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12-20-2022, 08:07 PM
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#81
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Recycles dryer sheets
Join Date: Aug 2017
Posts: 199
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Quote:
Originally Posted by Fermion
With TIPS now paying something like 1.4% real, a 30 year retirement on just 100% TIPS gives you 4% SWR at 100% success.
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A recent article said 100% TIPS with a 2% real return was the golden ticket. About 6 weeks ago TIPS were at 1.94% real and hit 2% for about 5 minutes.
Here is a site to follow TIPS
https://www.bloomberg.com/markets/ra...nment-bonds/us
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12-20-2022, 08:37 PM
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#82
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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: 38,145
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Quote:
Originally Posted by Doc0
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Which duration TIPS?
__________________
Retired since summer 1999.
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12-20-2022, 08:51 PM
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#83
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Recycles dryer sheets
Join Date: Aug 2017
Posts: 199
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20 year
Bernstein also recommended a TIP strategy to cover retirement
I read a book by James Rickards called Sold Out that inflation will remain high because of the destruction of the JIT (just in time) world wide supply chain due to covid and demographics. According to him this will result in long term GDP to be 2% rather than 3% which is a 33% hit on productivity. Treasuries or TIPS would likely be the right position if this comes true. I thin Powell is hellbent on destroying the FED put and restoring price discovery to the market.
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12-20-2022, 10:52 PM
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#84
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Recycles dryer sheets
Join Date: Nov 2021
Posts: 376
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Price-to-Book
Quote:
Originally Posted by NW-Bound
Some more performance data of a portfolio of 100% S&P for my own curiosity:
Jan 2014 - Dec 2022, no withdrawal: end balance of 2.60x
The optimists are still winners!
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Shareholders must see debt as equity:
Ratio of total debt to equity in the United States
Price-to-Book contains large dollops of GoodWill and ExuberantValuations based on LowestInterestRatesInKnownUniverse?
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12-21-2022, 04:52 AM
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#85
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Dryer sheet wannabe
Join Date: Jan 2018
Location: Montgomery, TX
Posts: 10
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On “The Long View” podcast Christine Benz and the Morningstar team do a nice job walking through the methodology used this year and why they are saying 3.8% now vs 3.3% last year.
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12-21-2022, 05:14 AM
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#86
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Administrator
Join Date: Apr 2006
Posts: 23,038
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Threads merged.
__________________
Living an analog life in the Digital Age.
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12-21-2022, 11:06 AM
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#87
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Thinks s/he gets paid by the post
Join Date: Jun 2017
Location: Western NC
Posts: 4,633
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Quote:
Originally Posted by NW-Bound
Eh, timing is everything, starting with when we were born.
If we were born in the Middle Ages, no, just 50 years earlier than our birthyear, there would be no IRA, no 401k, no SS. What would people do if they did not want to work till they died?
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Goodness, what year were you born?
My maternal grandfather, born 1907, still collected plenty of SS plus a small pension, died in 2000 at age 93.
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12-21-2022, 07:24 PM
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#88
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2008
Posts: 35,712
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Quote:
Originally Posted by ncbill
Goodness, what year were you born?
My maternal grandfather, born 1907, still collected plenty of SS plus a small pension, died in 2000 at age 93.
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After I made the post, realized my mistake and thought about changing the 50 to 100 years, but then decided to leave it there to see if anybody noticed and said anything.
Of course, many of us have read the story about the first ever SS recipient.
Quote:
On January 31, 1940, the first monthly retirement check was issued to Ida May Fuller of Ludlow, Vermont, in the amount of $22.54. Miss Fuller, a Legal Secretary, retired in November 1939. She started collecting benefits in January 1940 at age 65 and lived to be 100 years old, dying in 1975.
Ida May Fuller worked for three years under the Social Security program. The accumulated taxes on her salary during those three years was a total of $24.75. Her initial monthly check was $22.54. During her lifetime she collected a total of $22,888.92 in Social Security benefits.
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__________________
"Old age is the most unexpected of all things that happen to a man" -- Leon Trotsky (1879-1940)
"Those Who Can Make You Believe Absurdities Can Make You Commit Atrocities" - Voltaire (1694-1778)
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12-21-2022, 10:28 PM
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#89
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Full time employment: Posting here.
Join Date: Oct 2007
Posts: 621
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Making plans for our 1st portfolio withdrawal for living expenses during 2023 in our new retirement.
I am 66 1/2, DW is 61, no pension, no annuity & no Social Security yet.
Doing Roth conversions & saving Roth for health expenses later in life / For kids
In 2022 we supplemented our banked dividends with the cash savings which will soon be depleted.
Reading up on different withdrawal ways...Prime Harvest & other ways. Some say the traditional withdrawal sequence of taxable/ tax deferred & then Roth. Fidelity says proportional withdrawals every year from all 3 types according to the totals of taxable, tax deferred & Roth.
I suspect we will need about $50,000 to fill the gap after the taxable dividends which are coming to the bank & the ratio is 80% from taxable i.e $40k & 20% from tax deferred i.e.. $10k in accordance with percentages of the total kitty.
This is the initial premise I am starting with & will see how the year progresses. I may be close or totally off & will need a midway correction .
Leaning towards doing the above $50k withdrawal in January 2023, to avoid going thru this exercise each month.
I have read the bucket strategy withdrawals of Christine Benz, but do not understand the nitty gritty withdrawals from safer investments Bonds & then fill the Bond bucket from Stocks.
Will certainly need your help & guidance along the way. Trying to plan a simple 4% spending which will include dividends & some withdrawals.
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12-21-2022, 11:48 PM
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#90
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Full time employment: Posting here.
