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View Poll Results: Would you pull the plug with portfolio success rate of 90% to 85 and 75% to 95 years
Yes 68 43.04%
No 90 56.96%
Voters: 158. You may not vote on this poll

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Old 06-17-2012, 08:31 PM   #41
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I think you need to look at the income you've projected you need during retirement and ask yourself if you could live on less if you had to. There are many ways of cutting costs and some of us would prefer get out while we can and take the chance they we may have to cut back down the road. Realize too that every year you work is a year of health that could be in limited supply.
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Old 06-17-2012, 08:35 PM   #42
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Yes I would, but I will have 2 pensions that will sustain me/us even if/when the savings is depleted, and my health care will be covered. By the time I make it to 85, I don't expect our financial needs to be nearly what they are now, either. Most likely we'll spend a lot more time at home rocking on the front porch...

Also, I figure my kids owe me.....lol.
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Old 08-13-2012, 12:27 PM   #43
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As Dr. Pfau has been pointing out, the chance of living that long is fairly low, so the probability that you will live to 95 and run out of money would actually be much less than 25%. Unless there is some kind of perverse correlation there, like the 2008/2009 market.[/QUOTE]


Good point, Animorph.
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Old 08-13-2012, 03:41 PM   #44
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While I voted no on the poll, I think those probabilities offer a good chance of success. This is mainly because we don't live statically and we will adjust if circumstances change. For instance, my spreadsheet inflates expenses to amounts I just can't see spending. I follow the theory that your expenses go down as you age (I really don't see taking expensive trips in my 80's), so I'll likely spend less than my plan allows. I will admit that I'd feel differently if I didn't have a retirement medical benefit.
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Old 08-13-2012, 04:04 PM   #45
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I agree, my spreadsheet inflates different expenses as well and I don't think I will be spending as much on discretionary things as the spreadsheet calculates. Nice to have a buffer or two, anyway.
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Old 08-14-2012, 06:50 AM   #46
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The only scenario where I'd consider a 90% success rate would be if I have a major medical condition and was certain I would not live that long. And I'd make sure I have adequate health insurance.
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Old 08-14-2012, 10:45 AM   #47
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I was well over 100% to age 95 when I retired, but then I wasn't using hitting some number in FIRECALC to determine when to call it quits. My goal was to reach FI as young as possible, fortunately that turned out to be before I retired. I would not have been comfortable at 90% to 95 (both my parents are 90 and still ticking), even though those are excellent odds. What it takes to make any individual sleep well at night is unique to each of us...what works for someone else isn't of much value IMO.
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Old 08-14-2012, 02:01 PM   #48
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I was well over 100% to age 95 when I retired, but then I wasn't using hitting some number in FIRECALC to determine when to call it quits. My goal was to reach FI as young as possible, fortunately that turned out to be before I retired. I would not have been comfortable at 90% to 95 (both my parents are 90 and still ticking), even though those are excellent odds. What it takes to make any individual sleep well at night is unique to each of us...what works for someone else isn't of much value IMO.
It really is an individual matter. Part of me says that Midpack may have worked too long (but if you have heirs that not a bad thing). Part of me says, I have no heirs, statistically there's a 15% chance of either me or my DH living to 95 and a 25% chance of being broke at that age. I believe mathematically that means there is only an 4% chance of both of those happening.
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Old 08-14-2012, 02:17 PM   #49
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While I voted no on the poll, I think those probabilities offer a good chance of success. This is mainly because we don't live statically and we will adjust if circumstances change. For instance, my spreadsheet inflates expenses to amounts I just can't see spending. I follow the theory that your expenses go down as you age (I really don't see taking expensive trips in my 80's), so I'll likely spend less than my plan allows. I will admit that I'd feel differently if I didn't have a retirement medical benefit.

Yes, the cash needs after I would say 80 goes down from what I can see...

My mom traveled a LOT when she was in her 60s and even 70s.... one year she was traveling more than she was at home (and not a move to someplace and live there for awhile, really traveling)....

Now, her life is within 3 miles of where she lives if we (not just me, but all my siblings) do not take her anywhere... she does not want to take a plane anywhere... so the expensive trips stopped a long time ago...
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Old 08-14-2012, 02:22 PM   #50
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Part of me says that Midpack may have worked too long (but if you have heirs that not a bad thing).
Though we don't have heirs, "worked too long" does not apply IMO. I don't subscribe to the 'FI should automatically lead to ER' idea, there are many legitimate options, ER is but one...
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Old 08-14-2012, 03:15 PM   #51
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Though we don't have heirs, "worked too long" does not apply IMO. I don't subscribe to the 'FI should automatically lead to ER' idea, there are many legitimate options, ER is but one...
Completely agree. One of the ideas I toy with is working longer so I can travel more later. So while I can probably take care of basic needs and a little spending cash on my current portfolio part of me says "heck - put all your future earnings into a travel account and see the world".

I need to consult a Magic 8 Ball.
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Old 08-14-2012, 03:44 PM   #52
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I need to consult a Magic 8 Ball.
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Old 08-14-2012, 06:55 PM   #53
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LOL thanks - I needed that !

