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02-22-2017, 05:11 PM
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#21
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Thinks s/he gets paid by the post
Join Date: Dec 2016
Posts: 1,336
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Quote:
Originally Posted by exnavynuke
The other fun part is that the SWR calculations effectively assume that money is your ONLY source of retirement income. That is almost never the case in reality. When you account for pensions, social security payments, etc, the "real" safe withdrawal rate for most people is likely a significantly higher percentage of their assets. At 62, my COLA's "pension + SS" payments will cover 81.4% of my spending levels for my current lifestyle. If my nest egg only has to fund 80% of my spending for 17 years and then 20% of my spending for 30 years, then the "4% rule of thumb" becomes quite meaningless...
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Thank you for bringing this up. I'm 50. My current withdrawal rate is ~4.4%. When I start to take SS , whether that be at 62, 67 or 70 my withdrawal rate ( barring a severe prolonged market decline) will be much less.
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02-22-2017, 05:22 PM
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#22
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Moderator
Join Date: Feb 2010
Location: Flyover country
Posts: 25,362
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Quote:
Originally Posted by CaptTom
I'm thinking that, at 105, I'm not going to need much to get by on. If I live that long, a small non-private room in a nursing home would probably be more fun than many of the alternatives. If I don't, why waste the time I do have, worrying about something that's unlikely to happen to most of us?
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You never know.
Jeanne Calment lived on her own until 110, then moved into a nursing home for more than another decade. Her health remained tolerably good until 121.
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02-22-2017, 08:44 PM
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#23
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Thinks s/he gets paid by the post
Join Date: Apr 2012
Location: Nashville
Posts: 2,506
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Quote:
Originally Posted by braumeister
You never know.
Jeanne Calment lived on her own until 110, then moved into a nursing home for more than another decade. Her health remained tolerably good until 121.
...
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she illustrates the risk of long tail outcomes: the lawyer who effectively purchased the remainder interest in her house/apartment (the life estate outlived him):
Quote:
In 1965, at age 90 and with no heirs, Calment signed a deal to sell her apartment to lawyer André-François Raffray, on a contingency contract. Raffray, then aged 47 years, agreed to pay her a monthly sum of 2,500 francs (€381.12) until she died. Raffray ended up paying Calment the equivalent of more than €140,000 which was more than double the apartment's value. After Raffray's death from cancer at the age of 77, in 1995, his family continued the payments until Calment's death. Calment's comment on this situation was reported to be, "In life, one sometimes makes bad deals."
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https://en.wikipedia.org/wiki/Jeanne_Calment She would have cleaned up with an annuity.
__________________
OMY * 3 2ish Done 7.28.17
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02-22-2017, 10:38 PM
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#24
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Thinks s/he gets paid by the post
Join Date: Feb 2014
Location: Syracuse
Posts: 3,502
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Quote:
Originally Posted by exnavynuke
The other fun part is that the SWR calculations effectively assume that money is your ONLY source of retirement income. That is almost never the case in reality. When you account for pensions, social security payments, etc, the "real" safe withdrawal rate for most people is likely a significantly higher percentage of their assets. At 62, my COLA's "pension + SS" payments will cover 81.4% of my spending levels for my current lifestyle. If my nest egg only has to fund 80% of my spending for 17 years and then 20% of my spending for 30 years, then the "4% rule of thumb" becomes quite meaningless...
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That's why I like Fidelitys RIP or whatever it's called now. FireCalc takes this all in too, but is not as easy to work those changes.
In RIP i started with good amount of travel expenses that drop to half that amount at 77. I kept bumping that 50 to 77 travel budget up till I start to see failures and I get a pretty SWR of 6%. Since a lot of that is discretionary I feel fine with an initial 6% WR. (However, I structured my buckets (401k and IRA) so I'd only have access to 4.5% from 54.5 to 59.5 as I needed a emotional safety net at the time.) The 401k has done well and I might bump to the 6% now that it's in its last year.
And really, when I make it to 70, SS will cover all my nondiscretionary expenses and if I have a couple hundred k on top of that for fun money I'll be happy.
