Am I ready to be FIREd?

[Hyperborea]

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What's all that talk about 1.9% to 3% SWR?..I thought everybody agreed that 4% is a very conservative SWR...What am I missing here?

4% can leave you broke after 30 years. The retirement withdrawal calculators (FIREcalc and intercst's) figure out the withdrawal that will survive the duration given for all of the historical data but there are periods in which you would have had zero dollars left after the 30th year's withdrawal. If you are young enough then you need to be thinking about 40 or 50 or maybe even 60 years of withdrawals. That could mean lower withdrawal rates or variable withdrawal systems or more diversification than the SWR calculators use or a number of different things.

[renferme]

4% will not leave you broke if the FireCalc says you have a 100% chance of success. FireCalc looks at all periods from the past.
Of course, that's not to say that the future will resemble the past.

[Hyperborea]

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4% will not leave you broke if the FireCalc says you have a 100% chance of success. * FireCalc looks at all periods from the past. Of course, that's not to say that the future will resemble the past.

FIREcalc can and will leave you broke after you make your 30th year withdrawal or at the end of whatever other duration you choose. *The maximum SWR is chosen by finding the maximum withdrawal rate that won't leave you broke during the duration but after that there will be at least one historical period in which you are broke (or close to it) otherwise it wouldn't be a maximal withdrawal rate.

There will also be a larger number of other periods in which the portfolio is too small to sustain any significant withdrawals at the end of the specified duration. *There will also be periods in which you have so much money that you will be funding buildings at your alma mater. Which one you will be retiring to is not knowable in advance despite claims by some to be able to see into the future.

If you or your spouse are younger than about 70 you should probably be considering withdrawal periods longer than 30 years unless your portfolio is entirely "fun" money and you live off of SS and pensions.

And as you mention the future may not be like the past and that is yet another reason to be somewhat more conservative with the withdrawal rate and/or more diversified, use a variable withdrawal system, have backups, etc.

[Zipper]

That's bullsh*t Hyper, and you still being a young buck, need a reality check.

I'll be 62 in October, and I help out Seniors here in London.

30 years after age 70 SWR! Give me a break!

Look at the pope!

He's way beyond his best before date.

I know some on this forum think they will live to 100. Good luck!

I deal with 80+ year olds and the picture is not pretty.

Most males are dead at this age.

If they smoked, 90% of them are in the ground.

The surviving females have all kinds of debilitating problems.

Joints, arteries, hearts, kidneys, livers, and brains wear out.

I looked after an 86 year old female today. 15 minutes to get to the toilet, 15 minutes on the can, 15 minutes back to her chair.

She outlived 2 husbands. Hopefully she's going into long term care.

My point is, if you retire at 40, by all means make sure your i's are dotted and your t's are crossed.

If you are 60, 65, or 70, live one day at a time and enjoy yourself.

[retire@40]

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I know some on this forum think they will live to 100. Good luck! I deal with 80+ year olds and the picture is not pretty. Most males are dead at this age. My point is, if you retire at 40, by all means make sure your i's are dotted and your t's are crossed. If you are 60, 65, or 70, live one day at a time and enjoy yourself.

Well said and I agree. Life is too short. I'm figure I will have paid my dues by going to school and working until age 40 so I can live the next 40 in retirement and in reasonably good health (I hope). After 80, chances are I'll be happy just being able to take a piss without having it hurt. My living expenses then will just be food, PoliGrip® and Polident®, so I'm not too concerned what I'll have in the bank.

[Hyperborea]

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That's bullsh*t Hyper, and you still being a young buck, need a reality check. I'll be 62 in October, and I help out Seniors here in London. 30 years after age 70 SWR! Give me a break!

You're right that a lot of people don't make it but the problem is what if you lose your bet on dying before your 20 year - 10 year - 5 year SWR runs out? *My gran will turn 96 this year and we helped her move into an assisted living facility at the end of last year. *She's still lucid and capable of many things but she's become a bit too forgetful. *For the last two years she's been eating pre-prepared meals (store bought or homemade) but before that she had been living on her own in her own apartment cooking and baking for herself. *The facility provides fresh made meals, on site nurses, group activities, etc.

If she had been in the US she wouldn't have had the funds to pay for such a facility. *Her fate then would have been an (from everything I've read and heard) incredibly horrible US Medicaid facility.

As you get older your ability to generate significant new income declines and over 70 virtually disappears. *If you run out of funds then you are in deep trouble. *Of course since the majority of us here are men it would more likely be our wives in trouble after we've spent the money and passed on.

If we're talking about even younger folks at say 40 they should be considering 60 year withdrawals. *The odds that one of the couple reaches 100 is increasing every year. *The differences in the withdrawal rates between a 40 year SWR and a 50 or 60 year SWR are pretty small but it's enough to keep the portfolio from possibly dying before you do.

