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What's your planning horizon?
Old 09-20-2011, 09:28 AM   #1
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What's your planning horizon?

As many of you know, Doris Hope just passed away:

http://www.nzherald.co.nz/world/news/article.cfm?c_id=2&objectid=10753039&ref=rss

Anyway, Doris/Bob had two extraordinary "outliers" in their life together. One being that they were married (at 69 years) much longer than the "typical Hollywood" couple (who's lucky to last 69 weeks ), but also passing after being on this earth for at least a century.

While DW/me planned to age 100 in our own plan (no, don't expect to reach it) just got me thinking about folks on this forum and the general planning that they have done for the future.

So the question is what's the termination age (your age) for your plan?
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Old 09-20-2011, 09:49 AM   #2
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The men in my family, both sides of it. tend to die either in their 50's or before 82. Since I am almost done with the 50's I believe I am safe until my 80's unless I get a Widow Maker. My wife is another story. Who the heck knows? He Dad is 83 but her Mom died in her 40's from brain cancer. Her Dad has heart disease but is still going strong.

My horizon has always been 95 for me...just because you never know. My mother is almost 90 but my Dad had heart disease with several bypass operations and finally succumbed at age 80. He had outlived all his siblings...male and female.

My late wife died at 57. He Dad died in his 40's; her Mother is still living at age 90. Nobody knows when you are going to check out unless you do it yourself. Plan for life not death. My plan allows for survival of one of us up to age 100 or so. The money will be there and if not our grandkids's kids can feed us and change our diapers.
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Old 09-20-2011, 10:01 AM   #3
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I always ran my calculation out to the age of 100, which would be the year 2070.

I just plugged in different ending years though, and got some interesting results. I used the assumptions of retiring at 46, and put in zero for social security, and got the following results:

2070: 76.8% chance of making it
2065: 80.5%
2060: 79.3%
2055: 77.3%
2050: 76.5%

Odd...I wonder how in the heck I'd have a slightly Better chance of the portfolio surviving until the age of 100 (59 years from now) than to the age of 80 (only 39 years)?

The only thing I can think of is that, the shorter the timeframe, the more scenarios are available to be run, so a higher percentage of 39 year cycles tended to fail, than 59 year cycles.

But, if you fail in the 39th year, isn't that pretty much a guarantee your portfolio won't make it to the 59th?
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Old 09-20-2011, 10:06 AM   #4
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I used 95 but expect that I will kick in my late 80s absent special circumstances. But I have no intention of spending down my portfolio. I would like to preserve as much as possible consistent with an active, fun life style.
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Old 09-20-2011, 10:10 AM   #5
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Old 09-20-2011, 10:40 AM   #6
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the shorter the timeframe, the more scenarios are available to be run.
exactly

I ran into the same thing with FireCalc.
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Old 09-20-2011, 10:47 AM   #7
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Quote:
Originally Posted by rescueme View Post
As many of you know, Doris Hope just passed away:

http://www.nzherald.co.nz/world/news/article.cfm?c_id=2&objectid=10753039&ref=rss

Anyway, Doris/Bob had two extraordinary "outliers" in their life together. One being that they were married (at 69 years) much longer than the "typical Hollywood" couple (who's lucky to last 69 weeks ), but also passing after being on this earth for at least a century.

While DW/me planned to age 100 in our own plan (no, don't expect to reach it) just got me thinking about folks on this forum and the general planning that they have done for the future.

So the question is what's the termination age (your age) for your plan?
I put 97 in. I use to think I would start taking money out at 62 and 35 years seemed logical. At that point ssn + pension shold be enough.
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Old 09-20-2011, 11:41 AM   #8
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Call me a pessimist...I use 86. The tables say 84 for me, so I add two years. Some people may think this is too short...but I counteract that by stating that I've assumed a somewhat steady spending level throughout, whereas in actuality I know my spending will decrease in those "final years" as I stop travelling, spending on things like furniture and hobbies, and so on.

Bingo is not expensive.
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Old 09-20-2011, 12:18 PM   #9
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I don't think it is so much the maximum age but the drawdown (not just end value) from a portfolio peak and/or start value that is important. You know, those little wiggly chart lines on FIRECalc that go down to some minima and then go up to a nice end value. If that minima is too low then I don't want to be there.

How will you feel when the portfolio is cut in half? How about just to one quarter? I'm talking about those of us who do not have a pension and have some savings but not so much that these drawdowns would not hurt or make us extremely conservative and fearful.

Personally I plan for around a max drawdown of 50% of our starting portfolio value. I'd be very nervous about such an outcome but that is hopefully worse case. DS will benefit handsomely from this strategy but I'm not doing it for him.

Age wise I'm thinking mid 80's is a good target. Someone said I might live to 150 .

