Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 12-08-2008, 03:18 PM   #21
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,380
Quote:
Originally Posted by CuppaJoe View Post
My math has never been advanced but here are the numbers I come up with: start with my portfolio value on the day I retired times 4% = $xx. Now if I subtract 25%-30% from that original portfolio value, I can get very close to the same $xx number at a 5.3%-5.7% withdrawal. Is this just another way of saying that the 4% method works?
That works for me.

Ha
__________________

__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 12-08-2008, 03:24 PM   #22
Moderator Emeritus
CuppaJoe's Avatar
 
Join Date: Jun 2007
Location: At The Cafe
Posts: 6,866
Quote:
Originally Posted by haha View Post
That works for me.

Ha
I'm keeping the faith!
__________________

__________________
CuppaJoe is offline   Reply With Quote
Old 12-08-2008, 03:40 PM   #23
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Moemg's Avatar
 
Join Date: Jan 2007
Location: Sarasota,fl.
Posts: 10,029
There should be somewhere in the calculator where you enter your health risks For example if you are a life long smoker 6% is fine if you have High cholesterol maybe 4.5% and if you've led a really wild life go with 8% and have a ball.
__________________
Moemg is offline   Reply With Quote
Old 12-08-2008, 03:50 PM   #24
Moderator Emeritus
laurence's Avatar
 
Join Date: Feb 2005
Location: San Diego
Posts: 5,234
Quote:
Originally Posted by Moemg View Post
There should be somewhere in the calculator where you enter your health risks For example if you are a life long smoker 6% is fine if you have High cholesterol maybe 4.5% and if you've led a really wild life go with 8% and have a ball.
Planning an affair with wife's best friend - 50% SWR
__________________
laurence is offline   Reply With Quote
Old 12-08-2008, 04:08 PM   #25
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 7,526
Quote:
Originally Posted by laurence View Post
Planning an affair with wife's best friend - 50% SWR
Maybe 2% would be more appropriate? So after your assets are cut in half, you still can take a 4% SWR?
__________________
FUEGO is offline   Reply With Quote
Old 12-08-2008, 04:12 PM   #26
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,380
Quote:
Originally Posted by FUEGO View Post
Maybe 2% would be more appropriate? So after your assets are cut in half, you still can take a 4% SWR?
You don't know his wife!
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 12-08-2008, 04:17 PM   #27
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2007
Posts: 7,526
Quote:
Originally Posted by haha View Post
You don't know his wife!
Are you suggesting that his assets are not the thing that will get cut in half?
__________________
FUEGO is offline   Reply With Quote
Old 12-08-2008, 06:06 PM   #28
Recycles dryer sheets
 
Join Date: Aug 2003
Posts: 474
6% is wussy. The 4% retiree in January 2000 (with the FIRECalc default portfolio) was drawing over 6% last year. It's about 9.5% now (with an S&P of 900). This doesn't include any money lost in bond defaults.
__________________
bongo2 is offline   Reply With Quote
Old 12-08-2008, 09:19 PM   #29
Moderator Emeritus
laurence's Avatar
 
Join Date: Feb 2005
Location: San Diego
Posts: 5,234
Quote:
Originally Posted by FUEGO View Post
Are you suggesting that his assets are not the thing that will get cut in half?
He knows that even at 50% SWR I will never outlive my money!!
__________________
laurence is offline   Reply With Quote
Old 12-09-2008, 03:57 AM   #30
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2007
Posts: 5,072
Kitces P/E10 research comes to a similar conclusion. 4% in low P/E valuation periods may be overly conservative for a 30 year withdrawal period and that in low P/E10 periods a larger withdrawal rate can survive.


