Otar: Unveiling the Retirement Myth

[Moemg]

I sell on ebay so I deal with paypal a lot and in his defense Paypal sometimes has some weird glitches . Bosco , I am sorry you had problems but I have to say for $3.99 it was a great read . Heck it was a great read for $15.99 and I am cheap .

 

[RonBoyd]

Paypal sometimes has some weird glitches ./QUOTE]

I'll say, About five years ago, I tried PayPal... well in the sense that I bought a $7.95 item I needed from someone who only had Paypal as a pay option. Paypal deducted $985 from my Checking Account. For two weeks PayPal blamed me for everything from Stupidity to giving my Passward out.

Anyway, about two weeks later they said they had caught the culprit and refunded my money (well, actually my bank had held up the transaction). No further explanation, nor an apology. I asked PayPal to totally delete any records they had of me since I would never, ever have use for them again. They [-]agreed [/-]promised to.

Well, wouldn't you know. Every year I get an e-mail stating their "Privacy Policy." The conversation always goes as it did this year:

(Recognize that the only way to contact them is a silly dialog form)

ME:

customer subject: Why am I still in your records?

customer message: Additional Information: 'I received your "Annual Privacy Policy Notice." Several years ago I asked (begged) you to remove me from your records. You assured me then that you would. Why am I being sent e-mail messages from you?

Let me state my position one more time: Other than that one disasterous time, I have never used your service and never, ever will again.'

THEM:

Dear Ronald Boyd,

Thank you for inquiring as to how to restore access to your account.

PayPal is constantly working to ensure security by regularly screening
the accounts in our system. We recently reviewed your account and need
more information to help us provide you with secure service. Until we
can collect this information, your access to sensitive account features
will be limited.

To return your account to regular standing, please complete the
checklist items indicated when you login to your account and click on
the link provided on the "Account Overview" page.

 

[Darryl]

Bosco, I think you were more than reasonable and that his response was out of line. It lowers my (previously neutral) opinion of him. He is obviously taking on more than he can handle and apparently he didn't have the foresight to realize that handling customer service all by himself might be way over his head. His poor judgment in this regard says nothing good at all about his judgment in general.

W2R agreed author doesn't seem very bright.

Bosco thanks for posting your experience. Based on your experience I will not give this guy a nickel either. I took one of them there nationally recognized problem solving tests about ten years ago and scored in the top 2% (wunderlich??), maybe I'll be better off at the library too.

I saw a response about cultures. I am in Canada at least once a year and find the retail staff quite wonderful and I would argue better than my US experience of course as a vacationer in a good mood I may be biased.

I took several hundred emails last year from customers on quality issues I think I sent fewer than 4 emails in response the rest were handled with a phone call. Any idiot knows you can screw up an email response.

I am additionally empathetic with your situation as a top notch techie I know recommended a software security package a few months ago and after paying for it with a credit card, with paypal and I might have even tried a bank draft. They all got rejected so I tried to renew with my current provider and that payment was rejected. A wise man once said don't fight city hall so I signed up for the free service offered by my ISP and saved the money they would have had.

I sometimes get a little excited. You have always come across very reasonable. Thanks for sharing your experience.

 

[jdw_fire]

wow i am sooooo surprised. so many people on here are willing to not read a persons ideas on how to put together a sucessfull retirement withdraw plan just cus he doesnt have a clue about customer relations. well it is your retirement, more power to you

 

[LOL!]

wow i am sooooo surprised. so many people on here are willing to not read a persons ideas on how to put together a sucessfull retirement withdraw plan just cus he doesnt have a clue about customer relations. well it is your retirement, more power to you

I imagine if you had read the book Predictably Irrational that you would not be so surprised.

My company sells stuff and you never ever want to piss off any potential customer. Even if they buy from the competitor now, they will probably come back and buy from us eventually --- unless you create a grudge.

Anyways, maybe get the book from the library or a friend if you don't want to deal with Otar.

 

[W2R]

W2R agreed author doesn't seem very bright.

Darryl, just to clarify I neither said that nor actually do I believe it. I probably wasn't clear and for that I apologize.

Otar is probably a very bright and insightful engineer. Who am I to say he isn't? However engineering expertise doesn't necessarily imply expertise in other areas, and like many very bright and talented people, Otar may have assumed otherwise and may not realize where the boundaries of his expertise lie. That is what I meant by poor judgment.

Customer service requires patience, great quantities of time, and people skills that very bright people can lack. Engineering expertise does not imply the personal qualities needed to provide decent customer service.

 

[walkinwood]

This was a great thread on the merits of the book. Can we get back to it, please.

 

[RonBoyd]

This was a great thread on the merits of the book. Can we get back to it, please.

 

[walkinwood]

I've finally got to "The Zone Strategy" chapter.

