Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 02-06-2014, 12:14 PM   #21
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2003
Location: Kansas City
Posts: 7,408
Worry and whining is good clean fun - possibly part of the American way.

Tongue in cheek and hindsight - especially since I never got to pick. Plan was age 63 with over $1 mil plus a pension with health care so length/longevity wasn't a consideration.

However layed off at age 49 - I used (circa 1993) age 84.6 from IRS tables for single IRA. Ballpark 35 yrs. I had a paperback workbook from Vanguard - memory 16-18 times expenses was adequate - interest rates were higher back then.

Fear can be a wonderful thing so I 'really' cut expenses tryed some temp work, nursed severance pay cash, rental income from a duplex, dividend stocks, REITs and some bond funds and let principle and IRA rollover grow.

I had no idea what my chances of success were until I came across FireCalc almost a decade later.

heh heh heh - needless to say after 20 yrs I've upped spending considerably and changed to age 91. I think it's common for many ER's to run tight til they get the hang of it. Hindsight says my being cheap didn't cheat myself out of anything I regret not doing 'younger' (in ER). I haven't run my percent success calc in a while. I do use ORP to estimate my spending range.
__________________

__________________
unclemick is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 02-06-2014, 01:10 PM   #22
Thinks s/he gets paid by the post
walkinwood's Avatar
 
Join Date: Jul 2006
Location: Denver
Posts: 2,676
Quote:
Originally Posted by semi55 View Post
I'm looking for a bit of a survey here. How long of a planning horizon and what kind of portfolio survival rate are folks using? I've seen very conservative approaches, but I think that is likely both overkill and assuming that the various models are godlike in their ability to forecast.

Unless most of you are unlike me, you don;t have nearly enough (a la warren Buffett) to ensure that the government won't screw up your best plan anyway. On the other hand, you have enough that it is worth planning out a future.

So my personal method is to use a longevity survey, which says I'll live to 95. I'm sure hoping I make it past my "average" life expectancy.

I'm also planning on a portfolio survival rate of 85%+. Not worried about leaving any legacy, if I do great for the kids, if not, no worse than I had it.
I agree with your first paragraph. Retirement tools can give you a false sense of security. I'm also planning to 95. We're both in good health & have pretty healthy habits, so are hoping to beat the average life expectancy.

How much head-room do you have in your budget? If you just cover your essentials with very little discretionary income, you'll be courting trouble even if you have a 100% portfolio survival rate.

What sort of contingency plans do you have? work, reduce expenses, move, inheritance, Social Security? In close to 6 years of ER , we've already worked for a while and moved. Moving resulted in reduced expenses & a better quality of life for us.
__________________

__________________
walkinwood is offline   Reply With Quote
Old 02-06-2014, 01:29 PM   #23
Recycles dryer sheets
 
Join Date: Jan 2013
Posts: 96
I use 100 and 100%. in practice, I also use the same withdrawal strategy that everyone else uses - what makes sense given ever changing conditions and my personal circumstances.
__________________
enjoyinglife102 is offline   Reply With Quote
Old 02-06-2014, 01:58 PM   #24
Full time employment: Posting here.
BTravlin's Avatar
 
Join Date: May 2010
Posts: 994
I use 90 and 100%. I doubt I'll get past my average life expectancy of 82 though since my lifestyle was very unhealthy for most of my life so this SHOULD end up being a big fudge factor for me.
__________________
Wherever you go, there you are.
(In other words, no whining!)
BTravlin is offline   Reply With Quote
Old 02-06-2014, 02:10 PM   #25
Thinks s/he gets paid by the post
 
Join Date: Jan 2008
Posts: 1,495
Quote:
Originally Posted by Animorph View Post
My spreadsheet of life expectancy indicates a 10% chance of living to 96 for a single "average" female currently age 60 (period life table 2007 from ssa.gov) . If you are particularly healthy and don't smoke, you would do better. And for a couple (of females, since I used longer living females to be conservative), the chance of at least one spouse surviving to 96 would be roughly 19%.

