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RADDR crunched some numbers to see just how the last decade looked theoretically. the outlook not so hot.
there are other academic researchers who say that things may not end so bad but for anyone who wanted to see how you may have done raddr did the work.
he used a 75/25 cash model because he says folks at that time were told to go heavier in equities since markets were doing well prior. my only question is why no bonds????? the bull market in bonds should have pulled his results up in my opinion.
Just as an exercise, I substituted my returns since 2003, the year I started keeping track of them. My numbers might be a little off from his since I did a quick and dirty calculation. I show a balance of $933 compared to his $497 for 2011. I used $633 (from 2002), as the starting point and he withdraws he used. The portfolio went from the starting low ($633), to as high as $1287. Low point during the period was $677 in 2008. So I would have been concerned in 2008, but I'd be happy where I sat in 2011.
Yes, spending down was included. I used the same numbers as he did for withdrawals and his portfolio balance at the end of 2002 as the starting point. I'd guess my cash weighting was anywhere from 5 to 10% during the period with no bonds until the last couple of years. Essentially a equity portfolio. All it means is I was able to outperform the S&P 500 over that period. Good for me, but not necessarily for anyone else.
As long as his withdrawal numbers were, so were mine. Of course, with little cash, I'd have to sell equities and there is the chance I'd sell the wrong ones, producing a lower return. However, it does make me a little more confident that we'll be alright in retirement.
Just as an exercise, I substituted my returns since 2003, the year I started keeping track of them. My numbers might be a little off from his since I did a quick and dirty calculation. I show a balance of $933 compared to his $497 for 2011. I used $633 (from 2002), as the starting point and he withdraws he used. The portfolio went from the starting low ($633), to as high as $1287. Low point during the period was $677 in 2008. So I would have been concerned in 2008, but I'd be happy where I sat in 2011.
did you put anything in for 2000 to 2003? thats where the damage was done. 3 bad years in a row right at the start is what upset the retirement
2000 to 2003 were solid losses that set everything nose diving.
if you missed the first 3 years and dodged the bullet your were home free.
Last edited by mathjak107; 09-08-2012 at 02:31 AM..
No, I didn't keep track of my returns until 2003, so I don't have anything before that year. Actually, I didn't keep track until about 2005, but had data to go back to 2003. That's why for comparison I used his portfolio balance from 2002 as my starting point. There's a good chance I may have done worse than him during that period. but I may have done better too.
aaaah thats why... the killer for anyone who retired in 2000 was drawing off their incomes while equities were down the first 3 years.
the s&p 500 was down around 9% in 2000, down 12% in 2001 and down 22% in 2002. thats killer.
my own mix which was pretty diversified was down minus -11% in 2000 -6.44% in 2001 and down -17.1 in 2003 .
according to many top researchers the first 10 years are crucial to the entire rest of the retirement unless changes are made.
By 15 years the die has generally been cast and odds are the swr will no longer be where you thought and a pay cut will have to be taken to survive a full retirement.
Even if markets soared a bad start the first 15 years has to much damage done to be saved.
Last edited by mathjak107; 09-08-2012 at 07:20 PM..
The only thing I remember from 2000-2003 was at the worst point, I was down 50%. Fortunately, the portfolio recovered a good deal of it by the end of each year. I was down during that period too, but I didn't track my returns then. I agree the return during the first few years will make a big difference on your success.
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