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Old 03-09-2017, 09:50 PM   #21
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Old 03-10-2017, 12:49 AM   #22
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Originally Posted by kimcdougc View Post

Think I am smart enough to cut back if the market and our funds go down and smart enough to spend more if our accounts are doing good.

No rocket scientist needed.

Just my 2 cents.
This is my view as well. Once one has retired not much need to forecast these things as the actuals are available to us. Flexibility is key.
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Old 03-10-2017, 03:19 AM   #23
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A topic that we sometimes discuss is flexibility in what we decide to withdraw and spend. Flexibility in withdrawals and spending is important to retirees because of changing returns.

My own strategy has been to minimize my bare bones expenses, so that I can easily cut way back if the market drops. While the market is up, I feel fine about spending more on discretionary "fluff" of the type that is easy to eliminate from my spending later on.
This is a similar point I thought of while reading the article. Having room to slash your budget if needed takes much stress out of planning for the (unknown) future. Many early retirees have taken small mortgages into retirement and might travel more now than in the future. In a dozen years, if the mortgage is paid off, and the need for travel reduced, that would be a huge impact on future budgets.
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Old 03-10-2017, 03:42 AM   #24
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1st of all all you hippies from the 60's and 70's must be smoking again. A 3.5% wd rate has never failed a 30 year retirement and how many of you plan on living past 90. I'm pretty sure all I'm going need is a loud TV and a computer with large fonts after 80.
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Old 03-10-2017, 08:33 AM   #25
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Originally Posted by imoldernu View Post
Some numbers from a different post that didn't receive much attention, but what I think is important.
Projections... even averages... of market returns can be confusing, and vary according to the objectives of the source. A matter of establishing odds of success in investing.

More important I think, is looking back over time, to see actual numbers, and to look at the variances that happened in real time... in this case, the way that the economy has actually performed over time. The measure is inflation.

As we look forward to our future and the chances that we'll be able to maintain our hoped for standard of living, we can look to actual numbers... that happened.

The numbers below were taken arbitrarily from the government inflation calculator, (dates unimportant) on a ten year basis over the past several decades.
....................................
Ten Year Inflation $
Based on $100.
10 yr, infl $ from
...
1967 to:1977 $181
1977 to:1987 $187
1987 to:1997 $141
...
...................................
...
Not suggest as a means for planning, but to establish another "what if"... as what if high inflation is ahead? On a personal basis, we reassess our assets on a yearly basis, and consider the neartime outlook for our coming year budget.
Yes that was my point. The Firecalc history is during a period of very high returns which implies that 4% was a reasonable expectation in those days.
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+1. I completely agree that it is not prudent to expect future investment returns to match the past, and that the typically suggested 4% WR is unsafe. I have saved at varying rates from 10-30% over the years, had rather good luck with returns. DW and I will be very comfortable with a <2% WR plus a modest pension. I could do without the pension and still be at 2.25%.
Agreed. The lower the better.
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1st of all all you hippies from the 60's and 70's must be smoking again. A 3.5% wd rate has never failed a 30 year retirement and how many of you plan on living past 90. I'm pretty sure all I'm going need is a loud TV and a computer with large fonts after 80.
With technology, you can count on good vision and good hearing until you die. But good luck with 3.5%!
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Old 03-10-2017, 08:40 AM   #26
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It's not just real returns that effect the success of a withdrawal level, but variability of returns also. I haven't seen any forecast of future variability?
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Old 03-10-2017, 09:37 AM   #27
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1st of all all you hippies from the 60's and 70's must be smoking again. A 3.5% wd rate has never failed a 30 year retirement and how many of you plan on living past 90. I'm pretty sure all I'm going need is a loud TV and a computer with large fonts after 80.
Just sayin', that was based on past returns in a rather higher economic growth environment than I think we can expect in future decades.
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Old 03-10-2017, 09:59 AM   #28
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Yes that was my point. The Firecalc history is during a period of very high returns which implies that 4% was a reasonable expectation in those days.
Agreed. The lower the better.
With technology, you can count on good vision and good hearing until you die. But good luck with 3.5%!
FIRECALC does include several periods of horrible returns as well as deflation. The period 1895-1920 had several terrible years, and most of my worst runs start during that period - 1899, 1906, 1916, etc. so I don't think you can make such a blanket statement about the FIRECALC history. It is very long.
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Old 03-10-2017, 10:08 AM   #29
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Yes that was my point. The Firecalc history is during a period of very high returns which implies that 4% was a reasonable expectation in those days.
Agreed. The lower the better.
With technology, you can count on good vision and good hearing until you die. But good luck with 3.5%!
Our thoughts are that a matching strategy with a zero real return over 30 years would provide a 3.33% withdrawal rate before portfolio depletion (100 / 30 years = .333). Add in a bit of a real return and retiree household could be close to a 4% safe withdrawal rate, as long as big sequence of return years were avoided. But we won't withdraw that much anyway. We're also in the lower the better camp and going to try to live mostly off pensions, Social Security and a little side income, once we've started claiming SS.
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Old 03-10-2017, 12:05 PM   #30
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I have some contingency plans like skipping the annual trip to Europe and getting rid of one of our two houses. I did not do these during the last downturn but might if it lasts longer than 2 years. Part of that was my confidence in Firecalc. The other part is that I got here by taking risks and will likely continue to do so.

