Poll: Success rate - 90% to 85yo, 75% to 95yo

[Live And Learn]

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.

 

[Midpack]

I need to consult a Magic 8 Ball.

 

[Live And Learn]

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)

 

[Lazarus]

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.

 

[kyounge1956]

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).

 

[foxfirev5]

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.

 

[REWahoo]

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.

 

[Midpack]

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...

 

[kyounge1956]

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

 

[REWahoo]

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.

 

[NW-Bound]

I like to see 100% success rate to forever, even though I do not think I will live to the 90s (heck, if I croak in my early 80s, it will not surprise me). Additionally, I am of the same thinking as Bernstein when he says that there is too much unknown in the future to try to pinpoint any precise spending level with any calculator.

My reason is simply a psychological one: I do not want to see my net worth drop significantly. Nope! Once a millionaire, always a millionaire! In fact, it would drive me insane if I get down to, say, 1/2 of what I have now. I need plenty of margin to make sure it does not happen.

And then, if you play with FIRECalc until you get 100%, it will tell you that there just might be a chance, just might be, that you will end up with so much money before you die. I just love this! Outside of FIRECalc, nothing or nobody ever tells me that I had a chance to die a multi-decamillionaire. That's all I got to believe in. Heck, the chance that FIRECalc is right is a lot higher than my winning the lottery (I've got to buy a ticket first though).

PS. I never tell my children this. They may just quit working, and just hang out waiting for me to expire.

 

[ejman]

...snip...

PS. I never tell my children this. They may just quit working, and just hang out waiting for me to expire.

Heck with my kids I'd worry whether they might expedite things along... hey dad ski jumping would be a lot of fun... wanna try it?

 

[ER Fireball]

One of the ideas I toy with is working longer so I can travel more later.

Another approach is to splurge a bit right now and do some traveling. Not everybody's w*rk and situation will allow that, but for most people it is an option.

One approach is to live your life severely below your means for the purpose of ringing the bell on a calculator that says you can't spend your money. Then when you retire, you can do all the things that you refused to spend money on while you were w*rking. Hopefully you live long enough, and your health supports your travels.

Our approach includes an element of 'eat your desert first' in that we are taking some vacations and doing some travel now. I know a few too many people that retired and were taking a dirt nap within three years.

 

[btbw2380]

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...

This example by far demonstrates the biggest risk to me, that we wait for the numbers to tell us we're a slam dunk to get to some old age and suboptimize the years we can really enjoy life in order to achieve that. The chances are not great that we'll live to 95 and even much smaller than that, that if we do, they will be high quality years. I'm not looking to "exist", I'm looking to live!