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Old 12-10-2008, 06:50 AM   #41
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Who in the right mind would draw his/her assets down to 0?
I always specify in Firecalc that I don't want my portfolio ever to be any smaller than $200K. I am thinking of doubling that amount in future runs. I also specify 100% probability of success. These specifications just provide a peace of mind factor, for me.
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Old 12-10-2008, 07:06 AM   #42
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I always specify in Firecalc that I don't want my portfolio ever to be any smaller than $200K. I am thinking of doubling that amount in future runs. I also specify 100% probability of success. These specifications just provide a peace of mind factor, for me.
A year ago, FIREcalc was showing me 100% success at age 52 (assuming no changes in my j*b situation between now and then). Today that 100% success level is back up to 57 because of the whacking my portfolio has taken. If I put in a part-time j*b at $1,000 a month until age 62 I can get that back down to 54. And if my wife can ever find a j*b (in this crappy economy) at $20,000/yr, it's back down to 52.

Think I'm going to invest in a sandwich board.

Sigh.
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Old 12-10-2008, 08:11 AM   #43
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A year ago, FIREcalc was showing me 100% success at age 52 (assuming no changes in my j*b situation between now and then). Today that 100% success level is back up to 57 because of the whacking my portfolio has taken. If I put in a part-time j*b at $1,000 a month until age 62 I can get that back down to 54. And if my wife can ever find a j*b (in this crappy economy) at $20,000/yr, it's back down to 52.

Think I'm going to invest in a sandwich board.

Sigh.
Let's list some options:
(1) wife somehow manages to land a j*b (something you can't control)
(2) invest in a sandwich board and hope for a miracle (something you can't control)
(3) LBYM a little more (something you can control!)
(4) work an extra 5 years.

They all sound pretty dismal, though one sounds more appealing to me than the others.
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Old 12-10-2008, 08:16 AM   #44
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FIRECalc assumes people blindly increase spending each year with inflation regardless of what is happening. That is not a reasonable assumption.
Great point! Inflation is a complicated beastie. Sure the headline number increases by 3% - but what about your personal inflation rate? I don't enjoy travel much (too much of that in my job), and eat a vegan diet of vegs, fruits, beans and grains. The price of my foods is very stable, I didn't notice anything like the meat and milk eaters did when energy speculation drove up their costs last year.

If you live a low key lifestyle inflation doesn't have to be very troubling.
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Old 12-10-2008, 08:18 AM   #45
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Let's list some options:
(1) wife somehow manages to land a j*b (something you can't control)
(2) invest in a sandwich board and hope for a miracle (something you can't control)
(3) LBYM a little more (something you can control!)
(4) work an extra 5 years.

They all sound pretty dismal, though one sounds more appealing to me than the others.
We already live rather simply and in reality, if we cut out all the nonessential "stuff" we enjoy, other than making life feel like it sucks a lot more, the additional amount we could save is a puny pittance compared to another (or longer-lasting) income stream in terms of the "safe" retirement date. I saw that with no other changes in income and employment, saving another $3,000 a year would move the needle one year at most -- if that. It would only change the amount we're currently saving each year by about 10%.

Sure, it's something, but I don't know that moving up the exit date one year is worth living in near-austerity until then.
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Old 12-10-2008, 08:25 AM   #46
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We already live rather simply and in reality, if we cut out all the nonessential "stuff" we enjoy, other than making life feel like it sucks a lot more, the additional amount we could save is a puny pittance compared to another (or longer-lasting) income stream in terms of the "safe" retirement date. I saw that with no other changes in income and employment, saving another $3,000 a year would move the needle one year at most -- if that. It would only change the amount we're currently saving each year by about 10%.

Sure, it's something, but I don't know that moving up the exit date one year is worth living in near-austerity until then.
Well no - - I was thinking more like living a little simpler for the rest of your lives, which would lower the required income. But if this would take the fun out of life (more than working an extra five years would do), then it isn't the best option for you.

