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Old 12-20-2013, 01:51 PM   #21
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My plan is for a smooth living standard ala ESPlanner. Hence, I'll increase my spending budget to last years * 1.2% (YOY as of end of Nov). I'm early in my ER journey so this is subject to change as time goes on.

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Old 12-20-2013, 02:19 PM   #22
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It would be interesting to see an update on that paper. Since it was published in 2010 when Dow was floating around 11k and change, how the fortunes of the hapless year 2000 retiree would have looked 3 years and Dow 16k later.

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Old 12-20-2013, 03:28 PM   #23
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Originally Posted by clifp View Post
I am one of those Y2K retiree who should be growing broke if I took a 4% SWR.
According Raddr's calculation, a $1 million portfolio would have started 2013 worth $493,000 (358,000 Y2K dollars and my inflation adjusted withdrawal would be about $56,000. This year the portfolio would actually make money for the first time in a long time.

I avoid many of the worse problems of the Y2K portfolio (primarily by withdrawing only between 2.5-3% most years.). However, my portfolio didn't get back to its nominal level until 2007 and then again the end of 2010. In real terms I start 2013 about 10% behind what retired with in 99/2000 and am comfortably ahead of it in real dollars today.

Still having two ugly bear markets at the first 8 years of your retirement is not recommended.
I have cross-linked to a post by clifp in another thread to answer your question.

According to the calculation by Raddr as shown on the link, a Y2K retiree with a 75/25 portfolio worth $1M and drawing 4% would be down to $493K in nominal dollars at the end of 2012. His initial $40K would be $54K in 2012 dollars to keep up with inflation. Hence, his WR is now $54K over $493K or 11%WR.

He's in big trouble now, and needs more future years like 2013 to get out of the deep hole.
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Old 12-20-2013, 04:02 PM   #24
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I am beginning to wonder if the old sages that pronounced - never touch the principal, were right. With worst case data like this I fear I will never really become a total return investor.
Taking Social Security at 62 and hoping I live long enough to regret the decision.
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Old 12-20-2013, 08:09 PM   #25
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Originally Posted by W2R View Post
I am thinking of giving myself a nice (though sensible) raise, yes.

I may or may not spend it all, but I do plan to give it the "good ol' college try" as the expression goes. By this I mean that I plan to continue attempts to relax about my spending and not be such a tightwad because you only live once.

If we then experience a crash, like what happened to REWahoo, I will do what he did: claim my SS at that time, and tighten my belt. I already have thought of some continuing expenses that I could easily cut, should that happen. But meanwhile, let the good times roll!
Good for you W2R - Happy New Year!

Think about it this way - do you really want to reinvest the excess now? Or have it available to spend over the next few years?
Well, I thought I was retired. But it seems that now I'm working as a travel agent instead!
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Old 12-20-2013, 08:12 PM   #26
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Originally Posted by audreyh1 View Post
Good for you W2R - Happy New Year!

Think about it this way - do you really want to reinvest the excess now? Or have it available to spend over the next few years.
Thank you, and Happy New Year to you, too! That's a good way of thinking about it.

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