http://www.kitces.com/assets/pdfs/Ki...t_May_2008.pdf
__________________
chinaco is offline   Reply With Quote
Old 12-09-2008, 04:57 AM   #31
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 7,450
Quote:
Originally Posted by bongo2 View Post
6% is wussy. The 4% retiree in January 2000 (with the FIRECalc default portfolio) was drawing over 6% last year. It's about 9.5% now (with an S&P of 900). This doesn't include any money lost in bond defaults.
Hey I resemble that person. If I actually was withdrawing 4% of the amount I retired with summer 99 (heavily tech oriented). I'd be at a rate of 7.5%.
Fortunately, my portfolio didn't do as bad as the S&P and my withdrawal rate was closer 2.5%, still it has risen to above 4% of current value.
__________________
clifp is offline   Reply With Quote
Old 12-09-2008, 08:36 AM   #32
Thinks s/he gets paid by the post
lazygood4nothinbum's Avatar
 
Join Date: Feb 2006
Posts: 3,895
Quote:
Originally Posted by bongo2 View Post
6% is wussy. The 4% retiree in January 2000 (with the FIRECalc default portfolio) was drawing over 6% last year. It's about 9.5% now (with an S&P of 900). This doesn't include any money lost in bond defaults.
thanx bongo2. if what you cite is true, that somewhat scary example lends credence to what i had only a vague sense of dread about & expressed here:

Quote:
Originally Posted by lazygood4nothinbum View Post
it seems nothing more than a crap shoot to take long term averages and apply them to short term lives. it all sort of depends when you hop on the ride.
__________________
"off with their heads"~~dr. joseph-ignace guillotin

"life should begin with age and its privileges and accumulations, and end with youth and its capacity to splendidly enjoy such advantages."~~mark twain - letter to edward kimmitt 1901
lazygood4nothinbum is offline   Reply With Quote
Old 12-09-2008, 08:43 AM   #33
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
Quote:
Originally Posted by bongo2 View Post
6% is wussy. The 4% retiree in January 2000 (with the FIRECalc default portfolio) was drawing over 6% last year. It's about 9.5% now (with an S&P of 900). This doesn't include any money lost in bond defaults.
How would that compare to someone at the end of 1974 who started taking 4% in 1966, particularly in real dollars?
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 12-09-2008, 04:53 PM   #34
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
harley's Avatar
 
Join Date: May 2008
Location: Following the nice weather
Posts: 6,418
Quote:
Originally Posted by Nords View Post
Many aspiring to a 2% SWR are doing it for ERs that exceed the Trinity study's 30-year period. If you're trying to achieve success over five or six decades then 2% might actually be a better SWR. Raddr's research indicates that 4% is exceedingly optimistic past 30 years.
Nords, can you point me to any documentation or discussion of this? I searched the site, but couldn't find what I was looking for. And since I'm hoping (probably foolishly) for a 50 year retirement this would be a good thing to read up on. I might need to buy an annuity.
__________________
"Good judgment comes from experience. Experience comes from bad judgement." - Will Rogers, or maybe Sam Clemens
DW and I - FIREd at 50 (7/06), living off assets
harley is offline   Reply With Quote
Old 12-09-2008, 05:32 PM   #35
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Gone4Good's Avatar
 
Join Date: Sep 2005
Posts: 5,381
Quote:
Originally Posted by ziggy29 View Post
How would that compare to someone at the end of 1974 who started taking 4% in 1966, particularly in real dollars?
My simulation shows that with a 60/40 portfolio and a 4% SWR, the Jan 1, 1966 retiree's withdrawal rate would have only been 4.9% after 8 years. But that is before things really hit the fan. The WR jumps to 6.11% the following year and 8.11% the next. It plateaus for a couple of years but then it's pretty much downhill after that.

The retiree spends most of the last 17 years of his/her life drawing double digit percentages from the portfolio desperately hoping that they expire before the money does (which happens by the end of 1997).