So you may be using 95% success rate for 30 years but have only an 81% chance of actually fitting your life within 30 years. On the other hand, that should also give you a true failure rate (SWR fails and one of a couple lives too long) of about 1%. That's a 19% chance of outliving the 30 years, but only a 5% chance that it will coincide with running out of money before 30 years.
Yes, as soon as I posted that thought I should qualify it (but got lazy). For females, it's a different story as life expectancy is longer. For married couples, too, the equation changes. Then again, you could be one of the 1 out of 2 boomers > 50 accounting for over 50% of divorce these days. That might blow a big hole in one's plans.
__________________
Options is offline   Reply With Quote
Old 02-06-2014, 02:38 PM   #26
gone traveling
 
Join Date: Apr 2009
Location: Eastern PA
Posts: 3,851
Quote:
Originally Posted by woodguy00 View Post
I just don't get the 'plan to age 120 with 100% certainty with double my expected costs just in case and then cut the SWR in half cause the worst ever is yet to come, probably twice' mindset some folks have. But that's just me.
Some of us are in the rare situation of not only planning for our own lifetime, but also accounting for income for those that follow.

Our (disabled) son is 22 years younger than us, and will have a normal lifespan - whatever that will be. Our plan termination age is 120 to cover not only our outside chance of DW or me living to a longer age but also understanding while his current expenses are much less than us at this time, they will drastically increase when others (lawyer/investment manager/care manager) will have to take over the duties that I/wife are currenly handling.

Not every situation is the same and we all don't have the same (financial) plan for the future.

We planned for the worst and hope for the best; that's all we can do...
__________________
rescueme is offline   Reply With Quote
Old 02-06-2014, 02:50 PM   #27
Moderator
rodi's Avatar
 
Join Date: Apr 2012
Location: San Diego
Posts: 8,804
I use age 90 for myself (100 for DH), and 100%.
My parents died in their 60's and 70's. Only one grandparent made it to 90, the other 3 died in their 60's and 70's.
My FIL died last year at 90, and MIL is 87 and still physically sound (albeit dementia impacts her quality of life.)
I'm pretty comfortable with the age 90/100 for us.

I also include full social security. If that gets cut, we'll cut our budget.

And the long term care and other unknowns... I don't include our home in the firecalc runs - so plan B has a very hefty, $900k asset that can be sold. That should cover some good long years in a nursing home.

Haven't retired yet... my 100% involves market gains or 2.5 more years of work to hit the number that will let me retire. DH retired last month.
__________________
rodi is offline   Reply With Quote
Old 02-06-2014, 04:11 PM   #28
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,264
Quote:
Originally Posted by woodguy00 View Post
Age 90 / 90% success - let's me sleep just fine.

I just don't get the 'plan to age 120 with 100% certainty with double my expected costs just in case and then cut the SWR in half cause the worst ever is yet to come, probably twice' mindset some folks have. But that's just me.
Except the added cushion doesn't require doubling anything. A 30 year period (so assume age 60 to age 90) @ 90% success (or 10% failure as I like to call it), historically allows for 4.23% withdraws.

But going to 100% and 30 years drops to a 3.39% WR.

And 46 years* and 100% success drops to 3.05% WR.

So the extreme factor means spending about 72% of your more aggressive scenario. Or build 38.7% more in your portfolio. Not insignificant, but not a double of anything, even once.

* if you go beyond 46 years, you end up cutting off some of the bad scenarios, and rates go up again. But it's pretty safe to extrapolate that you are hitting diminishing returns, and you would not need to drop much at all to get extra years beyond 46, at some point you have a 'forever' portfolio.

-ERD50
__________________
ERD50 is offline   Reply With Quote
Old 02-06-2014, 04:21 PM   #29
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
braumeister's Avatar
 
Join Date: Feb 2010
Location: Northern Kentucky
Posts: 8,591
My mother and her father both made it to 96, so I figure there's a reasonable chance I will get to at least that age. As long as I can see the possibility, I feel it's necessary to make my plans out to age 100.

As for confidence level, I always use 99% (why type in three digits when two are close enough?).

Since FC tells me I can use a much higher WR than planned, I feel safely covered.

