View Poll Results: Lowest equity allocation with 95%+ success as reported by retirement tools
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0%
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45 |
60.81% |
1%-11%
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4 |
5.41% |
11% - 20%
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5 |
6.76% |
21% - 30%
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5 |
6.76% |
31%-40%
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7 |
9.46% |
41% - 50%
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2 |
2.70% |
50%+
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6 |
8.11% |
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Poll: Lowest equity allocation possible from retirement tools
09-17-2023, 10:07 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: Jun 2016
Location: Colorado
Posts: 8,816
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Poll: Lowest equity allocation possible from retirement tools
What is the lowest equity allocation you can use with 95%+ success from any of the popular retirement tools based on YOUR actual situation.
I know more may be better for individuals, but what is the lowest you can go with success?
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09-17-2023, 10:41 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: Jun 2006
Location: Boise
Posts: 7,611
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I don't understand the poll. I think there are missing requirements/assumptions.
Anyone can get 100% success in FIREcalc with 0% equities with a low enough WR% and/or a short enough time frame and/or enough SS income.
For example, $1M in FIREcalc, spending $20K per year, 0% equities, for 5 years is probably 100% successful. For another, $40K in SS, spending $30K, $500K in assets, 0% equities, for 10 years is probably also 100% successful.
Do you mean what is the lowest equity percentage I can use with all of my other actual particulars and still get to 95% success? For my particulars, I can do 0% equities and get 100% success.
(Didn't vote yet in the poll.)
__________________
"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
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09-17-2023, 10:44 PM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2016
Location: Colorado
Posts: 8,816
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Quote:
Originally Posted by SecondCor521
I don't understand the poll. I think there are missing requirements/assumptions.
Anyone can get 100% success in FIREcalc with 0% equities with a low enough WR% and/or a short enough time frame and/or enough SS income.
For example, $1M in FIREcalc, spending $20K per year, 0% equities, for 5 years is probably 100% successful. For another, $40K in SS, spending $30K, $500K in assets, 0% equities, for 10 years is probably also 100% successful.
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Base it on your situation, not a hypothetical. What is the answer for YOU?
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09-17-2023, 11:16 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: Apr 2012
Posts: 5,783
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Quote:
Originally Posted by COcheesehead
Base it on your situation, not a hypothetical. What is the answer for YOU?
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OK, I'll bite with what I think you are asking  .
For our situation, using a 30 year horizon and 0% equities (Selecting "Total Market" on the FIRECalc "Your Portfolio" tab" and setting the "percentage of equities..." value to zero) yields a 100% success rate in FireCalc. A pension (even though non-COLA) and getting (in the future) the maximum SS payout makes the difference.
For a 95% success rate, FIRECalc says we could increase our spending by about $45K/year. But we are fine where it is now  .
__________________
FIREd date: June 26, 2018 - "This Happy Feeling, Going Round and Round!" (GQ)
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09-17-2023, 11:23 PM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2016
Location: Colorado
Posts: 8,816
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Quote:
Originally Posted by jollystomper
OK, I'll bite with what I think you are asking  .
For our situation, using a 30 year horizon and 0% equities (Selecting "Total Market" on the FIRECalc "Your Portfolio" tab" and setting the "percentage of equities..." value to zero) yields a 100% success rate in FireCalc. A pension (even though non-COLA) and getting (in the future) the maximum SS payout makes the difference.
For a 95% success rate, FIRECalc says we could increase our spending by about $45K/year. But we are fine where it is now  .
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You get the question. Thank you.
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09-17-2023, 11:57 PM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2006
Location: Boise
Posts: 7,611
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Quote:
Originally Posted by COcheesehead
Base it on your situation, not a hypothetical. What is the answer for YOU?
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Ah, I thought that might be what you meant.
With my particulars in FIREcalc, I get 100% success across the entire spectrum (0% equities to 100% equities). I'm 54 and have a 36 year planning horizon, SS at 70 which covers my current spending, a side gig, and about a 1.39% net WR.
__________________
"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
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09-18-2023, 01:12 AM
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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: Jul 2008
Location: Leeward Oahu
Posts: 16,700
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I only have a 23 year time horizon as I plan to die at 99 (DW as well in our planning.)
