What do you consider an acceptable success %

[Gone4Good]

Quote:

Originally Posted by Cb 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) Cb

I guess this is a danger for the LBYM types who have squeezed every possible penny in their budget. It helped to build the portfolio, but it may be worth considering that all 4% withdrawal schemes are not created equally.

[wabmester]

Quote:

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.

So, our fictional financially savvy early-retiree retires in 1966 with $30K expenses and $750K in 75/25 stocks/bonds.

If he sticks to the 4% SWR and maintains the discipline to stay at 75/25, he's on a course to run out of money in 22 years.

What does our hero do? Does he cut back spending each year? Does he change his allocation once his nest egg is cut in half at year 9? Does he go back to work after a decade of being out of the rat race?

What is *your* savvy disciplined plan B?

[unclemick]

5k in 1966 on a 8.3k income - single and rich.

Throttle back to 12k/yr in the early 90's for a 'thrifty yr' and a lot of 18-24k high on the hog years in da ole Louisiana swamp.

heh heh heh heh heh - after a few years of cheap bastardhood and the history of the 90's have the nose bleed problem of spending too much - 5% variable while young at heart.

remember the Bear - agile, mobile and hostile. Really cheap is a labor of love.

[wabmester]

Quote:

Originally Posted by unclemick2 agile, mobile and hostile. Really cheap is a labor of love.

Yup. I think I could easily cut my expenses in half if it were just me. Not sure the wife and kid would be thrilled with the idea, though.

BTW, the guy who retired in 1966 had a 100% historical success rate at the time. Bad luck for him that the first failure sequence started in 1966.

[d]

one's ability to absorb the risk of lower success %s is clearly related to the amount of slack in one's budget.

[Zipper]

~ 85%.

[spideyrdpd]

So if it says 85% do you think about cutting costs and living on less moola or do you continue to work and save ?

[unclemick]

Chickenheartedness - a seldom used investment term - I adopted from a Bill Cosby monolog(the monster that devoured Cleveland) back when he was young.

In pukker time aka a market downturn of significance - the Norwegian widow likes current yield of your nest egg. I include pension or any other income stream.

Chickenheartedness < or = current yield.

heh heh heh - this under some circumstances could be less than FireCalc or not - depending on your asset mix.

[Khan]

Quote:

Chickenheartedness - a seldom used investment term - I adopted from a Bill Cosby monolog(the monster that devoured Cleveland) back when he was young.

"Smoke and fire and Jello will protect us from the Chicken Heart."

[unclemick]

Yep

Someone else remembers.

heh heh heh

[haha]

Quote:

Originally Posted by d one's ability to absorb the risk of lower success %s is clearly related to the amount of slack in one's budget.

Penetrating insight.

Ha

[youbet]

Quote:

Originally Posted by Cb I don't think 5-10% swings in our annual draw will be all that painful. Sure beats working. 8) Cb

I don't think 5-10% swings in annual withdrawal would be painful either. Too bad short term 5-10% swings wouldn't have a material impact on portfolio survival.

You're right regarding working....... FIRE beats it a zillions times over and I'm enjoying the hell out of it!

[audreyh1]

Quote:

Originally Posted by Cb 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) Cb

Hear! hear!

And the LYBM types can probably adjust most easily and sensibly to fluctuations in portfolio income.

I have a feeling that the "LYBM types" are also doing same after retirement. I know we are!

Audrey

[W2R]

Quote:

Originally Posted by audreyh1 I have a feeling that the "LYBM types" are also doing same after retirement. I know we are!

I know that I'm building a "fudge factor" into my budget, that I will invest most of the time. It's tentatively about 1/3-1/2 of my post-retirement budget.

This accomplishes several goals. If all goes smoothly, I'll continue to increase my nest egg so my 3.5% will get larger and larger as I age. I will be better able to survive various possible financial catastrophes, should they occur (such as if social security craters, if we experience utterly horrendous inflation for a decade, or if my house burns down, and so on). It will also allow me to decrease my withdrawals during bear markets. By considering my "fudge factor" money as a separate pot of money, I will be able to take somewhat greater investment risks with it if I want to. It won't be necessary for my ER income.

