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Re: What do you consider an acceptable success %
Old 02-09-2007, 06:11 PM   #21
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Re: What do you consider an acceptable success %

Quote:
Originally Posted by Scarab Dave

Like Kramer just said, this needs to be a flexible existance. Thinking one can lock in to a static existence is a little presumtuous. I would plan for monitoring and updating budgets/expecation regularly if 100% is really the confidence goal.

Dave
The difficulty is that except for those who are way over funded, there isn't much one can do other than find some kind of employment. Depending on what you did, how long ago, the state of the economy (bad, I would expect if a retirement is messed up) this may not be very easy to do.

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Re: What do you consider an acceptable success %
Old 02-09-2007, 06:27 PM   #22
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Re: What do you consider an acceptable success %


That would only be true HAHA if you planned to exist on cat food. Otherwise there are levers to be pulled to maintain the essentials. Cancel the golf outings, sell the mobile home in Brownsville, or for me, let the scarab sit a bit more than I had hoped. Regular adjustments are imperative to a successful retirement, in my opinion. To blindly follow a plan for 30 years would be unsuccessful unless you are very rich or quite lucky.

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Re: What do you consider an acceptable success %
Old 02-09-2007, 07:28 PM   #23
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Re: What do you consider an acceptable success %

A number of posts above compare "expected 21st century" returns to the "actual 20th century" returns in FIRECALC. I think they have valuable insights, and I don't have much to add.

However, I'd like to add to this comment:

Quote:
Originally Posted by brewer12345
Depends on your situation. Can you cut expenses or generate income in a pinch (possibly by going back to work)? Can you relocate to a lower cost area if things get bad? Then maybe 75 or 80% is OK.
Your required probability of success certainly depends on the split of "needs vs. wants" in your spending. If you think your spending is mostly on "needs" that you couldn't practically cut, then you have to look for a high probability. If your spending has plenty of "wants" that you'd be willing to do without, then a low probablity makes sense.

Here's an approach in FIRECALC: Determine your needs (as in "I need to have $35k per year just to pay for the basics), then run FIRECALC, solving for the assets required to support that spending at a 99% or so level. Intuitively, this much asset goes in one bucket, and you withdraw at the FIRECALC assumed rate from that bucket.

The rest of your assets can be spent on "wants". If you like, you can blow them all on the around-the-world cruise in the first year and know that your "needs" bucket will still sustain you for the rest of your life.

Or, you can just put them in a "wants" bucket, and spend from it in any pattern you like.

Or, you can put those assets in FIRECALC and solve for the annual income that gives you a modest probability of success - maybe 50%. Then you start your retirement by spending at that rate. Periodically you can re-run the "wants" bucket, maybe after the market makes a big up or down move, and adjust your "wants" spending depending on what you find.
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Re: What do you consider an acceptable success %
Old 02-09-2007, 07:36 PM   #24
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Re: What do you consider an acceptable success %

Quote:
Originally Posted by Independent

Your required probability of success certainly depends on the split of "needs vs. wants" in your spending. If you think your spending is mostly on "needs" that you couldn't practically cut, then you have to look for a high probability. If your spending has plenty of "wants" that you'd be willing to do without, then a low probablity makes sense.

Here's an approach in FIRECALC: Determine your needs (as in "I need to have $35k per year just to pay for the basics), then run FIRECALC, solving for the assets required to support that spending at a 99% or so level. Intuitively, this much asset goes in one bucket, and you withdraw at the FIRECALC assumed rate from that bucket.

The rest of your assets can be spent on "wants". If you like, you can blow them all on the around-the-world cruise in the first year and know that your "needs" bucket will still sustain you for the rest of your life.
Here is a post from Dory36 going back 3 years that carries the same basic concept. It's helped me come to terms with the "do I have enough" question and stop worrying about moving in with the kids:

http://early-retirement.org/forums/i...sg6096#msg6096

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Re: What do you consider an acceptable success %
Old 02-09-2007, 07:40 PM   #25
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Re: What do you consider an acceptable success %

Quote:
Originally Posted by wab
Bingo. We adapt our lifestyle to our income, and ideally leave enough headroom for a long rainy season.

I always enjoy all the "who needs bonds?" threads that appear after a 4-year-long bull market run. I look forward to the "uh oh -- now what?" era. Not so much for the schadenfreude, but for a nice new mix of topics.
Hike over here son, grab a knee, and I'll tell you about the 60's and 70's.
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Re: What do you consider an acceptable success %
Old 02-09-2007, 07:45 PM   #26
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Re: What do you consider an acceptable success %

Quote:
Originally Posted by Jarhead*
Hike over here son, grab a knee, and I'll tell you about the 60's and 70's.
Hey, I think I've already heard that story. You had to watch b&w TV by candlelight, right?

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Re: What do you consider an acceptable success %
Old 02-09-2007, 07:45 PM   #27
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Re: What do you consider an acceptable success %

95%
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Re: What do you consider an acceptable success %
Old 02-09-2007, 08:07 PM   #28
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Re: What do you consider an acceptable success %

Quote:
Originally Posted by REWahoo!
Hey, I think I've already heard that story. You had to watch b&w TV by candlelight, right?

Where in hell did you come from?

Blind-Sided by a heckling moderator.

Nice finish to a rain-filled no golf day.
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Re: What do you consider an acceptable success %
Old 02-09-2007, 08:13 PM   #29
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Re: What do you consider an acceptable success %

Quote:
Originally Posted by Jarhead*
Blind-Sided by a heckling moderator.
Yeah, lousy timing. On server switchover day I had to draw "heckelator" duty.

