Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 05-05-2016, 01:10 PM   #21
Thinks s/he gets paid by the post
Major Tom's Avatar
 
Join Date: Nov 2009
Location: SF East Bay
Posts: 3,129
On the other hand, you could always reduce your expenses and/or increase your portfolio enough so that you can live on a 2.5 - 3% withdrawal rate or less, and don't have to worry about running multiple retirement simulators to squeeze every last dollar out of your portfolio.

But then, we'd have a lot less to talk about here
__________________

__________________
ER, for all intents and purposes. Part-time income <5% of annual expenditure.
Major Tom 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 05-05-2016, 01:13 PM   #22
Full time employment: Posting here.
 
Join Date: Jul 2013
Posts: 568
How critical is it to achieve 100% success before retirement based on FireCalc and similar tools? Meaning should one not even consider jumping into retirement unless the tools give you a 100% success rate? Or have folks here done it at say 85-90% as good enough?
__________________

__________________
Target FI age /year: 50/2025
dvalley is offline   Reply With Quote
Old 05-05-2016, 01:27 PM   #23
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,117
Quote:
Originally Posted by dvalley View Post
How critical is it to achieve 100% success before retirement based on FireCalc and similar tools? Meaning should one not even consider jumping into retirement unless the tools give you a 100% success rate? Or have folks here done it at say 85-90% as good enough?
Bernstein suggests anything over 80% is merely rearranging deck chairs on the Titanic...

Quote:
But history teaches us that depriving ourselves to boost our 40-year success probability much beyond 80% is a fool’s errand, since all you are doing is increasing the probability of failure for political, economic, and military reasons relative to the failure of banal financial planning.
The Retirement Calculator from Hell, Part III
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 05-05-2016, 01:31 PM   #24
Full time employment: Posting here.
 
Join Date: Jul 2013
Posts: 568
Quote:
Originally Posted by REWahoo View Post
Bernstein suggests anything over 80% is merely rearranging deck chairs on the Titanic...
LOL...I think you meant under 80%? So 81% is fighting for the life boat and 100% is reaching ashore?

My conservative plan gets me at 84%, I can tweak things a bit to improve it but not to 100%.
__________________
Target FI age /year: 50/2025
dvalley is offline   Reply With Quote
Old 05-05-2016, 01:32 PM   #25
gone traveling
 
Join Date: Oct 2007
Posts: 1,135
Quote:
Originally Posted by dvalley View Post
How critical is it to achieve 100% success before retirement based on FireCalc and similar tools? Meaning should one not even consider jumping into retirement unless the tools give you a 100% success rate? Or have folks here done it at say 85-90% as good enough?

It's a good question.
My bet - 85% of those on this forum like to see a range of 95-100 percent out of the tools for a 25 year period.

Of course it's just a tool. It doesn't predict the future. Six sigma events do happen, and life events change from one run of firecalc to the next.


I contend this group is the A-list of financially savvy adults across all generational age brackets ... Better than just about anywhere else online or in real life. (Bogleheads too).
__________________
papadad111 is offline   Reply With Quote
Old 05-05-2016, 01:37 PM   #26
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,117
Quote:
Originally Posted by dvalley View Post
LOL...I think you meant under 80%?
No, I meant striving to get anything over an 80% success rate was a wasted effort - according to Bernstein.
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 05-05-2016, 01:43 PM   #27
Full time employment: Posting here.
 
Join Date: Jul 2013
Posts: 568
Quote:
Originally Posted by REWahoo View Post
No, I meant striving to get anything over an 80% success rate was a wasted effort - according to Bernstein.
Oh ok, thanks for the clarification...positive news for me

EDIT: I got a chance to read the Bernstein article and found it to be a great read, thanks REWahoo.
__________________
Target FI age /year: 50/2025
dvalley is offline   Reply With Quote
Old 05-05-2016, 02:09 PM   #28
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 REWahoo View Post
Bernstein suggests anything over 80% is merely rearranging deck chairs on the Titanic...
When your starting asset valuations for both stocks and bonds are in the top decile of periods included in FIRECalc's data set, it's not unreasonable to think that bottom decile returns are in store for us. If that's true one might expect that planning for a 20% failure rate as per FIRECalc might actually mean something closer to an 80% failure rate going forward.

You don't need to assume war, famine, pestilence and asteroids to plan for much lower investment returns than we've seen historically. And low investment returns are survivable, if you have enough starting capital.
__________________
Retired early, traveling perpetually.
Gone4Good is offline   Reply With Quote
Old 05-05-2016, 02:12 PM   #29
Full time employment: Posting here.
 
Join Date: Apr 2014
Location: Houston
Posts: 639
Quote:
Originally Posted by papadad111 View Post
It's a good question.
My bet - 85% of those on this forum like to see a range of 95-100 percent out of the tools for a 25 year period.).

Does anybody remember if we've ever done a survey on what people felt was ok? Might be useful to the OP if it existed.

