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Worst Case Scenario
Old 05-03-2010, 04:43 PM   #1
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Worst Case Scenario

One of the things I've done periodically, is to do exactly what they describe below. I "assume" worst case scenario with my savings, and if that happens, will I still be able to ER ?

Anyone else go through this excercise? Interesting article regardless.

b


Ready Your Nest Egg for the Worst Case

Testing your portfolio for a 'black swan' market event could up the chances your nest egg will last a lifetime.


By Susan B. Garland, Editor, Kiplinger's Retirement Report

May 3, 2010
Gambling With Monte Carlo


Kiplinger.com
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Old 05-03-2010, 04:58 PM   #2
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This post looks a lot like a copyright violation to me, BWTFDIK?

Always with the annuities, Moishe! Oy! What is wrong with simply buying some puts?

And BTW, worst case scenario is you get hit by a bus tonight. So like the man said in the movie: "get busy living, or get busy dying."
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Old 05-03-2010, 05:39 PM   #3
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The idea that poor or negative returns in the early stages of retirement can lead to financial failiure is not exactly new and there are many ways to deal with it - buying puts (as Brewer suggests), increasing the weighting in bonds, having a few years' expenses in cash, delaying retirement for a year or two (which is my approach), buying annuities.

Of course, it is always possible to have a worst case scenario that will result in running out of money (like putting your money into an annuity and the issuer going bankrupt - unlike deposits there is no govt guarantee for annuities in Hong Kong) and if you take this line of thinking too far you would never retire.
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Old 05-03-2010, 05:45 PM   #4
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Didn't we just go through one of those events?

To heck with the test.... we survived the real thing!
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Old 05-03-2010, 06:08 PM   #5
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I haven't tested a worst case scenario, but I do check to see the minimum average return needed for the retirement portfolio to survive 35 years (2% return). Our worst case is we living on pensions and SS. If it came to that, we'd need to cutback on expenses to fit income, which will be easy once the mortgage is paid off.
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Old 05-03-2010, 06:40 PM   #6
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This post looks a lot like a copyright violation to me, BWTFDIK? "
How so? Because I copied/pasted the entire article? Should I have just put the web link?

(I'm not being defensive, but just asking the logical question in order to understand.)
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Old 05-03-2010, 06:47 PM   #7
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How so? Because I copied/pasted the entire article? Should I have just put the web link?

(I'm not being defensive, but just asking the logical question in order to understand.)
While you can copy/paste one or two sentences as a reference to start a discussion, it is normally good practice to provide the direct link to protect the possible copyright concern. By posting the entire article, someone else could possibly quote your posting as a direct reference (a no-no).

That along with taking up a lot of "space" on this (or any forum) is not something that is normally done...
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Old 05-03-2010, 06:48 PM   #8
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How so? Because I copied/pasted the entire article? Should I have just put the web link?

(I'm not being defensive, but just asking the logical question in order to understand.)
To paraphrase 'Cool Hand Luke.'

Once again an article that fails to grasp the importance of learning to speak Norwegian.

heh heh heh - pssst Wellesley!
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Old 05-03-2010, 07:19 PM   #9
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To paraphrase 'Cool Hand Luke.'

Once again an article that fails to grasp the importance of learning to speak Norwegian.

heh heh heh - pssst Wellesley!
Now you really confused the OP.
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Old 05-03-2010, 07:56 PM   #10
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sorry guys. I was just trying to initiate a discussion.

Have a good day.
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Old 05-03-2010, 08:00 PM   #11
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Didn't we just go through one of those events?

To heck with the test.... we survived the real thing!
You got that right! This was the worst case scenario (I think) and we came out on the other side - back to where we were in 1999!
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Old 05-03-2010, 10:07 PM   #12
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You got that right! This was the worst case scenario (I think) and we came out on the other side - back to where we were in 1999!
I agree the last 10 or so years have been trying to say the least. However, 1966 to 1982 seems to be the most recent "worst case" scenario. People actually retired then thinking they could withdraw 10% (when even 4% failed) of principal per year.
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Old 05-04-2010, 12:53 AM   #13
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People actually retired then thinking they could withdraw 10% (when even 4% failed) of principal per year.
10%!!! Either they were indulging in some fairly high end substance abuse or they had very short life expectancies.
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Old 05-04-2010, 09:57 AM   #14
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I don't think we've seen the worst yet...

China is almost 20% down from their high...

Australia is a bubble waiting to pop...

Europe

Maybe our King will get on the propaganda machine today and anounce another "stimulus" plan to keep this Ponzi scheme going
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Old 05-04-2010, 10:08 AM   #15
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Originally Posted by brewer12345 View Post
This post looks a lot like a copyright violation to me, BWTFDIK?

Always with the annuities, Moishe! Oy! What is wrong with simply buying some puts?

And BTW, worst case scenario is you get hit by a bus tonight. So like the man said in the movie: "get busy living, or get busy dying."

I don't know... maybe the moon gets hit with a black hole and comes crashing into the Earth... that might be a little worst for all..
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Old 05-04-2010, 10:18 AM   #16
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Always with the annuities, Moishe! Oy! What is wrong with simply buying some puts?
I met Moshe a couple years ago. He's a pretty bright guy. This is a guy who HATED VAs several years ago.

Keep in mind a pension IS an annuity............

Are there more scary stories about VAs or options in the news? Probably a dead heat. Puts are not hard at all to do, but most ordinary folks freak out a the word "option" or "derivative".............
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