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Old 05-15-2010, 09:54 PM   #21
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Duke,

Yes, Galeno used CDs and MMFs. I played with using bond funds and the TIPS fund just for grins. The TIPS fund looked the best.

Be aware that different asset classes perform differently at different times. Maybe someday the S&P will come back. I am not very optimistic on large-caps, though. Too much puff for me.
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Old 05-16-2010, 05:18 AM   #22
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Ed- ok then, am still wondering how much better would the results have been with CDs and MM??
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Old 05-18-2010, 08:13 AM   #23
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I don't have data for CDs and MMFs, Duke, but don't expect magic. The returns should be similar--low.
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Old 05-18-2010, 08:48 AM   #24
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Quote:
Yes, Galeno used CDs and MMFs. I played with using bond funds and the TIPS fund just for grins. The TIPS fund looked the best.
Quote:
I don't have data for CDs and MMFs, Duke, but don't expect magic. The returns should be similarólow
Ed, nice job with the graphs. TIPS were a great investment ove the past decade - around 3.5% real annual return. Now, however, they only offer half that Ė 1.7% for a 10 year TIP. At this rate I think large cap stocks look better, and the typical 60/40 equity to fixed income ration needs to be reconsidered.
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Old 12-06-2018, 02:31 AM   #25
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This is intriguing. I had originally thought about an approach where I did something very similar. Any idea how to model what would happen if you:

Took 3%, 3.5%, or 4% from portfolio every year? How bad would your income swings be? By definition you would never exhaust the portfolio.

What to do with the non-stock portion of the portfolio is a puzzle I'm still working on, but I don't think it is key to this question.

Thanks!


Fast forward 8years and now these days how do you feel about the WR?
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Old 12-06-2018, 06:13 PM   #26
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Fast forward 8years and now these days how do you feel about the WR?
Funny you should ask right now. In the last 8 years, Iíve been working less and less instead of outright retiring. Loving it by the way! But, Iíve still covered all of my expenses with my work income. So, Iím not in the decumulation phase just yet.

However, I was recently asked by a charitable organization to come work full-time (for free with only some expense reimbursements). I am going to do it. So, now I will be working harder and starting to use what Iíve planned so long to use. Fortunately, the last 8 years have allowed me to drop the required withdrawal rate to well below 3%. So, I should be just fine.

Funny how things work out . . .
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Old 12-06-2018, 09:39 PM   #27
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For fun, how a 50/50 portfolio would have fared with 3% withdrawals from May 2010 to Nov 2018... basically 150% of what it began after 8+ years of withdrawals.

https://www.portfoliovisualizer.com/...location2_1=50
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Old 12-06-2018, 09:54 PM   #28
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Here is my Withdrawal strategy: I have a diversified portfolio with many different asset classes. Stock portion includes large cap, mid caps, small cap, health sector, energy sector, real estate, asia, europe, south america, etc. Bond portion should include government, corporate, junk, asian bonds, etc I then pick the asset class that is relatively high. This is consistent with the Buy low, Sell High strategy.

I also believe in the bucket strategy. One bucket for cash reserve, another bucket for age 65 to 70, another bucket for 70 to 75, another bucket for medical expenses, etc. This is because of the time horizon of the different buckets. Cash reserve is conservative while the bucket for age 85 to 90 can be more aggressive because that is 20 years from now.

The big question is how much? That will depend on your standard of living. I always lived below my means and I will continue to do so in retirement. If I am age 70 and there is money left over in my 65 to 70 bucket, I usually party like hell because I can't take it with me. My 70 to 75 bucket then takes over.
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Old 12-08-2018, 06:02 PM   #29
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For fun, how a 50/50 portfolio would have fared with 3% withdrawals from May 2010 to Nov 2018... basically 150% of what it began after 8+ years of withdrawals.

https://www.portfoliovisualizer.com/...location2_1=50
Thanks for putting this together. It provides an interesting reality check on my future plans.
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Old 12-08-2018, 08:44 PM   #30
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2010 to 2018 was generally a bull market. It is not reasonable to expect the same results. However a 3% withdrawal is conservative which is OK. I prefer to be flexible and pay attention on my retirement expenses rather than my income. I divide my expenses into mandatory and discretionary. During a bear market, I cease discretionary spending so I can minimize my withdrawals. You should always try to buy low and sell high. In retirement, you are in the selling phase. Withdrawing during a bear market means you may be selling low. You should try to minimize your withdrawals. During a bull market it is OK to sell high but put some money away for a rainy day. This means increase your cash asset portion of your portfolio. I am always fearful of a big and unexpected mandatory medical expense during a bear market. This is why I have a bucket strategy with a portion of my portfolio in cash or treasury bonds dedicated for this purpose. Make sense?
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Old 12-08-2018, 08:53 PM   #31
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2010 to 2018 was generally a bull market. It is not reasonable to expect the same results. ...
Thanks for the perceptive glimpse of the obvious. We never would have thought of that.
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Old 12-10-2018, 10:32 PM   #32
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The 4% rule assumes a lifetime of 30 years and an AA of 60/40. You can run it through Firecalc with your parameters but that will be iffy because the statistics are poor for 50 year retirements - there just aren't enough 50-year sequences in the historical record to give much confidence in assessing a retirement of that length.
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Old 12-11-2018, 08:21 AM   #33
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The 4% rule assumes a lifetime of 30 years and an AA of 60/40. You can run it through Firecalc with your parameters but that will be iffy because the statistics are poor for 50 year retirements - there just aren't enough 50-year sequences in the historical record to give much confidence in assessing a retirement of that length.
Actually, not so bad. 1966 was the most recent 'fail year', and a 50 year run (just) includes 1966. So the years that are skipped in a 50 year run won't add to failures.

You can re-verify that by doing 50,49,48,47.... year runs, with "Investigate" spending for 100% success. The spending should increase each time you shorten the years. If it doesn't, it shows you dropped off some bad years. I think you will see spending decrease when you cover 1966. 1966-2017 (last full data) is 51 years, maybe 52 (start-end inclusive?)

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