Y2K Retirement?

[Sam]

... not realistic because inflation has already eaten nearly 13% of the person's spending power and yet their withdrawals haven't gone up to reflect higher living expenses.

The following numbers assume a 0.2%/yr. expense ratio, 4%/yr. withdrawal, and are stated in constant (real) dollar amounts:

I did not verify the numbers, but according to lswswein, inflation is already taken into account.

I think the retiree is ok if he/she has the gut to stay the course. In a few years, the balance will bounce back to the original value.

 

[farmerEd]

So we should all be going to cash next year?

I am staying fully invested until my brother calls me up and tells me he is getting back in the market. Then I sell. When he gives up and closes his trading account, then I get back in.

 

[lswswein]

I did not verify the numbers, but according to lswswein, inflation is already taken into account.

Yes those numbers have inflation already included in them. All the numbers are inflation adjusted real dollars. Infact the nominal dollar numbers do not look as bad the numbers before.

This is the nominal dollars ie not adjusted for inflation
Commercial Composite
CPI S&P500 Paper Return Withdrawal Portfolio
2000 3.4 -9.1 6.8 -5.4 40 906
2001 1.6 -11.9 3.7 -8.3 41 789
2002 2.4 -22.1 1.8 -16.4 42 618
2003 1.7 28.7 1.2 21.5 43 707
2004 3 10.9 1.7 8.3 44 722
2005 3.4 4.7 3.3 4.1 45 706

See the withdrawal amount increase? That's inflation - The assumption was that you need $40K in real dollars. Obvioulsy does not take into account that your "personal" inflation could be different from the CPI numbers and all that. (We discuss that topic annualy and it is not that time of the yr yet! )

-h
again Reference:
http://www.raddr-pages.com/forums/v...&postorder=asc&highlight=y2k+retiree&start=45

 

[Jarhead*]

I like the 7 year cushion. That's what I plan to do.

Hey Jar, got my round in this morning and shot a 73. That included an eagle from a hole out with a 7 iron on a par 4 hole. My partner and I won the money. Life is good!

Now there's the "pony" in this thread.

If I recall, I think you mentioned that you were an ll or l2 handicap.

You sound like the answer to a Pro's dream as a playing partner.(Net 61)

The NCGA since going to a Statewide Computer system, has placed anyone that plays a tournament at less than 6 shots under his handicap in the category of "keep an eye on that guy." If it happens a 2nd. time, they will force him to play at the lower handicap of the two.

Be careful out there.

Anyway, great round, and an Eagle on a Par 4 is no easy task.

Congratulations on your retirement, and good to hear you are putting your time to constructive use.

 

[Dawg52]

Now there's the "pony" in this thread.

If I recall, I think you mentioned that you were an ll or l2 handicap.

You sound like the answer to a Pro's dream as a playing partner.(Net 61)

The NCGA since going to a Statewide Computer system, has placed anyone that plays a tournament at less than 6 shots under his handicap in the category of "keep an eye on that guy." If it happens a 2nd. time, they will force him to play at the lower handicap of the two.

Be careful out there.

Anyway, great round, and an Eagle on a Par 4 is no easy task.

Congratulations on your retirement, and good to hear you are putting your time to constructive use.

Last Saturday I shot 81 so 73 is not the norm. My handicap is probably closer to the 7-8 range now that I'm playing more. Our group knows who shoots what so we give up strokes to whoever really needs them.
Enough of off topic talk. Time for a beer.

 

[ERD50]

The portfolio of a hypothetical investor who retired at the end of 1999 with a 75:25 mix of S&P500 stocks and 6 mo. commercial paper. The following numbers assume a 0.2%/yr. expense ratio, 4%/yr. withdrawal, and are stated in constant (real) dollar amounts:

Year Return CPI Withdrawal Balance
1999 1000
2000 -9.1 3.4 40 869
2001 -9.9 1.6 40 743
2002 -18.8 2.4 40 564
2003 19.7 1.8 40 635
2004 5.3 3 40 628
2005 40 599

Is a table like this realistic ?
I'm not retired, but, if I were, the withdrawals would have dropped way before now. Probably starting in 2000.

Drysocks, I think it is a good question, but we are looking at that table in hindsight. If you look year by year, what would you do? Would you have cut spending the very first down year? I've only been retired a few years, so I have not been 'tested' in this way - but my time will surely come.

If your portfolio dropped 9% one year, would you automatically cut back - or assume that next year would be fine and just ride it out? And, if the next year was down 9% again, OK this might get us a bit more concerned. That third year with the -18% - at that point I'm sure I would want to start doing some adjustment. And then the next year of +20% might have me wondering what the fuss was all about, and thinking ' just trust the FireCalc numbers'!

Something I really should do is actually identify how I would cut back, and see what that % comes to so I am prepared if/when the time comes. As an LBYM I don't think of myself as having a bunch of obvious extravagances that I would just cut. I should review it, but there are so many more interesting things to do!

I think I mentally rely on some of my 'back pocket' safety factors built into my SWR. I've never counted the NW in my home, so that is probably making my SWR look conservative by about 15% to 20%. DW has a job she wants to continue for a few more years, reducing withdraws and boosting ultimate pension a bit. Hopefully, I would pretty much just ride out a storm, but who knows?

-ERD50