__________________
“No, not rich. I am a poor man with money, which is not the same thing"
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02-22-2017, 11:27 PM
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#25
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,154
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Quote:
Originally Posted by exnavynuke
The other fun part is that the SWR calculations effectively assume that money is your ONLY source of retirement income. That is almost never the case in reality. When you account for pensions, social security payments, etc, the "real" safe withdrawal rate for most people is likely a significantly higher percentage of their assets. At 62, my COLA's "pension + SS" payments will cover 81.4% of my spending levels for my current lifestyle. If my nest egg only has to fund 80% of my spending for 17 years and then 20% of my spending for 30 years, then the "4% rule of thumb" becomes quite meaningless...
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Yes they do. Most clarify that you take your spending needs minus your other sources of income to determine how large a portfolio you need to support that additional spending. Remember the 4% rule was developed for the full retirement age of 65/66 where it is reasonably assumed that the retiree has also begun their pension and SS income streams. And FIRECALC certainly models the cases where additional income comes online later - as is pertinent to the early retiree. It doesn't render the case where someone has no or little additional income stream meaningless.
__________________
Retired since summer 1999.
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02-23-2017, 05:55 AM
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#26
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Full time employment: Posting here.
Join Date: May 2015
Location: Atlanta suburbs
Posts: 633
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Quote:
Originally Posted by RetiredGypsy
But the 4% rule is 4% the first year and is assumed to increase with inflation each year, right, and that's based on the initial value of the nest egg without yearly re-evaluations? Or did I read the Trinity Study all wrong?
Has a strict perpetual 4% rule been tested? Because my spending isn't anything near what COLA increases say they should be, and that's going back through 12 years of tracking finances.
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This article (link below) seems to indicate that the Perpetual Withdrawal Rate (PWR) is around 3.5%, although I have read other articles which say it is around 3%.
https://portfoliocharts.com/2016/12/...ng-retirement/
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02-23-2017, 07:00 AM
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#27
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Recycles dryer sheets
Join Date: Jul 2014
Posts: 153
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Quote:
Originally Posted by JohnnyBGoode
I have always found Mr. Money Mustache's take on SWR very clear: The 4% Rule: The Easy Answer to “How Much Do I Need for Retirement?”
The whole post is worthwhile reading, but specifically related to the topic of retirement duration there is a relevant passage:
YMMV of course, but it is still one of the best analysis I've seen on the topic.
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+100 on this. I think his analysis and perspective is right on for those using a total return/withdrawal strategy.
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02-23-2017, 08:17 AM
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#28
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Thinks s/he gets paid by the post
Join Date: Jan 2017
Posts: 2,662
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Quote:
Originally Posted by braumeister
You never know.
Jeanne Calment lived on her own until 110, then moved into a nursing home for more than another decade. Her health remained tolerably good until 121.
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People also win the lottery. I'm not going to include that in my retirement plan, either.
I just don't see the need to arrive at death with all my assets intact. Or even any value in doing so.
I'm not against the idea of a PWR or leaving as much of an inheritance as possible. If that's your goal, go for it. It's just not my choice.
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02-23-2017, 08:20 AM
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#29
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Thinks s/he gets paid by the post
Join Date: Jul 2013
Location: Texas
Posts: 1,065
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Quote:
Originally Posted by Big_Hitter
no one lives "30 years" or "35 years" or "20 years"; a little piece of us dies each year until we are 100% dead
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love this quote..I'm stealin' it
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02-23-2017, 08:32 AM
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#30
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2013
Location: Les Bois
Posts: 5,761
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well it's true - that's how the force of mortality works
https://en.wikipedia.org/wiki/Force_of_mortality
maybe I should get a vanity place for the scoob that says "mux"
__________________
You can't be a retirement plan actuary without a retirement plan, otherwise you lose all credibility...
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02-23-2017, 08:48 AM
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#31
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2005
Posts: 10,252
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Quote:
Originally Posted by Travelwanted
wow, I thought these were gems...not one comment...hmmm.
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Your first link had its own 6-page thread a short while ago:
http://www.early-retirement.org/foru...ons-84814.html
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02-23-2017, 09:55 AM
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#32
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2006
Location: west coast, hi there!
