Retiring in 1965 - The Worst Time Ever?

[Fermion]

Is it really surprising that 20% of people 85+ die with no or little assets? It is quite likely most of those people spent a few of the last years in LTC which from stories on here can reach $100k or higher per year.

I am actually surprised only 20% died with little assets.

[dallas27]

Agreed, shocked it was only 20-30 percent. They didn't even have the interwebcloud to help them.


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[Rothman]

I think the percentage with no assets is probably highly correlated to those with medical conditions or in long term care. The system today depletes assets fast and government supports comes only after assets are depleted.


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[Hermit]

Quote:

Originally Posted by GravitySucks All you need to do is live in a tent for two years and South America for a couple other years. I'd rather get another job than live in a tent. Sent from my Nexus 7 using Early Retirement Forum mobile app

I lived in a tent on 3-week visits out here in the Colorado mountains before I retired. It wasn't so bad. Glad it wasn't this year, though. With all the spring snow we've had, the tent probably would have collapsed!

[GravitySucks]

Quote:

Originally Posted by Hermit I lived in a tent on 3-week visits out here in the Colorado mountains before I retired. It wasn't so bad. Glad it wasn't this year, though. With all the spring snow we've had, the tent probably would have collapsed!

Since retiring I've spent a month plus living in a 30 year old Toyota Mini Motorhome and two weeks sleeping mostly on a train in the coach seats. Plus some generous couch surfing time.

Tenting for two years would be beyond the pale though. I stand by the going to a part time job instead statement. 😀

[aim-high]

Quote:

Originally Posted by Running_Man These carefree yes you can retire with 80 - 100 percent stock portfolios presented as see you can survive the worst times are absurd, the article has the following problem: 1) How was this mythical person invested? In non-existent low cost ETF's? Per John Bogle in 1965 only 5.7% of equities were owned by funds and most of those funds were blends of stocks and bonds. Pure equity plays were almost impossible to find. 2) in 1975 when they cut their spending to 2.5% of the original portfolio amount, at that point the 40K withdrawal should have been $69,418 with inflation, they are going to live on 25K? The chart implies about 18K on an inflation adjusted basis but that does not match with the article statement. That 2,5% of original portfolio is equivalent to $15,716 in 1965 or in other words changed to a 1.5% withdrawal rate! Hey you can retire with 4% withdrawals, all you need is flexibility to live on 1/3 of that amount. 3) In the middle of this in 1970's they consider a part time minimum wage job to make $500 a month after tax. Minimum wage in 1977 is $2.30 so they are going to need to work 217 hours without considering taxes to make $500 per month. This is 54 hours per week. But hey no, let's just move to Brazil for a couple of years it'll be great there and we'll save a fortune so we go!. 4) The article implies you live off an average of 3.75% over the lifetime of 50 years with a little flexibility - really what is written calls for psychic powers. Despite a belief in 4% withdrawals you know enough to start at 3% and average a 2.5% withdrawal during the early bad years and are able to drop that to 1.5% 10 years in and at the all time low in stocks you go 100% stocks invest at the absolute bottom. Then when portfolio is just starting to recover you go to 4% of original portfolio, 8% withdrawal of the actual portfolio why not!, right when the market makes a huge multi-year greatest bull run ever, which helps because otherwise that withdrawal rate would have failed for sure. This psychic ability is necessary since if you started at 4 per cent withdrawals and dropped to 3% as the portfolio fell and invested in the mutual funds available at the time you would be a 50 year old bankrupted individual in 1980 otherwise, right when unemployment is set to be at an all time high. Of course at age 50 with no retirement savings, you would be no worse off than over 50% of all 50 year olds. This obvious rip-off of the Mr Money Mustache the world is all sunshine blog and 100% stocks always works out if you keep a good attitude and are willing to ride a bike is dangerous to financial planning. Of course the income from the blog from people wishing to be able to stop working at age 35 means the writer never has to worry about living on stocks, he's got blogging income!

