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Re: SWR Question
Old 11-05-2004, 04:45 AM   #41
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Re: SWR Question

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We have one of those in our home too. *It doesn't matter what we do when the kid goes to school each morning-- as far as she's concerned we go into suspended animation when she leaves and we re-animate the microsecond she enters the door.

Hopefully our kid's work ethic is based on the realization that if she has one (especially coupled with a savings ethic!) then she can retire early like us ('cause she's sure not getting an inheritance). *We figure that, like most of us today, the epiphany won't kick in until she's in her 30s.
Nords: Sounds like you have a handle on it.
My wife and I have talked about the mistakes we made while raising our kids. (We came to the same conlusion each time. We worried too much.) It's hard to not have high expectations with your teen-agers when you were so perfect yourself. ;)
Also convenient to forget when you were 17 and joined the Marine Corps., with the background sound a standing ovation from parents, and the local sheriff ;)

Good surfing Nords
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Re: SWR for non-engineers
Old 11-05-2004, 08:00 AM   #42
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Re: SWR for non-engineers

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Hey, Hyper, that iterative algorithmic SWR is described in "J.K. Lasser's Your Winning Retirement Plan" and at Bud Hebeler's "Analyze Now!" website.
Thanks for the link. *I've only had a chance to skim it right now but I'll give it a more detailed look later.

Quote:
but his system takes all the uncertainty out of predicting the future...
Hmmm, an algorithmic/feed-back SWR system isn't meant to predict the future but just to react to changing conditions now. *I suppose you could look at it as prediction but only in the sense similar to noticing that it's overcast outside and that means a good chance of rain so you should bring an umbrella today.

Quote:
we still have to consider the "gotcha"s that SWR calculators can't model very effectively.
Absolutely right. *One place to do this is in your asset allocation. *Another is in how or where you choose to retire to. *There are a lot of other choices that can affect survival in ER.

Quote:
For example, those with pension income have a very realistic basis for concern over their former company's solvency. *All of us should fear a return to 1970s inflation rates ("But, but, this time it's REALLY different!!!") and we certainly fear healthcare inflation.
Oh definitely. *My already retired dad (before the boomers) is probably going to be ok with his pension but my brother-in-law (Gen-X) may very well have problems with his.

With the current administration's plans of massive spending and decreased taxes leading to almost unheard of deficits and mounting debt I think that a return to 70's double digit inflation is almost a given. *That and a US dollar that is becoming next to worthless suggest putting a good percentage of one's assets outside of the US.

Quote:
Oddly enough, the calculator that gives me the most comfort is Bernstein's "Retirement Calculator from Hell" series.
Yup, his number of 3-4% is probably going to be fine for most. *I still think that the feed-back approach will allow one to take more if you are doing well and less if not so well without involving any "pants".
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Re: SWR Question
Old 11-06-2004, 11:10 AM   #43
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Re: SWR Question

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Now that I am fully retired (as of 9/30/04) I have been thinking about portfolio withdrawals. Can someone answer the following questions for me?

If I have already determined that a 4% SWR will meet my spending needs with a 95% probability of success, and my portfolio returns more than 4% plus inflation in the first year of retirement, can I safely withdraw all of the portfolio gain for the year?
There is a severe penalty for proceeding as you have indicated.

I have collected some relevant data using my modified version of the Retire Early Safe Withdrawal Calculator, version 1.61, November 7, 2002. The Retire Early Safe Withdrawal Calculator uses algorithms that are similar to those in FIRECALC, but they are not identical.

With my modified version, I withdrew a percentage of the gains whenever there were gains in portfolio balances. I did not withdraw a percentage of portfolio balance changes when there were losses from one year to the next. In all cases I withdrew a fixed withdrawal rate (plus inflation) in terms of the portfolio's initial balance.

Data for amounts withdrawn have been averaged over the previous five years to smooth out the choppiness of withdrawals. Some years withdrawals are big. Some years they are small. When the portfolio balance decreases, only the baseline withdrawal applies.

Tapping into Portfolio Gains dated Sat Oct 23, 2004.
http://www.nofeeboards.com/boards/viewtopic.php?t=3021
Tapping into Portfolio Gains: Portfolio Balances dated Sun Oct 24, 2004.
http://www.nofeeboards.com/boards/viewtopic.php?t=3023
Tapping into Portfolio Gains: Amounts Withdrawn dated Sat Oct 23, 2004.
http://www.nofeeboards.com/boards/viewtopic.php?t=3022

Have fun.

