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04-28-2017, 06:50 PM
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#2
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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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The problem with the RMD approach is that the withdrawal is a percentage of the current value of the portfolio, which can fluctuate wildly with market boom and bust cycles. During the Great Recession, it can result in one living on 60% in 2008 and 2009 than the amount in 2007. If one has enough discretionary expenses to cut, it can work. Else it is tough.
Hence, most people try to do a more constant WR method. Or if they withdraw more in a good year, they save part of it for future leaner years.
The nice thing about the RMD method is that it reminds us that we are not immortal. At my current age of 60, the life expectancy is 23. The RMD approach would have me withdraw 1/23 = 4.34%. That is not too far from the 4% rule of thumb.
PS. There are all kinds of life expectancy tables on the Web. Even the SS site has different ones for different purposes. It's confusing.
The number I quote above comes from the 1st page that a Web search found: http://www.helpage.org/global-agewat...ectancy-at-60/.
__________________
"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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04-28-2017, 07:15 PM
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#3
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Thinks s/he gets paid by the post
Join Date: Feb 2007
Posts: 2,525
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I've been living off my taxable stash since ER at the end of 2002, Started SS @ 2012 and have not touched my tax deferred at all so far. (Amazingly, the nominal value of my taxable stash is 25% higher than when I started 15 years ago) When RMD's start in 2021 I figure that's the time to start spending like a drunken sailor - after all it'll be gummint approved
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42 % of 60 year old men dont make it to 80
04-28-2017, 08:02 PM
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#4
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Thinks s/he gets paid by the post
Join Date: Mar 2017
Location: New York City
Posts: 2,838
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42 % of 60 year old men dont make it to 80
Quote:
Originally Posted by NW-Bound
The problem with the RMD approach is that the withdrawal is a percentage of the current value of the portfolio, which can fluctuate wildly with market boom and bust cycles. During the Great Recession, it can result in one living on 60% in 2008 and 2009 than the amount in 2007. If one has enough discretionary expenses to cut, it can work. Else it is tough.
Hence, most people try to do a more constant WR method. Or if they withdraw more in a good year, they save part of it for future leaner years.
The nice thing about the RMD method is that it reminds us that we are not immortal. At my current age of 60, the life expectancy is 23. The RMD approach would have me withdraw 1/23 = 4.34%. That is not too far from the 4% rule of thumb.
PS. There are all kinds of life expectancy tables on the Web. Even the SS site has different ones for different purposes. It's confusing.
The number I quote above comes from the 1st page that a Web search found: Life expectancy at 60 | Data | Global AgeWatch Index 2015.
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Social Security Life Table Charts - Business Insider, take the money, i suspect its lower for 83 years old
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04-28-2017, 08:15 PM
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#5
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Thinks s/he gets paid by the post
Join Date: Mar 2013
Location: Southern California
Posts: 3,995
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I suspect that the majority of members in this forum will die with substantial fortunes, in spite of the comments many of us have made about wanting our final check to bounce on our way to the funeral.
I think it's a combination of several things:
1) We enjoy accumulating wealth, and resist seeing it being spent and watching the balance decline after so many years of seeing it grow.
2) We overanalyze the SWR rules in spite of the studies demonstrating that 4% easily survived over many years of stock market booms and busts. We think 3% is the new 4%, and then we reduce the 3% to 2.5% just to be safe.
3) We are so worried about needing end of life care that we are willing to sacrifice enjoying the money today just in case we need extensive care down the road.
4) We have become so accustomed to LBYM that even though we have plenty of money we can't bring ourselves to spend it.
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04-28-2017, 08:24 PM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2006
Posts: 11,401
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The thing about RMDs is, you have to take it out of the tax-sheltered account, but there's no law that says you have to spend it.
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04-28-2017, 08:25 PM
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#7
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Dryer sheet wannabe
Join Date: Jun 2016
Location: Ottawa
Posts: 13
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Jeez Ready, I think you nailed it........
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04-28-2017, 08:35 PM
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#8
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Thinks s/he gets paid by the post
Join Date: Nov 2013
Location: Twin Cities
Posts: 3,927
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Quote:
Originally Posted by boomer239
Jeez Ready, I think you nailed it........
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Word.
