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05-05-2016, 12:10 PM
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#21
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Thinks s/he gets paid by the post
Join Date: Nov 2009
Location: SF East Bay
Posts: 4,324
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On the other hand, you could always reduce your expenses and/or increase your portfolio enough so that you can live on a 2.5 - 3% withdrawal rate or less, and don't have to worry about running multiple retirement simulators to squeeze every last dollar out of your portfolio.
But then, we'd have a lot less to talk about here
__________________
Contentedly ER, with 3 furry friends (now, sadly, 1).
Planning my escape to the wide open spaces in my campervan (with my remaining kitty, of course!)
On a mission to become the world's second most boring man.
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05-05-2016, 12:13 PM
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#22
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Thinks s/he gets paid by the post
Join Date: Jul 2013
Posts: 1,046
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How critical is it to achieve 100% success before retirement based on FireCalc and similar tools? Meaning should one not even consider jumping into retirement unless the tools give you a 100% success rate? Or have folks here done it at say 85-90% as good enough?
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05-05-2016, 12:27 PM
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#23
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,004
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Quote:
Originally Posted by dvalley
How critical is it to achieve 100% success before retirement based on FireCalc and similar tools? Meaning should one not even consider jumping into retirement unless the tools give you a 100% success rate? Or have folks here done it at say 85-90% as good enough?
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Bernstein suggests anything over 80% is merely rearranging deck chairs on the Titanic...
Quote:
But history teaches us that depriving ourselves to boost our 40-year success probability much beyond 80% is a fool’s errand, since all you are doing is increasing the probability of failure for political, economic, and military reasons relative to the failure of banal financial planning.
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The Retirement Calculator from Hell, Part III
__________________
Numbers is hard
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05-05-2016, 12:31 PM
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#24
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Thinks s/he gets paid by the post
Join Date: Jul 2013
Posts: 1,046
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Quote:
Originally Posted by REWahoo
Bernstein suggests anything over 80% is merely rearranging deck chairs on the Titanic...
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LOL...I think you meant under 80%? So 81% is fighting for the life boat and 100% is reaching ashore?
My conservative plan gets me at 84%, I can tweak things a bit to improve it but not to 100%.
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05-05-2016, 12:32 PM
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#25
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gone traveling
Join Date: Oct 2007
Posts: 1,135
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Quote:
Originally Posted by dvalley
How critical is it to achieve 100% success before retirement based on FireCalc and similar tools? Meaning should one not even consider jumping into retirement unless the tools give you a 100% success rate? Or have folks here done it at say 85-90% as good enough?
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It's a good question.
My bet - 85% of those on this forum like to see a range of 95-100 percent out of the tools for a 25 year period.
Of course it's just a tool. It doesn't predict the future. Six sigma events do happen, and life events change from one run of firecalc to the next.
I contend this group is the A-list of financially savvy adults across all generational age brackets ... Better than just about anywhere else online or in real life. (Bogleheads too).
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05-05-2016, 12:37 PM
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#26
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,004
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Quote:
Originally Posted by dvalley
LOL...I think you meant under 80%?
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No, I meant striving to get anything over an 80% success rate was a wasted effort - according to Bernstein.
__________________
Numbers is hard
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05-05-2016, 12:43 PM
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#27
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Thinks s/he gets paid by the post
Join Date: Jul 2013
Posts: 1,046
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Quote:
Originally Posted by REWahoo
No, I meant striving to get anything over an 80% success rate was a wasted effort - according to Bernstein.
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Oh ok, thanks for the clarification...positive news for me
EDIT: I got a chance to read the Bernstein article and found it to be a great read, thanks REWahoo.
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05-05-2016, 01:09 PM
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#28
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Posts: 5,381
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Quote:
Originally Posted by REWahoo
Bernstein suggests anything over 80% is merely rearranging deck chairs on the Titanic...
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When your starting asset valuations for both stocks and bonds are in the top decile of periods included in FIRECalc's data set, it's not unreasonable to think that bottom decile returns are in store for us. If that's true one might expect that planning for a 20% failure rate as per FIRECalc might actually mean something closer to an 80% failure rate going forward.
You don't need to assume war, famine, pestilence and asteroids to plan for much lower investment returns than we've seen historically. And low investment returns are survivable, if you have enough starting capital.
__________________
Retired early, traveling perpetually.
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05-05-2016, 01:12 PM
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#29
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Full time employment: Posting here.
Join Date: Apr 2014
Location: Houston
Posts: 957
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Quote:
Originally Posted by papadad111
It's a good question.
My bet - 85% of those on this forum like to see a range of 95-100 percent out of the tools for a 25 year period.).
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Does anybody remember if we've ever done a survey on what people felt was ok? Might be useful to the OP if it existed.
Just curious as my target was only 80% but I had flexibility to lower expenses if I ran into trouble.