I get 100% with zero equities - though I'd likely never do that.
IF I deleted all my equities (maybe 1/3 now) I'd be investing very differently in cash investments and bonds.
I look at "plan killers" as two of us in LTC for 15 years, runaway inflation, or a big asteroid hitting the mid pacific. Maybe something else unknown, but unimaginable at this point??
__________________
Ko'olau's Law -
Anything which can be used can be misused. Anything which can be misused will be.
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09-18-2023, 09:26 AM
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#8
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Recycles dryer sheets
Join Date: Dec 2022
Posts: 123
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For my specific situation- needing an 8 year bridge to SS starting soon-
0% equities gives the highest withdrawal rate with zero failures.
25% equities gives a slightly higher withdrawal rate with around 5% failures.
60% (my current portfolio) gives a higher rate with around 8% failures. I’m going to stick with this approach. Going up doesn’t increase the withdrawal rate without significantly increasing failures.
This account is only half of our 401k. We can always adjust withdrawals or SS start date based on performance.
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09-18-2023, 09:31 AM
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#9
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Thinks s/he gets paid by the post
Join Date: Jul 2011
Location: Reading, MA
Posts: 1,478
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Quote:
Originally Posted by COcheesehead
What is the lowest equity allocation you can use with 95%+ success from any of the popular retirement tools based on YOUR actual situation.
I know more may be better for individuals, but what is the lowest you can go with success?
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0% equities, obviously.
You simply need a large portfolio of bonds relative to your withdrawal/spending amount...
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09-18-2023, 09:32 AM
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#10
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2016
Location: Colorado
Posts: 8,816
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Quote:
Originally Posted by TheWizard
0% equities, obviously.
You simply need a large portfolio of bonds relative to your withdrawal/spending amount...
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So 0% works for you in you current situation?
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09-18-2023, 09:33 AM
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#11
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Thinks s/he gets paid by the post
Join Date: Oct 2014
Posts: 1,470
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Quote:
Originally Posted by SecondCor521
Ah, I thought that might be what you meant.
With my particulars in FIREcalc, I get 100% success across the entire spectrum (0% equities to 100% equities). I'm 54 and have a 36 year planning horizon, SS at 70 which covers my current spending, a side gig, and about a 1.39% net WR.
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^This is us. Mutiple COLA pensions currently totaling over 100k/yr. Eventually with SS and DW's future FERS COLA pension we will be at aprox 180k/yr. Budget is aprox 110k now so we could definitely be fine with 0% equities.
__________________
-Big Dawg-FI since 9/2010. Failed ER in 2015. 2/15/2023=DONE! "Blow that dough"-Robbie
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09-18-2023, 09:33 AM
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#12
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Thinks s/he gets paid by the post
Join Date: Nov 2006
Posts: 1,577
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I have a feeling the vast majority on this forum will have enough money to show 0% equities - especially if they add in SS and other income. Mine was 100% at 0% equities.
My actual allocation is 50/25/25
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09-18-2023, 09:37 AM
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#13
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Thinks s/he gets paid by the post
Join Date: Jul 2011
Location: Reading, MA
Posts: 1,478
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Quote:
Originally Posted by COcheesehead
So 0% works for you in you current situation?
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Not for me.
But I have a negative withdrawal rate now in year eleven of retirement, so how I invest my portfolio has close to zero impact on my lifestyle and spending...
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09-18-2023, 09:45 AM
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#14
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Thinks s/he gets paid by the post
Join Date: Aug 2017
Posts: 1,900
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Disregard my vote of 11-20 as I didn't understand the question!
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09-18-2023, 10:22 AM
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#15
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Administrator
Join Date: Apr 2006
Posts: 22,236
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My success rate is 100% at 0% equities and 100% at 100% equities and 100% at all points in between.
__________________
Living an analog life in the Digital Age.
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09-18-2023, 02:19 PM
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#16
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2016
Location: Colorado
Posts: 8,816
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Interesting so far. Many, including myself, could sustain a nice retirement without any equities.
