The 6% SWR -- it's official

[W2R]

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.

 

[ziggy29]

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?!?!"

 

[W2R]

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!

 

[Moemg]

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 .

 

[Nords]

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

 

[RonBoyd]

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/magazine/14wwln-lede-t.html?ref=magazine

 

[Gone4Good]

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'.

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?

 

[haha]

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".

 

[REWahoo]

He said, "voluntary simplicity?" "No, I was drafted".

Uncle Scrooge Wants You!