Article NY Times-How to Enjoy Retirement Without Going Broke

[Luvtoride]

I hope the link works and opens for any who wish to read it. The story is fairly basic for those of us here, but because it’s in the Times it will probably be read by many people who need this type of info on decumulation of assets etc.

There is a very good link in the article to a technical paper by a Sanford University professor “ Retirement Income Analysis with scenario matrices”. It is free to download and is designed with tools for drawing income etc in retirement. I’m starting to make my way through it and it is technical but interesting.

https://www.nytimes.com/2021/08/27/opinion/how-to-enjoy-retirement-without-going-broke.html

Anytime that mainstream media publishes articles like this I’m sure it helps some who haven’t given the subject enough attention.

 

[CSdot]

Behind a pay wall.

 

[MichaelB]

The article links to a paper or ebook authored by William Sharpe. The link is free and can be found here https://web.stanford.edu/~wfsharpe/RISMAT/

 

[Luvtoride]

Thanks for posting the link to the Sanford paper…that would be of most interesting to this group.

 

[Major Tom]

Behind a pay wall.

IIRC, you can register for an account, and are allowed a certain number of free articles a month. I currently have a subscription, but that is the way it was a few months ago before I signed up with them.

The one part of the article that jumped out at me, at the very end, was the following,

Annamaria Lusardi, an expert on personal finance at George Washington University School of Business, says that in her research, “I kept being surprised by how little people know.” For many people, she says, finance is a foreign language.

Finance - even at the basic level, certainly is a foreign language for many. Although I am missing out on many wonderful talents and skills, I'm at least glad that I quite like numbers, and have been able to make sense of my personal finances.

 

[retire-early]

IIRC, you can register for an account, and are allowed a certain number of free articles a month. I currently have a subscription, but that is the way it was a few months ago before I signed up with them.

I think it is 10 articles a month.

 

[Ready-4-ER-at-14]

The idea of lock box annuities was interesting.

Not so sure about tips actually protecting against inflation since the payee calculates what inflation is and that seems to change whenever tips would seem to be coming into payout areas.

 

[MC Rider]

The E book is "only" 730 pages.

 

[Koolau]

The E book is "only" 730 pages.

Yeah. A bit TMI for me. I AM keeping it to refer to however. YMMV

 

[CSdot]

Annamaria Lusardi, an expert on personal finance at George Washington University School of Business, says that in her research, “I kept being surprised by how little people know.” For many people, she says, finance is a foreign language.

Finance - even at the basic level, certainly is a foreign language for many. Although I am missing out on many wonderful talents and skills, I'm at least glad that I quite like numbers, and have been able to make sense of my personal finances.

Great point!!

Most either don't know where to start, or they get analysis paralysis and fail to implement their good intentions. You can always tweak the plan later, but you can't go back in time and make up for a decision to hold off on starting to invest.

For me, actually pulling the trigger in 1996 on a plan for investing regularly (every pay period) was the KEY to my financially being where I am today.

 

[calmloki]

Reading some of Sharpe's paper left me feeling pretty dense and in need of math term refresher courses. So we'll be sub-optimal and end up spending less than we could have, enriching heirs. (as the guy falling past the 7th story window was heard to say; "so far so
g
o
o
d)

 

[travelover]

I was surprised at the positive view of annuities and the lack of parsing out the types of annuities.

 

[SnowballCamper]

I went and looked toward the end for a summary and/or recommendations (of Sharpe's treatise). Here is what I found: "That said, the list of types of employers provided by the IAQF [International Association for Quantitative Finance] does not include financial planners, nor does the list of applications include retirement income analysis. Perhaps this will be rectified in future years."

I thought we were told the problem was basically poor financial engineering for the market collapse in 2007-08...

As someone with graduate degree training in applied mathematics, I could follow a financial advisor who was interested in doing analysis along the lines of what Sharpe has done. But having been a mathematics instructor, I'm well aware that most people don't have the interest/motivation/aptitude to do a thorough quantitative analysis of their options. And in any case, the decision will come down to some personal preferences...precisely because it depends on what we think will happen in the future, and we can only answer that for ourselves.