For me, well, I don't really need much more than what I have, and my house is paid off. So when we move to Springfield, where the cost of living is less, my essential expenses will be pretty low. Although I will enjoy spending any extra money I might have, what I spend over and above the essentials really doesn't matter to me as much as having the time to enjoy what I have now. YMMV and you are younger than me, so maybe the idea of working an extra 5 years isn't as much of a downer for you as it might be for me.
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Old 12-10-2008, 08:54 AM   #47
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Originally Posted by Want2retire View Post
I always specify in Firecalc that I don't want my portfolio ever to be any smaller than $200K. I am thinking of doubling that amount in future runs. I also specify 100% probability of success. These specifications just provide a peace of mind factor, for me.
Be honest now. Judging from your feelings and posts during the current or recent stress, how peaceful would your mind be if your portfolio declined to $200,000- or to $400,000 for that matter?

Ha
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Old 12-10-2008, 09:37 AM   #48
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Great point! Inflation is a complicated beastie. Sure the headline number increases by 3% - but what about your personal inflation rate? I don't enjoy travel much (too much of that in my job), and eat a vegan diet of vegs, fruits, beans and grains. The price of my foods is very stable, I didn't notice anything like the meat and milk eaters did when energy speculation drove up their costs last year.

If you live a low key lifestyle inflation doesn't have to be very troubling.
I disagree - "it depends" is a more accurate answer, IMO.

For example, my health ins payment increase *alone* in one year accounted for over 6% 'personal inflation'.

Heck, if I had a lower lifestyle, that would have been an even higher portion of my 'personal inflation'. And I don't consider having health insurance for me and my family to be living the "high life".

-ERD50
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Old 12-10-2008, 11:46 AM   #49
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Be honest now. Judging from your feelings and posts during the current or recent stress, how peaceful would your mind be if your portfolio declined to $200,000- or to $400,000 for that matter?

Ha
Not peaceful at all! You are right. But, I could probably manage somehow.
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Old 12-10-2008, 01:10 PM   #50
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Originally Posted by ziggy29 View Post
A year ago, FIREcalc was showing me 100% success at age 52 (assuming no changes in my j*b situation between now and then). Today that 100% success level is back up to 57 because of the whacking my portfolio has taken. If I put in a part-time j*b at $1,000 a month until age 62 I can get that back down to 54. And if my wife can ever find a j*b (in this crappy economy) at $20,000/yr, it's back down to 52.

Think I'm going to invest in a sandwich board.

Sigh.


Maybe a rich relative will die and leave you a chunk of money and then you can brag to the board how frugally you lived to make it to retirement .
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Old 12-10-2008, 01:16 PM   #51
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Maybe a rich relative will die and leave you a chunk of money and then you can brag to the board how frugally you lived to make it to retirement .
LBYM pays off no matter how much money you may or may not have inherited, don't you agree? Living Beneath Your Means is still LBYM'ing even if/when your Means increase.

Take for example the stereotypical basketball player or rock star who earns millions and then blows it, versus the typical ER-Forum LBYM'er who would probably do just fine either with or without a windfall.
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Old 12-10-2008, 01:20 PM   #52
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Maybe a rich relative will die and leave you a chunk of money and then you can brag to the board how frugally you lived to make it to retirement .
This makes me think of the times I watch Antiques Roadshow and see people bringing in these horrifically valuable things in great condition and they mention that it was handed down for several generations and maybe rested in an attic for 50 years.

At that point I'm thinking, "why the [expletive deleted] couldn't any of my ancestors have kept cool stuff like this to hand down to US?!?!"
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"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)
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Old 12-10-2008, 01:21 PM   #53
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This makes me think of the times I watch Antiques Roadshow and see people bringing in these horrifically valuable things in great condition and they mention that it was handed down for several generations and maybe rested in an attic for 50 years.

At that point I'm thinking, "why the [expletive deleted] couldn't any of my ancestors have kept cool stuff like this to hand down to US?!?!"
Yeah!! I agree. Those things are cool! I think the problem is that I don't have an attic!
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Old 12-10-2008, 01:31 PM   #54
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This makes me think of the times I watch Antiques Roadshow and see people bringing in these horrifically valuable things in great condition and they mention that it was handed down for several generations and maybe rested in an attic for 50 years.

