What Success % do you use?

[Dtail]

Quote:

Originally Posted by audreyh1 Yet that can easily happen with just a series of good market runs after one retires. Something that absolutely cannot be determined in advance of retiring. The alternative is not pleasant - not quite enough and then experiencing a series of bad market runs right after retiring. You've got to do the best you can when you retire. Because you are truly rolling the dice. You don't really get a do over. You can go back to work - but it's not going to be the same - it may be hopeless returning to the same type of job and income when you left a couple of years earlier. The longer time passes, the tougher it's going to be.

Bolded - for many/some of us, including me, going back to any resemblance of our old jobs/careers is just not a possibility and that includes consulting.
Thus though or because I don't pad any numbers for the retirement calculators, I do wish for 100% success rate if possible.

[youbet]

Quote:

Originally Posted by audreyh1 Your example is far more extreme - ultra low WR.

Yep, as I said, it's a matter of degree.

[Beer-man]

I use 80% but most likely that is because I’m still in my 30’s and I like the idea of getting to that “don’t have to work” number sooner. The oxymoron is that because of my age the idea of not working also seems boring and non-stimulating.
I’ve observed that bogleheads seems to be a 150-200% group, this forum is a 100-120% group, and mustache group is a <100% group.

[USGrant1962]

Quote:

Originally Posted by Beer-man I’ve observed that bogleheads seems to be a 150-200% group, this forum is a 100-120% group, and mustache group is a <100% group.

Astute observation, and I tend to agree. "This group," of course, is correct!

Serious comment: the "chicken little" mentality that is rampant on BH and shows up here sometimes is an anathema to the fundamental concept of early retirement. If you believe that the next 10 years will be worse than both the Great Depression and the Great Inflation, good for you - don't ER!

[RunningBum]

In the days of yore and pensions with COLA, people didn't need much savings. You lived on what you had coming in with pension+SS, maybe saved a little extra for emergencies and vacations, so you didn't die with much no matter if you went at 70 or 95.

Now, with little or no pension and more uncertainty about SS, we have to build up a nest egg. Unless you buy a bunch of annuities, it's hard to know how much is enough. Some of us will die as millionaires not just because we padded our accounts, but also because probably nothing resembling a bad case we planned to handle happened. You could avoid it by cutting it very thin and planning to find ways to supplement income if a bad case happened, or live very frugally so you don't need much to begin with. Returning to work is an absolute no for me. Living frugally is something I would've considered, but it turned out I had some good fortune and was willing to trade a few years to live better. I'd rather have 40 years of retirement and live very comfortably than 50 years having to watch every penny. If I'd have had to change that 40 number to 25 I'd probably think differently.

[Jerry1]

Quote:

Originally Posted by Dtail Bolded - for many/some of us, including me, going back to any resemblance of our old jobs/careers is just not a possibility and that includes consulting. Thus though or because I don't pad any numbers for the retirement calculators, I do wish for 100% success rate if possible.

Plus, how likely are you to figure out you didn’t save enough soon enough to go back to work? If you retire at say 55, you may not know you screwed up until your 70. In that time, you’ll tell yourself that the market will come back up (feeling comfortable that ups and downs were certainly in your plan). You’ll believe that once Medicare hits, you’ll be better off having some of your medical expenses for health insurance covered. Same with SS. Point is, it’s likely to take a long time and while you may be able to go back to work, you’re not even going to have a chance at anything like you had. You’re old, the world and your field has changed and you won’t even be considered. So, you’re greeting me as I walk into Walmart, but that’s just one more strategy to take some of the financial pain away. By the time you figure out that you screwed up, you’re screwed (IMHO).

So yes, I’d rather be over conservative, work a few more years and die a millionaire. That scenario leaves money to my family. A much better outcome than the alternative.

[donheff]

I used 100% with several calculators when planning for retirement. I found Firecalc shortly after I retired but before DW retired and adopted it as my only calculator. We saved enough to drop way below 4% using the traditional SWR approach and 14 years in have switched to the % remaining portfolio method since we remain way below 4%. At this point, unless there is a financial catastrophe beyond anything we have seen, DW and I have won the game and are focused on living a comfortable life and leaving a good estate to the kids.

For planning purposes I would still recommend that people use the traditional approach with a starting % and annual inflation adjustments to see if you are in the ballpark. 4% may still be reasonable for planning if you have room to fall back in your budget. 3% would be a better level for someone who wants to avoid a stretch. Once you get older your options will widen.

[kcowan]

My odds of surviving to 85 are 50% and our plan took us to 95 before the latest activity.
I will look again when things settle down.

[Car-Guy]

When I retired (6+ years ago) my calculator/calculations said I was 100+% out to 100. I soon realized, after retiring, that living to 100 was extremely improbably and most likely, undesirable. Even 90 would be surprising but remotely possible. Early to mid 80's seem more reasonable/probable for both me and the DW.



So now with my current perspective (realization), I'm blowing that dough while I can enjoy it.

