Jane_Doe said:
While people don't mind helping out, you really need to dive in and read, read, read a lot of the older posts on this board. There is a HUGE amount of information and discussions on how every one handles their own situation.
Yeah, like anyone listens to that when we keep looking up things for them. I feel your pain, Jane...
FinanceDude said:
What kind of investments are you doing to make sure you don't outlive your money? (Besides LBYM)
A lot of folks on here have military or govt pension, that's going to help a ton.
However, I think about 80% of all Americans will not have a pension........
I've said it before: if you want a lifetime COLA pension then go buy yourself an annuity with those features. It's not a club with a closed membership. I wouldn't recommend the military method of obtaining one of them, so don't envy those of us who joined the military just because it looked like a fun challenge. We didn't join for the pension either, and if I had to do it all over again I would've chosed the Warren Buffett method.
Trinity's 4% SWR method assumes that there will be some consumption of principal and that hopefully past is prologue. That means you'll need 25x assets above your initial annual expenses and you'll probably die before your principal is gone.
However ESRBob's 4% SWR/95% rule ensures that you'll always have something left in your portfolio. An unusually severe bear market may require part-time work or a temp job to get over the nastiest patches, but that's why his book says "Work Less" instead of "Don't Work". As long as you're capable of some sort of work, this approach is free of failure.
For the "Don't Touch The Principal!!" route, living off dividends may require as much as 33x assets. It's a little difficult to tell people that they could retire in their 40s via Bob's part-time option, in their 50s with the Trinity study, or in their 60s if they wanted an extra 33% in their portfolio to ensure sufficient dividend income-- "So hang in there another decade or two, folks, and wait until you can collect those dividends!!". And if the govt messes with the current very generous taxation of dividends then dividend ERs may be screwed. Of course one's dividends would have to be high enough to also pay taxes, just like FIRECalc spits out its results in before-tax dollar amounts.
It's also difficult to tell clients people to read up on euthanasia, but that's one sure-fire way to ensure you don't outlive your assets.
Since ERs face a potential retirement of seven or eight decades, I feel that the primary concern should be inflation while volatility is irrelevant over that time span. According to Dimson & Marsh, the only investment to regularly beat inflation over the last century has been stocks. So our retirement portfolio is over 90% stocks, tilted toward small-cap, value, & international, with the remainder in cash (MM or CDs). No bonds.
But for those who absolutely positively don't want to outlive their money, their only "guaranteed" solution is an annuity with a COLA-- for which peace of mind they will pay dearly. It'll almost certainly require more than 33x expenses...