Just curious as my target was only 80% but I had flexibility to lower expenses if I ran into trouble.



Sent from my iPhone using Early Retirement Forum
__________________
Whisper66 is offline   Reply With Quote
Old 05-05-2016, 02:15 PM   #30
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,465
Quote:
Originally Posted by REWahoo View Post
No, I meant striving to get anything over an 80% success rate was a wasted effort - according to Bernstein.
Quote:
Originally Posted by Gone4Good View Post
When your starting asset valuations for both stocks and bonds are in the top decile of periods included in FIRECalc's data set, it's not unreasonable to think that bottom decile returns are in store for us. If that's true one might expect that planning for a 20% failure rate as per FIRECalc might actually mean something closer to an 80% failure rate going forward.

You don't need to assume war, famine, pestilence and asteroids to plan for much lower investment returns than we've seen historically. And low investment returns are survivable, if you have enough starting capital.
Bernstein makes an important point. The 80% failure won't happen because half the people won't live long enough. The failure rate only applies to the small % of population that actually survives the 30 year period.
__________________
MichaelB is online now   Reply With Quote
Old 05-05-2016, 03:36 PM   #31
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 11,977
Quoting Bernstein out of context again, happens here often. While he indeed stated the above re: 80%, it wasn't to suggest higher probabilities of success weren't without merit/benefit. Immediately after the quote above he also said:
Quote:
Mind you, this is not a call for wild abandon. The above table constrains the retiree desiring a theoretical 97% success rate (of portfolio survival) from spending more than 3% per year of the initial real amount of his nest egg. Taking the accident propensity of the species into account would allow him to spend about 4%. But if you believe that we’re about to encounter a bad returns sequence or simply wish to leave a few baubles to your heirs, you’re right back to 3% again.

So live a little, and enjoy your money, for tomorrow we may be consumed by the ghosts of Hitler, Lenin, and Attila the Hun. And at withdrawals of 3% to 4% of your nest egg, don’t spend it all in one place.
For a 30 year retirement, 3-4% WR corresponds to 95-100% probabilities - not 80%.

While some are comfortable pulling the plug at 80% or less, others need $ well over 100% threshold to sleep at night. Both are good answers, depending on individual circumstances and expectations.
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
Midpack is offline   Reply With Quote
Old 05-05-2016, 03:49 PM   #32
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,117
Quote:
Originally Posted by Midpack View Post
Quoting Bernstein out of context again,...
Yikes! You caught me red fingered...
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 05-05-2016, 04:08 PM   #33
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,431
Quote:
Originally Posted by Major Tom View Post
On the other hand, you could always reduce your expenses and/or increase your portfolio enough so that you can live on a 2.5 - 3% withdrawal rate or less, and don't have to worry about running multiple retirement simulators to squeeze every last dollar out of your portfolio.

But then, we'd have a lot less to talk about here
Quote:
Originally Posted by dvalley View Post
How critical is it to achieve 100% success before retirement based on FireCalc and similar tools? Meaning should one not even consider jumping into retirement unless the tools give you a 100% success rate? Or have folks here done it at say 85-90% as good enough?
When I include SS in FIRECalc calculation, either at 62 or 70 makes very little difference in the result, it tells me that my current spending is about 70% of the level for 100% success rate.

And I do not expect to live another 30 years either.

So, why don't I spend more?

I have enough, and crave no fancy toys. And if I spend more, my stash will likely shrink with time. I hate to see that, being so used to see my stash grow, whether a lot or a little.

Money is cool, even if it is just a number on the laptop screen.
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is offline   Reply With Quote
Old 05-05-2016, 04:17 PM   #34
Recycles dryer sheets
Retch The Grate's Avatar
 
Join Date: Jul 2010
Location: Mountain View
Posts: 252
Quote:
Originally Posted by NW-Bound View Post
I have enough, and crave no fancy toys. And if I spend more, my stash will likely shrink with time. I hate to see that, being so used to see my stash grow, whether a lot or a little.

Money is cool, even if it is just a number on the laptop screen.
And thus the motivations that make players in the games I design happy. Folks love to see little numbers getting bigger on screen.
__________________
Retch The Grate is offline   Reply With Quote
Old 05-06-2016, 11:01 AM   #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 MichaelB View Post
Bernstein makes an important point. The 80% failure won't happen because half the people won't live long enough. The failure rate only applies to the small % of population that actually survives the 30 year period.
But we're early retirees here at ER.org and many of us are married. Joint survivorship is way longer than individual life expectancy.
__________________

__________________
Retired early, traveling perpetually.
Gone4Good 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
Question about FIRECalc spending models howdidigetthisold FIRECalc support 0 03-19-2013 10:11 AM
Dumb "spending models" tab question gsmolin FIRECalc support 8 10-18-2011 09:53 AM
2 Different Spending Models but Same Result...What Up? pinot FIRECalc support 8 06-03-2010 09:23 AM

 

 
All times are GMT -6. The time now is 05:27 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.