P.S. I seem to recall Bob Hope made gazillions in California real estate
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Old 09-20-2011, 12:43 PM   #10
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84.6 That's my number and I'm sticking to it. Even thou I see some calculators like ORP going to 91 nowdays.

heh heh heh - Don't ask - I think I got the number from an old RMD table back ??
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Old 09-20-2011, 02:13 PM   #11
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Age wise I'm thinking mid 80's is a good target. Someone said I might live to 150 .
By your mid 80's, you just might feel like you're 150 ...
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Old 09-20-2011, 02:16 PM   #12
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My plan goes to age 95 right now. Realistically I would expect to live until about age 88 or so. Still, with greater longevity relatively frequent in my family, I have to consider the question of "What if I live to 104 like my great-grandfather?"

My solution to that is that if I should live to 85, at that point I will re-do my financial plan so that it extends to 105. With part of my funds I'll probably buy a fixed lifetime annuity (should be cheap at that age). Also, if I am not in a continual care facility yet by that age, that could be a good time to arrange for it. I'll have all my bills on auto-pay and the annuity directly deposited into the same account so that those with POA won't have much that they have to do. Gonna be major financial upheaval at W2R's house in the year 2033.
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Old 09-20-2011, 02:25 PM   #13
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By your mid 80's, you just might feel like you're 150 ...
I'm counting on those exoskeleton research efforts to payoff for me by then.
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Old 09-20-2011, 02:27 PM   #14
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I have been using 95. Based on our family history... that seem age is probably pretty solid for planning purposes.
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Old 09-20-2011, 02:30 PM   #15
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My plan goes to age 95 right now. Realistically I would expect to live until about age 88 or so. Still, with greater longevity relatively frequent in my family, I have to consider the question of "What if I live to 104 like my great-grandfather?"

My solution to that is that if I should live to 85, at that point I will re-do my financial plan so that it extends to 105. ...
Wow, you are quite a planner W2R! You have gone well beyond my planning time horizon. Perhaps you should write this all down in some medium that will still be readable by age 85. We cannot know that we will be all that sharp then. The good news is that FIRECalc will have more history to deal with in 20 years, the bad news is that we may have trouble understanding it .
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Old 09-20-2011, 02:49 PM   #16
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Wow, you are quite a planner W2R! You have gone well beyond my planning time horizon. Perhaps you should write this all down in some medium that will still be readable by age 85. We cannot know that we will be all that sharp then. The good news is that FIRECalc will have more history to deal with in 20 years, the bad news is that we may have trouble understanding it .
Luckily, Alzheimers doesn't run in my family and 100% of my relatives have remained as sharp as a tack well into their 90's. My mother was still sending e-mails and making portfolio decisions up to about age 95-97, when she became more and more occupied with her declining health. She did not begin to wander mentally even a little bit until two months before her death, as far as I could tell.

However, you make a good point and one I should and will consider, since I should not count on similar mental strength in old age.
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Old 09-20-2011, 03:13 PM   #17
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I'm counting on those exoskeleton research efforts to payoff for me by then.
Me, too. Lucas Garner, born in 1939, Larry Niven tells us, with the help of prostheses and organ transplants, lived to at least 174, so my plan goes to 2116 (since I was born 3 years after Garner).
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Old 09-20-2011, 06:00 PM   #18
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On a more serious note, I've been thinking recently of taking SS at 64 instead of holding out for more later. This longevity stuff has me a little concerned. What if I really do hit 100?

But then I think, we'll have to sell this big house probably at least by the time we hit our 80's. That should bring in a lot more cash -- Plan B put into action.

Then there is always the chance I'll ride one of those FIRECalc curves up and to the right even if it hits a minima along the way.
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Old 09-20-2011, 06:40 PM   #19
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So the question is what's the termination age (your age) for your plan?
It's not how long we expect to live (sentient or not)-- it's how long we might live.

The worst case would be outliving your money, right? So what's the worst age you could live?

I seem to recall the world's record being a 122-year-old woman. I've heard of a few Japanese elders making it to 111-114. The Department of Defense's annual demographic data routinely shows pension payments to those as old as 110... people who were born at the turn of the 20th century when the "average" age expectancy was 47.

FinancialEngines.com has a limit of 115. FIRECalc used to whine about insufficient data runs if you entered age 120.

I guess the most conservative projection would assume that you stay within your retirement portfolio's dividend yield. But most workers aren't willing to stay on the job for as long as that takes.
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Old 09-20-2011, 06:56 PM   #20
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I'm pretty much in agreement with W2R - age 95 is our target for the physical exit of this world. The mental exit; however, may be sooner depending on unknown variables.

Spouse and I have reasonable longevity on both sides as well as mental acuity until the last five years of life for any relatives who made it to their early 90s. We should have enough money coming in that the LTC is simply icing on the proverbial cake of life.
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