Sent from my iPhone using Early Retirement Forum
__________________
"Learn everyday, but especially from the experiences of others. It's cheaper! " - John Bogle
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05-05-2016, 01:15 PM
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#30
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Administrator
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,584
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Quote:
Originally Posted by REWahoo
No, I meant striving to get anything over an 80% success rate was a wasted effort - according to Bernstein.
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Quote:
Originally Posted by Gone4Good
When your starting asset valuations for both stocks and bonds are in the top decile of periods included in FIRECalc's data set, it's not unreasonable to think that bottom decile returns are in store for us. If that's true one might expect that planning for a 20% failure rate as per FIRECalc might actually mean something closer to an 80% failure rate going forward.
You don't need to assume war, famine, pestilence and asteroids to plan for much lower investment returns than we've seen historically. And low investment returns are survivable, if you have enough starting capital.
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Bernstein makes an important point. The 80% failure won't happen because half the people won't live long enough. The failure rate only applies to the small % of population that actually survives the 30 year period.
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05-05-2016, 02:36 PM
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#31
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2008
Location: NC
Posts: 21,202
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Quoting Bernstein out of context again, happens here often. While he indeed stated the above re: 80%, it wasn't to suggest higher probabilities of success weren't without merit/benefit. Immediately after the quote above he also said:
Quote:
Mind you, this is not a call for wild abandon. The above table constrains the retiree desiring a theoretical 97% success rate (of portfolio survival) from spending more than 3% per year of the initial real amount of his nest egg. Taking the accident propensity of the species into account would allow him to spend about 4%. But if you believe that we’re about to encounter a bad returns sequence or simply wish to leave a few baubles to your heirs, you’re right back to 3% again.
So live a little, and enjoy your money, for tomorrow we may be consumed by the ghosts of Hitler, Lenin, and Attila the Hun. And at withdrawals of 3% to 4% of your nest egg, don’t spend it all in one place.
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For a 30 year retirement, 3-4% WR corresponds to 95-100% probabilities - not 80%.
While some are comfortable pulling the plug at 80% or less, others need $ well over 100% threshold to sleep at night. Both are good answers, depending on individual circumstances and expectations.
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57
Target AA: 50% equity funds / 45% bonds / 5% cash
Target WR: Approx 1.5% Approx 20% SI (secure income, SS only)
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05-05-2016, 02:49 PM
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#32
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,004
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Quote:
Originally Posted by Midpack
Quoting Bernstein out of context again,...
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Yikes! You caught me red fingered...
__________________
Numbers is hard
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05-05-2016, 03:08 PM
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#33
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2008
Posts: 35,712
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Quote:
Originally Posted by Major Tom
On the other hand, you could always reduce your expenses and/or increase your portfolio enough so that you can live on a 2.5 - 3% withdrawal rate or less, and don't have to worry about running multiple retirement simulators to squeeze every last dollar out of your portfolio.
But then, we'd have a lot less to talk about here
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Quote:
Originally Posted by dvalley
How critical is it to achieve 100% success before retirement based on FireCalc and similar tools? Meaning should one not even consider jumping into retirement unless the tools give you a 100% success rate? Or have folks here done it at say 85-90% as good enough?
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When I include SS in FIRECalc calculation, either at 62 or 70 makes very little difference in the result, it tells me that my current spending is about 70% of the level for 100% success rate.
And I do not expect to live another 30 years either.
So, why don't I spend more?
I have enough, and crave no fancy toys. And if I spend more, my stash will likely shrink with time. I hate to see that, being so used to see my stash grow, whether a lot or a little.
Money is cool, even if it is just a number on the laptop screen.
__________________
"Old age is the most unexpected of all things that happen to a man" -- Leon Trotsky (1879-1940)
"Those Who Can Make You Believe Absurdities Can Make You Commit Atrocities" - Voltaire (1694-1778)
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05-05-2016, 03:17 PM
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#34
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Full time employment: Posting here.
Join Date: Jul 2010
Location: San Francisco
Posts: 861
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Quote:
Originally Posted by NW-Bound
I have enough, and crave no fancy toys. And if I spend more, my stash will likely shrink with time. I hate to see that, being so used to see my stash grow, whether a lot or a little.
Money is cool, even if it is just a number on the laptop screen.
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And thus the motivations that make players in the games I design happy. Folks love to see little numbers getting bigger on screen.
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05-06-2016, 10:01 AM
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#35
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Posts: 5,381
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Quote:
Originally Posted by MichaelB
Bernstein makes an important point. The 80% failure won't happen because half the people won't live long enough. The failure rate only applies to the small % of population that actually survives the 30 year period.
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But we're early retirees here at ER.org and many of us are married. Joint survivorship is way longer than individual life expectancy.
__________________
Retired early, traveling perpetually.
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