Your net assets after every 10 years? (mutual funds, calls, investor, Vanguard)
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okay , simply put what firecalc dosnt average out the returns... it takes each year on its own merit ...
I know how it works, that's why I was completely puzzled by your claims that it just takes a rate of return for your asset mix.
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its just another way to the same conclusion, namely to see if our portfolios will give us a 95% success rate of not out living our money....
No, it's not aimed at 95% or any other percentage. It takes your allocation and runs it in hundreds of scenarios over time, then you conclude whether the risk or failure (whatever it might be) is something that is acceptable to you.
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only problem is like i said, they dont adjust for the low returns we have been stuck with going forward... firecalc still shows to large of a withdrawl rate possible for me based on what i would do on todays returns..
Agreed, future rates of return will likely be lower. But how low is too low? Would you agree that getting a 6% rate or return can work if you draw 4% on a million bucks, given 3% inflation? When I run the numbers it seems to work for both 6% and 5%, I might be missing something I'm not sure that's why I'm enjoying the discussion with someone I consider one of the wisest financial guys on these forums.
If getting a 6% return works I'm comfortable with that, so would be good claiming 40k is how much you can draw on a million bucks.
I used to prefer FIDELITY'S calculator..fidelity gives me in dollars and cents what i can draw and still maintain 95% which the majority of planners feel is what is acceptable and has a cuSsion.
I can enter my exact portfolio and have thousands of simulations run on it historically giving me the best and worst case amounts they predict , key word predict i can withdraw.
So far the only one i saw run numbers based only on this decade is scott burns.. The numbers like we mentioned earlier werent pretty
based on 10 years returns on the typical 50/50 mix these are the returns we got, they are far different then anything in those simulations historically.
the results aint good . Scott hasnt translated any of these new numbers in to success rates but he did run a few numbers and found to maintain that 95% success rate retirees needed 3.7 million dollars to take a 70,000.00 draw and not drop below 95%. prior worst case was 1.8 million.
How written in stone is that 95% rate? Beats me .... But i guess we will all find out as numbers like these are rediculios.
Lets hope gains increase so the numbers go back to their historical norms.
With 6 to 8 percent returns a 40k draw from a million, indexed to inflation, works quite easily. Here is the annual totals for an assumed 6% return on assets with an initial 40k out, with the 40k increased 3% per year for cost-of-living. Columns are stash, withdraw:
6% returns work fine, but i dont know anyone who got 6% in a deade on an entire retirement portfolio. it dosnt exist anymore.
we all want to know ,where are you getting 6% returns today on an entire portfolio? in fact where were you getting 6% returns on an entire portfolio this past decade? we are talking an entire nest egg now including cash.
my actual retirement portfolio as a total ran at an average of 2% this decade, my origional more aggressive growth portfolio i used ran 3.5% on the decade so if your got 6% this past decade we all want the secreat.
.... my own mix is about 30% equities/ some gold/ ...40% bonds/un-traded reits, 30% cash today
heres my returns on my entire portfolio this decade , some stuff did well ,other stuff not so well but over all heres what i got on everything i own when taken as a whole..i averaged about 2% this decade.
heres my own portfolio returns.
2000 -1.4% minus
2001 -5.5 minus
2002 -6.8 minus
2003 +18.9
2004 +7
2005 +3.5
2006 +7.2
2007 +5.2
2008 -18.4 minus
2009 +19.2
2010 so far +1.8
i also still track the growth portfolio i used since1987 even though i now use a capital and income preservation portfolio as we are retiring very very soon
the growth portfolio is 68% equities 28% bonds 4% cash...that averaged 3.5% return a year..
