Avoid running out of money

[obgyn65]

Well there are some posters (like you, W2R, ziggy, FIREd, Braumeister, Rambler, Midpack,Alan, pb4uski, frayne, Nords, Sarah in SC, and a few others) with whom I would feel comfortable asking specific questions, sharing my income data, spreadsheets, working assumptions, the international taxation issues US/EU that I face etc.. This is a website I feel happy and privileged to be part of. However, I am a bit less comfortable sharing more real life, concrete data on this open forum. Especially after sharing some key data over the last few weeks and being told that my profile is quite an outlier... :-)

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Originally Posted by MichaelB Hope you find time to read it and, if it raises any questions, to ask them here.

[Richard4444]

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Originally Posted by obgyn65 Thank you, W2R. I just ordered this book.

+1

[sheehs1]

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Originally Posted by samclem But I'm sure there are people who hit 25X their required annual withdrawals and decide to "take risk off the table" by going from a balanced portfolio with equities to 100% CDs and bonds. Doing that heaps a PILE of risk on the table.

That wasn't exactly the level I was talking about but your point is well taken. I suppose I recognize there are others out there that have WAY more than they will ever need, well above and beyond the 25X and don't need to take any risk at all. I'm not one of them. But they are out there.

Also doesn't mean they do not want what they have to keep up with inflation but it is not required with the level of assets they have.

I think the video was specifically addressing "those" people . Wish I WAS one of them.

[Midpack]

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Originally Posted by Ed_The_Gypsy What a stupid example. That couple was both stupid and greedy. I have no trace of sympathy for them. Swedroe is pitching in a different ballpark than mine.

While I agree it was a terribly "far fetched" example, I've read and followed Larry Swedroe for many years, and he is a (deservedly) well respected financial author/source. A 70 year old couple with $13M investing 100% in risky equities is (I'll be kind) "not normal or typical."

I'm not sure why he chose such an outlier example to make the valid point he was going for in the video - the example distracted from, even obscured the message unfortunately.

FWIW...

[Stanley]

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Originally Posted by Sarah in SC Yes. They aren't off the hook just by shifting the blame to some mythical "bad guy" advisor. It is their money, and ultimately, it is their responsibility to safeguard it.

This article makes a great case for buying some brains by putting the money into a few balanced funds like Wellesly and letting an impartial adviser invest and balance it automatically. When a person gets to old to do it themselves, this would be a great alternative.

I wonder if the adviser violated her fiduciary duty to put people into investments that make sense for their age, risk tolerance, etc.

[ERD50]

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Originally Posted by Midpack I'm not sure why he chose such an outlier example to make the valid point he was going for in the video - the example distracted from, even obscured the message unfortunately.

Agree completely.

And just to test that this isn't driven by any bias on my side (I'm a 75/25 AA type), let's turn this video around a bit. Imagine that couple had $13M in five junk bonds, and four of them defaulted, leaving them with the same ~80% drop in asset value.

I sure would not try to use that as an example of why someone needs more stocks in their AA. The message from me would be the same - they need appropriate investments, diversification, and a reasonable AA. Easy to do with a target fund, a couple index funds, etc. Silly video.

-ERD50

[NotMyFault]

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Originally Posted by obgyn65 His Chinese proverb makes a lot of sense to me. Once you have "won the game", as many forum participants here have, there is no need to take additional risks, as the consequences of being wrong later in life can be disastrous.

Maybe this depends on your definition of the game. Someone who is only investing in high risk high growth potential stocks is definitely playing a game with their future. I would suggest that people using broad market index funds and a reasonable asset allocation were never playing the game to begin with.

[REWahoo]

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Originally Posted by obgyn65 ...being told that my profile is quite an outlier... :-)

You don't think that's an accurate assessment of your often expressed plans to eschew all investments other than annuities, municipal bonds and CD's for a 40+ year retirement horizon? Please point to any other forum members who have plans to retire in their 40's with similar investment plans.

[W2R]

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Originally Posted by obgyn65 Well there are some posters (like you, W2R, ziggy, FIREd, Braumeister, Rambler, Midpack,Alan, pb4uski, frayne, Nords, Sarah in SC, and a few others) with whom I would feel comfortable asking specific questions, sharing my income data, spreadsheets, working assumptions, the international taxation issues US/EU that I face etc.. This is a website I feel happy and privileged to be part of. However, I am a bit less comfortable sharing more real life, concrete data on this open forum. Especially after sharing some key data over the last few weeks and being told that my profile is quite an outlier... :-)

I can understand that! We would be glad to help, but you may not need any help. Either way, I think Swedroe is a sensible guy and his books are really good. I hope you enjoy reading it.

Richard4444, you too! Hope you like the book.

[ERD50]

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Originally Posted by obgyn65 Quote: Originally Posted by MichaelB Hope you find time to read it and, if it raises any questions, to ask them here. ... However, I am a bit less comfortable sharing more real life, concrete data on this open forum. Especially after sharing some key data over the last few weeks and being told that my profile is quite an outlier... :-)

No need to get to specifics, I think most questions can be asked/answered in general, using % rather than actual figures.

But I am curious, what is it about having your profile characterized as an 'outlier' that makes you 'uncomfortable'? I seem to recall that comment (heck, it might have even been from me, but I don't think so), and I saw it only as an observation, not judgmental in any way.

And as an observation, I think it's true. Very few on this forum, let alone the general population, could consider retirement in their mid-40s, with a low WR and zero equities.