We don't have any burning desire to die broke, and we're very happy with our current spending level. I see a high probability that we'll die with a substantial nest egg left over, but since it's all earmarked for our favorite charities we don't worry about it.
__________________
braumeister is offline   Reply With Quote
Old 02-06-2014, 09:29 PM   #30
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Ed_The_Gypsy's Avatar
 
Join Date: Dec 2004
Location: the City of Subdued Excitement
Posts: 5,292
Quote:
Originally Posted by Ed_The_Gypsy View Post
...but long-term care or the Big C scare me. So, I want a fat poke for emergency purposes.
Also Alzheimer's. I think I have reason to be concerned.
__________________
my bumpersticker:
"I am not in a hurry.
I am retired.
And I don't care how big your truck is."
Ed_The_Gypsy is offline   Reply With Quote
Old 02-07-2014, 09:57 AM   #31
Recycles dryer sheets
 
Join Date: Oct 2012
Posts: 117
Quote:
Originally Posted by ERD50 View Post
Except the added cushion doesn't require doubling anything. A 30 year period (so assume age 60 to age 90) @ 90% success (or 10% failure as I like to call it), historically allows for 4.23% withdraws.

But going to 100% and 30 years drops to a 3.39% WR.

And 46 years* and 100% success drops to 3.05% WR.

So the extreme factor means spending about 72% of your more aggressive scenario. Or build 38.7% more in your portfolio. Not insignificant, but not a double of anything, even once.

* if you go beyond 46 years, you end up cutting off some of the bad scenarios, and rates go up again. But it's pretty safe to extrapolate that you are hitting diminishing returns, and you would not need to drop much at all to get extra years beyond 46, at some point you have a 'forever' portfolio.

-ERD50
My tongue in cheek comments have more to do with the many posts where people stack ultra conservative assumptions on top of other ultra conservative assumptions in whatever planning tool someone is using. The compounding effects may mean people either continue working long past when they need to or live on much less than they could and in both cases leave large estates they would have preferred not to.

While it is clearly preferable to leave more behind than anticipated when compared to running out early, one Plan B is to reduce spending long before you run out. Not living on cat food but cutting back if necessary. A bit of cushion is good but IMHO it is better to start with very realistic assumptions and then consciously apply a cushion factor to the outcome, not at each step in the process.
__________________
woodguy00 is offline   Reply With Quote
Old 02-07-2014, 04:36 PM   #32
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,264
Quote:
Originally Posted by woodguy00 View Post
My tongue in cheek comments have more to do with the many posts where people stack ultra conservative assumptions on top of other ultra conservative assumptions in whatever planning tool someone is using. ...
I 'got' the doubling and doubling angle (though I realize that wasn't clear from my response).

But my point was towards that end - the added security really doesn't add all that much to what you need. And I'm probably guilty of multiple 'cushions'. But I don't really think of planning for age 100 and a 100% HSWR as doubling up. If it happens (and it could), I want to have money (not, gee, statistically I had a good chance of having some money). But discounting some of my NW for a cushion and rounding down my WR fall into some double counting, but it's hard for some of us to not want a little more assurance!


-ERD50
__________________
ERD50 is offline   Reply With Quote
Old 02-07-2014, 04:47 PM   #33
Thinks s/he gets paid by the post
obgyn65's Avatar
 
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
Same for me.

Quote:
Originally Posted by Bestwifeever View Post
Always 100 percent. And still worry.
__________________
Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
obgyn65 is offline   Reply With Quote
Old 02-07-2014, 04:54 PM   #34
Thinks s/he gets paid by the post
robnplunder's Avatar
 
Join Date: Nov 2013
Location: Bay Area
Posts: 2,124
95% success ratio to last until 82 which is my life expectancy according to census.

..... but I will set aside $300 - $600k for contingency plan (DW & I live longer, bigger than anticipated stock market set backs, traveling, unexpected LTC, ...).
__________________
Pura Vida
robnplunder is offline   Reply With Quote
Old 02-07-2014, 04:54 PM   #35
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
I'm surprised more people are not mentioning the difference between portfolio withdrawals and SS/pensions.