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04-28-2017, 08:44 PM
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#9
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2016
Posts: 9,417
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Quote:
Originally Posted by Ready
I suspect that the majority of members in this forum will die with substantial fortunes, in spite of the comments many of us have made about wanting our final check to bounce on our way to the funeral.
I think it's a combination of several things:
1) We enjoy accumulating wealth, and resist seeing it being spent and watching the balance decline after so many years of seeing it grow.
2) We overanalyze the SWR rules in spite of the studies demonstrating that 4% easily survived over many years of stock market booms and busts. We think 3% is the new 4%, and then we reduce the 3% to 2.5% just to be safe.
3) We are so worried about needing end of life care that we are willing to sacrifice enjoying the money today just in case we need extensive care down the road.
4) We have become so accustomed to LBYM that even though we have plenty of money we can't bring ourselves to spend it.
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All of the above.
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04-28-2017, 08:52 PM
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#10
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Thinks s/he gets paid by the post
Join Date: Mar 2010
Location: Kerrville,Tx
Posts: 3,361
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Quote:
Originally Posted by NW-Bound
The problem with the RMD approach is that the withdrawal is a percentage of the current value of the portfolio, which can fluctuate wildly with market boom and bust cycles. During the Great Recession, it can result in one living on 60% in 2008 and 2009 than the amount in 2007. If one has enough discretionary expenses to cut, it can work. Else it is tough.
Hence, most people try to do a more constant WR method. Or if they withdraw more in a good year, they save part of it for future leaner years.
The nice thing about the RMD method is that it reminds us that we are not immortal. At my current age of 60, the life expectancy is 23. The RMD approach would have me withdraw 1/23 = 4.34%. That is not too far from the 4% rule of thumb.
PS. There are all kinds of life expectancy tables on the Web. Even the SS site has different ones for different purposes. It's confusing.
The number I quote above comes from the 1st page that a Web search found: Life expectancy at 60 | Data | Global AgeWatch Index 2015.
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Actually if you look at table 3 the single life expectancy table for account owners the assumed life expectancy of a 70 year old is another 27.4 years, at 80 18.7, at 90 11.4 and at 100 6.3 , where as for beneficiaries of accounts, table 1 yields 17 years at 70, 10.2 at 80 and 5.5 at 90.
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04-28-2017, 08:53 PM
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#11
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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 Ready
I suspect that the majority of members in this forum will die with substantial fortunes, in spite of the comments many of us have made about wanting our final check to bounce on our way to the funeral.
I think it's a combination of several things:
1) We enjoy accumulating wealth, and resist seeing it being spent and watching the balance decline after so many years of seeing it grow.
2) We overanalyze the SWR rules in spite of the studies demonstrating that 4% easily survived over many years of stock market booms and busts. We think 3% is the new 4%, and then we reduce the 3% to 2.5% just to be safe.
3) We are so worried about needing end of life care that we are willing to sacrifice enjoying the money today just in case we need extensive care down the road.
4) We have become so accustomed to LBYM that even though we have plenty of money we can't bring ourselves to spend it.
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I plead guilty on 1), and 4).
__________________
"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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04-28-2017, 11:04 PM
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#12
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Thinks s/he gets paid by the post
Join Date: Mar 2017
Location: New York City
Posts: 2,838
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Quote:
Originally Posted by Ready
I suspect that the majority of members in this forum will die with substantial fortunes, in spite of the comments many of us have made about wanting our final check to bounce on our way to the funeral.
I think it's a combination of several things:
1) We enjoy accumulating wealth, and resist seeing it being spent and watching the balance decline after so many years of seeing it grow.
2) We overanalyze the SWR rules in spite of the studies demonstrating that 4% easily survived over many years of stock market booms and busts. We think 3% is the new 4%, and then we reduce the 3% to 2.5% just to be safe.
3) We are so worried about needing end of life care that we are willing to sacrifice enjoying the money today just in case we need extensive care down the road.
4) We have become so accustomed to LBYM that even though we have plenty of money we can't bring ourselves to spend it.
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+1
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04-29-2017, 12:16 AM
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#13
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Recycles dryer sheets
Join Date: Feb 2014
Posts: 157
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Quote:
Originally Posted by Ready
I suspect that the majority of members in this forum will die with substantial fortunes, in spite of the comments many of us have made about wanting our final check to bounce on our way to the funeral.
I think it's a combination of several things:
have plenty of money we can't bring ourselves to spend it.
