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Is 95% Success Rate Good Enough?
Old 08-05-2017, 02:39 PM   #1
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Is 95% Success Rate Good Enough?

That is the number I am using as my acceptable risk threshold. Curious what others think.

Thanks.
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Old 08-05-2017, 02:46 PM   #2
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95% is reasonable. It's a crap-shoot anyhow.
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Old 08-05-2017, 03:01 PM   #3
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95% is higher than the one I had when I retired, so yes, good enough (for me). Besides, to piggyback on REWahoo's post, it is a number that reflects portfolio survival. You may not survuve, and other things may happen, such as natural disaster or armed conflict. Life.
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Old 08-05-2017, 03:08 PM   #4
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It's at least worth considering the data set we are using to compute the risk. 95% sounds good enough, but maybe not if it is already "cherry picked" since it represents the performance within the very best performing economy among hundreds on the planet. If we correct for the possibility that won't continue, maybe 95% isn't what it appears to be. But--how to do that correction/adjustment?
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Old 08-05-2017, 03:21 PM   #5
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From what I've been reading here of late, a 95% success rate would, in a normal/historical environment mean that you'd likely depart this earth with considerably more than what you started with.

My view is that if the absolute worst were to happen, a whole lot of other people will be worse off than the folks on this forum. Ok, so your portfolio cratered by 80% (!). Aside from presenting an awesome buying opportunity, I suspect that one would still be in better shape than the average Joe. The multimillionaires would then be just millionaires and the $50K middle class curve would drop to maybe $30K.
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Old 08-05-2017, 03:25 PM   #6
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I think 95% is perfectly fine.

I used 100% for a while, but decided that was overdoing.
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Old 08-05-2017, 04:38 PM   #7
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Considering there is a better than 5% chance you won't even live long enough to enjoy retirement, I think 95% is fine.
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Old 08-05-2017, 05:50 PM   #8
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If you're looking at 95% and you're 38, ehh... but if you're 58, better.
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Old 08-05-2017, 06:06 PM   #9
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On another forum (bogleheads?) it's been pointed out there's little difference above 80%.

IIRC, because other factors beyond your control come into play.
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Old 08-05-2017, 06:12 PM   #10
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My brain says it's good enough. My blather says it's good enough...

...but my actions say that I'm holding out for 100%. Plus a cushion for a few unforeseen luxuries. Sorry to be such a wuss. Please don't hate me.
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Old 08-05-2017, 06:20 PM   #11
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If the stuff hits the fan, I'm gonna dial back my spending, anyway. I'd go with 95%.
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Old 08-05-2017, 06:39 PM   #12
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95% should be fine. As others have stated there are many things that could happen. However look at the bright side. With every passing year you're closer to realizing that you were OK.
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Old 08-05-2017, 07:14 PM   #13
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95% should be fine. As others have stated there are many things that could happen. However look at the bright side. With every passing year you're closer to realizing that you were OK.
I don't look at it that way. I don't give a hoot about some theoretical "20% chance of plague or Zombies." I look at it as: the last thing I want to be holding the bag for is running out of money. Ergo, what if I don't die early from that 20% chance of something/whatever? So I always calculate to 100% knowing that it's probably roundable to 99% because the financial and economic future cannot effectively be a clone of the past.

I do like that aspect of getting older though. I don't have to cover 50 or 60 years. Just what's left.
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Old 08-05-2017, 07:19 PM   #14
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If you are down to the wire and have 95%, it is NOT good enough. If you are 45 years old and 95%, it is risky.
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Old 08-05-2017, 08:39 PM   #15
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We plan for 100% to over age 100, using a matching strategy, plus a safety margin and money for extended LTC. I don't want to be 90 and have to worry about running out of money.
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Old 08-05-2017, 11:15 PM   #16
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If you are down to the wire and have 95%, it is NOT good enough. If you are 45 years old and 95%, it is risky.
I claim my small contribution to the SWR literature was to point out about 20 years ago on another internet forum that independent of the probability of one's portfolio lasting 30-40 years, one has to consider the probability of dying before running out of money. I think intercst from retireearlyhomepage.com picked up on this idea and extended it here:

Combining Safe Withdrawal Rates and Life Expectancy

Just as a SWAG, if you are 45 years old and plan to a 95% portfolio survivability for, say 40 years, that means your money has a 1 in 20 chance of running out of money by age 85. But there is approximately a 50% chance you'll be dead by 85. So that 1 in 20 chance is effectively cut in half to a 1 in 40 chance, or 97.5%.
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Old 08-06-2017, 12:37 AM   #17
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I agree with travellover, 95% and the knowledge that I have significant room to cut back comfortably, if needed, is good enough for me.
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Old 08-06-2017, 01:05 AM   #18
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I agree with travellover, 95% and the knowledge that I have significant room to cut back comfortably, if needed, is good enough for me.
Exactly. The extra cushion puts you greater than 95%. If you were at the wire, a bare minimum at 95%, it would be a lot scarier. When a cutback means skipping the hot dogs in the beans and rice...
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Old 08-06-2017, 01:29 AM   #19
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It depends........do you just wear a belt?
Or do you wear a belt, PLUS suspenders?

Ok, Ok. My real question is what are your fall back plans if things don't go as well as planned? Could you downsize? Sell a vacation home? Boat, RV? Would you be willing to work part time until the crisis passes? An extra $500-$1000 a month could be huge if you "almost have enough" to survive.
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Old 08-06-2017, 04:25 AM   #20
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Originally Posted by REWahoo View Post
95% is reasonable. It's a crap-shoot anyhow.
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If the stuff hits the fan, I'm gonna dial back my spending, anyway. I'd go with 95%.
+1. There have been people here say they retired with an 80% prob of success, others who waited for 200% (a nest egg 2X the 100% prob $) and everything in between. It's whatever allows you to sleep at night, there is no guarantee, so no right answer.
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