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I know some on this forum think they will live to 100. Good luck! I deal with 80+ year olds and the picture is not pretty.

As I said, my gran is 95. *My other grandparents lived to their late 70's or 80's and only went so "young" because of smoking related causes. *My parents and their siblings are all still alive and in good health. *So with those genes and advancing medical technology I don't think it would be adviseable for me to bet on either dying at 80 or being so far gone that I won't know the difference.

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Most males are dead at this age.

I'm not sure about the rest of you but I sure don't want to spend it all and leave my wife with nothing after I'm gone.

[Eagle43]

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That's bullsh*t Hyper, and you still being a young buck, need a reality check. I'll be 62 in October, and I help out Seniors here in London. 30 years after age 70 SWR! Give me a break! I deal with 80+ year olds and the picture is not pretty. Most males are dead at this age. If they smoked, 90% of them are in the ground. The surviving females have all kinds of debilitating problems. Joints, arteries, hearts, kidneys, livers, and brains wear out. If you are 60, 65, or 70, live one day at a time and enjoy yourself.

One of the best posts on this forum. DW and my parents, 1 is dead, 2 need LTC, and the last one is basically miserable with physical ailments. I hate to be negative, but it is not easy to get old.

Carpe Diem! Even if you beat the average, age-wise, you will probably be infirm. I saw Phyllis Diller on Larry King last nite, discussing heart disease. She's 88 now, and although she still had that wonderful laugh, she looked like a deer in the headlites. It's way past her time. I'm sure there are many 80+ year-olds who are physically and mentally well-off, but don't bet the house or the IRA on it. If you haven't visited a nursing home, you might try it once. Then you really will believe in Carpe Diem.

[sgeeeee]

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Well said and I agree. *Life is too short. *I'm figure I will have paid my dues by going to school and working until age 40 so I can live the next 40 in retirement and in reasonably good health (I hope). *After 80, chances are I'll be happy just being able to take a piss without having it hurt. *My living expenses then will just be food, PoliGrip® and Polident®, so I'm not too concerned what I'll have in the bank.

My father retired at age 62. He is 83 years old today and is more vital and active than some of my friends who are only 50. He doesn't hear quite as well as he used to, but he hasn't slowed down much. When I say active, I mean he jogs with the dog every day, drives all over the country to visit friends and relatives, does his own auto and house maintenance, sleds and plays in the snow with his grandchildren, . . .

I may not be as active when I'm 83, but I'm going to plan for it because if I can, I want to have as much fun as he's having.

Nice story about your Dad SG. My Dad will be 88 this year, but he can't match your Dad's activity level.
Come to think of it, neither can I

Something for you to shoot for though.

JG

[laurence]

My wife has two great-grandmothers alive, one 96, the other 100. The 96 year old is independent and the 100 year old is in assisted living, both are lucid. Everyone's situation is different, but my wife and I will definitely have to hedge for an extremely long for her (my relatives all seem to kick off in the late 80's). Her grandparents in their late 70's are still crossbow hunting on their Wisconsin property!

[flipstress]

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Everyone's situation is different...

Ain't that the truth? Mine is that I am adopted and have no indication of what my health is likely to be at old age based on genetic info or just plain observing how fit older blood relatives are and how long they live. A bigger retirement pot would be safer for me, but I need to balance it with saving too long that I don't ER at all.

I do appreciate Hyperborea's reminder that the 100%-safe SWR can leave one broke after the SWR period. Each of us can choose to have more padding with our funds or decide it's not worth it based on our situation.

[ESRBob]

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4% can leave you broke after 30 years. The retirement withdrawal calculators (FIREcalc and intercst's) figure out the withdrawal that will survive the duration given for all of the historical data but there are periods in which you would have had zero dollars left after the 30th year's withdrawal. If you are young enough then you need to be thinking about 40 or 50 or maybe even 60 years of withdrawals. That could mean lower withdrawal rates or variable withdrawal systems or more diversification than the SWR calculators use or a number of different things.

Flipstress:
Hyper makes a good point. That is why I try to follow a SWR method that seeks to define "success" or "Survivability" by whether the Real Value of the Portfolio is maintained over the 30 or 40 year time period, as opposed to just having a balance at or above zero dollars at the end of the period.

My method, which is modelled by some researchers, gives up lock-step inflation adjustments each year, instead giving you 4% (possibly as much as 4.3%) of the portfolio value for your withdrawal each year. So you get less-than-perfect inflation protection, but much better survivabilitity (90%+ by historical models with a diversified Slicer's Dream portfolio). Again, survival means the real value of the portfolio is maintained. That means at the end of 30 years or 40 years, or next year, I can start fresh as if it were today, with a new portfolio and a new SWR method.

