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Old 11-30-2013, 08:09 PM   #21
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I spend less than what FireCalc suggests we could spend.

I suspect that this is the kind of belt Alan as on his mind.

Temptation Garter Belt - Very Sexy - Victoria's Secret

W2R, she's quite the sassy gal!
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Old 11-30-2013, 08:12 PM   #22
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I spend less than what FireCalc suggests we could spend.

I suspect that this is the kind of belt Alan as on his mind.

Temptation Garter Belt - Very Sexy - Victoria's Secret

W2R, she's quite the sassy gal!
Ding ding ding, we have a winner

That's the type of belt and suspenders I was thinking of

(In England, what you wear to keep your trousers up are called braces)
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Old 11-30-2013, 08:14 PM   #23
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Somebody said "temptation"?

Temptation, temptation, temptation
I can't resist

I know that she is made of smoke
but I've lost my way
she knows that I am broke
but I must play
temptation, temptation, temptation

Dutch pink and Italian blue
she is waiting there for you
my will has disappeared
now my confusions oh so clear
temptation, temptation, temptation
I can't resist



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Old 11-30-2013, 09:48 PM   #24
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Old habits die hard. I never ever spent all my salary, now that I "pay" myself I never spend all that either.
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Old 12-01-2013, 06:48 AM   #25
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Old habits die hard. I never ever spent all my salary, now that I "pay" myself I never spend all that either.
+1. So far I have "saved" about 15% of my annual withdrawal in a rainy day account. It will be interesting to see if I dare tap that pseudo account on a rainy day.
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Old 12-01-2013, 08:44 AM   #26
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Nope. I told FC how much I wanted to spend to be happily retired. It said I could spend more. I don't see any reason to run out and spend it. But it is nice to know it is there, simply because even FC cant predict the future - so I know I have buffer in FC's recommendation, as well as within my own budget.
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Old 12-01-2013, 09:27 AM   #27
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Old habits die hard. I never ever spent all my salary, now that I "pay" myself I never spend all that either.
Yep - extra goes into a pigeonhole for "special expenses" - more travel or a major purchase someday when we feel like it........
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Old 12-01-2013, 09:39 AM   #28
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This is a common misinterpretation.

FIRECALC is based largely on SWR methodology. It's for planning, SWR was never meant to be applied rigidly for future withdrawal/spending, the various originators said as much from the outset - and repeatedly thereafter. I'd be surprised if the OP finds anyone following FIRECALC or SWR as defined, you're not supposed to!!!
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The authors of the paper, however, did not mean for their scenarios to be applied rigidly or uncritically. The article makes this very important statement:
The word planning is emphasized because of the great uncertainties in the stock and bond markets. Mid-course corrections likely will be required, with the actual dollar amounts withdrawn adjusted downward or upward relative to the plan. The investor needs to keep in mind that selection of a withdrawal rate is not a matter of contract but rather a matter of planning.
Nisiprius requested clarification from Professor Philip L. Cooley, senior author of the Trinity study:
What the "4% SWR" means is not that you can treat a portfolio as if it were a guaranteed annuity. I think all the [Trinity] authors meant is that if it is late 2008 and your stocks halve in value, you don't need to halve your spending instantly. It's OK to cross your fingers and continue spending according to the 4%-then-COLAed plan, even though it means dipping into capital, and it's OK to go on doing that for a while.
Professor Cooley's response:
You have hit the nail on the head! I've tried to explain that thought to journalists but they don't seem to get it. You've got it. Stay flexible my friend!, which is the advice we should give to retirees
.
Safe withdrawal rates - Bogleheads

http://www.aaii.com/journal/article/...is-sustainable
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Old 12-01-2013, 10:06 AM   #29
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Old habits die hard. I never ever spent all my salary, now that I "pay" myself I never spend all that either.
On a monthly basis, I usually have a little left over at the end of each month, which I save. However, bigger expenditures usually come up. Recently I gifted a friend who was in a very tight spot a fairly substantial sum of money. It was annoying because it took me the best part of a year to save that much up but at least I have it to give.

So between the more normal bigger expenditures and me being a philanthropist to my less fortunate friends, I spend most of what I pay myself, though I always keep a decent cushion in checking.

My WR is ~2.5% of the original portfolio and is now ~2.1% of the current portfolio amount, so although I don't save a lot from my monthly "paycheck" I feel as if I am effectively still saving due to my relatively low WR.
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Old 12-01-2013, 01:13 PM   #30
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I have seen many posts over the years on this forum that suggest people spend their money ever so cautiously. If FIRECALC says they can spend 4 percent they spend 2 percent and so on.... Just in case. Many will go out as very wealthy individuals foregoing much utility from their hard-earned nest-egg. At some age it becomes impossible to spend it all without doing stupid things.