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09-18-2023, 02:29 PM
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#17
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 35,282
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Quote:
Originally Posted by COcheesehead
What is the lowest equity allocation you can use with 95%+ success from any of the popular retirement tools based on YOUR actual situation.
I know more may be better for individuals, but what is the lowest you can go with success?
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0%
If I started SS today our WR, with very generous annual spending (more than we actually spend) would be 1.85%, so we can easily afford to avoid equities.
And I have recently. Not because I disfavor equities, but because I think they are overvalued and I don't "need" them. For the risk portion of my portfoio I delve into investment grade preferred stocks. If equities ever become reasonably priced then I'll reconsider them.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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09-18-2023, 02:39 PM
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#18
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Location: Northern IL
Posts: 26,500
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Quote:
Originally Posted by COcheesehead
So 0% works for you in your current situation?
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You are looking at this all wrong. It has nothing to do with anyone's particular situation, it just depends on your withdrawal rate and number of years you model.
A portfolio with a 4% WD rate will fail 5% of the time over 30 years (historically) with the default portfolio. Makes no difference if you have SS, pensions, etc. The portfolio can only support 4% for 95% success.
If you go to the investigate tab, you can get a chart of AA vs success. This will vary somewhat depending on your WD % (and # of years).
IOW, I think what you really should be looking at is understanding how AA, WD% and # of years interact. Just try a few scenarios to get a handle on this. Asking for specifics from people is just throwing a bunch of variables and different ways to measure it and confusing the issue.
I think what we are seeing in the replies was covered by Groucho Marx many years ago. Something about him investing only in Treasuries, and friends saying you can't live off that. And Groucho said "You can if you have enough of them". And that's all there is.
So as your WR% goes down, at some point you could live off of cash in your mattress. Get it?
-ERD50
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09-18-2023, 02:43 PM
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#19
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Thinks s/he gets paid by the post
Join Date: Jul 2011
Location: Reading, MA
Posts: 1,478
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Quote:
Originally Posted by ERD50
You are looking at this all wrong. It has nothing to do with anyone's particular situation, it just depends on your withdrawal rate and number of years you model.
A portfolio with a 4% WD rate will fail 5% of the time over 30 years (historically) with the default portfolio. Makes no difference if you have SS, pensions, etc. The portfolio can only support 4% for 95% success.
If you go to the investigate tab, you can get a chart of AA vs success. This will vary somewhat depending on your WD % (and # of years).
IOW, I think what you really should be looking at is understanding how AA, WD% and # of years interact. Just try a few scenarios to get a handle on this. Asking for specifics from people is just throwing a bunch of variables and different ways to measure it and confusing the issue.
I think what we are seeing in the replies was covered by Groucho Marx many years ago. Something about him investing only in Treasuries, and friends saying you can't live off that. And Groucho said "You can if you have enough of them". And that's all there is.
So as your WR% goes down, at some point you could live off of cash in your mattress. Get it?
-ERD50
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I like the "get it" quip.
Reminds me of Phil Ochs...
😟
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09-18-2023, 02:48 PM
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#20
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2016
Location: Colorado
Posts: 8,816
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Quote:
Originally Posted by ERD50
You are looking at this all wrong. It has nothing to do with anyone's particular situation, it just depends on your withdrawal rate and number of years you model.
A portfolio with a 4% WD rate will fail 5% of the time over 30 years (historically) with the default portfolio. Makes no difference if you have SS, pensions, etc. The portfolio can only support 4% for 95% success.
If you go to the investigate tab, you can get a chart of AA vs success. This will vary somewhat depending on your WD % (and # of years).
IOW, I think what you really should be looking at is understanding how AA, WD% and # of years interact. Just try a few scenarios to get a handle on this. Asking for specifics from people is just throwing a bunch of variables and different ways to measure it and confusing the issue.
I think what we are seeing in the replies was covered by Groucho Marx many years ago. Something about him investing only in Treasuries, and friends saying you can't live off that. And Groucho said "You can if you have enough of them". And that's all there is.
So as your WR% goes down, at some point you could live off of cash in your mattress. Get it?
-ERD50
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I think you are not understanding the question and maybe that is my fault. I thought it was clear. It is essentially who doesn’t need equities to have a great retirement.
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