Your Magic 8 Ball was no help - maybe I'll try Ouija again (scared the YKW out of me the first (and last) time I tried it)
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Old 08-14-2012, 07:04 PM   #54
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The problem for me of having 100% success at 90+ years of age would require me to work a lot longer. I would more likely lose the very thing I was working for (ER), than fail in old age. I can't go to zero anyway with a pension and social security.
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Old 08-16-2012, 12:40 PM   #55
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I summon William Bernstein and "The Retirement Calculator From Hell, Part III"
The Retirement Calculator from Hell, Part III

In other words, "Don't worry, be happy."
I may be the person mentioned elsewhere in this thread who was looking for results of 100% out to age 100. My response to the "Calculator from Hell" is this: if a 100% calculator result is equivalent to a real-world success rate of 80% (because there is a 20% chance of The End of the World as we Know It sometime during the span of one's retirement) then all the more reason to require an extremely high probability of success in my calculated scenarios.
The 20% risk of failure due to TEOTWAWKI is quite scary enough for me!
I certainly don't want to increase my chances of suffering financial disaster by retiring with portfolio/income inputs that would have failed under conditions that have already happened in history (FIRECalc failures) or that might occur within economic parameters based on history (Monte Carlo failures).
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Old 08-16-2012, 01:48 PM   #56
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Still haven't pulled the plug with Firecalc giving me a 95% chance to 95. When it gets to 100% I simply raise the level of spending until it drops below 90%. I guess I'm not mentally prepared for the RE part yet.
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Old 08-16-2012, 02:16 PM   #57
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Still haven't pulled the plug with Firecalc giving me a 95% chance to 95. When it gets to 100% I simply raise the level of spending until it drops below 90%. I guess I'm not mentally prepared for the RE part yet.
The general way this plays out for you "just one more year" syndrome sufferers is along one of two paths: your BS bucket gets full at work or a serious health scare hits you or someone close to you. Here's hoping you experience the former rather than the latter.
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Old 08-16-2012, 02:35 PM   #58
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I may be the person mentioned elsewhere in this thread who was looking for results of 100% out to age 100. My response to the "Calculator from Hell" is this: if a 100% calculator result is equivalent to a real-world success rate of 80% (because there is a 20% chance of The End of the World as we Know It sometime during the span of one's retirement) then all the more reason to require an extremely high probability of success in my calculated scenarios.
I think Bernstein's point was not that you can't do better than 80% so why bother, as some people seem to interpret his article. If FIRECALC returns a 100% success rate, that's indeed 20% better than an 80% results. But retirement calculators really just project your probability of success based on historical returns and inflation, that's it. There's lots of other variables you can't begin to predict. You may live 20 years longer than you plan. Or in Bernstein's paper, geopolitical events may override the variations in real return and make "past performance no guarantee of future results."

Life is uncertain, no way around it. You just plan for what you reasonably expect and be prepared to adjust like everyone else if you're wrong. And live well in the present...
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Old 08-18-2012, 04:38 PM   #59
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This whole problem can be finessed by adopting a dividend strategy. When your dividend income is reasonably above your expenses, you are good forever.

Ha
Sounds good to me, as long as dividends don't fall off a cliff. So far I haven't seen that happening too much.(snip)
Does use of a dividend strategy require 100% in dividend-paying stocks, or does it include bonds as well? I keep waffling back and forth between an income oriented strategy and a buy-&-hold/total return plan. Dividends don't fall off a cliff very often, which I like. I like the idea of getting income from my investments without being perhaps forced to sell stocks or mutual funds in a down market, and the thought of being able to choose individual stocks that don't derive income from sources which I find objectionable (e.g. tobacco). But I don't think I have the stomach for a 100% equity portfolio, and interest rates are so low right now, I don't know if I have enough money to retire using an income-oriented strategy that includes bonds too.

I wish there was an "income portfolio tutorial" thread like the asset allocation tutorial I found so helpful in setting up my current portfolio. Following the "homework assignments", combined with the reading I had already done gave me some confidence that my portfolio was set up in a reasonable way, within the limited choices available in my deferred compensation account at work. And to link these thoughts with another recent thread, what happens to the income-oriented investor when s/he starts to "get stupid"? How do those of you with a portfolio of individual dividend stocks (and/or laddered individual bonds) plan to compensate for age-related cognitive decline? I'm 56 now, which according to that graph in the other thread is getting pretty close to my pull date.

What to do, what to do
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Old 08-18-2012, 04:55 PM   #60
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Does use of a dividend strategy require 100% in dividend-paying stocks, or does it include bonds as well?
Both.

Those of us who are proponents of the "psst Wellesley" school of retirement income investing use balanced funds as a way to produce dividend income. ~ 65% of my portfolio is in Wellesley and Wellington funds. The dividends they produce, along with SS, fund 100% of our basic living expenses in retirement.

As to what to do when I get stupid(er), balanced funds take all the work out of rebalancing and the dividends are automatically sent to my cash account. About as idiot proof resistant as it gets.
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