Intermediate treasuries would be more like 5 year, not 10. Most folks refer to 10 year treasuries as long bonds.I finally had some time to sit down and read both Bengen's paper and Raddr's thread on his 75/25 Portfolio. Bengen's was for 30 years and Raddr was for 40-50 years of retirement. We are talking about Bengen 1994 paper called "Determining Withdrawal Rates Using Historical Data" not Raddr portfolio Y2K.
1. Bengen looked at 50 to 75% stock and he actually said someone in middle would be best, which is @ 60%. Raddr only used 75%.
2.Bengen said Intermediate treasury fund which is 10 year treasuries. Buy 10y treasuries and sell when at the 5 year mark, rinse and repeat. Now comes the big reason why Raddr's portfolio is way down. He buys 6 month CD's and short term commercial paper for the 17 years and so far hasn't changed.
3. Runningman you take Raddr's number $491k right off his website.
Here are the inflation adjusted numbers off the Portfoliovisualizer.com website using Vanguard total stock market fund and Vanguard intermediate treasury fund. 55/45 1,181,323 60/40 1,137,996 65/35 1,088,995 and of course the 75/25 974,091. They aren't setting the world on fire but they are a far cry from your 491,000 and they only have 13 years to go. This is for a 4% withdrawal rate.
Bottom line is you can't compare apples to oranges and you need to read before you comment on something.
Interest-Rate Sensitivity
The bond style box's horizontal axis shows a fund's interest-rate sensitivity as measured by duration (see definition below). Here's how Morningstar determines which bond funds it considers short-, intermediate-, or long-term.
Bond Type Short Intermediate Long Taxable bond funds 0-3.5 years 3.5-6 years 6+ years Tax-exempt bond funds 0-4.5 years 4.5-7 years 7+ years
Intermediate treasuries would be more like 5 year, not 10. Most folks refer to 10 year treasuries as long bonds.
Here is how Morningstar sorts duration which I think is pretty standard in the industry:
I guess vanguard isn't most folks, Read the Product summary.
https://personal.vanguard.com/us/funds/snapshot?FundId=0925&FundIntExt=INT
Plus https://www.thebalance.com/choosing-bond-fund-term-416948
from https://www.columbiathreadneedleus.com/investment-products/index-description-glossary/The Ibbotson U.S. Intermediate-Term Government Bond Index is an unweighted index which measures the performance of five-year maturity U.S. Treasury Bonds. Each year a one-bond portfolio containing the shortest noncallable bond having a maturity of not less than five years is constructed.
from https://www.invesco.com/pdf/benchmarkdef.pdfis measured using a one-bond portfolio with a maturity near five years.
Still a big difference between 5 to 10, and 10. Most intermediate bond funds run 5 to 6 years in average duration, and I notice that for BIV average duration is 6.5 years.
Reread what I wrote . Yes right now in a rising interest they are shorting the duration. Biv avg eff maturity is 7.20 Yrs pretty hard to have only have 3-7 bonds with 6.5 duration and maturity of 7.20. A couple of years ago(maybe longer) they were higher than now.
I understand, sorry. I as concerned that your model didn't seem to quite match what Bengen was doing. But now I see you were using Vanguard funds as your benchmarks, not the 10year treasury per se. So never mind - close enough.I didn't response to runningman to talk about bond duration and what is a intermediate bond. it was to dispute what he was saying about Bengen 1994 papers.
I understand, sorry. I as concerned that your model didn't seem to quite match what Bengen was doing. But now I see you were using Vanguard funds as your benchmarks, not the 10year treasury per se. So never mind - close enough.
I don't think the FIRECALC results are as positive as yours. But it's a bit tricky to tease out the exact run for 2000 as you have to do a shorter run (16 years) to get data starting at 2000. I'm getting ending portfolio (for 60% total stock market, 40% 5 year treasuries, 4% withdrawal) as $569K nominal which is $406K inflation adjusted through the end of 2015 (spreadsheet generated by FIRECALC seems to mean the end of each numbered year). It doesn't output data for 2016 yet.
For 75% total stock market I get $507K nominal and $361K inflation adjusted.
He is probably right. Almost everyone on er.org is going to kick the bucket with their children fighting over several million dollars and who gets the old couch.
