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Old 01-06-2016, 08:47 AM   #21
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Originally Posted by mathjak107 View Post
interesting article on withdrawal methods . interesting how poorly rebalancing did compared to systematic equal withdrawals .

Best Retirement Withdrawal Strategies
Sorry, but it is very poorly written. Regardless of his withdrawal strategy, did this guy ever rebalance his portfolio to a desired asset allocation? He never tells us. The closest we get is this:
The strategies themselves are each quite simple, but vary significantly in their philosophy and results. Note these are pure withdrawal strategies. They never buy or sell, or change the asset allocation, by any amount other than to generate the required withdrawal in a given year:
So apparently he's not actually doing any rebalancing as we know it beyond taking the annual withdrawal from the most out-of-balance asset.

Originally Posted by hnzw_rui View Post
In terms of median ending portfolio, sure. Success rate of rebalancing wasn't bad though. It was only lower to equal withdrawals by 1.8% (likely failing in scenarios with unusually high inflation).

How Portfolio Rebalancing Usually Reduces Long-Term Returns (But Is Good Risk Management Anyway)

Indeed, the equal withdrawals strategy likely ends up being unintentionally similar to rising equity glidepath.
+1. The "equal withdrawals" method simply results in higher equity allocations over time, which produce higher average returns. But if a retiree wanted that higher return (and volatility) he could have simply started with the higher equity allocation.

The finding that the CAPE (aka PE10)-based withdrawal strategy had the highest value and survival (even better than his "equal withdrawals" strategy) at least hints at the value of using PE10 (whether for withdrawals or for adjusting AAs).

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Old 01-06-2016, 11:08 AM   #22
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Originally Posted by Marketwatcher View Post
I have very nice pension. On a present value basis, it makes sense for me to take the pension as soon as I retire. I only gain 1.5% a year for each year I wait until 65. So I'll get about 82% of what I would have gotten at 65, 13 years earlier. The lump sum I'm offered is quite a bit less than an equivalent annuity valued on the open market. It makes sense for me to take the pension as soon as possible. In this case, paying taxes isn't such a bad thing.

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Forget the math stuff, its just plain more enjoyable spending 82% of something for 13 years, instead of 100% later.

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Old 01-06-2016, 01:59 PM   #23
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Originally Posted by Mulligan View Post
Forget the math stuff, its just plain more enjoyable spending 82% of something for 13 years, instead of 100% later.
+1. Hedonic tilt.

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