2000 -2.7 minus
2001 -2.1 minus
2002 -4 minus
2003 +33
2004 +14.4
2005 +11.1
2006 +11.8
2007 + 7.8
2008 -38.2 minus
2009 +32.2
Last edited by mathjak107; 06-28-2010 at 02:59 AM..
the bottom line to the entire discussion is really that if you were one of those folks who retired in 2000 you generated almost nothing for over 10 years so far after taxes and inflation..
that burned thru a fairly large chunk of capital ..if your financial planners told you that you had a 95% success rate back in 2000 what do you think your success rate is now unless you dropped your withdrawls by at least 1/2.
thats my point!.. im retiring in 1-3 years.. what the heck do i figure ?
my planners i use are already way off base telling me i can still draw amounts based on my portfolio getting at least 6-8% a year... .. no way!
the scarey thing is all those financfial calculators all told folks the same thing back in 2000.. no problem drawing 40,000 a year off a million bucks if you have the model portfolio we are using to work these numbers, they are telling you its a 95% success rate......
well those folks would now be broke within the next 10 years based on this past decades performance. they had to be smart enough to realize that not only couldnt they take an inflation adjusted raise each year but if they didnt cut back to 15-20,000 a year in withdrawls they would blow thru 1/3-1/2 the money possibly in the first decade.
dont forget as they spend principal they get even less generated each year.
worst case scenerio now looks like this past decades performance for a retiree portfolio..... if i was retireing this year i would need more then 3 million bucks to generate that 79,000 inflation adjusted income if i wanted to plan for another decade like we just had. my planners still say 1.8 million is enough but its not even close if this decade is a repeat.......
no one knows what the future will bring but plan for the worst and hope for the best is never truer.... for those retirees in 2,000 it may be to late and their retirements will fail.
Last edited by mathjak107; 06-28-2010 at 05:41 AM..
6% returns work fine, but i dont know anyone who got 6% in a deade on an entire retirement portfolio. it dosnt exist anymore.
we all want to know ,where are you getting 6% returns today on an entire portfolio? in fact where were you getting 6% returns on an entire portfolio this past decade? we are talking an entire nest egg now including cash.
Well I certainly won't measure a retirement portfolio over only 10 years I plan on being retired a lot longer than that. Yes last decade was quite poor for everyone, but I don't think one can take that and declare that from this day forward nobody will ever make 6% on a retirement portfolio over a 30-40 year span. In fact if I run those numbers for a portfolio making 5% returns with same 40k initial draw it still works, although you're eating into principle so it is down to about half a million after 30 years.
According to firecalc if one draws 35k from a million in savings they would have never have run out of money over any 30 year span in history. Never. That includes retiring right before and during the Great Depression. I can understand looking at lower returns going forward but given that 35k has never failed taking it to 15k to be safe is extreme and will only result in people working until they drop trying to save up enough then only enjoying a very short retirement and leaving a ton of money on the table.
Most have trouble even saving a million by the time they are 60, can you imagine reaching that goal and saying hey well only two million more to go. No way.
Well I certainly won't measure a retirement portfolio over only 10 years I plan on being retired a lot longer than that. Yes last decade was quite poor for everyone, but I don't think one can take that and declare that from this day forward nobody will ever make 6% on a retirement portfolio over a 30-40 year span. In fact if I run those numbers for a portfolio making 5% returns with same 40k initial draw it still works, although you're eating into principle so it is down to about half a million after 30 years.
According to firecalc if one draws 35k from a million in savings they would have never have run out of money over any 30 year span in history. Never. That includes retiring right before and during the Great Depression. I can understand looking at lower returns going forward but given that 35k has never failed taking it to 15k to be safe is extreme and will only result in people working until they drop trying to save up enough then only enjoying a very short retirement and leaving a ton of money on the table.
Most have trouble even saving a million by the time they are 60, can you imagine reaching that goal and saying hey well only two million more to go. No way.
well think of it this way, a million bucks and a 4% withdrawl (40,000) inflation adjusted and no gains would be out of money in about 14-17 years so the gains going forward are very crucial.... 2% return and you would be dead broke in about 23years.... so firecalc looking at 30 years and saying no one went broke didnt help the folks in 2000 who retired...
they would be broke over the next 7 years at the 2% they got the last decade..
its not that no one will ever see 6-8% again..the problem is if i retire next year i sure as heck cant figure pulling 4% of my savings like i normally may have. at best i may figure 1/2 that and hope the decade will be better.
Last edited by mathjak107; 06-28-2010 at 08:39 AM..
There is no way in hell for anyone making less than 50k/yr to ever save up a million dollars plus for a retirement. For these people getting to retirement age without any debt is barely possible. What a bad joke you financial types are playing on the majority of the population. How is the next generation, without any likelyhood of a 30 to 40 year career, ever going to have any retirement income?
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