[MichaelB]

Quote:

Originally Posted by audreyh1 Bernstein had a series of articles called "The Retirement Calculator from Hell" where he postulated that 80% success rate was good enough, because anything could happen wreaking however carefully modeled a retirement might be. This is in Part III of The Retirement Calculator from Hell. The Retirement Calculator from Hell, Part III Now about 9 years later, Bernstein seriously backpedals on his advice about AA oriented retirement investments in general, because he discovered that a large number of his clients were spooked out of the market in 2008/2009 and never got back in. Thereby ruining their chances of recovery. Instead, he now recommends covering at least 20 years of (after pension, SS) income needs with high quality low-volatility investments - CDs, short-term bonds, TIPs, SPIAs and only when that was covered should you invest additional money in equities. https://www.whitecoatinvestor.com/be...-win-the-game/

The problem with calculators, and retirement formulas / algorithms in general, is they cannot factor investor behavioural responses into forecasts. It is safe to assume there will be considerable volatility in asset markets and that volatility will negatively affect returns. Portfolio survival rate calculations are only as good as the investor making the decisions.

[CRLLS]

A lot of talk here about less than 100% is good enough. That's OK for them. And a 100% success virtually guarantees that you will die leaving money behind. That is a given, not a possibility, assuming the calculators were right, the market does vary from past performances and we follow the "plan" throughout retirement. For me (us) 100% up to age 100 are the plan. Even then, we have padded our expenses a bit higher than we will actually spend. It is not a goal to spend our last dime. I can't imagine how horrible life would be when/if we reach 90+ yrs and have no money left to spend on a "good home".

Further, I don't understand why Bernstein "seriously backpedaled" from his earlier recommendation based on some people's decision to vary from their plan during the last downturn. That is on the individual person, not Bernstein's recommendation.

[wmc1000]

Like many here we use 100% including SS haircut and longevity to 95.

[mrfeh]

I've always used 100% success.

I use both historical and monte carlo, but prefer historical.

[ERD50]

Quote:

Originally Posted by CRLLS .... Further, I don't understand why Bernstein "seriously backpedaled" from his earlier recommendation based on some people's decision to vary from their plan during the last downturn. That is on the individual person, not Bernstein's recommendation.

Agreed. While we should not ignore the emotional aspect, we should recognize that it is separate from what the numbers say.

Like my analogy - a fear of flying doesn't change the fact that flying is safer than driving. But if flying is going to make you miserable, maybe you should drive instead. But don't fiddle with the statistics to justify your personal preference, just acknowledge it.

-ERD50

[tb001]

Quote:

Originally Posted by ERD50 Agreed. While we should not ignore the emotional aspect, we should recognize that it is separate from what the numbers say. Like my analogy - a fear of flying doesn't change the fact that flying is safer than driving. But if flying is going to make you miserable, maybe you should drive instead. But don't fiddle with the statistics to justify your personal preference, just acknowledge it. -ERD50

FWIW, I really appreciate your number based approach and it’s helped balance the emotional component I see often in people’s posts. We have no interest in living on an ultra low withdrawal rate, so it helps me balance their true risk vs perceived risk. As a relative newbie to thinking about all of this, understanding the numbers behind the failures, and the market dynamics behind cycles that failed, has changed my perspective a lot. My traditional ‘conservative’ approach was always property or cash. I still tend to keep too much in cash, but at least I understand the implications!

[big-papa]

If by success, you mean not running out of money before I die, I will use 100% because my withdrawal method (a version of VPW) guarantees it, unless I am Methusehla. :-)

[gstillson]

100% success is a bit silly though. Imagine if you were confident in your 100% success rate as you sat in your villa in Germany in 1920.

Examining such a long period of 30 to 50 years, you should be looking at a couple thousand years of data and even that would not get you anywhere near a 100% prediction rate.

[Al18]

In the decade before retirement, I thought 80% was sufficient. When I was nearing retirement, I thought 100% was acceptable. Now that I'm retiring next month, 120% is the number I settled on.

[Dtail]

Quote:

Originally Posted by gstillson 100% success is a bit silly though. Imagine if you were confident in your 100% success rate as you sat in your villa in Germany in 1920. Examining such a long period of 30 to 50 years, you should be looking at a couple thousand years of data and even that would not get you anywhere near a 100% prediction rate.

I hear ya, but I guess psychologically for me, it tells me that the future has to be worse than anything we have ever experienced so far and that just makes me feel better. Yes we can have the Japan 1989 long lasting scenario......

[ERD50]

Quote:

Originally Posted by gstillson 100% success is a bit silly though. Imagine if you were confident in your 100% success rate as you sat in your villa in Germany in 1920. Examining such a long period of 30 to 50 years, you should be looking at a couple thousand years of data and even that would not get you anywhere near a 100% prediction rate.

It's not silly, not even a bit. It's a choice.

I don't think of 100% as an 'absolute'. I think of it as 'it will succeed where 80% fails'. And that is a fact. It's a relative thing.

We can't predict the future of course. But that's no reason to ignore the past. Personally, I just did not feel that I should retire early with a plan that has been known to fail in the past. Sure, still no guarantee, but there never is.

So if we don't face anything like 1920's Germany, but do face a challenging market like 10% of the profiles ( a 90% success rate), how will I feel if I run out of money in my early 90's, after scrimping with a diminished quality of life throughout my 80's, trying to stretch my dwindling portfolio?

If that 10-20% is acceptable to you, fine. But what is your plan B?

-ERD50