As for Firecalc success %, I consider between 90-95% to be adequate, BUT - - I only use Firecalc to validate decisions that I have already come to on my own. If my own common sense and computations say that a withdrawal amount is reasonable, then I run Firecalc as a double-check. So really, all I am getting from it is a sort of veto power which then sends me "back to the drawing board", so to speak.

[rs0460a]

Quote:

Originally Posted by testtubes After running your numbers through Firecalc, what do you think is an acceptable chance for success?

For DW/me, our goal is 100% success rate (against a target of 100% current net income, to age 100, at 3% inflation)

Since DW/me suffer from the bag lady/man syndrome, we tend to be "uber conserative" in our finances. I guess you can say our mantra is "we don't worry about dying with money (we'll never know!), but we don't want to live without it"...

- Ron

[Sam]

Quote:

Originally Posted by tui_xiu 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.

Agreed. BTW, what's the meaning of "tui_xiu"?

[cute fuzzy bunny]

Plan B is cut spending in bad years, and since we're spending fairly loosely over the last few good years, that makes sense. Plan B1 is employ my handyman skills to do odd jobs, mow lawns, replace water heaters, change peoples oil or whatever gets a little cash flow going. Hell, maybe even fix someones computer, develop a marketing/advertising plan and bring in some real money.

Budget wise, I think we're spinning out something in the mid 40's right now. We can trim that back to about 24k without feeling any serious hardship and still living a nice middle class-ish sort of life. Just drop the non-essential spending, turn down the thermostat, go back to the basic satellite package, drop the king crab and filet mignon and champagne from the diet.

In a serious situation, we can drop to 12k or so for a year, maybe two, but thats more severe. Drop non-mandated insurance, very basic, inexpensive but palatable diet, drop the satellite tv and cable internet. Certainly not panhandling/bag lady level, but pretty minimalistic.

Shoot, we might even find that we like simple living

Not to bang the same drum over and over again, but its these scenarios where having limited or no debt really gives you a lot of flexibility.

[Sam]

Quote:

Originally Posted by Cute Fuzzy Bunny In a serious situation, we can drop to 12k or so for a year, maybe two, but thats more severe. Drop non-mandated insurance, very basic, inexpensive but palatable diet, drop the satellite tv and cable internet. Certainly not panhandling/bag lady level, but pretty minimalistic.

That's way too severe, imo. 12K for a family with a young child, in the US? What would your budget look like at that level.

[cute fuzzy bunny]

All the food we could eat of the chicken/pasta/vegetable variety, a nice home, riding in a lexus, watching tv from an antenna, using the local coffee shop or supermarket for occasional internet access, being a bit bare on insurance (except health care), no discretionary spending of any kind.

Looking at about $200 a month for food, $50 for gas (we dont have to drive far), $250 a month for all utilities, $150 for supplemental medical, the rest miscellaneous necessary items.

Pretty tight, but for a year, maybe two...pretty doable. Remember, no car payments, no mortgage, no credit card debt.

Two keys are no debt and being able to make very tasty low cost (and probably healthier) meals at home.

I see a lot of low income people at the supermarket with a cart full of chips, ice cream, hamburger helper and frozen pizzas. My cart would be full of fresh vegetables, beans, rice, pasta and a little chicken or pork.

[heyyou]

What got us to ER, will also get us past hard times in ER. Read "The Millionaire Next Door" for instructions about LBYM.
I second what CFB said about substituting time for convenience in the kitchen. Many tasty dishes (some from other cultures) are started from scratch with fresh, cheap, seasonal ingredients added to legumes and grains.
Spenders will make unwise choices at the grocery store, too. Modern anthropologists found that richer homes had cheaper brand beer cans in the trash. The poorer folks were more susceptible to the lure of premium beer advertising.