The software has two ways of figuring out portfolio "growth." One is the standard X% return with Y% inflation. It can be "historical" or user input. For more money, you can get the Monte Carlo version. I really don't see how this makes any great predictor of our recent meltdown.
Yes. I did not thing the book was about specific investment advice... but illuminates the topic of risk in terms of maintaining a lifestyle and how to think about it and manage it.
I was thinking that this downturn may have affected how people think and are approaching FI and management of it. (e.g., It looked a certain way last summer... things look different now). Have your interpretation changed about the ideas put forward in the book.
The value of STTE is really philosophical. It shows how the young are capital poor but have a long amount of earning years ahead of them. They "need" the housing and "things" to go out into the world, marry and raise children. The old have fewer (or no) earning years ahead and are in the contraction phase. They are free to shed capital because it's no longer "needed" to raise their family.
The whole concept involves "consumption smoothing" and goes against the mantra that everyone needs to save 10% or more of their income for retirement from Day 1. They show that it is better for the workers entering the workforce to establish themselves financially before saving for retirement.
They also make a point out of showing the 80% of pre-retirement earnings needed for retirement spending is not correct for most people.
I am in the transition stage of ER. We have what we have and I am endeavoring to better understand the spending phase.
I have been using about 100% of my earnings as a benchmark for income in ER (but not including DW's earnings). But we only spend about 60% of my earnings today and that includes paying the mortgage. We intend to have the house paid off when we ER. After the mortgage, we probably only spend about 45% of my current income.
Obviously we were in much better financial shape (on paper) 12 months ago. Last year, I was doing modest projections and was thinking, we have a surplus... So I was not looking too closely at the consumption side. But now our total portfolio is off by about 30% (much money), I am taking a closer look. I am doing more analysis using my method... But I suspect my method is lacking because it involve certain generalizations.
I am hoping the book will help me to think about things I have not considered.
One area I am coming to grips with is the idea of my goal. It took me a while to figure it out... but my goal is not to become rich (although I would like to
)... My goal is to maintain my standard of living. To that end.... am I taking too much risk? Or am I forgoing spending on products and services that DW and I might otherwise purchase?
I am hoping the book will shed light on those concepts.
Did you think ESPlanner was a worthwhile purchase? Has it helped you in making decisions or show you where you need to adjust.