Reading this treatise would be a good exercise to see how what we think will happen can effect our financial future... I'm just not inspired to do so yet.

 

[Dd852]

DW ordered me to read the whole friggen’ paper and explain it to her. My head quickly started to spin, so I told her that amazingly the conclusion was that we’ve been basically on the right track, albeit a bit conservative. My old corporate bullsh*ting skills must not have atrophied because she bought it hook, line and sinker and is happy. Mission accomplished. Please don’t blow my cover!

 

[ExFlyBoy5]

Just a bit off topic, but many library systems have lots of newspapers available for reading online and at no cost. I can access that days NYT as early as 7am.

 

[Yoheadden]

Great point!!

Most either don't know where to start, or they get analysis paralysis and fail to implement their good intentions. You can always tweak the plan later, but you can't go back in time and make up for a decision to hold off on starting to invest.

This is my finding as well. Hell, this was me 15 years ago, but the more you read, the more you learn. Eventually, things start making sense and sinking in, but you have to make the effort.

 

[zippy2020]

Current offer on NY Times (has been going on for a while, actually) is $1/week for all-access DIGITAL-only. Payable in 1-month increments but you can cancel anytime for a refund.

Limit is 5 free articles/monthly.

 

[GTFan]

IIRC, you can register for an account, and are allowed a certain number of free articles a month. I currently have a subscription, but that is the way it was a few months ago before I signed up with them.

Or use a browser extension like Tranquility Reader and see all the NYT and WaPo articles you want, on a PC.

 

[ShokWaveRider]

Here are excerpts from the article that does not have a paywall.

https://empirefinancialresearch.com...rts-today-your-phone-is-turning-you-into-an-a

 

[Major Tom]

Or use a browser extension like Tranquility Reader and see all the NYT and WaPo articles you want, on a PC.

I thought that Tranquility Reader just removed ads. I didn't know that it also allows one to get behind a paywall.

 

[GTFan]

It strips out pretty much everything but text from a page.

 

[NateW]

IIRC, you can register for an account, and are allowed a certain number of free articles a month. I currently have a subscription, but that is the way it was a few months ago before I signed up with them...

For those web sites that limit your number of free articles, you can reset the web site counter when your limit is reached and enjoy more free articles. The download count is stored on your device as cookies. Simply go into the browser settings and under "data stored", clear the data for that site. In order to find the site in "Data Stored" use the search function and search on part of the url (this works at least for Chrome).

 

[Markola]

The Sharpe paper reminded me of a droning math teacher writing furiously on the black board, while I concentrated instead on the unfathomable mystery of a pretty girl sitting in front of me, and while looking forward to, literally, any other class. No wonder I gravitated to the humanities.

This seems to be the gist of the NYT article. Apparently, all one needs to succeed in retirement is accurate foresight about what the markets will do and to know when you will die. Thanks a lot:

“Do you keep your spending steady and allow the assets in your portfolio to fluctuate, or do you do the opposite — keep your portfolio steady and allow your spending to fluctuate?

Both choices have drawbacks. Let’s say you want to keep your spending steady to maintain a stable lifestyle but, right when you retire, the market has a few bad years in a row. The spending level that you chose, which seemed reasonable when you retired, will be too much for your shrunken portfolio to sustain. Your assets will shrink far faster than you intended, and you will run out of money.

Or let’s say you choose instead to keep your portfolio steady or shrinking at a slow and steady pace. That means that when the market goes down, you’ll have to cut back how much you pull out of the portfolio to avoid draining it too quickly. That could be a problem if you need the money to pay bills.

A good choice is to come down somewhere between the two. Try to keep your lifestyle fairly stable, but bow to reality and cut back at least a bit in years when your portfolio is down.

 

[Koolau]

A good choice is to come down somewhere between the two. Try to keep your lifestyle fairly stable, but bow to reality and cut back at least a bit in years when your portfolio is down.

I think this is the instinctive approach most folks use. Even though most of us have bought into FIRECalc and the research behind it, who among us didn't cut back a bit during the Great Recession? YMMV