My personal opinion, is that we would be much better off to cover basic living expenses with Social Security and a self-funded pension (ie. a SPIA). And then take a somewhat aggressive decumulation approach to the remaining nest-egg. Perhaps making sure that half (or more) of the remaining nest-egg is completely spent by age 80. That type approach will allow for much better nest-egg utility (ie. lifestyle) while you are alive and yet protect you should you win the old age lottery. there are other approaches such as old-age insurance (ie. a SPDA) that can achieve similar results.

Gummi did a study of what "true" safe withdrawal rates would have been to never go broke had you retired in one of the last 50 years or so. His results showed that for a mixed portfolio, the real "safe" rate was almost always much greater than the ubiquitous 3 or 4 percent. If I recall, Safe rates depending on when you retire could be double the 3 or 4 percent rates, and sometimes above 10 percent, The peak in 1950 was at 16 percent (believe it or not).

In my opinion, the problem isn't just to never go broke. The issue is to never go broke and maximize the utility of what you have over your lifetime, especially before the go-slow years.
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Old 12-01-2013, 01:27 PM   #31
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In my opinion, the problem isn't just to never go broke. The issue is to never go broke and maximize the utility of what you have over your lifetime, especially before the go-slow years.
We all have different opinions on this. Mine is to find the compromise WR that allows me enough income while still allowing me to sleep at night. Merely ensuring I don't go broke isn't enough for me; I want to do my best to make sure I'm not walking around with a full load in my pants during severe bear markets.
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Old 12-01-2013, 01:43 PM   #32
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In my opinion, the problem isn't just to never go broke. The issue is to never go broke and maximize the utility of what you have over your lifetime, especially before the go-slow years.
I think that those who are truly content with what they have and their current lifestyle may not see much "utility" in spending just for the sake of spending. Some of our members may choose not to spend simply because they don't have any great burning desire to spend.
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Old 12-01-2013, 06:32 PM   #33
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In my opinion, the problem isn't just to never go broke. The issue is to never go broke and maximize the utility of what you have over your lifetime, especially before the go-slow years.
I tend to agree with you. And if I was around 65 years old and had as much as I do now, I'm sure I'd spend at least 4% and not worry much about it. But for those of us who retired early (47 for me), I just see a potentially very long road ahead, with many years that I need to cover my expenses. I live very comfortably, no complaints, but I'm sure I'd spend a bit more if I didn't worry about a major stock market crash wiping out a good chunk of my savings.
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Old 12-01-2013, 09:17 PM   #34
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I usually run firecalc to include 70% of promised social security, 50 years of non-croak, and a 95% success rate. It comes slightly higher than 4%.
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Old 12-02-2013, 10:00 AM   #35
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100% success and a 45 year period gets you to ~ 3.23% HSWR (Historically Safe Withdraw Rate).

-ERD50
Thats what my WR would be if I retired now. I'm probably going to hold on a little longer because I'm afraid that history will NOT repeat itself and that things may be worse. If it turns out that it looks like I'll have more than expected when I'm 65 (in 14 years) then I'l up the travel budget for a few years - not a bad problem to have.

I don't plan to blindly follow a 3.25% WR each year. I am using FIRECalc (and other tools) to determine if I can retire. I will hopefully spend less as my ER budget assumes I hit the OOP maximum for healthcare costs every year.
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Old 12-02-2013, 10:04 AM   #36
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I use Firecalc as a tool, but not a script.
Me too. Haven't looked at Firecalc in years. Good planning tool but once you reach the conclusion that 3.25% or 3.75% or 4.25% is a good number why do you have to keep obsessing about it? I doubt many people would actually run it every year and base their spending on the results. Me? I just spend the portfolio income which is increasing nicely. port yield varies every day but certainly hasn't impacted my spending.
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Old 12-02-2013, 10:08 AM   #37
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Good planning tool but once you reach the conclusion that 3.25% or 3.75% or 4.25% is a good number why do you have to keep obsessing about it?
Because I'm the mildly obsessive type
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Old 12-02-2013, 11:48 AM   #38
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Because I'm the mildly obsessive type
I think you may have quite a bit of company here.
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Old 12-02-2013, 12:18 PM   #39
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I think you may have quite a bit of company here.
Yes, I think there is a contingent here that does mild OCD well (I claim membership )
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Old 12-02-2013, 12:28 PM   #40
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Yes, I think there is a contingent here that does mild OCD well (I claim membership )
+1

If I had a dollar for every time I've run FireCalc and cFIREsim I'd be...well...retired early...
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