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You're confusing 'not zero-sum' with USGovt/FED/virtual taxpayer welfare. Post 2008, the zero-sum game/REALITY was put on hold!
I've been telling mathjak107 this for 2+ years now: If you still need other income when spending down (decumulation stage), you're accumulation stage has failed! So, theoretically, the accumulation stage never ends; the financial apparatus has CONTROL of retirement money via perpetual participation in the accumulation stage for 70+ years!
From what I remember circa 1980s, 401ks were panhandled to the masses with the mantra 'you can live off your SS & investments!' Fast-forward circa 2000 & reality becomes clear: the zero-sum game was beginning to benefit/transfer wealth to the shoeshine investors—not good for the greedy, elitist bastards.
that is not true at all. if you have other passive income you just needed to save less , nothing is failing. social security , pensions ,annuities , rental income are all income that people live on combined with their withdrawals.
you are going to tell me that my accumulation stage has failed when i start drawing next year because i have 50k in outside income that will be coming in without working ? thats nonesense.
withdrawals fail when you try to take to much income for conditions.
anyone who runs sequence risk,inflation risk and poor market and interest rate risk while drawing out is not in the accumulation stage anymore.
in fact it may be bad market sequencing or even raging inflation that takes a huge sum of money you accumulated and tears it to shreds.
spending down is very different then the accumulation side and is affected by things that don't even matter in accumulation so you cannot consider it all accumulation.
the fact is if scenerios play out well you may end up with more than you started with but if scenerios turn out bad you could just the same end up broke and all with the same amount of money starting off. that is not a failed accumulation stage my friend. that is a failed decumulation stage and you didn't make the right moves to compensate in your withdrawal rate.
1 million bucks can provide a lifetime of income at the right withdrawal rate and right set of conditions. or 1 million bucks can run out before you run out of time. it is not based on the amount you saved but on scenerios and how they play out as well as your investment choices through retirement..
it is like there is no such thing as a bad employee, only bad managers.
there is no such thing as a failed accumulation stage , only a wrong safe withdrawal rate for conditions and the amount..
i will bet you will find it very hard to find any planner that does not make a distinction between the the 2 stages.
Last edited by mathjak107; 08-06-2013 at 04:38 PM..
.....nothing is failing. social security , pensions ,annuities , rental income are all income that people live on combined with their withdrawals....
Tell that to people in Detroit. Lots of pensions are gonna go bust, especially gov pensions. Many companies are moving from the traditional pension to new cash balance pension that effectively cuts most retirees pension benefits in half. The ones close to retiring get the favor of having the years that grow their pension benefit the most, axed.
Social Security is a ticking bomb. People in their 40s will not collect all and will be fortunate to collect a few years, people in their 30s will never collect a cent. I already wrote it off years ago as just another tax I have to pay, because thats all it is, a tax scam.
The pot just like the market cap can change value as people come and go, but its still a zero sum game because you can't have a winner without a loser.
Sure you can.I buy a stock at 10 sell it to you for 20. Where is the loser
The pot just like the market cap can change value as people come and go, but its still a zero sum game because you can't have a winner without a loser.
Sure you can.I buy a stock at 10 sell it to you for 20. Where is the loser
Me until I sell it to the next guy for more....just like a hand in poker I tossed my bid in the pot but I don't know if I have won or lost yet, the trade isn't done until I sell the stock.
Again, its just like poker, all that money in the stock market was put their by gamblers putting money in the pot, not a single cent comes from a company. (well except dividends but thats a very small percentage).
If you still don't believe me then answer this one question. Since companies aren't putting money into the stock market pot then where does all the money people make in it come from?
Now I don't think that the stock market is gambling (even though thats what some people "investing" do with it), in the respect of its all up to the odds. You can definitely invest in the market without gambling, but if your making money your taking it away from someone else.