My thoughts to this point (in addition to what I've already said earlier in this thread)

- Still an invaluable read.
- If I were just beginning to learn about withdrawal portfolios and sustainable withdrawals, I think this book would have been confusing. I think Bengen's papers or the Trinity study is a better place to start.
- I find it frustrating and confusing that he changes his assumptions from example to example, seemingly without any reason. In one example, expenses are 2%, in another, they are .5%.
- He sometimes uses extreme examples - eg. 100% equity portfolios to make a point, and then refers to the example to make some other point later on. See the use of the example of Bob's retirement plan first mentioned in Ch. 2. It consists of 100% DJIA. Then read pg 107. Now, Bob has a 60/40 portfolio, but there is still comparisons being made to ch. 2.
- This book would definitely have benefited from a top notch editor. The examples would have been more consistent and the book would have had a better flow. Right now, it reads like a collection of unrelated papers with some rather confusing references to previous chapters.
- I gave the chapters on market timing only a cursory look. As he says, it may or may not work for you.
- I have also not read the chapters on annuities in detail, but need to do that at some future point.. At my age (49), they're way to expensive a way to fund retirement.

I like this line the best so far in the book (pg 418)
" When you are lucky, just about anything works"

 

[Alan]

I've finally got to "The Zone Strategy" chapter.

I confess that I jumped ahead to chapter 41 to read from here to the end since I am only a few months from my planned ER date. Fortunately for me I am in the "Green Zone" so don't have to worry about whether or not to export some of the risk by buying an annuity. He has several chapters prior to this devoted to the various types of annuities and I found these pretty heavy reading (may be because I'm not interested in buying an annuity).

However, 2/3 of my RE income will be coming from a defined benefit pension so I have a very large part of my risk exported to the equivalent of an annuity.

I've since gone back and read the rest of the book. A lot of equations and techy stuff, but reading the intro's and conclusions of each chapter was pretty easy and interesting reading for the most part.

 

[LOL!]

...
Right now, it reads like a collection of unrelated papers with some rather confusing references to previous chapters.

I thought I read somewhere that this book was mostly a collection of his previous articles. Maybe in the preface?

Much of it is a reprise of a chapter he wrote in another book that was linked by Moemg(?).

 

[walkinwood]

I thought I read somewhere that this book was mostly a collection of his previous articles. Maybe in the preface?

I think I heard that in an interview he did. Probably from the link on the bogleheads page.

 

[dizzy]

From page 9, in the section, "How to Read this Book":

This book is mostly a collection of my articles. I wanted to gather them all under one
cover for your convenience. There are numerous tables and charts in each chapter. Some
of the material might appear to be repetitious. For some readers, this can be
overwhelming.

 

[Nords]

I like this line the best so far in the book (pg 418)
" When you are lucky, just about anything works"

I got so tired of hearing that from my commanding officers...

 

[Meadbh]

may be because I'm not interested in buying an annuity).

However, 2/3 of my RE income will be coming from a defined benefit pension so I have a very large part of my risk exported to the equivalent of an annuity.

You DEFINITELY do not need an annuity: you've got one, or the equivalent!

 

[thefinancebuff]

Well, I prefaced both my earlier communications with an apology to take up his time over $3.99, but I really needed to find out how far the transaction(s) had proceeded before I attempted to take any action.

The first time I ordered the book, I used a Canadian credit card and my Canadian address (since he's Canadian, I figured it would be simpler). Paypal put a temp. authorization of $1.09 on that account (I assume $1.00 US with exchange).

The second time, I thought it would be simpler to try a US card and US address, since Paypal seemed intent on a US transaction. Different error message, but same result--$1.00 temp auth.

I honestly thought this was info he needed, and didn't know how proceed without contacting him anyway. Paypal has no phone number or email listed, and my only other recourse was to cancel the charge through the credit card company. But I can't do that until it is permanently posted.

So I thought he could let me know what he knew, if anything, about the transactions since I'd need that info to dispute any charges anyway. Wow--I was flabbergasted at his last response.

A temporary authorization is just that -- temporary. If PayPal says the payment did not go through, it will not make it permanent. As a result, Otar will not see anything from you. You have indeed bothered the wrong person. You treated the two temporary authorizations as payments. They are not. Ignore the temporary authorizations. Worry about them only when they become permanent.

 

[Midpack]

- I find it frustrating and confusing that he changes his assumptions from example to example, seemingly without any reason. In one example, expenses are 2%, in another, they are .5%.
- He sometimes uses extreme examples - eg. 100% equity portfolios to make a point, and then refers to the example to make some other point later on. See the use of the example of Bob's retirement plan first mentioned in Ch. 2. It consists of 100% DJIA. Then read pg 107. Now, Bob has a 60/40 portfolio, but there is still comparisons being made to ch. 2.
- This book would definitely have benefited from a top notch editor. The examples would have been more consistent and the book would have had a better flow. Right now, it reads like a collection of unrelated papers with some rather confusing references to previous chapters.

Your points are well taken. However, as I recall, he said the "book" was built on a collection of articles he had written in the past. Probably explains the different assumptions from chapter to chapter. And an editor would have been a big help, but for a cost of $0 to $3.99, I think it's a spectacular value and the inconsistencies from chapter to chapter don't invalidate the conclusions from each chapter IMO. But again, your points are certainly valid.

