Ultra Conservative Retirement Planners

[wabmester]

Quote:

Originally Posted by rmark "The Firecalc model defines success based on the "worst historical market performance"- note that should be "worst US historical market performance".

Domo arigato!

[2B]

Quote:

Originally Posted by rmark "The Firecalc model defines success based on the "worst historical market performance"- note that should be "worst US historical market performance".

At the moment my personal portfolio rate of return YTD is just over 10% annualized. This is safely above the return of the S&P because of my foreign stock performance. The question becomes should we base our SWR on US or world market performance?

[rmark]

Here's a larger sample of historical geometric market returns copied from "Triumph of the Opimists". They suggest possibly using world returns to reduce country bias.

Real, Annual Stock Bond
geo sd geo sd
Australia 7.5 17.7 1.1 13.0
Belgium 2.5 22.8 -0.4 12.1
Canada 6.4 16.8 1.8 10.6
Denmark 4.6 20.1 2.5 12.5
France 3.8 23.1 -1.0 14.4
Germany 3.6 32.2 -2.2 15.9 (ex-weimar)
Ireland 4.8 22.2 1.5 13.3
Italy 2.7 29.4 -2.2 14.4
Japan 4.5 30.3 -1.6 20.9
Netherlands 5.8 21.0 1.1 9.4
South Africa 6.8 22.8 1.4 10.6
Spain 3.6 22.0 1.2 12.0
Sweden 7.6 22.8 2.4 12.7
Switzerland 5.0 20.4 2.8 8.0
UK 5.8 20.0 1.3 14.5
US 6.7 20.2 1.6 10.0 < 4% based on this
World 5.8 17.0 1.2 10.3

[Spanky]

Both calculators say that we have saved enough for retirement. However, we will wait 4 more years until our daughter completes college.

[wabmester]

Quote:

Originally Posted by Spanky Both calculators say that we have saved enough for retirement. However, we will wait 4 more years until our daughter completes college.

Spanky, you're golden! It's been a while since I tried the fido calc, but it basically told me that I could never retire. I forget what inputs I gave it, but even though FIREcalc gave me 100% success, fido suggested that I increase my bond allocation to go from 80% to 82% success or somesuch nonsense.

I played around with it for a while, and even though my WR was less than 3%, fido said "Sorry, you can't retire. Better luck next time."

What was the retirement term length you gave fido? I think I used 40 or 50 years.

[2B]

Just for grins I tried the AARP retirement calculator. The AARP calculator said I needed about twice of the assets to retire for the same income FIRECalc had me about 80% safe.

Now that is the most ultra conservative calculator I've ever come across.

[chinaco]

I know this subject has come up before... But isn't this in part an issue related to retirement expense needs? And isn't this the point of Laurence Kotlikoff (economics professor) and part owner of E$Planner. Your retirement assets are there to meet your needs and most of the Financial Service Companies over estimate needs. Partly due to reduced spending as one gets older!

I have not seen the software. But the claim is that is does a monte carlo simulation on assets. Probably not a lot that is new there... But where it may shine is in understanding youe expense needs.



http://www.esplanner.com/

[clifp]

I don't know if AARPs calculator is the most conservative but it is one of the lamest I've ever seen.
You have to make estimates about every thing inflation rate,expected returns now and when you retire etc.

But the kicker for me was when it asked for current retirement assets, so I type in my liquid net worth, and the stupid calculator said your retirement can't exceed a $1 million. I guess I am suppose to donate the excess to AARP or something.

[2B]

Quote:

Originally Posted by clifp But the kicker for me was when it asked for current retirement assets, so I type in my liquid net worth, and the stupid calculator said your retirement can't exceed a $1 million. I guess I am suppose to donate the excess to AARP or something.

I did a ratio to make everything work. I thought it was pretty stupid but I guess I'm willing to overlook things I can work around.