Spanky
Thinks s/he gets paid by the post
We have been planning on 3-4% SWR. This may go down to 2-3% if social security payments (about $40K @age 62) were included, keeping our fingers crossed.
I doubt that anyone on the board has been living solely from his portfolio longer than I have. Whatever may be better in theory (and this is debatable anyway), if a collection of high quality stocks with growing dividends can fund your retirement you are much more secure than hoping that you can liquidate shares when you need to.
That's about all I will say on the topic, other than long term success speaks a lot louder than anything one might read.
Ha
In conclusion, the total-return approach to spending
is identical to the income approach for investors whose portfolios generate enough cash flow to meet their spending needs. For those investors
who need more cash flow than their portfolios yield, the total-return approach is the preferred method.
In this last go-round SPX dividends fell by 25% and interest rates fell anywhere from 50%-90+% depending on the portfolio's duration. It seems to me that portfolio income is every bit as volatile as portfolio value.
While SPX dividends fell by 25% (not insignificant), SPX fell by 50%.
Well for those 1-3% swr people. You should never run out of money but you'll almost certainly go with a huge stash left behind. Does anyone besides myself see that as a huge opportunity cost ?
for fun, here's a link to the flip side of the 4% SWR....
http://www.early-retirement.org/forums/f28/beware-the-4-rule-50857-5.html#post952928
the 4% SWR will probably insure that if you retire into a severly falling market that you won't end up eating dog food. However mostly that doesn't happen per the link above.
I doubt that anyone on the board has been living solely from his portfolio longer than I have. Whatever may be better in theory (and this is debatable anyway), if a collection of high quality stocks with growing dividends can fund your retirement you are much more secure than hoping that you can liquidate shares when you need to.
Back in 2007 the DVY ETF would have more appropriately been named the "DOW Dividend Select Financials That Have Been Making Obscene Mortgage-lending Profits" fund. Been a few changes to its holdings since then...It's worth noting that distributions from the Dividend Select fund declined far more than those of the S&P 500 as a whole, as did its NAV. Concentrating in dividend paying stocks is not necessarily a low-risk strategy.
Back in 2007 the DVY ETF would have more appropriately been named the "DOW Dividend Select Financials That Have Been Making Obscene Mortgage-lending Profits" fund. Been a few changes to its holdings since then...
While I agree that concentrating in dividend-paying stocks has its risks, they can be minimized through diversification.
I always enjoy seeing links to threads that I might have missed in the past so appreciate the post. At times, particularly when I'm looking for factual information or a general background that is enough. In fact, I confess that before I ever posted here I actually went back and skimmed through every thread in the Fire and Money forum (to be clear, if the thread didn't look interesting from the subject I didn't always read it). That took me a very long time to do it. And I learned a lot.
Even so, at times I want to actually post about a topic and talk about my thoughts on it and go back and forth with others. For that purpose, reading those old threads does nothing much for me. In fact, they are tantalizing. I so much want to leap in and talk and then I see that, oh, that thread was from 4 years ago.
So, for us newer people, as annoying and tedious as it may be for the long time members, we are probably going to discuss some topics that have been discussed before simply because we haven't discussed them.
All those years shown in the graph, don't they reflect a significant growth period in this country?
Also, the analysis in the graph totally ignores the inflation rate that the US saw in any of the 30-year periods (if this is not correct, please let me know). As you can see in a page like Historical Inflation Rates: 1914-2010, Annual and Monthly Tables - US Inflation Calculator there's enough years with >4% inflation that really makes the argument moot. The analysis has to be done in terms of real buying power rather than nominal dollars.