Join Date: May 2014
Posts: 986
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Quote:
Originally Posted by marko
+1. I always wonder how valid looking back 100 years is. The world, finance, people and life is so entirely different from even 50 years ago that I worry that that data cannot be really relevant.
How different we are from the people of 1922! How differently companies are run today with very different tools, information, regulations. Who could have guessed 50 years ago that the likes of GE, GM and others would be where they are today?
I appreciate looking back at history, but often wonder how valuable financial data is coming from such a different world.
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I also thought that the old data from many years ago would be of very limited value. But what else is certain except perhaps keep working until death and hope not to get unemployed before that.
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12-22-2022, 02:43 PM
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#91
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Dryer sheet aficionado
Join Date: Apr 2020
Location: D.C. Metro Area
Posts: 49
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This seems relevant but I have not seen it discussed here:
The Impact of Taxes on the 4% Rule by Wade Pfau, 9/25/22
https://www.advisorperspectives.com/...-on-the-4-rule
Quote:
The goal of constant inflation-adjusted spending in retirement is presumably meant to be an after-tax objective. But constant inflation-adjusted taxes will not be a reality for most retirees, meaning that the starting premise of the 4% rule is even less applicable in real life than commonly presumed. Even with the incredibly simplified cases examined here, constant pre-tax spending will not translate into constant after-tax spending.
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__________________
One can tilt at only so many windmills.
DH: Federal FI/ResignE December 2021 (age 50)
DW: Federal FI/RetireE March 2023 (age 56)
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12-22-2022, 04:48 PM
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#92
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Administrator
Join Date: Apr 2006
Posts: 23,038
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It seems a fairly obvious point - you need to include taxes as part of your expenses when you do your analysis. To grossly simplify, if you live solely off your portfolio and need to pay tax on each dollar you take from it, then your spending, grossed up for taxes is:
Actual buying stuff spending/(1-tax rate) = expenses for retirement calculators like FIRECalc.
So if I want to buy $100k worth of stuff every year, and my effective tax rate (state + federal) is 27.5%, then the spending number I plug into the first tab of FIRECalc is $100k/(1-.275) = $137,931
__________________
Living an analog life in the Digital Age.
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12-22-2022, 08:10 PM
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#93
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Thinks s/he gets paid by the post
Join Date: Dec 2016
Location: DC area
Posts: 2,495
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Quote:
Originally Posted by OfficeSpace
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It is frequently discussed here. Income taxes are an expense and need to be included in your budget - just like property taxes or food. And tax-free accounts (Roth) are more valuable than tax deferred accounts. No model or withdrawal scheme knows your personal tax situation, you need to account for taxes in your budget.
__________________
FI and Semi-ER March 24, 2017
Consulting to stay engaged
"All models are wrong, some are useful." - George Box
“There is always a well-known solution to every human problem: neat, plausible, and wrong.” - H.L. Mencken
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12-22-2022, 08:47 PM
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#94
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Thinks s/he gets paid by the post
Join Date: Nov 2013
Location: Twin Cities
Posts: 3,941
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4% is the perfect SWR. Well, as long as your horizon is exactly 30 years, your portfolio is 50/50 domestic and you don’t ever have:
- Social Security income
- rental income
- work income
- a sale of property or other investment
- a major expense
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12-22-2022, 08:48 PM
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#95
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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: 38,145
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Ha ha!
__________________
Retired since summer 1999.
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12-22-2022, 10:39 PM
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#96
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2013
Posts: 9,358
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Quote:
Originally Posted by flyingaway
I also thought that the old data from many years ago would be of very limited value. But what else is certain except perhaps keep working until death and hope not to get unemployed before that.
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There is a lot strategies in between that scenario and a 4% withdrawal rate using stock and bond funds.
__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
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12-22-2022, 10:49 PM
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#97
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2014
Location: Spending the Kids Inheritance and living in Chicago
Posts: 17,094
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Quote:
Originally Posted by rkser
Making plans for our 1st portfolio withdrawal for living expenses during 2023 in our new retirement.
I am 66 1/2, DW is 61, no pension, no annuity & no Social Security yet.
Doing Roth conversions & saving Roth for health expenses later in life / For kids
In 2022 we supplemented our banked dividends with the cash savings which will soon be depleted.
Reading up on different withdrawal ways...Prime Harvest & other ways. Some say the traditional withdrawal sequence of taxable/ tax deferred & then Roth. Fidelity says proportional withdrawals every year from all 3 types according to the totals of taxable, tax deferred & Roth.
I suspect we will need about $50,000 to fill the gap after the taxable dividends which are coming to the bank & the ratio is 80% from taxable i.e $40k & 20% from tax deferred i.e.. $10k in accordance with percentages of the total kitty.
This is the initial premise I am starting with & will see how the year progresses. I may be close or totally off & will need a midway correction .
Leaning towards doing the above $50k withdrawal in January 2023, to avoid going thru this exercise each month.
I have read the bucket strategy withdrawals of Christine Benz, but do not understand the nitty gritty withdrawals from safer investments Bonds & then fill the Bond bucket from Stocks.
Will certainly need your help & guidance along the way. Trying to plan a simple 4% spending which will include dividends & some withdrawals.
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My plan is to take from IRA and leave the Roth as long as possible. Doing this prior to SS and RMD means it's possible the IRA withdrawal is large enough to seriously reduce or eliminate the Roth Conversion amount.
Either way by withdrawal or withdrawal and conversion, the IRA is reduced (not counting growth) for when RMD's are required.
If I was taking out a huge amount, I could see the attractiveness of taking the last bit out of taxable/roth to prevent triggering IRMA or other surtaxes.
__________________
Fortune favors the prepared mind. ... Louis Pasteur
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12-23-2022, 11:30 AM
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#98
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2013
Posts: 9,358
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My bad, last post should read there *are* a lot of strategies.
__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
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