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More 4% vs. 5% Discussions
09-02-2009, 03:35 PM
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#1
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Apr 2004
Location: South Texas~29N/98W Just West of Woman Hollering Creek
Posts: 6,673
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More 4% vs. 5% Discussions
Since we seldom have any discussions about 4% SWR here  , I thought that this was an interesting piece from yahoo today.
 Quote:
What he concluded was that the overall market’s price-earnings ratio — taking the current price for the Standard & Poor’s 500-stock index divided by the average inflation-adjusted earnings for the past 10 years before the date of withdrawal — was predictive enough to produce guidelines. Then he came up with the following suggestions for a portfolio of 60 percent stocks and 40 percent bonds meant to last through 30 years of retirement.
If the ratio was above 20, indicating that stocks were overvalued, than a 4.5 percent withdrawal rate was prudent given that the stock market was likely to fall. But if it was between 12 and 20 (the historical median is roughly 15.5), a 5 percent rate was safe, tested against every historical period for which data was available. And if it was under 12 — a level it almost got to earlier this year — a rate of 5.5 percent would work.
The most recent figure was 17.67, which suggests a 5 percent withdrawal rate for current retirees. It had been above 20 until October 2008.
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how-retirees-can-spend-enough-but-not-too-much.html: Personal Finance News from Yahoo! Finance
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09-02-2009, 04:47 PM
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#2
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Oct 2006
Posts: 7,733
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The thread on the original NYT article is here.
Personally, I am always leary of discussing anything relating to P/E 10 for fear that that H*c*us or his buddy JWR will suddenly appear...
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09-02-2009, 06:04 PM
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#3
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Moderator Emeritus
Join Date: Dec 2002
Location: Oahu
Posts: 26,859
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Quote:
Originally Posted by clifp
Personally, I am always leary of discussing anything relating to P/E 10 for fear that that H*c*us or his buddy JWR will suddenly appear...
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They've conditioned us to flinch in a Pavlovian reflex to any discussion involving that term, no matter how appropriate it is!
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09-02-2009, 06:39 PM
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#4
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
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Quote:
Originally Posted by clifp
The thread on the original NYT article is here.
Personally, I am always leary of discussing anything relating to P/E 10 for fear that that H*c*us or his buddy JWR will suddenly appear... |
Eh, I think that I am about ready to pound the jeebus out of ***** again, assuming he has not been dragged off to the looney bin yet.
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"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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09-03-2009, 08:55 AM
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#5
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Give me a museum and I'll fill it. (Picasso)
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Join Date: Sep 2005
Location: Charleston, SC
Posts: 13,566
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I for one am bored and would love to see the Brewer / Hcs throwdown match of the century. Just for old times sakes. 
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“One day your life will flash before your eyes. Make sure it's worth watching.”
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09-03-2009, 12:32 PM
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#6
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Full time employment: Posting here.
Join Date: Jul 2005
Posts: 987
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Please, folks, how quickly we forget!!!
***** is capable (and regularly does) type pages and pages of his characteristic blather. "Discussing" anything with him is impossible. Arguing with him is like arguing with a 1-hour newscast on the radio. It's all 1-way. One of the good things about this board is the *****-lessness.
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I have an inferiority complex, but it's not a very good one.
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09-03-2009, 01:01 PM
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#7
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
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Yeah, and it is possible that he would be shot on sight here. So the likelihood of ***** bothering us is probably not high.
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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09-03-2009, 02:17 PM
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#8
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Thinks s/he gets paid by the post
Join Date: Oct 2003
Posts: 1,323
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This article in the current Journal of Financial Planning discusses the issue as it relates to retiring into various points in secular bull and bear market cycles. Have to read carefully to fully understand the assumptions and some of the results seem weird but there it is anyway.
Market Cycles and Safe Withdrawal Rates
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We are, as I have said, one equation short. – Keynes
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09-03-2009, 02:29 PM
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#9
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Thinks s/he gets paid by the post
Join Date: Dec 2007
Posts: 4,764
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My plan is to roll a six sided dice each year. That will be the percentage I use. This and more if you sign up for my newsletter.
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