[1979dreamer]

Quote:

Originally Posted by Bestwifeever Bloggers. I also read the comments to the link, most made by other bloggers. I wonder how many of their commenters/readers are bloggers. I bow to whoever created the blogosphere. He links to another article of his about how the 4 percent annual withdrawal for 50 years is supported, but that article of course is all about the 30 year period, not 50. I think we need a blog entry about how you can take 4 percent from birth.

From this thread (and others) it seems that the common wisdom around here is contrary to MMM and other bloggers whose common wisdom is that 4% is just fine, even for 50 years. So what is the mindset here? 3% 2%?

[W2R]

Quote:

Originally Posted by 1979dreamer From this thread (and others) it seems that the common wisdom around here is contrary to MMM and other bloggers whose common wisdom is that 4% is just fine, even for 50 years. So what is the mindset here? 3% 2%?

For other people, I would think probably 3% for a 50 year retirement.

For myself - - well, I think everyone here would agree that I am cautious about money, perhaps overly cautious. So far in retirement I have been spending around 2%, but I am taking steps to increase my spending from now on because you can't take it with you. I am 66 so I think 3.5% is a better spending level for me.

[pb4uski]

Quote:

Originally Posted by 1979dreamer From this thread (and others) it seems that the common wisdom around here is contrary to MMM and other bloggers whose common wisdom is that 4% is just fine, even for 50 years. So what is the mindset here? 3% 2%?

4% can be close to ok if you have SS or a pension that replaces a good portion of your spending needs.

For example, take firecalc and a 50 year old single with $1 million in assets and $40k living expenses, 60/40 portfolio and the remaining assumptions defaults. Success ratio is 73.7%.

Now assume that SS replaces 25% of living expenses ($10k in current $) beginning at age 66 and the success ratio increases to 91.6%.

Now assume that instead the person waits until age 70 and receives $13.2k (132%, 8% increase for 4 years) and the success ratio is still 91.6%.

So SS can have a significant impact on a sustainable withdrawal ratio. For me, I would want 98% success which implies a 3.75% WR with SS covering 25% of living expenses ($10k in the scenario above), so it isn't a lot lower than 4%.

[2017ish]

Quote:

Originally Posted by 1979dreamer From this thread (and others) it seems that the common wisdom around here is contrary to MMM and other bloggers whose common wisdom is that 4% is just fine, even for 50 years. So what is the mindset here? 3% 2%?

I don't know that there is a particular mindset--other than that many (most) feel that the "traditional" lockstep 4% every year is likely a risky way to go when you are planning a 40-50 year retirement in the current environment for Stocks/Bonds. 3% is probably common.

OTOH, we plan to work until 3% would let us travel more/better than we have to date, and 1% would let us live reasonably well without travel. But leaning toward a withdrawal "strategy" of 4.5-5% of the previous year end portfolio value; indeed, in the early years, it may even be 1.1-1.25% of the previous quarter's ending value. This will be a roller coaster, but given that the vast majority of our spending will be discretionary....

VPW (Variable Percentage Withdrawal) is also a noteworthy approach, and there are many others.

[ejman]

Quote:

Originally Posted by pb4uski 4% can be close to ok if you have SS or a pension that replaces a good portion of your spending needs. For example, take firecalc and a 50 year old single with $1 million in assets and $40k living expenses, 60/40 portfolio and the remaining assumptions defaults. Success ratio is 73.7%. Now assume that SS replaces 25% of living expenses ($10k in current $) beginning at age 66 and the success ratio increases to 91.6%. Now assume that instead the person waits until age 70 and receives $13.2k (132%, 8% increase for 4 years) and the success ratio is still 91.6%. So SS can have a significant impact on a sustainable withdrawal ratio. For me, I would want 98% success which implies a 3.75% WR with SS covering 25% of living expenses ($10k in the scenario above), so it isn't a lot lower than 4%.

Or 92.6% success ratio if SS is started at 62. I guess in this simple scenario it does pay to start SS early (per Firecalc anyway)

[haha]

Quote:

Originally Posted by pb4uski 4% can be close to ok if you have SS or a pension that replaces a good portion of your spending needs.

Sure, as is amply proven by those retirees with essentially no savings, What counts is not savings, but cash flow and its reliability.

Ha