Posts: 8,809
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Yep. And most of these studies are probably done by people who are not personally into retirement yet. Some come out with multiple studies ... an endless paper mill to keep up with.
I like the idea of an open spreadsheet that I can poke around in and check the math and assumptions. Might even customize the spreadsheet for myself. Then the mistakes will be mine. But what the heck, I'm in the drivers seat for better or worse.
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02-23-2017, 10:31 AM
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#33
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Thinks s/he gets paid by the post
Join Date: Nov 2009
Location: SF East Bay
Posts: 4,342
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Quote:
Originally Posted by Big_Hitter
no one lives "30 years" or "35 years" or "20 years"; a little piece of us dies each year until we are 100% dead
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I understand the context in which you said this but taken as a stand-alone statement, that is easily the most depressing thing I have read so far today
__________________
Contentedly ER, with 3 furry friends (now, sadly, 1).
Planning my escape to the wide open spaces in my campervan (with my remaining kitty, of course!)
On a mission to become the world's second most boring man.
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02-23-2017, 11:19 AM
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#34
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2013
Location: Les Bois
Posts: 5,761
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well if it makes you feel any better sometimes a big piece of us dies?
__________________
You can't be a retirement plan actuary without a retirement plan, otherwise you lose all credibility...
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02-23-2017, 11:37 AM
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#35
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Full time employment: Posting here.
Join Date: Mar 2008
Posts: 979
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Quote:
Originally Posted by Big_Hitter
well if it makes you feel any better sometimes a big piece of us dies?
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Yeah but they've had a pill for that for a long time now.
__________________
I'm free and I like it!
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02-23-2017, 02:43 PM
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#36
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2003
Location: Hooverville
Posts: 22,983
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Quote:
Originally Posted by Travelwanted
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This Portfolio Charts.com site is extremely interesting. Who is the person behind it?
Ha
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02-23-2017, 03:34 PM
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#37
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2006
Location: west coast, hi there!
Posts: 8,809
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Quote:
Originally Posted by haha
This Portfolio Charts.com site is extremely interesting. Who is the person behind it?
Ha
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See: https://portfoliocharts.com/about/
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02-23-2017, 03:47 PM
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#38
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Recycles dryer sheets
Join Date: May 2012
Location: Brewster
Posts: 367
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Quote:
Originally Posted by exnavynuke
The other fun part is that the SWR calculations effectively assume that money is your ONLY source of retirement income. That is almost never the case in reality. When you account for pensions, social security payments, etc, the "real" safe withdrawal rate for most people is likely a significantly higher percentage of their assets. At 62, my COLA's "pension + SS" payments will cover 81.4% of my spending levels for my current lifestyle. If my nest egg only has to fund 80% of my spending for 17 years and then 20% of my spending for 30 years, then the "4% rule of thumb" becomes quite meaningless...
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I use the Present Value of my Social Security in my calculations.
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02-23-2017, 03:50 PM
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#39
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2003
Location: Hooverville
Posts: 22,983
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Quote:
Originally Posted by Lsbcal
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Thanks Lsbcal. I couldn't imagine that this was essentially an anonymous guy. Not only are the ideas very advanced, but so are the graphics.
Ha
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02-23-2017, 04:54 PM
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#40
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Full time employment: Posting here.
Join Date: Mar 2008
Posts: 979
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Quote:
Originally Posted by DEC-1982
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How interesting. I went back and read through the Trinity Study and they do have unadjusted constant percentage withdrawal rates. Up to 30 years starting just before the Great Depression, there was a 96-88% success rate at 7%(!) between 20-30 years. Starting in 1946, it's 100% across all time periods.
At 6% that increases to 95-98% and remains 100%, respectively.
They even have this to say about 3-4% withdrawal rate:
Quote:
Finally, the lower withdrawal rates of 3% and 4% recommended by some analysts appear to be excessively conservative for portfolios with at least 50% stock, unless the investor wishes to leave a substantial portion of the initial retirement portfolio to his/her heirs.
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Huh. I never caught that there was unadjusted rates in the Trinity Study before.
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