View Poll Results: What nest egg withdrawal rate are you comfortable with?
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1.0 - 1.49 percent
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9 |
3.19% |
1.5 - 1.99 percent
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4 |
1.42% |
2.0 - 2.49 percent
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26 |
9.22% |
2.5 - 2.99 percent
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42 |
14.89% |
3.0 - 3.49 percent
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78 |
27.66% |
3.5 - 3.99 percent
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61 |
21.63% |
4.0 - 4.49 percent
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26 |
9.22% |
4.5 - 5.0 percent
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17 |
6.03% |
more than 5%
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19 |
6.74% |
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04-17-2017, 01:44 PM
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#121
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Thinks s/he gets paid by the post
Join Date: Nov 2009
Location: SF East Bay
Posts: 4,342
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Quote:
Originally Posted by Alan
+1
Whether or not you believe in it, it is an iconic study in making your money last, a piece of ER history all students should study.
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+1 to your +1 Alan.
I'd also say that if you're not the analytical or particularly academic type, you'd still benefit from absorbing the main conclusions of this study, whether you do it from reading the study itself, or from reading a synopsis from a trusted person.
I'm a bit of a fuzzy thinker at times, but the main takeaway from the Trinity Study for me was that if I have my money invested in a very roughly equal mixture of stocks and bonds, then a WR of 4%, based on the starting value of the portfolio, and adjusted every year for inflation, should last for 30 years (~95% probability which, for many people, is good enough). If you have a lower tolerance for risk, or a longer timespan, or both, then reduce the WR accordingly.
The main conclusions from The Trinity Study, along with a habit of using Firecalc far too many times to check what is essentially the same set of figures ( ) have been the main factors in convincing me that spending the rest of my life not working is actually a viable idea.
__________________
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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04-17-2017, 01:56 PM
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#122
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Thinks s/he gets paid by the post
Join Date: Apr 2012
Location: Nashville
Posts: 2,506
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Quote:
Originally Posted by daylatedollarshort
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Apologies for linking to Vox, but couldn't quickly find a better analysis showing the misinterpretations of the Kahneman/Deaton study: http://www.vox.com/2015/6/20/8815813...appiness-study Conclusion of the Vox article:
Quote:
So don't home in on that one number, in one study. Focus on the huge amount of evidence suggesting that money always makes you happier.
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The author does provide links, including to Stevenson/Wolfers.
__________________
OMY * 3 2ish Done 7.28.17
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04-17-2017, 02:04 PM
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#123
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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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Speaking of the Trinity study, one takes that as a baseline, or a standard recipe. Then, he can add more salt or pepper to suit his preference. Gotta start from somewhere.
__________________
"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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04-17-2017, 02:10 PM
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#124
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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 Another Reader
Yeah, but we won't be living under a bridge, eating cat food.
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Quote:
Originally Posted by Major Tom
But if you were, just think of the fantastic meals and trips you could afford, being free of the worry of having to pay for housing
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Any such fancy meal will have to be cooked under said bridges, and trips will also be from bridge to bridge.
That of course does not mean that 0% WR makes any sense. If I could live the way I do now on the 2% dividend yield of the S&P, I would be getting richer with time already. There's no point in doing 0% WR.
__________________
"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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04-17-2017, 02:14 PM
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#125
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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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Quote:
Originally Posted by Major Tom
+1 to your +1 Alan.
I'd also say that if you're not the analytical or particularly academic type, you'd still benefit from absorbing the main conclusions of this study, whether you do it from reading the study itself, or from reading a synopsis from a trusted person.
I'm a bit of a fuzzy thinker at times, but the main takeaway from the Trinity Study for me was that if I have my money invested in a very roughly equal mixture of stocks and bonds, then a WR of 4%, based on the starting value of the portfolio, and adjusted every year for inflation, should last for 30 years (~95% probability which, for many people, is good enough). If you have a lower tolerance for risk, or a longer timespan, or both, then reduce the WR accordingly.
The main conclusions from The Trinity Study, along with a habit of using Firecalc far too many times to check what is essentially the same set of figures ( ) have been the main factors in convincing me that spending the rest of my life not working is actually a viable idea.
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Thanks for the Cliff notes version. I'll try to read it, but I often forget to do things I'm supposed to do. Too many distractions.