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Wow. My compliments to you.
This should be a sticky in a section titled " The Angst of FIRE".
I'm up at nights worrying about retirement- and clearly know we have more than enough money.
These four items are exactly how I think.
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04-29-2017, 12:20 AM
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#14
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Thinks s/he gets paid by the post
Join Date: Mar 2014
Location: Southern Cal
Posts: 4,032
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I think Ready might be onto something. Maybe some of us are not totally honest with ourselves. Maybe we want to leave a big legacy but too afraid to admit it. Heck I often told my kids to not expect anything. I want them to work hard, and not hardly working.
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04-29-2017, 12:27 AM
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#15
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2006
Posts: 11,401
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Quote:
Originally Posted by boomer239
Jeez Ready, I think you nailed it........
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Yes! We are all Scrooge.
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04-29-2017, 01:53 AM
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#16
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2013
Posts: 9,358
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My hobby is finding ways to live the high life on a low withdrawal rate. We optimize our spending but we have low overhead relative to our retirement income and never worry about running out of money. We were at an art museum today with discount tickets. Last night we saw a play with tickets I won in a contest. Tomorrow we're seeing a musical with seat filler tickets. Those are the kind of things we enjoy doing and I like the bargain hunting part so why spend more.
__________________
Even clouds seem bright and breezy, 'Cause the livin' is free and easy, See the rat race in a new way, Like you're wakin' up to a new day (Dr. Tarr and Professor Fether lyrics, Alan Parsons Project, based on an EA Poe story)
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04-29-2017, 03:23 AM
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#17
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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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Quote:
Originally Posted by boomer239
Jeez Ready, I think you nailed it........
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+3. We're spending just as much now as when we were working, we don't need or want more. Maybe we'll spend more when we get much older, but I'd rather err on the side of caution while I have another 30 years ahead of us...
__________________
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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04-29-2017, 05:22 AM
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#18
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Thinks s/he gets paid by the post
Join Date: Jun 2013
Posts: 2,518
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Withdrawal Rate Too Low?
Quote:
Originally Posted by Ready
I suspect that the majority of members in this forum will die with substantial fortunes, in spite of the comments many of us have made about wanting our final check to bounce on our way to the funeral.
I think it's a combination of several things:
1) We enjoy accumulating wealth, and resist seeing it being spent and watching the balance decline after so many years of seeing it grow.
2) We overanalyze the SWR rules in spite of the studies demonstrating that 4% easily survived over many years of stock market booms and busts. We think 3% is the new 4%, and then we reduce the 3% to 2.5% just to be safe.
3) We are so worried about needing end of life care that we are willing to sacrifice enjoying the money today just in case we need extensive care down the road.
4) We have become so accustomed to LBYM that even though we have plenty of money we can't bring ourselves to spend it.
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Gotta chime in here. +4. We have a very detailed retirement budget, and track expenses in a similar detailed manner. I have to admit that we try to "beat the budget" (as in underspend) every single month and feel unsuccessful if we don't. To what end, I'm not sure.😕
Sent from my iPad using Early Retirement Forum
__________________
"Luck favors the prepared mind"
Pasteur
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04-29-2017, 05:36 AM
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#19
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2011
Posts: 8,368
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Quote:
Originally Posted by NW-Bound
I plead guilty on 1), and 4).
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"Likewise" said Tweedledum.
__________________
"Exit, pursued by a bear."
The Winter's Tale, William Shakespeare
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04-29-2017, 06:01 AM
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#20
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2011
Posts: 8,362
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+1 for Ready's comment.
HOWEVER... DW and I are slowly coming to the conclusion that we're under spending.
We have no direct heirs and a couple of hefty inheritances we never counted on are looking more and more unavoidable/likely and a couple of other family gyrations will add to the pot. Combined, they would drop our WR to about 2% despite the fact that we live fairly 'high' (Snowbirding, eat out 3X a week, good sized money pit boat etc).
We're nearing the point (almost there) where we plan to upgrade our car inventory, only fly first class, update our kitchen and perhaps move to a larger boat. I'll be 80 in 15 years and 'now is the time'.
I'm not eager to leave a large inheritance to a bunch of nieces who won't even talk to me unless I talk to them first.
__________________
Living well is the best revenge!
Retired @ 52 in 2005
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