At that point I'm thinking, "why the [expletive deleted] couldn't any of my ancestors have kept cool stuff like this to hand down to US?!?!"

Ziggy , funny you should mention that but in my attic I found a box of autographs that belonged to my late husband including a Babe Ruth autograph . I took it to an autograph dealer and sold it for $3,000 .
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Old 12-13-2008, 08:56 PM   #55
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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.
Sorry for the delayed response-- I don't read every thread every day, but I do run a weekly search for my name.

I've gone through Raddr's site and I must be remembering wrong. So I went over to Greaney's site and found a number of links:
The Retire Early study on safe withdrawal rates - Millenniam Edition.
This has the charts & graphs that I mistakenly credited to Raddr.

I also found:
Even Safer Withdrawal Rates.
Retire Early's Safe Withdrawal Rates in Retirement.
Combining Safe Withdrawal Rates and Life Expectancy
The Big Question: How much do I need to retire on?
Calculate your own safe withdrawal rates.

And in a few months we'll get the update to this one:
2007 Update: Real-Life Retiree Investment Returns
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Old 12-14-2008, 06:02 AM   #56
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Keynes’s prescriptions were guided by his conception of money, which plays a disturbing role in his economics. Most economists have seen money simply as a means of payment, an improvement on barter. Keynes emphasized its role as a “store of value.” Why, he asked, should anyone outside a lunatic asylum wish to “hold” money? The answer he gave was that “holding” money was a way of postponing transactions. The “desire to hold money as a store of wealth is a barometer of the degree of our distrust of our own calculations and conventions concerning the future. . . . The possession of actual money lulls our disquietude; and the premium we require to make us part with money is a measure of the degree of our disquietude.” The same reliance on “conventional” thinking that leads investors to spend profligately at certain times leads them to be highly cautious at others. Even a relatively weak dollar may, at moments of high uncertainty, seem more “secure” than any other asset, as we are currently seeing.

from http://www.nytimes.com/2008/12/14/ma...l?ref=magazine
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Old 12-14-2008, 11:10 AM   #57
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If you live a low key lifestyle inflation doesn't have to be very troubling.

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I disagree - "it depends" is a more accurate answer, IMO.

For example, my health ins payment increase *alone* in one year accounted for over 6% 'personal inflation'.

I have to agree with ERD50. I wouldn't bank on being able to beat inflation just by being frugal (unless you're planning on a persistent reduction in your standard of living).

Historic price survey, Morris County New Jersey 1900-2000

This is an interesting site I found that shows prices of various things as published in the Morristown NJ Daily Record going back to 1900. Not only can I see that a "Coal Hod" sold for about $0.20 in 1900, but I can also compare prices of other every day items over a period of time (a bit of a sanity check on reported CPI numbers).

So for example, a dozen eggs sold for $0.59 in 1978. In 2008 the Daily Record says they sell for $2.29 . . . a 4.6% compound average annual increase! I'm not sure living a low key lifestyle will protect you from that, unless by "low key" you mean trading down from eggs to oatmeal as time goes by.

In fact, one might argue that a "low key" lifestyle actually puts you at greater risk. The guy who starts out eating eggs every morning can always trade down to oatmeal as finances get tight (not to mention he'll have the added "benefit" of a shorter expected retirement period ). But how does the person who only budgeted for oatmeal cope?
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Old 12-14-2008, 12:24 PM   #58
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But how does the person who only budgeted for oatmeal cope?
He just claims that spending money on eggs sucks anyway, and he is morally better as a practitioner of voluntary simplicity.

I had lunch with an old freind recently. He looked around the neighborhood and said "you have house here?" No, I said, "apartment." He said, "voluntary simplicity?" "No, I was drafted".
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Old 12-14-2008, 12:52 PM   #59
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He said, "voluntary simplicity?" "No, I was drafted".
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