There is a 20% chance that I will be dead by 84.
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Old 03-10-2017, 08:46 PM   #31
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how many of you plan on living past 90.
Me!! Even though my best guess is that I might expire at around 82 or so, nobody wants to be (or plans to be) old, alone, and broke. But it happens. Therefore my financial plan goes to 95 right now. If I live to 85, I'm going to revise my plan to age 105, probably partially by getting an SPIA.

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I'm pretty sure all I'm going need is a loud TV and a computer with large fonts after 80.
I'm only 68, and I already need a lot more than that (although I really don't use my TV much). I would imagine that by 80 I'll be spending even more than I do now. An 80-year-old might need a lot of things that we don't need now. Have you priced a motorized mobility scooter lately? How about having ramps installed, or buying another house without steps? Dental implants? Long hospitalizations? Live in elder care helper? I could go on.
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Old 03-10-2017, 11:31 PM   #32
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I planned to 95 also, though my Dad is turning 97 in a couple of months. My Mom died just before she would have turned 90, so longevity is common in my family.
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Old 03-11-2017, 02:46 PM   #33
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Me!! Even though my best guess is that I might expire at around 82 or so, nobody wants to be (or plans to be) old, alone, and broke. But it happens. Therefore my financial plan goes to 95 right now. If I live to 85, I'm going to revise my plan to age 105, probably partially by getting an SPIA.


I'm only 68, and I already need a lot more than that (although I really don't use my TV much). I would imagine that by 80 I'll be spending even more than I do now. An 80-year-old might need a lot of things that we don't need now. Have you priced a motorized mobility scooter lately? How about having ramps installed, or buying another house without steps? Dental implants? Long hospitalizations? Live in elder care helper? I could go on.
I've already renovated my retirement home to be handicap accessible. Kinda had to since I bought it to let my parents retire in it and plan to move in it myself once they're gone or need my assistance more frequently and my mom uses a motorized wheelchair already. If not already done, it can be quite pricey to renovate for accessibility. Definitely something that should be considered.
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Old 03-12-2017, 07:17 AM   #34
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I planned to 95 also, though my Dad is turning 97 in a couple of months. My Mom died just before she would have turned 90, so longevity is common in my family.
I haven't specifically planned an expiry date. Since my portfolio keeps increasing, it hasn't been necessary. Probably would pick 95 if I had to as this is conservative.
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Old 03-12-2017, 12:46 PM   #35
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I don't agree with their premise about low future returns, but I like their suggestion to plan for the possibility. I'm early 50s and my 401ks have been 100% equity from Day 1 due to FOMO. But my annual spend stayed low (would be <1% WR excluding income taxes) and I keep over a decades worth in FDIC insured deposits. And still working so my actual WR is still negative.

Longevity risk is a good point, I think. I'm probably among the small minority who won't exclude the possibility of a decade or so bump in lifespans due to some unexpected improvement. And I like the way they framed the SPIA as a trade of higher cash flow in exchange for giving up residual value, I'll probably buy some if my SS doesn't materialize at age 70.
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Old 03-12-2017, 12:53 PM   #36
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Never tally unhatched chickens. Below is a pic of my late wife, taken less than 15 years before she died. She was 6 1/2 years younger than me, and the paramedic who brought her home to die thought she was my mother, (and I was in my 60th year at the time).

I'll take what life I can get, but I don't count on it.

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Old 03-12-2017, 12:55 PM   #37
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I don't agree with their premise about low future returns...
Seems like another version of 'this time it'll be different' to me. I'll believe we've hit the pinnacle of economic and technological development when we've retroactively made Asimov, Roddenberry and Lucas futurists. Maybe without the evil empires.
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Old 03-12-2017, 02:51 PM   #38
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Never tally unhatched chickens. Below is a pic of my late wife, taken less than 15 years before she died. She was 6 1/2 years younger than me, and the paramedic who brought her home to die thought she was my mother, (and I was in my 60th year at the time).

I'll take what life I can get, but I don't count on it.
Carpe diem my friend! Same with Bro. The hospital mistook him for my 94 yo Dad in his final trip. (He was 69)
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Old 03-12-2017, 02:57 PM   #39
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Carpe diem my friend! Same with Bro. The hospital mistook him for my 94 yo Dad in his final trip. (He was 69)
It can come on way, way, too fast, and all previous planning is for naught.
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