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and that formula is nonsense and has no bearing on anyone in particular .
wall street likes nice simple cover your butt rules but in reality like target date funds they cover very few but they sound good .
why should an 80 year old with a pension and social security that is supporting him have 80% in bonds when he is investing for his heirs who have decades of time ?
on the other hand a 65 year old who safely wants to draw about 4% inflation adjusted with a high rate of surviving even the time frames we already had needs at least 40-50% equities . the lower your equity allocation goes the more you failed to last through in the past .
you have everyone in between too so as usual a simple answer to a complex question is the wrong answer.
for most avoiding equities is the wrong answer , it can become the most riskiest path . even from the point of never developing much of a balance and cushion for emergency and unexpected spending .
the video has zero to do with setting allocations for retirement income . i am not sure why your are trying to dispute what is proven facts and in fact is the industry standard by credible planners who do retirement planning .
if you want an education i suggest you stop with the nonsense and google the likes of michael kitces . his words move the entire financial industry .
google some of his studies and findings as well as his view points . it will make you far more knowledgeable and once you understand where your thinking is incorrect you can have a better plan for yourself . the end !
'Biggest Worry: The Fed has pushed many retirees into stocks, but he thinks stocks could take a bigger hit than bonds when interest rates rise. "If you look historically, a horrible year in the bond market was you might have lost 5%. A horrible year in the stock market is like 2008--you lose 40%."'
All fact . stocks will always lose more than bonds in a down turn . But stocks falling 40% still would have left you with a bigger balance than not investing all those years prior . As well as the fact that if you retired in 2008 kitces points out in another study you are no different than any other average retirement group 10 years in. If you had a 50/50 mix you were not down 40% either.
Today you would not even know 2008 happened if you just stayed the course . You are trying to argue against using equities and it is nonsense
they always have and always will but they always end up having higher highs and higher lows too so they leave cash instrument balances in the dust and most of the time they are even higher at the lows . so enough with this silliness .
the fact is long term stocks are less risky and more consistent then cash instruments are and overwhelmingly are considered safer than cash instruments for generating higher incomes in retirement . balanced portfolio's are perfect for retirees .
a retiree who tries to draw a 4% safe withdrawal rate with no equities has failed to last more than 1/2 of all 117 30 year cycles we had to date at a 45% success rate . on the other hand 50/50 has a 96% success rate .
that is why good retirement planning uses between 40-60% equities .
Interesting discussion. Is it possible anyone can be that ignorant and have such difficulty understanding basic concepts? That is why I think you are just dealing with a blatant troll.
here is your data . under a 90% success rate is unsafe and unacceptable to the industry . we have had 117 30 year periods through the great depression , wars , high inflation , etc etc already . this merely shows how many times you would have already run out of money before your 30 years ended just based on what we already had happen .. you can see no equities is quite a gamble over time .
no equities , just fixed income , 4% inflation adjusted safe withdrawal rate
FIRECalc looked at the 117 possible 30 year periods in the available data, starting with a portfolio of $1,000,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 117 cycles. The lowest and highest portfolio balance at the end of your retirement was $-517,560 to $2,349,575, with an average at the end of $187,979. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)
For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 64 cycles failed, for a success rate of 45.3%
50/50 4% safe withdrawal rate
FIRECalc looked at the 117 possible 30 year periods in the available data, starting with a portfolio of $1,000,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 117 cycles. The lowest and highest portfolio balance at the end of your retirement was $-223,952 to $4,145,063, with an average at the end of $1,136,507. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)
For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 6 cycles failed, for a success rate of 94.9%.
even 100% equities proved safer than no equities .
FIRECalc looked at the 117 possible 30 year periods in the available data, starting with a portfolio of $1,000,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 117 cycles. The lowest and highest portfolio balance at the end of your retirement was $-931,017 to $8,509,297, with an average at the end of $2,691,022. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)
For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 8 cycles failed, for a success rate of 93.2%.
Last edited by mathjak107; 02-15-2018 at 06:35 PM..
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