One other benefit of this approach is if you get lucky and retire into a period of above-average returns, you are giving yourelf a raise, enjoying some of that as you continue to withdraw your 4% or 4.3% of this bigger number. In the traditional inflation-adjusted withdrawal method, the money just keeps piling up but you only give yourself a raise of the inflation rate each year. Suggests no small number of people may end up underspending and leave huge amounts to heirs.

[ESRBob]

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That's basically what my husband is doing. He wants to go in often enough to have a couple of breakfasts with the guys. About stress - I was talking with my doctor the other day, and told him I had stopped all my asthma drugs because I just wasn't having the same problems as when I was working. He said that he has seen a large upswing of stress-related asthma, and that work could certinly be part of that. So, in many ways, being FIREd is good for your health. arrete

Arrete,
Thanks for starting this thread-- I agree with pretty much everything you're saying -- and specifically I have no doubt ER is great for your health. If nothing else you have time to work out. But reducing job stress should be an easy gain if you were not loving work.

Re: your husbands plans to Early semi-retire -- I also like that path but after 4-5 years have one caution:

Initially I started out sticking close to my old work, kept contacts alive, consulting to my old industry essentially.

As I got deeper into ER (and yes, admittedly, at the market restored some portfolio purchasing power and my need for supplemental income started to wane) I started to change and discover more of the 'real me' under all the old armor laid on during my working years. That person really has new interests, and frankly isn't that drawn to the old work stuff I used to do.

So counting on sticking with your old work on a part=tiime and casual basis for 10 or 20 years might be optimistic. Unless you were really lucky and always loved your work, you might find it just doesn't draw you after a few years, and feels a little toxic. Especially true if you have something else you're discovering that you genuinely like to do more, unencumbered by any need to make it yield much, if any, financial rewards, which I believe is a reasonable goal for anyone in ER.

Now I am mostly in learning mode for new interests that might yield reasonable part-time income in a few years, but in any case will be far from my old work world or my initial part-time work in early semi-retirement.

[Nords]

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I saw Phyllis Diller on Larry King last nite, discussing heart disease. *She's 88 now, and although she still had that wonderful laugh, she looked like a deer in the headlites. *It's way past her time.

That's not age, that's cheap plastic surgery.

And having her discuss heart problems with Larry King is like having Jack Daniels & Johnny Walker attend AA meetings...

I agree that visiting a nursing home is great for inspiring carpe diem. But I doubt that even a significant minority of the 80+ are full-time residents, and I suspect that there are more of them out there being active than there are sitting in front of their TVs.

But don't confuse "carpe diem" with "buy it now." Everyone should plan to live longer, whether they expect to or not. Most of us in our 40s, 50s, and even 60s will live longer than today's "average" lifespan (which is only a 50% mortality marker).

And nothing sucks worse than being an elderly invalid-- unless it's being a PENNILESS elderly invalid.

[Eagle43]

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But don't confuse "carpe diem" with "buy it now." *Everyone should plan to live longer, whether they expect to or not. *Most of us in our 40s, 50s, and even 60s will live longer than today's "average" lifespan (which is only a 50% mortality marker). * And nothing sucks worse than being an elderly invalid-- unless it's being a PENNILESS elderly invalid.

I would never promote buy it now. In fact, I express time and again to the point of boring everyone is to LBYM. What I was addressing was the idea that you will live longer and happier. The 80-year olds that I know personally are not in good shape.

I wanna live to be 100, and on that noteworthy birthday I wanna drink a bottle of wine, jog around the block, get laid, and then drop dead. Maybe check the market, call Vanguard, and sell everything, too! That would be in 2043, so keep your fingers crossed. I am. ;D

[BUM]

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I wanna live to be 100, and on that noteworthy birthday I wanna drink a bottle of wine, jog around the block, get laid, and then drop dead.

Me too Eagle but not necessarily in that order.

[Martha]

Gee Bum, you're fiesty this morning.

[flipstress]

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...I try to follow a SWR method that seeks to define "success" or "Survivability" by whether the Real Value of the Portfolio is maintained over the 30 or 40 year time period, as opposed to just having a balance at or above zero dollars at the end of the period.

ESRBob, I'll be looking up your past posts to see further explanations on your withdrawal method--thanks.

I am still in the accumulation phase, with a long way to go. Sometimes, I feel like an ant carrying a few grains of sand each trip in an effort to build a mountain. So I have not begun thinking much about withdrawal strategies.

[bow-tie]

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...I am still in the accumulation phase, with a long way to go. *Sometimes, I feel like an ant carrying a few grains of sand each trip in an effort to build a mountain. *So I have not begun thinking much about withdrawal strategies.

Don't feel like the lone ranger, flipstress. There are times I feel like I'm never gonna get there.

[Mountain_Mike]

Hang in there Flipstress! You sound like a very determined woman, and I'm sure you will attain your goals!