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04-17-2017, 02:14 PM
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#126
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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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Hey, I just looked again at my numbers. If the market does not crash, and my stash stays pretty much the same as it is now, in a few years when we draw SS (not waiting till 70), our SS needs only be supplemented with the dividend from the stash for us to live the same way we do now.
How about that? No "Wh***" please.
__________________
"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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04-17-2017, 02:14 PM
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#127
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Thinks s/he gets paid by the post
Join Date: Mar 2005
Location: yonder
Posts: 2,851
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Quote:
Originally Posted by Major Tom
I'd also say that if you're not the analytical or particularly academic type, you'd still benefit from absorbing the main conclusions of this study, whether you do it from reading the study itself, or from reading a synopsis from a trusted person.
I'm a bit of a fuzzy thinker at times, but the main takeaway from the Trinity Study for me was that if I have my money invested in a very roughly equal mixture of stocks and bonds, then a WR of 4%, based on the starting value of the portfolio, and adjusted every year for inflation, should last for 30 years (~95% probability which, for many people, is good enough). If you have a lower tolerance for risk, or a longer timespan, or both, then reduce the WR accordingly.
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Thanks for the synopsis.
You have just become one of my trusted people. It's a small group. Very exclusive .
__________________
When the people shall have nothing more to eat, they will eat the rich--philosopher Jean-Jacques Rousseau
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04-17-2017, 02:36 PM
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#128
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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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Quote:
Originally Posted by 2017ish
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There are many research studies on happiness. Not all researchers agree with the $75K study, but many studies do find there is a diminishing marginal utility of spending after a certain point. Getting out in nature, number of friends, social support, meditation, volunteer work, mental health, diet, exercise, music, charitable giving, leisure time, feelings of control, sunshine and physical health are all factors in happiness where money is just one component of many.
Based on brain wave patterns, the happiest man in the world is reported to be a Buddhist monk:
Life Lessons From The World's Happiest Man
__________________
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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04-17-2017, 02:50 PM
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#129
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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
... whether you do it from reading the study itself, or from reading a synopsis from a trusted person...
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Quote:
Originally Posted by redduck
Thanks for the synopsis.
You have just become one of my trusted people. It's a small group. Very exclusive .
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Congrats to Major Tom, as you have now joined me in this very small group. The count is 2, as I know it.
Of course, I do not know everything that redduck says to other posters.
__________________
"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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04-17-2017, 04:51 PM
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#130
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Recycles dryer sheets
Join Date: Mar 2014
Location: Islands
Posts: 363
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When I input my portfolio and time horizon (40-50 years) into FIRECALC for "investigate spending level" it recommends just about 3.1%.
Will likely do about 2-2.5% on average but fully expect swings based on market and occasional big expenses.
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04-17-2017, 06:25 PM
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#131
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Thinks s/he gets paid by the post
Join Date: Nov 2009
Location: SF East Bay
Posts: 4,342
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Quote:
Originally Posted by redduck
Thanks for the synopsis.
You have just become one of my trusted people. It's a small group. Very exclusive .
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Thanks, but you may want to take a little longer to consider this move, in light of the fact that I didn't make this synposis based on reading the study. I don't even remember whether I've read the study in it's entirety, but I have spent quite a lot of time reading discussions between others who have read it, whose analytical abilities I trust. It's how I've learned the little I do know about this ER/FI stuff - by listening to people smarter than me, and getting on the same bus as them, figuring it will take me to roughly the same place. It's the old 80/20 rule - 20% of the effort getting me (hopefully) 80% of the results.
I think it's useful to know what you are good at, and to what extent you are good at it. The world is full of people who think they know more than they actually do about all sorts of things when, in reality, they actually know just enough to be quite dangerous. Computers, and sophisticated investment strategies, are two of the subjects that spring to mind.
Quote:
Originally Posted by NW-Bound
Of course, I do not know everything that redduck says to other posters.
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"How dare he! I thought I was the only one who got the sweet talk!"
__________________
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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04-18-2017, 05:41 AM
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#132
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,154
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Quote:
Originally Posted by Fedup
I'm aware of 4% withdrawal rate of your yearly balance, but I wasn't sure why with the Trinity study, withdrawal from the original amount is better way.
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It's not necessarily better. It's just one method that achieves certain goals and has been heavily studied/modeled so it's a good benchmark.
__________________
Retired since summer 1999.
