Ray Lucia's new book

[Brat]

I remember that dividends were significant % during those years. A PE of 13 was on the high side.

[modhatter]

Yes, you are right. There were dividends.

[Rich_by_the_Bay]

Quote:

Originally Posted by Brat I remember that dividends were significant % during those years. A PE of 13 was on the high side.

Right. And since we are talking about net value after 14 years, even if gains were neutral, the dividends would have fueled a decent if not stellar increase in your portfolio, I suspect.

[modhatter]

Problem is though. We don't have dividends like that any more.

[Rich_by_the_Bay]

Quote:

Originally Posted by modhatter Problem is though. We don't have dividends like that any more.

It was what it was, dividends were earned, and a bucket approach would have worked, according to Lucia's back testing

Feels like you are trying to talk yourself out of the Buckets approach, which is fine. It's not everyone's cup of tea and there are plenty of other great ways to implement your retirement program. I'm not trying to sell it, just explaining why it feels right for me. Each of us needs an approach we're comfortable with.

You might want to also consider Armstrong's recommendations. I find him very persuasive, too.

[teejayevans]

Quote:

Originally Posted by modhatter Problem is though. We don't have dividends like that any more.

We don't have the inflation either...gotta look at the whole picture:
gains/lossses, dividends, inflation, taxes...you just can pick one and
say "see this will/won't work"
In opinion, its hard to compare what happen in 1929, or 1974, etc
because:
1. we monitored the health of the economy so much closer, we can make
corrections earlier.
2. FED is much smarter and more proactive about controlling inflation
3. Economy is more global
4. Controls on the stock market, imagine what would have happen on 9/11
if we didn't shut down the market for a couple of days.

I'm not saying depression/high inflation couldn't happen, but I think it would
take something extraordinary to cause it, and I don't want to spend too
much of my time or resources on it.
TJ

[mathjak107]

im a big believer in planning around whaT makes sence , what has been historically and what has been the long term trends.

i plan for lower taxes when i retire---- no pay check coming in, higher and higher tax bracketing raising the 15 and 25% brackets allowing more and more income at a lower rate

i plan for social security to be there, as we will just pull from other programs,

no political group will dare tell 80 million voting baby boomers they are raising taxes or taking away social security.

i plan for long term average market returns for my mix, about 3-4% over inflation.

lastley i plan for uncertainty in our markets and allow for it using the bucket system.

[modhatter]

Today, 03:10 PM #67 mathjak107


I am not dismissing Ray's book at all. In fact my inclination tells me it is a practical strategy. However, whenever I read ANY BOOK by an author who also has something to sell, whether it be his asset management company or just a book, I always question the validity of the advise given to some extent and use my own brain to consider all the "what ifs".

It doen't mean that I think the book is bad or the advice is bad, I just don't allways accept everything I read without weighing all the pros and cons of it myself. Many times I just file the information in my head as just more information or approaches to consider, and as I become a little more astute in finances, I may draw upon them.

Heaven knows there are more books out there claiming that their way is the best way. Whether it be financial books, diet books, health books, self help books. Everyone wants you to believe that their way is the best way so you will buy their book (and make them very rich) Therefore, I feel it necessary to question everything I read, and in the end draw my own conclusions.

[hogwild]

Quote:

I am not dismissing Ray's book at all. In fact my inclination tells me it is a practical strategy. However, whenever I read ANY BOOK by an author who also has something to sell, whether it be his asset management company or just a book, I always question the validity of the advise given to some extent and use my own brain to consider all the "what ifs".

Modhatter, I can appreciate your caution. I, too, always thoroughly research anything that affects me financially and there is nothing more financially important than how you plan for retirement income. As I said in a previous post, I have read both of Ray's books and I do plan to follow his advice. However, I wouldn't be doing this based on the books alone. I have been listening to his radio show for many months now and believe that I have a good idea of his integrity. I think if you just listen to a few of his archives as the link I previously posted, you will see what I mean.

[walkinwood]

Quote:

Originally Posted by Rich_in_Tampa You annuitize bucket 1, so 4% x 7 years works out to less than 4 x your anticipated annual expense.

Can someone tell me how to annuitize an amount using Excel? Is it just the net present value of a series of payments at a given interest rate?

Thanks for the help.
ww.

[Rich_by_the_Bay]

Quote:

Originally Posted by walkinwood Can someone tell me how to annuitize an amount using Excel? Is it just the net present value of a series of payments at a given interest rate?

Yes. It's something like:

=PV((return%-inflation%),num_of_yrs,annual_withdrawal_amt,0,1)

You may have to multiply it by -1 to use it to calcluate a bucket amt. The above is for inflation-adjusted numbers. And don't forget that for bucket 2, it builds for 7yrs (or whatever you choose) at bucket 2 return rates, but the target is an amount sufficient to annuitize under bucket 1 return rates once you transfer it over at 7 years.

Hope that helps.