Tell that to people in Detroit. Lots of pensions are gonna go bust, especially gov pensions. Many companies are moving from the traditional pension to new cash balance pension that effectively cuts most retirees pension benefits in half. The ones close to retiring get the favor of having the years that grow their pension benefit the most, axed.
Social Security is a ticking bomb. People in their 40s will not collect all and will be fortunate to collect a few years, people in their 30s will never collect a cent. I already wrote it off years ago as just another tax I have to pay, because thats all it is, a tax scam.
i have no idea what your point is , it has nothing to do with safe withdrawal rates. no one is discussing whether pensions , social security will be around
by the same token your own investments can fail and or markets can plunge. that is just the risk of life and goes along with all the other risks in life..
but it still is not what we are are discusing which is accumulation vs decumulation.
just for the record those in detroit still get their pensions through the pension guaranty fumd although there are caps on the max you can get.
but that too still has nothing to do with what we were refering to.
Last edited by mathjak107; 08-07-2013 at 04:15 AM..
the obvious question should be "well isn't it the fact a person didn't save enough the reason they failed?
the answer is no.
there is no golden number at which spending down and an amount is considered fool-proof or a match.
that is why there are 2 very distinctions between our savings period and our spending down period.
whether your money lives or dies pre-maturely is dependent on the rules and factors that pertain to the spending down stage , not the amount you start with.
1 million bucks can last a lifetime or it can fail subject to the planning and conditions of your spending down phase.
unlike the saving stage (accumulation ) where only the amount and average long term return matters, the spending down stage has many many parameters that determine your outcome. the least of the factors is your long term average return. some of the parameters are in your control and some are not.
what does matter?
how much do you want to draw?
inflation adjusting?
your allocations?
most important ,the sequences of your gains and losses are very key while spending down.
what is your plan for spending in prolonged downturns
what is inflation running yearly
what are stock valuations like the day you set an income draw level.
what method of even determining your safe withdrawal rate are you using?
what success rate of maintaining that level of income do you want to maintain.
this why there are two very distinct lines between saving vs spending down and it is also why there is no golden level of savings you can achieve that can determine if it is enough.
all passing or failing grades are determined by how you play the 2nd half of the game not how you end the first half..
500k can work out the same as 1 million if conditions are favorable in your time period. sometimes even just increasing equity allocations can do the trick and make a lot less savings pass muster.
as I illustrated above:
consider the best 17 years the stock market ever had , that would be 1987 to 2003 when markets averaged almost 14% a year.
if you subtracted out the amount of inflation and left it with your savings to grow your money and used the rest to live on the results are mind blowing .just shifting the order around of your gains and losses coming in with the same almost 14% average return can have a huge difference .
For a $100,000 portfolio over those 17 years, the difference is a remaining balance of $76,629 to a deficit of $187,606 .
that difference is with the same 13.47% average return.
that is why an accumulation amount does not fail, only the decumulation stage can pass or fail based on conditions.
it is like we say in wilderness camping " there is no such thing as bad weather, only bad gear or wrong gear."
to fully understand this concept I suggest starting to play with firecalc and changing the parameters for spending down from your investments .
you will learn why it is not just about the amount saved and your average returns. they are the smallest part.
Last edited by mathjak107; 08-07-2013 at 06:51 AM..
So what? Life is all about winners and losers. Some people may not be comfortable with this fact, but that's just the way it is.
The whole point is to become a winner.
Yes thats my point. Other people here do not think that all the money you make from the market is from someone else. They think everyone can pull out more money than they put in, like its a magical money printer.
Yes thats my point. Other people here do not think that all the money you make from the market is from someone else. They think everyone can pull out more money than they put in, like its a magical money printer.
The stock market represents ownership in companies. Companies continue to make money, therefore the stock market continues to rise in value (long-term). That is the "magical money printer" you refer to, and that is why there can be far more winners than losers, potentially.
The losers are the ones who make bad decisions in terms of stock selection or timing (and there are plenty of them, but do you feel sorry for them?), or who get hit by a bus before their investments can make money, etc.
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