone actually limit their withdrawals to 2%.

I have no objection to anyone taking a 4 percent withdrawal in their plan so long as they are informed as to what the historical data says re SWRs. On this question, Bernstein and I are in complete agreement.
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Re: new retire early home page article
Old 01-05-2005, 03:09 AM   #24
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Re: new retire early home page article

My sincere apologies to everyone.

You have nothing to apologize for, wzd. If the community had no concerns re this matter, it would not put up questions and comments about it. If the community still has unasnwered questions, it will continue to pursue them by putting posts to the board. That's as it should be.
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Re: new retire early home page article
Old 01-05-2005, 09:41 AM   #25
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Re: new retire early home page article

Just my 2 cents worth...

All this debate over over SWRs is a waste of perfectly good brain power IMHO. OK, there is no guaranteed SWR. Never has been , never will be. There is no way to tell who is right and who is wrong, only history will tell us that. These are all opinions {by intelligent people} who have worked hard to come up with a method to predict the future based on the past.

I, for one, like using the 4% withdrawal rate as a guideline; however, I will adjust my investments, spending, etc. based on my performance as measured by my change in net worth from year to year. I am not going to cheat myself now because of some potential future catastrophic event that may change (reduce) my withdrawal rate. I will deal with that IF it happens.

Anybody that retires on a shoestring budget, at whatever age, based on a 4%, or 3% or 2% for that matter, withdrawal rate has to know that there is a chance that they may actually have to go back to work at some point in the future if things go wrong, God forbid.
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Re: new retire early home page article
Old 01-05-2005, 10:16 AM   #26
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Re: new retire early home page article

Quote:
. . .

I, for one, like using the 4% withdrawal rate as a guideline; however, I will adjust my investments, spending, etc. based on my performance as measured by my change in net worth from year to year. I am not going to cheat myself now because of some potential future catastrophic event that may change (reduce) my withdrawal rate. I will deal with that IF it happens.
. . .
Sounds pretty reasonable to me. It seems like most ERs come to a similar conclusion. It is an important conclusion and probably has to be discussed repeatedly so that newcomers who are just starting down the road to ER can be exposed to the issue.
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Re: new retire early home page article
Old 01-05-2005, 10:56 AM   #27
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Re: new retire early home page article

The two most recent posts strike me as being conciliatory in tone. That makes me think that it might not be a bad time for me to put forward an idea that I have been thinking over for some time that might help us diminish the friction that has come to dominate many SWR threads for several years now.

Our problem is that we have some posters who think that the conventional SWR methodology is the only way to go, some who think that the data-based SWR methodology is the only way to go, and some (perhaps most) whose viewpoints are somewhere in the middle of these two extremes. On some threads, it is nice to have input from the entire spectrum of SWR viewpoints. On some others, however, the poster starting the thread would prefer to have input only from other posters in the same SWR "camp." In those cases, friction results when a poster from the other camp ventures forth with a statement that is counter to the core assumptions of some others participating on the thread.

My suggestion is that posters starting an SWR thread indicate in the title of the thread what sort of feedback they are seeking. Option One would be not to specify a preference for one methodology or the other. On those threads, input from both advocates of the conventional methodology and from advocates of the data-based methodology would be welcomed. Option Two would be to put the words "Conventional SWR Thread:" at the beginning of the title of the thread, letting proponents of the data-based methodology know that this is not a thread where questioning of the premises of the conventional methodology studies is appropriate. Option Three would be to put the words "Data-Based SWR Thread:" at the beginning of the title of the thread, letting proponents of the conventional methodology know that this is not a thread where questioning of the premises of the data-based methodology is appropriate.

Any poster could participate on any thread, under this proposal. For example, I could participate on threads marked "Conventional Methodology Thread," and intercst could participate on threads marked "Data-Based Methodology Thread." However, it would not be appropriate for me to challenge the conventional methodology on conventional methodology threads, and it would not be appropriate for intercst to challenge the data-based methodology on data-based methodology threads.

Any thoughts?
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Re: new retire early home page article
Old 01-05-2005, 11:08 AM   #28
 
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Re: new retire early home page article

Nope!
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Re: new retire early home page article
Old 01-05-2005, 12:28 PM   #29
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Re: new retire early home page article

Hmmmm...It might be time for one of Cut-throats fish pictures!
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Re: new retire early home page article
Old 01-05-2005, 12:36 PM   #30
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Re: new retire early home page article

Quote:
Hmmmm...It might be time for one of Cut-throats fish pictures!
Anyone got a folding kayak story? *
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Re: new retire early home page article
Old 01-05-2005, 12:39 PM   #31
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Re: new retire early home page article

Quote:
Any thoughts?
The advocates of the conventional methodology are unable to defend it.

That it why they interfere with any reasoned discussion.

Have fun.

John R.
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Re: new retire early home page article
Old 01-05-2005, 12:42 PM   #32
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Re: new retire early home page article

Oh, no! Not the folding kayaks! Please, I'll do anything. Just don't go with the folding kayaks again!

Beachbums had a good idea. We could go with a fish picture. Just promise me we won't do the folding kayaks again! Is there no mercy in this cold world? AAAHHH!
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Re: new retire early home page article
Old 01-05-2005, 12:48 PM   #33
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Re: new retire early home page article

The advocates of the conventional methodology are unable to defend it.

Yeah, yeah. That's old news.

The question on the table at the moment is--Will it be folding kayak stories or fish pictures? I vote enthusiastically in favor of fish pictures.

Are you out there, Cut-Throat? We need a fish picture. Any old fish picture will do. But we need it fast.
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Re: new retire early home page article
Old 01-05-2005, 12:57 PM   #34
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Re: new retire early home page article

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Re: new retire early home page article
Old 01-05-2005, 01:02 PM   #35
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Re: new retire early home page article

That'll work
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Re: new retire early home page article
Old 01-05-2005, 01:05 PM   #36
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Re: new retire early home page article

Thank you for having a heart, SalaryGuru. I always knew that you were made of the right stuff.
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Re: new retire early home page article
Old 01-05-2005, 02:03 PM   #37
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Re: new retire early home page article

Do you really expect this community to believe that you caught that monster?

Remember the rules--no deception on SWR threads!
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Re: new retire early home page article
Old 01-05-2005, 02:11 PM   #38
 
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Re: new retire early home page article

Nice fish!

JG
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Re: new retire early home page article
Old 01-05-2005, 02:31 PM   #39
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Re: new retire early home page article

Wow! Cutthroat, that thing is almost as big as you are! What is it? And what did you do with it?
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Re: new retire early home page article
Old 01-05-2005, 03:17 PM   #40
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Re: new retire early home page article

Holy crap! Thanks CT
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