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04-18-2017, 05:45 AM
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#133
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,154
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Quote:
Originally Posted by NW-Bound
Hey, I just looked again at my numbers. If the market does not crash, and my stash stays pretty much the same as it is now, in a few years when we draw SS (not waiting till 70), our SS needs only be supplemented with the dividend from the stash for us to live the same way we do now.
How about that? No "Wh***" please.
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That already reads like a jinx to me!
__________________
Retired since summer 1999.
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04-18-2017, 06:05 AM
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#134
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Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 4,872
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Quote:
Originally Posted by Meadbh
Many of you 0% people are going to die stinking rich. Your heirs will have a blast.
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I'm having a blast on 0% and hope that my heirs will make good use of the money they get. I'm going to leave some to local charities as well.
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”
Current AA: 75% Equity Funds / 15% Bonds / 5% Stable Value /2% Cash / 3% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
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04-18-2017, 07:04 AM
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#135
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Thinks s/he gets paid by the post
Join Date: Dec 2009
Location: Alberta/Ontario/ Arizona
Posts: 3,393
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Quote:
Originally Posted by Meadbh
Many of you 0% people are going to die stinking rich. Your heirs will have a blast.
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Maybe smaller portfolios? Agree with your sentiment though. It would be useful if the people with low WR's explained what their plan is for the residual? Although obviously, it would be heirs and charities.
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04-18-2017, 07:16 AM
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#136
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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 Danmar
Maybe small portfolios? Agree with your sentiment though. It would be useful if the people with low WR's explained what their plan is for the residual?
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We live on, (with dividends/interest income, CPP/OAS), less than we bring in, (plus in October DW is eligible for OAS)...........and regard 'the nut' as a bulwark*.
We're happy now, increased spending might makes us marginally happier, (but that's moot).......when we're gone, those to whom we leave it can do whatever they want...not our problem.
*Also, we have no company pensions, so by necessity, we have to concern ourselves with market collapse/fluctuations.
__________________
"Exit, pursued by a bear."
The Winter's Tale, William Shakespeare
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04-18-2017, 08:40 AM
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#137
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Thinks s/he gets paid by the post
Join Date: Oct 2012
Location: Colorado Mountains
Posts: 3,165
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Quote:
Originally Posted by Danmar
Maybe smaller portfolios? Agree with your sentiment though. It would be useful if the people with low WR's explained what their plan is for the residual? Although obviously, it would be heirs and charities.
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After the house is built and college expenses done and I turn 70.5, SS and pension will cover living expenses including most all foreseeable fun stuff. Right now, the spread sheet says I will be adding to the stash throughout retirement. Charity will be a large element in keeping the overall portfolio manageable without giving such a big chunk to Uncle Sam. (The portfolio is all in tax deferred accounts. ) I think I will buy a new or newer diesel pickup and slide-in camper along with ATVs and other toys. That should help too. When all is said and done, and my chips get cashed in, the kids will likely get enough to help them toward FI, but I doubt it will cover their needs completely. This assumes it does not get used for assisted living and nursing home care, etc. (We told our kids a long time ago that they would get their college expenses paid for and that was all they should expect.)
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04-18-2017, 08:52 AM
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#138
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Moderator Emeritus
Join Date: May 2007
Posts: 12,901
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I am comfortable with a WR below 3% right now, at age 43. If I was in my 60s, I'd be comfortable with a WR up to 3.5%.
I have quite a few backups built into my plan (substantial non-retirement assets which could be liquidated if necessary, SS, guaranteed access to affordable healthcare in the EU, etc...). Without them, I'd set my WR below 2% at this time.
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04-18-2017, 09:34 AM
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#139
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2006
Location: Pacific latitude 20/49
Posts: 7,677
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Quote:
Originally Posted by Fedup
I'm thinking of upgrading my residence because of this. But the new home is nearly 6000 sqft. Except I want more land, not bigger house. But around here more land means bigger house. I worry my husband and I will get lost in this big home. But still contemplating.
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Don't do it! Buy a second property on a lake. Those huge homes will become a large burden. Think small!
__________________
For the fun of it...Keith
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04-18-2017, 09:40 AM
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#140
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2006
Location: Pacific latitude 20/49
Posts: 7,677
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Quote:
Originally Posted by Travelwanted
Will likely do about 2-2.5% on average but fully expect swings based on market and occasional big expenses.
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No swings on market once you pull the trigger. Always based on original stash.
Amortize the big expenses over 10 years to recalculate your rate.
__________________
For the fun of it...Keith
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