As long as you understand that guarantee is only as good as the insurance company stays in business and like your investments, you might want to be diversified.
TJ
Must we spend every last penny? Is our appetite for consumption so urgent that we cannot possibly satisfy it? If we die with a nickel left must we regret it?
I plan to live on ~95% of the previous year's income (dividends, interest, SS) and count on my LBYM history to make adjustments for shortfalls. Every year I accomplish this will increase the portfolio and therefore provide a cushion if I need to dip into the principal.
DW and I don't have kids. We're going to be at a WR of less than 3% and if there's a pile left (statistically likely based on historical data at least) when we've both gone poof, it will go to charities - I can live with that. But yes, we'll have regrets that we didn't enjoy it more while we were alive. If there was actually a way to ensure we could "die broke" - we'd absolutely go for it, and that does not mean the excess would go to "consumption."Must we spend every last penny? Is our appetite for consumption so urgent that we cannot possibly satisfy it? If we die with a nickel left must we regret it?
That's a fine strategy, just so long as you take into account how volatile investment income can be. I think some folks have the view that interest and dividends are less volatile than the market overall, but I'm not so sure. CD rates are down 60% or more from just a couple of years ago. Dividends on the S&P 500 are down ~20% or so.
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Doesn't mean the difference between austerity and lifestyles of the rich & famous, but there could be a substantial difference in consumption. Consumption at this stage of our lives is for life's experiences - not things as some may be thinking. YMMV
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If there was actually a way to ensure we could "die broke" - we'd absolutely go for it, and that does not mean the excess would go to "consumption."
Actually I agree with considering an annuity late in life. But if we've spent 1X in the first 20 years of retirement, having 2-3X/yr (for example) for our remaining years when we can't readily enjoy experiences for physical if not other reasons would lead to the same regrets. So the problem remains. But it's a potential solution to the 'die broke' aspect...Annuity.
I don't want to do it now as I don't trust the company over that long of a term. But I'll re-think it as each decade passes.
-ERD50
Maybe I've been wrong all these years but 4% SWR is very near the historical floor for a 30 year retirement, so odds are there would be considerable money left on average. I'm going to be more conservative, but as most here know 4% SWR is not an average, which implies a 50/50 chance, it's a very high probability of success (again historically). Choosing a WR of less than 4% for a 30 year retirement means the retiree is assuming returns will be worse than we've ever seen, including the Great Depression, and/or he/she will live longer than 30 years in retirement. All understandable, but to put it in perspective...
R U sure?But yes, we'll have regrets that we didn't enjoy it more while we were alive.
Actually I agree with considering an annuity late in life. But if we've spent 1X in the first 20 years of retirement, having 2-3X/yr (for example) for our remaining years when we can't readily enjoy experiences for physical if not other reasons would lead to the same regrets. So the problem remains. But it's a potential solution to the 'die broke' aspect...
I have thought for sometime that the "4% SWR" figure is too widely misunderstood. Especially for those on this board, if you retire early, unless very wealthy, less than 4% is likely needed. I think the 4% rule was generally created at a time most retired at 65. Pensions, SS, and lifestyle all have to be considered. With pending SS changes in the future, this too may have an impact down the road.
+1You might want to do some "additional" research about the 4%. Or you can simply ask. I guarantee you that most members of this board do not misunderstood that 4% SWR.
Actually I agree with considering an annuity late in life. But if we've spent 1X in the first 20 years of retirement, having 2-3X/yr (for example) for our remaining years when we can't readily enjoy experiences for physical if not other reasons would lead to the same regrets. So the problem remains. But it's a potential solution to the 'die broke' aspect...
-1I guarantee you that most members of this board do not misunderstood that 4% SWR.
With a "misunderstand" or "is not misunderstood", then I think Sam's grammar is perfectly correct. As it stands it's still plenny good. How's your Vietnamese?-1
This is so far from being grammatical English that I can't even figure out the intent of the posting.
With a "misunderstand" or "is not misunderstood", then I think Sam's grammar is perfectly correct. As it stands it's still plenny good. How's your Vietnamese?
He's letting Bizlady know that while he agrees most of the general population might not understand the concept of the 4% SWR, he thinks that concept is quite well understood by most of the members of this board.
I think we [-]waste[/-] spend quite a bit of time trying to nail down the fourth significant digit of a number that can probably wander back & forth from 3-6% over at least three decades.