An interesting side note. A 10% cut in spending in 1974, once the SWR hit 6%, keeps the portfolio alive for another 10 years.
__________________
Gone4Good is offline   Reply With Quote
Old 12-09-2008, 06:05 PM   #36
Thinks s/he gets paid by the post
Gotadimple's Avatar
 
Join Date: Feb 2007
Posts: 1,758
So your simulation shows that one shouldn't withdraw more than 6%, or 6% less 10% (no more than 5.9%) when the economy started downward?

-- Rita
__________________
Only got A dimple, would have preferred 2!
Gotadimple is offline   Reply With Quote
Old 12-09-2008, 06:10 PM   #37
Recycles dryer sheets
 
Join Date: Aug 2003
Posts: 474
Quote:
Originally Posted by ziggy29 View Post
How would that compare to someone at the end of 1974 who started taking 4% in 1966, particularly in real dollars?
Very close. That one withdraws $52.5k Jan of 1975 from a portfolio of $548k for a WR of 9.5%. 1966 runs out of money in year 23. The worst (after 9 years) is 1973 with a 1982 withdrawal of 11.7%. The bull market soon kicks in and this one just barely runs out of money in year 30.

You can look at this in the detailed results of FIRECalc.

Clifp: 2.5% in 2000 becomes 4.9% today. You can benchmark against that.

Yrs to go: you must have very different data from what FIRECalc is using. Changing the allocation to 60/40 (from the 75/25 default) doesn't change the numbers in FIRECalc nearly that much.
__________________
bongo2 is offline   Reply With Quote
Old 12-09-2008, 06:16 PM   #38
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Gone4Good's Avatar
 
Join Date: Sep 2005
Posts: 5,381
Quote:
Originally Posted by Gotadimple View Post
So your simulation shows that one shouldn't withdraw more than 6%, or 6% less 10% (no more than 5.9%) when the economy started downward?

-- Rita
Not exactly. What I was trying to show was that cutting spending can make a big difference. FIRECalc assumes people blindly increase spending each year with inflation regardless of what is happening. That is not a reasonable assumption. Instead I took an arbitrary date (1974) where someone with a pulse might have had a clue that something bad was happening, and assumed they cut spending by 10%. The result was that the portfolio lasted for another 10 years.
__________________
Gone4Good is offline   Reply With Quote
Old 12-09-2008, 06:38 PM   #39
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,387
Quote:
Originally Posted by . . . Yrs to Go View Post
What I was trying to show was that cutting spending can make a big difference. FIRECalc assumes people blindly increase spending each year with inflation regardless of what is happening.
Not really. Firecalc has different spending models, whose parameters you can tweak, which reduce the expenditure during lean years.

The trick is to make sure that your initial 4% still has enough discretionary expenses that you can cut during bad times like travel, dining out, Xmas gift, etc...

Failing that, I think most people would do something more drastic if this turns out to be a long dry spell. I would sell my house, regardless of how low it fetches, to move into a smaller home with lower operating costs, or to a rural area with a lower cost of living, get rid of one car, for example.

Who in the right mind would draw his/her assets down to 0?
__________________
NW-Bound is offline   Reply With Quote
Old 12-10-2008, 04:14 AM   #40
Thinks s/he gets paid by the post
2B's Avatar
 
Join Date: Mar 2006
Location: Houston
Posts: 4,330
Quote:
Originally Posted by NW-Bound View Post
Who in the right mind would draw his/her assets down to 0?
My in-laws just about did. Wait a minute. You wrote "in their right mind."

Unfortunately, money management skills don't get better as we age.
__________________

__________________
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
2B is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Well...it official....I'm UnER'd! VaCollector FIRE and Money 26 01-20-2008 01:47 AM
It's official! linkerbink Life after FIRE 11 01-02-2007 03:46 PM
Well, its official brewer12345 Young Dreamers 37 11-11-2005 08:46 PM
Now it's official... dory36 Other topics 13 06-02-2005 03:33 PM
The Official Under 30 Thread! Tommy_Dolitte Young Dreamers 30 08-24-2004 09:48 AM

 

 
All times are GMT -6. The time now is 08:30 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.