And as a judgement, ... well, I guess I just don't see it that way at all.

Here's another, more subjective observation - perhaps your sensitivity knob is 'set to eleven'? Google "this is spinal tap" and "eleven" if that doesn't ring a bell.

ooops, I see another poster said some of the same.. oh well, submit!

-ERD50

[Animorph]

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Originally Posted by NotMyFault Maybe this depends on your definition of the game. Someone who is only investing in high risk high growth potential stocks is definitely playing a game with their future. I would suggest that people using broad market index funds and a reasonable asset allocation were never playing the game to begin with.

With 30+ years of possible retirement, I'm still in the game.

According to FIRECalc a 100% equity allocation is as risky as a 40% equity allocation, each 92.8% success rate for the default 4% settings. I'm fine with 100%, but will adjust if the portfolio starts dropping too far. Same as if I was 40% equities. And the average ending portfolio is higher with 100% stocks. Safety in large numbers there. Also seems a shame to have the kids inherit a bunch of bonds/cash I've been holding for 30+ years.

[NotMyFault]

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Originally Posted by Animorph With 30+ years of possible retirement, I'm still in the game. According to FIRECalc a 100% equity allocation is as risky as a 40% equity allocation, each 92.8% success rate for the default 4% settings. I'm fine with 100%, but will adjust if the portfolio starts dropping too far. Same as if I was 40% equities. And the average ending portfolio is higher with 100% stocks. Safety in large numbers there. Also seems a shame to have the kids inherit a bunch of bonds/cash I've been holding for 30+ years.

I agree that 100% stocks should work if you have the fortitude to handle the market drops. I personally do not have that courage. I am currently about 95% stocks and plan to be at 75% at ER in about 10yrs.
I probably didn't do a very good job of making my point. What I was trying to say was that someone experiencing a loss like the one described must have been in some wildly risky and overvalued investments. In my opinion if that is how you are investing you a playing a serious "game" with your future.
Just out of curiosity are you strictly following the 4% rule now or do you have a lower WR any annuities or pensions?

[HFWR]

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Originally Posted by REWahoo You don't think that's an accurate assessment of your often expressed plans to eschew all investments other than annuities, municipal bonds and CD's for a 40+ year retirement horizon? Please point to any other forum members who have plans to retire in their 40's with similar investment plans.

JG?

[REWahoo]

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Originally Posted by HFWR JG?

You obviously forgot about his working wife...

[gerrym51]

i have substantial amount in trprice 2020 fund.

I am 62.

trowprice tends to have higher percentatages of stocks in their lifrstyle funds

and keeps higher percentages of stocks even after they pass the date than their competitors.

i think thats a good thing

[tryan]

Interesting we never heard the husbands perspective ... some are in it for the GAME. He might be comfortable with his decisions.

[samclem]

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Originally Posted by gerrym51 i have substantial amount in trprice 2020 fund. I am 62. trowprice tends to have higher percentatages of stocks in their lifrstyle funds and keeps higher percentages of stocks even after they pass the date than their competitors. i think thats a good thing

TRP Retirement 2020 fund: 69% equities (US and foreign), ER= .70%
Vanguard Retirement 2025 fund: 70.9% equities (US and foreign), ER = .17%

Pick a target fund to match the allocation and "slope" you want, not your anticipated retirement date. (They don't actually check!)

If an investor's "substantial amount" is $100k, that's how he could save $530 per year with zero added risk. That's a lot of beer and pizza. Multiply as appropriate.

[Animorph]

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Originally Posted by NotMyFault I agree that 100% stocks should work if you have the fortitude to handle the market drops. I personally do not have that courage. I am currently about 95% stocks and plan to be at 75% at ER in about 10yrs. I probably didn't do a very good job of making my point. What I was trying to say was that someone experiencing a loss like the one described must have been in some wildly risky and overvalued investments. In my opinion if that is how you are investing you a playing a serious "game" with your future. Just out of curiosity are you strictly following the 4% rule now or do you have a lower WR any annuities or pensions?

No, I agree. It was just an opportunity to jump in.

I'm not strictly 4%. DW retires this year, we have 2x SS's kicking in, a small pension, kids graduating from college, and Roth conversions. We'll peak at something like 6% early and cruise at 3% for the majority of the time (excluding Roth conversion taxes). However, the basic plan is that the budget is fixed and gets CPI increases, which is sort of close to the 4% rule. Just the income sources are mixed up.

[obgyn65]

I think there are other very conservative investors around here. But I agree my case is non typical.

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Originally Posted by REWahoo You don't think that's an accurate assessment of your often expressed plans to eschew all investments other than annuities, municipal bonds and CD's for a 40+ year retirement horizon? Please point to any other forum members who have plans to retire in their 40's with similar investment plans.

[obgyn65]

I am very comfortable around here. By the way, I have actually shared quite a lot about myself already over the last few weeks, including my NW, annual expenditures, planned annual withdrawals, etc.

Now what about YOUR numbers, ERD50 - when are you going to get comfortable enough about sharing your numbers? :-) I am not being judgmental in any way :-)

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Originally Posted by ERD50 But I am curious, what is it about having your profile characterized as an 'outlier' that makes you 'uncomfortable'? I seem to recall that comment (heck, it might have even been from me, but I don't think so), and I saw it only as an observation, not judgmental in any way. -ERD50