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Re: What do you consider an acceptable success %
Old 02-09-2007, 08:22 PM   #30
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Re: What do you consider an acceptable success %

Crap

I wanted to relive the fun filled 60's and 70's again.

heh heh heh heh heh heh eh
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Re: What do you consider an acceptable success %
Old 02-09-2007, 08:25 PM   #31
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Re: What do you consider an acceptable success %

Quote:
Originally Posted by HaHa
This is more like a footbridge over a high canyon. You have some data that 3 out of 4 people make it over; otherwise it is a long and tiring detour.

3 out of 4 still good enough?
If the footbridge fails, you die. If your fund runs out, you have to cut back on the expense, or get a job. But you don't die. Is 3 out of 4 still good? Yes, it is for me. Fortunately, for me again, my firecal success rate is 90%. So 9 out of 10 is even better.

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Re: What do you consider an acceptable success %
Old 02-09-2007, 08:44 PM   #32
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Re: What do you consider an acceptable success %

Quote:
Originally Posted by REWahoo!
Hey, I think I've already heard that story. You had to watch b&w TV by candlelight, right?
While carrying it to school in knee deep snow. Uphill. Both ways.

And we generated electricity by holding a small generator in our teeth and grinding them to turn the generator as we walked, carrying the black and white tv and balancing the candle behind it.

Of course, all this 'certainty' stuff presumes you have the inputs correct. Something about a heisenberg uncertainty principle is ringing a bell...
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Re: What do you consider an acceptable success %
Old 02-10-2007, 10:15 AM   #33
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Re: What do you consider an acceptable success %

Quote:
Originally Posted by REWahoo!
Here is a post from Dory36 going back 3 years that carries the same basic concept. It's helped me come to terms with the "do I have enough" question and stop worrying about moving in with the kids:

http://early-retirement.org/forums/i...sg6096#msg6096
Yep, looks like the same concept.

But now I want to know - How did you find a 3 year-old post?
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Re: What do you consider an acceptable success %
Old 02-10-2007, 10:32 AM   #34
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Re: What do you consider an acceptable success %

Quote:
Originally Posted by Independent

But now I want to know - How did you find a 3 year-old post?


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Re: What do you consider an acceptable success %
Old 02-10-2007, 10:32 AM   #35
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Re: What do you consider an acceptable success %

Another thing to consider . . .

As we get older, each year becomes more precious and our lifespan shorter. If I were 65 and I had to choose between retiring at an 85% success rate today or working 5 more years to move it up to 90%, I think I'll roll the dice and take my chances.

On the other hand, if I'm 40 and I have to work 10 more years to move from the 80's to the 90's, I think I hunker down and work for greater security.

So with my expectations of a sub-40 retirement age, I'm putting on a couple of belts and suspenders because working the next couple of years is worth the added security over the next 40-60.
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Re: What do you consider an acceptable success %
Old 02-10-2007, 11:06 AM   #36
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Re: What do you consider an acceptable success %

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Originally Posted by REWahoo!


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Re: What do you consider an acceptable success %
Old 02-10-2007, 12:50 PM   #37
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Re: What do you consider an acceptable success %

Quote:
Originally Posted by kramer
For instance, if you can get long term TIPs at 2.4% real (about the current rate), the SWR for 45 years is about 3.57% (40 years is 3.83%). This becomes more impressive when you consider that most folks will also have social security. Of course, there will be reinvestment risk and CPI risk and probably tax issues, but that is still impressive as an extreme example.
You're right - this is a solid way to get a "4-ish" SWR with high success rate.

The only downside for me is it practically assures full depletion of assets at end of retirement.

The same 4-ish SWR with a 60/40 gives you more "run out of money" doomsday scenarios - but on the upside it offers a number of "die with an incredible estate" situations.

Obviously you "can't take it with you" - but having decent odds of leaving a decent pile of money to my kids/grandkids is attractive. Or, having resources for possible late life medical issues.
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Re: What do you consider an acceptable success %
Old 02-10-2007, 01:14 PM   #38
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Re: What do you consider an acceptable success %

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If the footbridge fails, you die. If your fund runs out, you have to cut back on the expense, or get a job.
Exactly what I was thinking... and funny the post you refer to started with an admonishment about poor analogies.

If someone lucked into a lottery or inheritance windfall retirement despite having never saved a dime I'd lean more towards the 100% safety, but all these resourceful, financially saavy, disciplined posters? Nahhh I suspect most would easily adjust and do fine if they rolled the 10% dice on the 90% safety.
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Re: What do you consider an acceptable success %
Old 02-10-2007, 02:51 PM   #39
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Re: What do you consider an acceptable success %

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Originally Posted by tui_xiu
all these resourceful, financially saavy, disciplined posters? Nahhh I suspect most would easily adjust and do fine if they rolled the 10% dice on the 90% safety.
That might work for you........but the concept didn't set well with me so I planned to be able to continue discretionary spending even in down markets. Those "easy adjustments" just didn't look so easy to me!
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Re: What do you consider an acceptable success %
Old 02-10-2007, 03:52 PM   #40
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Re: What do you consider an acceptable success %

Quote:
Originally Posted by youbet
That might work for you........but the concept didn't set well with me so I planned to be able to continue discretionary spending even in down markets. Those "easy adjustments" just didn't look so easy to me!
Why not just defer "long-cycle" discretionary expenditures such as auto replacements or remodeling projects during down years? Or dial it back a few notches on vacation outlays? I don't think 5-10% swings in our annual draw will be all that painful.

Sure beats working. 8)

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