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Old 07-26-2020, 10:10 AM   #101
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It makes one wonder how accurate data really is on Firecalc
I've never been aware of a FireCalc inaccuracy. Can you be more specific as to why you are wondering about the accuracy? Some example?
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Old 07-26-2020, 10:21 AM   #102
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Originally Posted by Navigator View Post
I am using P/E10, not P/E (which tends to be lower). The P/E10 uses real per share earnings over 10 years and is less volatile than the P/E. According to multipl.com, it is 29.97 today and for most of 2019 was over 30.

I think you may misunderstand my point. Your chart shows that the market tends to return to an average valuation. This is a long term empirical trend and is consistent with the data shown in my graph. If one retires when the market is priced high, they are likely to have a lower SWR than if they retire when the market is priced low. One can plot SWRs vs starting P/E10 For every year between 1928 and 1990 for a 30 year retirement. The data show a clear relationship. Yes there is some noise in the data, but the curve shows a definite relation between the two.

I think there is more to it than a nominal PE or PE 10 number. But first off,the S and P actual earnings for 2019 was ~160. So with the index at 3200 that is a PE of 20x last years numbers so right off the bat that source you cited is incorrect ( by a lot).


I would also argue that interest rates being so low today is a much bigger part of the equation when determining SWR than the CAPE 10. So, for me, I wouldn't put much credibility in using the chart you posted for determining what is a safe WR.
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Old 07-26-2020, 05:09 PM   #103
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Nobody would have know that. Moreover, nobody would have been as diversified either. Most likely most people would have held Kodak, GE,GM,F and a lot of other loser large ‘safe’ companies. It makes one wonder how accurate data really is on Firecalc
I don't understand what you mean by the last sentence. Could you elaborate on why you're questioning the data that Firecalc uses?
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Old 07-26-2020, 05:42 PM   #104
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I don't understand what you mean by the last sentence. Could you elaborate on why you're questioning the data that Firecalc uses?
Index type historical data vs. referenced single name stock holdings?
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Old 07-28-2020, 07:19 PM   #105
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The 3 to 4% SWR discussion is good to have. But it ignores several key points:

1) The Rich, Broke or Dead calculator. https://engaging-data.com/will-money-last-retire-early/ When taking 4%, you're much more likely to die before you run out of $ than going broke.
2) SS or Pensions to the Rescue. If you can sustain a 3.5% WR indefinitely, then when SS or pensions kick in, you can reduce that to maintain your same standard of living, or maintain the rate (increasing income by SS), or increase the rate even more, as you have a shorter horizon.
3) Variable spending. Who actually spends the same amount every year? Especially, when the market tanks?
4) Bernickie's Reality Retirement Plan. In ER, you will likely spend more initially (especially if we can go back to travelling); Approaching your mid-70s, yours spending will likely gradually decrease, and if you make it to your early to mid 80s, will likely increase due to health care costs. This is why I really like the Marketwatch calculator: https://www.marketwatch.com/calculat...ing-calculator

My goal is to spend as much as possible as early as possible to have the best experiences as early in life as possible, when health is theoretically better, and I'm not concerned about spending nearly as much when I hit my 80s. I'll happily move to a condo then, and cut out most travel....hopefully, I'll still be diving some, into my mid 80s.
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Old 07-31-2020, 04:44 PM   #106
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I think the reason is that 4% is the amount needed to be relatively certain people would have money throughout their retirement. But that is based on a retirement of 30 years. With people living longer plus some people retiring early, 3% may be more prudent.
However, i do not believe that has to be a steady %. Some years could be more and others less, depending on need as long as the average is about 3%.
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Old 07-31-2020, 05:43 PM   #107
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Theory is great, experience is better. I ran all the FIRE Calcs and other stuff before retiring at 63, which isn't all that early. We have 2 homes and paid off the mortgage before retiring. We juggled stuff so I could wait to take SS at 70 and my net after they take out Medicare is over $3500 a month. My dw gets another $1600 and we might be able to increase that a little next month when she hits 66. We started investing in tax free bonds years ago when you could get 5-6%, although those keep getting called early.

Bottom line is that w e haven't withdrawn any principal, although the market downturn reduced our net worth. I just quit worrying much about it cuz we can suck it up and live just fine on tax free income, dividends and SS, even when we pull out some bigger chunks to travel or replace vehicles or whatever. Maybe when covid is over we'll pull 4% or whatever out of principal and do a nice trip or something. I guess we have always been ok living below our means.
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Old 07-31-2020, 05:50 PM   #108
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Firecalc is history, it is not theory.
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Old 07-31-2020, 08:22 PM   #109
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Originally Posted by HNL Bill View Post
The 3 to 4% SWR discussion is good to have. But it ignores several key points:
4) Bernickie's Reality Retirement Plan. In ER, you will likely spend more initially (especially if we can go back to travelling); Approaching your mid-70s, yours spending will likely gradually decrease, and if you make it to your early to mid 80s, will likely increase due to health care costs. This is why I really like the Marketwatch calculator: https://www.marketwatch.com/calculat...ing-calculator

My goal is to spend as much as possible as early as possible to have the best experiences as early in life as possible, when health is theoretically better, and I'm not concerned about spending nearly as much when I hit my 80s. I'll happily move to a condo then, and cut out most travel....hopefully, I'll still be diving some, into my mid 80s.
I’m all for spending money while you can, just wish I had started when I was healthier. I wish there was better data spending post retirement. I read a study from University of Michigan a few years ago that said 16% of people actually spend more once they retire, while about 67% spent less. Supposedly, the average spending decrease for everyone is 1% - 2% per year, but I suspect there is a wide variation in this among retirees.
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Old 07-31-2020, 08:49 PM   #110
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I’m all for spending money while you can, just wish I had started when I was healthier. I wish there was better data spending post retirement. I read a study from University of Michigan a few years ago that said 16% of people actually spend more once they retire, while about 67% spent less. Supposedly, the average spending decrease for everyone is 1% - 2% per year, but I suspect there is a wide variation in this among retirees.
+1. I'm guessing the 67% didn't plan well for retirement. I had planned to shift from my 50% savings mode to more than doubling my spending. Then COVID-19 hit, and no more travel. No problem, I bought a house.
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Old 07-31-2020, 08:54 PM   #111
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My goal is to spend as much as possible as early as possible to have the best experiences as early in life as possible, when health is theoretically better, and I'm not concerned about spending nearly as much when I hit my 80s. I'll happily move to a condo then, and cut out most travel....hopefully, I'll still be diving some, into my mid 80s.
This is a good goal/plan. Take it from one who is in good health turning 77 in a few months and has a handicapped wife (who was just fine a few years ago). Travel is out for us now (too difficult for DW). Good times now are just getting together with friends and maybe going out for dinner.
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