John R.
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Re: SWR Question
Old 11-06-2004, 06:22 PM   #44
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Re: SWR Question


We have one of those in our home too. *It doesn't matter what we do when the kid goes to school each morning-- as far as she's concerned we go into suspended animation when she leaves and we re-animate the microsecond she enters the door.


It makes me remember that when I was in High School, I wondered why the radio stations kept on broadcasting, since there was no one to listen. :
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Re: SWR Question
Old 11-06-2004, 06:23 PM   #45
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Re: SWR Question


[We have one of those in our home too. *It doesn't matter what we do when the kid goes to school each morning-- as far as she's concerned we go into suspended animation when she leaves and we re-animate the microsecond she enters the door.]


It makes me remember that when I was in High School, I wondered why the radio stations kept on broadcasting, since there was no one to listen. :
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Re: SWR Question
Old 11-14-2004, 09:31 AM   #46
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Re: SWR Question

Hyperborea on small correction on one of your previous post. A 1000 year storm do not occur every 1000 years - they have a .1% chance of occuring every year - you can have 2 1000 year storms in the same year
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Re: SWR Question
Old 11-15-2004, 12:11 AM   #47
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Re: SWR Question

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Jarhead,

Actually another thought just occured to me. At age 15 anything over age 35 is ancient. Retirement at 50 was probably not considered early for her at the time.
My wife has a great story along these lines. When she was 12 and at a picnic with her parents and their friends, she made a big deal of how old 30 was. How life was just about over when you got that OLD. Well, on her 30th birthday, she got about a dozen cards from those people consoling her on her life being just about over!
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Re: SWR Question
Old 11-15-2004, 02:58 AM   #48
 
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Re: SWR Question

Hello Bruce! Your comments about a "1000 year storm"
got me thinking about our situation. We live in a
"100 year flood plain". Only the thing is, this area flooded in 1996, 2000, 2002. Supposedly this improves our odds going forward. We still keep a lot of the stuff in our garage up off the floor though. The worst part is what to do with 4 dogs when the house is surrounded by water

John Galt
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Re: SWR Question
Old 11-15-2004, 03:38 AM   #49
 
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Re: SWR Question

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We live in a
"100 year flood plain". Only the thing is, this area flooded in 1996, 2000, 2002.
I guess this explains all of the exceptional deals in real estate in your area.
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Re: SWR Question
Old 11-15-2004, 04:14 AM   #50
 
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Re: SWR Question

Hi Cut-Throat! Being serious for a change, I have owned
property in this particular flood plain continuously since
1974. So, it's not a problem for me. It's a real pretty
area and I am used to it (the occasional high water).
Although, it can be a turn off for potential buyers, this is offset
by our location (90 miles from Chicago). To anyone used
to big city prices, all of this beauty, waterfront
property and cheap prices look mighty appealing.
It's a good deal for everyone.

John Galt
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Re: SWR Question
Old 11-15-2004, 07:15 AM   #51
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Re: SWR Question

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Hello Bruce! Your comments about a "1000 year storm"
got me thinking about our situation. *We live in a
"100 year flood plain". *Only the thing is, this area flooded in 1996, 2000, 2002. *Supposedly this improves our odds going forward.
In general that's not true. If I roll a normal dice (actually die) and get a '6' it doesn't lessen the chance of getting a '6' on the next roll. I could get '6' 100 times in a row and the chance of getting '6' on the next roll is still 1 in 6. That is if the events are independent. This might just be the case with your flooding. Getting the flooding one year is a 1 in 100 event and getting it 3 times in 7 years (or perhaps longer depending on what's happened earlier) is a lot smaller probability but not infinitessimal.

Bruce, thank you for expanding on the '1000 year storm'. I wasn't sure how much detail to go into and the post was already pretty long as it was. Your expansion along with JG's flood plain example should emphasize the need for fallbacks and contingency plans in ER (i.e. being close to collecting SS or marrying a working woman).
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Re: SWR Question
Old 11-15-2004, 07:25 AM   #52
 
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Re: SWR Question

Re. my "fallback and contingency plans", I also
keep a boat near the house

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