Check out this site https://www.portfoliovisualizer.com/ you can input by actual funds or ETF's. I used VTSMX and VFITX.
Fermion said:He is probably right. Almost everyone on er.org is going to kick the bucket with their children fighting over several million dollars and who gets the old couch.
And when you have no direct heirs, and no grand plans for gifting, the eternal SWR question takes on a sort of bizarre tenor - how do I spend as much of it as possible while still making sure I have enough? I don't care at all about "touching the principal," other than how spending too much too early will cause trouble later.He is probably right. Almost everyone on er.org is going to kick the bucket with their children fighting over several million dollars and who gets the old couch.
Joke's on them: My children don't exist. Ha!
Same here. But DW has nieces and nephews who'll be faced with a huge "lottery winner's syndrome" challenge.
It won't be pretty for a few of the ingrates. If any of them bothered to give me the time of day I might be able to coach them......(sigh)
at 4.5% it has a fair chance of success about 50/50 I would think to make 30 years
Year Start of Year Annual withdrawal Investable Annual % Return Closing Balance Yearly Inflation 2000 1,000,000.00 (45,000.00) 955,000.00 2.86% 982,313.00 3.40% 2001 982,313.00 (46,530.00) 935,783.00 0.47% 940,181.18 2.80% 2002 940,181.18 (47,832.84) 892,348.34 -6.78% 831,847.12 1.60% 2003 831,847.12 (48,598.17) 783,248.96 23.80% 969,662.21 2.30% 2004 969,662.21 (49,715.92) 919,946.29 12.27% 1,032,823.70 2.70% 2005 1,032,823.70 (51,058.25) 981,765.44 6.89% 1,049,409.08 3.40% 2006 1,049,409.08 (52,794.23) 996,614.85 14.38% 1,139,928.06 3.20% 2007 1,139,928.06 (54,483.65) 1,085,444.41 5.12% 1,141,019.17 2.80% 2008 1,141,019.17 (56,009.19) 1,085,009.98 -20.44% 863,233.94 3.80% 2009 863,233.94 (58,137.54) 805,096.40 20.75% 972,153.90 -0.40% 2010 972,153.90 (57,904.99) 914,248.91 12.83% 1,031,547.04 1.60% 2011 1,031,547.04 (58,831.47) 972,715.57 -9.20% 883,225.74 3.20% 2012 883,225.74 (60,714.08) 822,511.66 11.10% 913,810.46 2.10% 2013 913,810.46 (61,989.07) 851,821.38 15.80% 986,409.16 1.50% 2014 986,409.16 (62,918.91) 923,490.25 6.40% 982,593.63 1.60% 2015 982,593.63 (63,925.61) 918,668.02 -0.82% 911,134.94 0.10% 2016 911,134.94 (63,989.54) 847,145.40 9.20% 925,082.78 1.30% 2017 925,082.78 (64,821.40) 860,261.38 -7.0%
I'm waiting for my nieces and nephews to get old enough to realize that being nice to and helping take care of old aunt googily might have some benefits.I have two nieces (sisters, 7&10) and a nephew (2).
The two nieces in particular have a lot of 'no-kids' relatives and decently middle-class grandparents with either a decent cash reserve or solid pensions, which in practice means they'll have several houses and quite a wad of cash coming their way, regardless of what I do (or have) in the end.
I'm waiting for my nieces and nephews to get old enough to realize that being nice to and helping take care of old aunt googily might have some benefits.
My withdrawal percentages have been pretty irregular too, up to almost 9%!! See below. I use the "% of 12/31 portfolio value" method, and I feel that 3.5% is reasonable for me, or maybe even 4% since I turn 70 next year. But here's what reality has been, for me:I'm taking 3% for the next 3 years while I work online part-time (about 15 hours/week) since DW is hanging it up. Then 6.5% for 3 years until my SS (I'm assuming the portfolio value will go down), then back to 4.5% until DW hits full SS age, then 3.5-4%.
I'm with Lawrence of Suburbia. 5% of investments yearly WR. I don't count home equity or social security. We are 60/58 so we can be a little extra aggressive. Our plan is to delay SS for 9 -10 years to max it out but we can always start early if the market tanks.I'm rounding up to 5% when I finally retire.