Three buddies

[Cut-Throat]

And VPW is not "Safe" . Sure there will be money left as a mathematical certitude but the food and shelter might run out first.

Well, let's put it this way, it will be much safer than the off touted 4% Rule..... I am using VPW and if the Market Drops 50%, my Withdrawal Amount only drops 15%, based on my asset allocation. Add to this Social Security and it's even a smaller portion of my budget. For anyone who studies VPW and employs it properly, running out of 'food an shelter' is quite laughable. It would take a complete financial meltdown on a global scale for this to happen... Where nothing you could do would save you, let alone a different withdrawal scheme.

If you cannot cut your Budget by 15% you probably should not be retired. So while your point is correct academically, it's not even close to correct in practicality.

 

[razztazz]

Well, let's put it this way, it will be much safer than the off touted 4% Rule..... I am using VPW and if the Market Drops 50%, my Withdrawal Amount only drops 15%, based on my asset allocation. Add to this Social Security and it's even a smaller portion of my budget. For anyone who studies VPW and employs it properly, running out of 'food an shelter' is quite laughable. It would take a complete financial meltdown on a global scale for this to happen... Where nothing you could do would save you, let alone a different withdrawal scheme.

If you cannot cut your Budget by 15% you probably should not be retired. So while your point is correct academically, it's not even close to correct in practicality.

Yes of course. If this and if that... then I use my other money I'll never want for anything. I actually use that in my own calculations. I was speaking in the sterile, academic way the "pure" 4%'ers usually do. 4% is 4%. Not "desired slop factor built in so 4% is really some other percent" How big does that have to be anyway? The world should never know. BYW, what inflation rate were you playing with in your mind with that example?

When I think of VPW I think.... crappy returns.... high/accelerating inflation... cutting back can go only so far for so long. That's where the "food and shelter running out before the money does" came in.

I can live with your equity allocation though.

 

[Cut-Throat]

When I think of VPW I think.... crappy returns.... high/accelerating inflation... cutting back can go only so far for so long. That's where the "food and shelter running out before the money does" came in.

VPW does NOT cause crappy returns and inflation... And what withdrawal method do you propose for not having to Cut Back? Yes, the Food and Shelter thing is laughable!

If Food and Shelter is put at risk, it's because of too risky an Asset Allocation and Not enough money saved for retirement. It has nothing to do with VPW... You have to structure your investments correctly. And I have been using VPW the last 5 years... In the most strictest terms... I actually sit down on Jan 1 of each year, and calculate my withdrawal amount and withdraw that exact amount. Selling off investments to make the withdrawal. No matter what the market does. -- And as you admit, no one actually employs the 4% method (It's a planning tool)...

One big advantage of VPW, is that it forces you to sell investments when markets are higher, and sell fewer when markets are lower..... This is like a 'Reverse Dollar Cost Averaging'.

 

[joylesshusband]

no one actually employs the 4% method (It's a planning tool)...

Really?
I agree that most folk frequenting this forum are not likely to blindly execute the 4% method.
However I'm pretty sure that the world is full of poor misguided souls, who have read a few articles in financial magazines and online ranting about the "25x" and the 4%, and being simple-minded, have believed and are about to follow this as a rule, to the letter.
As a matter of fact I happen to know a couple of these. Critical thinking is not their strong suit.

 

[redduck]

Really?
I agree that most folk frequenting this forum are not likely to blindly execute the 4% method.
However I'm pretty sure that the world is full of poor misguided souls, who have read a few articles in financial magazines and online ranting about the "25x" and the 4%, and being simple-minded, have believed and are about to follow this as a rule, to the letter...

oh

 

[Cut-Throat]

Really?
I agree that most folk frequenting this forum are not likely to blindly execute the 4% method.
However I'm pretty sure that the world is full of poor misguided souls, who have read a few articles in financial magazines and online ranting about the "25x" and the 4%, and being simple-minded, have believed and are about to follow this as a rule, to the letter.
As a matter of fact I happen to know a couple of these. Critical thinking is not their strong suit.

But here is what will really happen... If we get into a period of high inflation, and a stock market downturn -- Like the Stagflation of the mid 1970s (Which I lived through) ... They will pull in their horns.... They will not take their inflation adjusted 4% into the teeth of a Bear Market, Hyper Inflation environment.... especially if they have any sense at all... They will be driven by fear.

 

[RobbieB]

I agree. When the net worth goes down big time so will spending.

 

[urn2bfree]

Seems to be the CAPE based strategy. High Cape -stocks are overvalued, use lower SWR.
Stocks drop, Cape goes low, allows higher SWR.
It does suggest that the SWR for 30 years is 4% of the highest portfolio value you ever reach.

 

[Plantman]

Where did Larry, Curly and Moe go?

 

[REWahoo]

Where did Larry, Curly and Moe go?

They went ice fishing:

 

[marko]

They went ice fishing:

Did Larry have worms?

 

[pb4uski]

This does not make mathematical sense. If Moe started the year with $960,000 and Curly and Larry started with $1,000,000 and the market gained 4.16% before dropping 30%, then the beginning balances in year two would not be the same. .....

+1 Not interested in playing the OP's silly game with such ridiculousness.

 

[haha]

I feel that events in real life are much less predictable than pseudo-events modeled by various withdrawal schemes promulgated by different retirement "professionals".

When the smash-up finally occurs, I will be hurt like most here, but I have a psychological tendency toward an AA that is counter-cyclical to market exuberance. This has usually helped me in downturns, at least to some degree, but it also seems true that every chapter is in some ways a whole new book.

Ha

 

[garyt]

I thought of that first thing but the premise is all had a 30 yr horizon. Not a specified age. So, no Curly wouldn't be looking at a 29 yr time line

Revising and extending: Curly is not "safe" as stated. But he is as safe as Moe +/- one year perhaps.

And VPW is not "Safe" . Sure there will be money left as a mathematical certitude but the food and shelter might run out first. Yes, I know, that means there's money left 'cause you're dead! The whole pernt of all these exercises is to have money only in order to have the things money provides. If you can't get those things the whole "money angle" is moot

I don't think the difference between 29 and 30 years will matter. Whenever I run firecalc the failure cycles end well before the last year. If you hit a really bad sequence of returns you're in trouble. In fact, when I add 5 years to mine I actually end up with more money and still get the same failure %

 

[marko]

+1 Not interested in playing the OP's silly game with such ridiculousness.

Respectfully disagree.
While the details and position weren't properly laid out, I thought the premise was an interesting one and I had been hoping for a more insightful discussion.

 

[joylesshusband]

...the premise was an interesting one and I had been hoping for a more insightful discussion.

So had I...
A bit of a more insightful discussion on the subject meanwhile took place in the "Ratchet Up" thread.

And, sadly, only a few of the posters here realized that Larry was the true loser in my story.

 

[AginMS]

And, sadly, only a few of the posters here realized that Larry was the true loser in my story.

To be fair, that wasn’t the question you asked in your OP.

 

[donheff]

So had I...
A bit of a more insightful discussion on the subject meanwhile took place in the "Ratchet Up" thread.

And, sadly, only a few of the posters here realized that Larry was the true loser in my story.

So what are some insights you think are missing? And why should anyone focus on Larry? The question was about Moe and Curly and the scenarios discussed applied just as well to Larry if he was lurking and chose to entertain them.