 

[jdw_fire]

I've finally got to "The Zone Strategy" chapter.

i find his zone strategy interesting but familiar.

the dividing line between his green and grey zones should be very familiar to anyone with FIRECalc experience. he basicly used a FIRECalc run for the indicated years with a portfolio of 40% s&p 500 index/ 60% fixed income with a survival rate of 90%. the majority of the discussion here (the early retirement forum) has "defined" safe as the results of a 60%/40% portfolio with a 95% survival rate, so it appears that Otar is comfortable defining a SWR based on a less survivable WR then most of our FIRECalc users.

also the fact that a successful withdraw strategy could be had at a WR above the SWR by using SPIAs as part of income strategy has been discussed here before. i personally pointed out that people could get a higher SWR by purchasing COLAed SPIA(s) instead of self annuitizing a portfolio a few years ago. of course since that involved annuities the discussion was heated and i seemed to be standing alone. it is kinda nice to see my idea vindicated.

 

[ERD50]

- I find it frustrating and confusing that he changes his assumptions from example to example, seemingly without any reason.

Don't have the 'book' yet, but I downloaded the "Sample Case" from the sidebar on his site. I'm lost in the comparisons.

Go through Questions 1-13 for "Bill" - Q#13 is about cutting back expenses 20% in any negative year. He says it "didn't do much", with a 43% Probability of Depletion at 95. But what is the POD @ 95 w/o cutting back spending? I can't follow where he "resets" his assumptions? If it as all the way back to the beginning, there hasn't yet been any optimization of AA or anything? And if so, he goes from 75% POD to 43%, which is a bad outcome, but certainly much better than 75%. I wouldn't characterize it as "not doing much".

-ERD50

 

[gryffindor]

This is a great book

While there are some areas where he could benefit from an editor, this is much more comprehensive than 95% of the materials out there. He blows up many financial myths. And his emphasis on the difference on how to think about portfolios for accumulation vs. decumulation was critical.

One modest shortfall -- he talks about categories of income streams and after stating that positive cash flow rental income (e.g, buying rental property for cash or only with modest debt) addresses market, longevity and inflation risks (pg 335), he then devotes only 3 sentences to that category. All other income classes get a much more detailed treatment.

 

[chinaco]

I have not read the book. But I found this article from his web site insightful.

http://retirementoptimizer.com/articles/Article113.pdf

 

[W2R]

I have not read the book. But I found this article from his web site insightful.

http://retirementoptimizer.com/articles/Article113.pdf

I've got to say that the 8% withdrawal rate which he mentions (among others) is simply out of the question for me personally, whether or not my portfolio increases during the first four years! Others may differ.

According to this paper in which he discusses the zones, I am one of those cautious green zone types.

 

[Rich_by_the_Bay]

I've got to say that the 8% withdrawal rate which he mentions (among others) is simply out of the question for me personally, whether or not my portfolio increases during the first four years! Others may differ.

I've read the book and he consistently suggests something like 3.5 to 4% as a suggested sustainable withdrawal rate.

Maybe you are remembering one of his "don't do this" examples, or some other unusual circumstance?

 

[chinaco]

I've got to say that the 8% withdrawal rate which he mentions (among others) is simply out of the question for me personally, whether or not my portfolio increases during the first four years! Others may differ.

According to this paper in which he discusses the zones, I am one of those cautious green zone types.

I the paper I think he is highlighting examples that are slightly risky to more risky to illustrate his warning signals that show trouble is ahead.

I am with you on the WR % rate. I am more of a 4 percenter (excluding our house which I do not include as an asset to fund ER). At least that is what I use for our planning purposes.

 

[W2R]

I've read the book and he consistently suggests something like 3.5 to 4% as a suggested sustainable withdrawal rate.

Chinaco's post is discussing one of Otar's papers, not the book!! My response is discussing that paper as well. I've read the paper that we are discussing and there has been topic drift to the contents of that paper.

Maybe you are remembering one of his "don't do this" examples, or some other unusual circumstance?

Naw, I'm just discussing what he is talking about in the paper, for example when he goes through the "4th year check-up procedure" for withdrawal rates of 5%, 6%, and 8%. http://retirementoptimizer.com/articles/Article113.pdf I just thought he could have used more reasonable SWR's for his examples. Since most people (hopefully) would not even consider SWR's this high, it would be more helpful if he had included a 3% or 4% SWR in his table as well. Why would I even want to do a check-up procedure on an 8% SWR? I would not use an SWR like that for four years to begin with!! To me, that is not an SWR that I would consider. But conceivably one might want to do a check-up on a 4% SWR one day just to see if it should be 3.5% instead. So, using more reasonable SWR's in his table could not only be helpful, but also would not imply that the range of 5% - 8% SWR are normal to begin with. Check out the paper.

Although he does discuss lower SWR's later in the paper, to me the implication is that you can try these higher SWR's and if you are doing OK after 4 years you might want to consider continuing with them. For example, if a portfolio has increased after four years with an 8% SWR, according to the table at the top of p.3 there would only be a 6% chance of portfolio depletion after 20 years (so the implication might be that there is a substantial chance that the portfolio would last a full 25-30 years). No, thanks.

As I also mentioned in my post, his paper discussing "zones" reveals that I am in the green zone, a much more conservative approach. Can't imagine otherwise, frankly.