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Otar: Unveiling the Retirement Myth
Old 08-23-2009, 04:48 PM   #1
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Otar: Unveiling the Retirement Myth

Some of you don't get over to the bogleheads forum. There is (I think) a very important thread started about Jim C. Otar's new book "Unveiling the Retirement Myth" Bogleheads :: View topic - The Decumulation Phase which includes links to links to download the book in PDF format.

Anyways, the topic of designing a portfolio and exporting some risk to an insurance company is discussed here at EarlyRetirement all the time. You may enjoy reading the boglehead thread and Otar's ideas on how much is enough, CPI-indexed annuities, SWR, fluctuations in portfolio value, etc.

(I expect a full book report from Nords in a day or so. )
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Old 08-23-2009, 05:08 PM   #2
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I just downloaded it. TY
I hold a fixed annuity, which once upon a time was my TSP account. This was an "only option" situation for my age at FIRE. I'm still happy with the choice and the results.
I will be very interested in seeing what Otar has to say.
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Old 08-23-2009, 05:22 PM   #3
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Thanks, but my Fixed Annuity is my Bond Portfolio...
and doing very well thank you..

8.2% last yr and already +14% this yr..

;>) Happy Camping!
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Old 08-23-2009, 05:50 PM   #4
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Some of you don't get over to the bogleheads forum. There is (I think) a very important thread started about Jim C. Otar's new book "Unveiling the Retirement Myth" Bogleheads :: View topic - The Decumulation Phase which includes links to links to download the book in PDF format.
(I expect a full book report from Nords in a day or so. )
Hey, it's a weekend, it might take me two days.

I was surprised to see that "Nords" registered at the Bogleheads forum a couple years ago. I just tried logging in and asking for my password but the board doesn't recognize any of the the four e-mail addresses I entered.

I probably typo'ed my e-mail address when I signed up (or perhaps that Nords is not me). If any of you know a moderator over there who can either get me into the account or delete it so that I can start over, I'd appreciate the help.
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Old 08-23-2009, 05:58 PM   #5
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Its over 500 pages. Going to take me awhile to read it. Im one of those types who has difficulty reading things on a computer
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Old 08-23-2009, 06:55 PM   #6
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I just downloaded too, thanks. Decumulation is a topic that is not discussed near enough IMO, compared to the tons of info on accumulation...
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Old 08-23-2009, 07:29 PM   #7
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OK, a poster has offered his help and I've sent an e-mail to the webmaster.
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Old 08-24-2009, 06:20 AM   #8
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Unfortunately, there are no more free copies available. We will have to rely on the generosity of you fast acting readers to summarize.
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Old 08-24-2009, 06:37 AM   #9
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Unfortunately, there are no more free copies available. We will have to rely on the generosity of you fast acting readers to summarize.
I understand that the book is somewhat expensive.
But you can down load it for, I think $3.99
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Old 08-24-2009, 10:25 AM   #10
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Its over 500 pages. Going to take me awhile to read it. Im one of those types who has difficulty reading things on a computer
Me too, the glare gets to me very fast. I went over to Amazon and requested that they put it on "their e-book reader."
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Old 08-24-2009, 03:33 PM   #11
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Thanks for the heads up. I just asked my library to order it and add it to their collection.
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Old 08-24-2009, 07:50 PM   #12
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Unfortunately, there are no more free copies available. We will have to rely on the generosity of you fast acting readers to summarize.
The first chapter is an excellent review of the math behind present value <--> future value conversions and their assumptions. For those of us who didn't study this sort of financial analysis from a math text, it's worth the entire book.

Did the author put any limits on e-mailing 6 MB PDFs to discussion-board members? Or posting them to social groups?

Where's my reading glasses for this four-point font? Ah, here we go. Let me manually type an excerpted quote:
Quote:
"No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the written permission of the publisher except in critical articles & reviews."
There'd certainly be a lot of critical reviewing around here...
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Old 08-24-2009, 08:30 PM   #13
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Well, it's going to take a lot of reading to understand all this. As far as I've got so far, he seems to be making a case that asset allocation is not the overwhelming determinant of portfolio outcomes that Bogleheads claim it is, but rather how "lucky" you are in the timing of your accumulation and retirement relative to stock market trends is an even more powerful factor. Since you cannot know in advance what way future markets will trend, he suggests alternate ways to construct your portfolio and trigger points to warn you that things are not going according to plan. In some of the early examples, he mentions heeding certain warnings and annuitizing before irreversable damage is done. I'll need to read a lot more to understand if this is what he really means.
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Old 08-24-2009, 08:52 PM   #14
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As suggested at Bogleheads, I started reading at chapter 41. This tells one whether you are in the "green" zone which means you don't have to worry about retirement assets and their allocation because anything will work or if you are in the "red" zone where nothing will work short of cutting your expenses or if you are in the "gray" zone where you have some decisions to make which will affect the outcome.

No one should be surprised that the green zone is where the folks with a 3% sustained withdrawal rate live.
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Old 08-25-2009, 07:52 AM   #15
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I've gone through about 200 pages so far. Great information, and his focus on portfolio performance during the distribution phase is really useful. Even if you don't agree with everything he says, its a worthwhile read (so far) and a good reference for an unbeatable $3.99 price!

He addresses the affects of dividends, asset allocation, equity sub-asset classes, rebalancing have on a distribution portfolio. His assessment:
- Asset allocation counts, but not as much as the financial industry says.
- Dividends don't have a cumulative effect (as they do in accumulation portfolios), since they're consumed;
- Diversification between equity sub-asset classes helps or hurts depending on your luck. He doesn't seem to discuss the effect on sequence of returns which he rightfully deems as one of the most important determinants of portfolio survival. In my own experience, this has helped - especially in the 2001-2003 downturn.

For those breezing through, pay attention to his assumptions. He sometimes assumes some rather severe constraints. Eg. on page 159, Examples 16.1
"Note: Equity history is based on S&P500 index, plus 2% dividends, less 2% management fees. ..."
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Old 08-25-2009, 08:04 AM   #16
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For those breezing through, pay attention to his assumptions. He sometimes assumes some rather severe constraints. Eg. on page 159, Examples 16.1
"Note: Equity history is based on S&P500 index, plus 2% dividends, less 2% management fees. ..."
Holy cow, that is rather severe.
It does sound like an interesting set of ideas. But if many of his assumptions are like this, there may be simpler methods. Such as not paying 2% management fees
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Old 08-25-2009, 08:09 AM   #17
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I read it. It seems like a reasonable explanation of the retirement process. My only disagreement is with the heavy use of annuities in the distribution phase.
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Old 08-25-2009, 08:44 AM   #18
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Don't forget that Otar is Canadian and that Canadians enjoy it when they can get their MERs in the 2% range.
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Old 08-25-2009, 09:09 AM   #19
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Aha, excellent point.
Is this less applicable then to areas other than Canada?
I may have to pick up a copy somewhere
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Old 08-25-2009, 03:52 PM   #20
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No one should be surprised that the green zone is where the folks with a 3% sustained withdrawal rate live.
That's all I need to know.
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