When FireCalc refers to "failures," it's referring to your portfolio going to zero. SS and pensions continue. For lucky folks with SS and some sort of pension providing, say, half of their spending, running out of portfolio dollars is not nearly so bad as it would be for folks who count on their portfolio for all or nearly all of their spending.

For folks whose spending is primarily supported by some cola'd stream of payments from a secure source outside of their FIRE portfolio, I don't think going with a 90%, or even less, survival rate is daring at all.

For folks where their FIRE portfolio provides all, or nearly all, of their spending dollars, 100% survivability is none too conservative IMHO.
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Old 02-07-2014, 04:57 PM   #36
Thinks s/he gets paid by the post
robnplunder's Avatar
 
Join Date: Nov 2013
Location: Bay Area
Posts: 2,124
Quote:
Originally Posted by youbet View Post
I'm surprised more people are mentioning the difference between portfolio withdrawals and SS/pensions.

When FireCalc refers to "failures," it's referring to your portfolio going to zero. SS and pensions continue. For lucky folks with SS and some sort of pension providing, say, half of their spending, running out of portfolio is not nearly so bad as it would be for folks who count on their portfolio for all or nearly all of their spending.

SS is baked into my failure analysis. If my money runs out, then I'd only have SS to support me (which is doable if I wait until 70 before withdrawing).
__________________
Pura Vida
robnplunder is offline   Reply With Quote
Old 02-07-2014, 04:59 PM   #37
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
Quote:
Originally Posted by robnplunder View Post
95% success ratio to last until 82 which is my life expectancy according to census.

..... but I will set aside $300 - $600k for contingency plan (DW & I live longer, bigger than anticipated stock market set backs, traveling, unexpected LTC, ...).
The methods of building in conservatism are endless! I like yours robnplunder.

For us, we're happy with a one percent success rate and use a one year time period. But, just in case, we've set aside several $million plus SS and pensions. If something goes wrong, we'll just live on that!
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Old 02-07-2014, 05:02 PM   #38
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
braumeister's Avatar
 
Join Date: Feb 2010
Location: Northern Kentucky
Posts: 8,591
Quote:
Originally Posted by robnplunder View Post
SS is baked into my failure analysis.
Carrying that a step further, my planning assumes that the SS trustees are right, and there will be a 25% cut in SS benefits starting in 2035.
__________________
braumeister is offline   Reply With Quote
Old 02-07-2014, 05:30 PM   #39
Dryer sheet aficionado
 
Join Date: Feb 2008
Posts: 32
The problem is that nothing is 100%.
The economic/financial future for developed nations may follow a different trajectory over the next 30-40 years vs the past 80-100 years
There is also an unknown risk of war, plague and social/political disorder that represent potential sources of portfolio failure.
While useful for ballpark estimates FireCalc and other modeling tools are a very cloudy crystal ball.
__________________
Nothing I say should be considered medical,psychiatric,legal,financial,electrical,or plumbing advice. I know nothing about anything.
FLD3C is offline   Reply With Quote
Old 02-08-2014, 07:28 AM   #40
Thinks s/he gets paid by the post
 
Join Date: Sep 2009
Location: Hong Kong
Posts: 1,571
Another 100 percenter.

Anything less and I would lose even more sleep. Even so, there are plenty of things that can derail even the best of plans with my on emotions (aka bad decisions) edging out government action for first place on the list.
__________________

__________________
Budgeting is a skill practised by people who are bad at politics.
traineeinvestor is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
WSJ: Retirement Planning assumptions too optimisic growing_older FIRE and Money 10 06-20-2011 11:03 PM
Social Security assumptions Red_y FIRE and Money 10 08-26-2005 11:24 AM
Invalid Assumptions? Whisper9999 FIRE and Money 22 11-30-2004 06:58 AM
Assumptions malakito Young Dreamers 31 10-05-2004 04:21 PM
Inflation assumptions Peter FIRE and Money 5 12-19-2003 01:48 PM

 

 
All times are GMT -6. The time now is 07:45 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.