Regimented Variable Withdrawal Strategies?

[psuindc]

Originally Posted by Hamish Forbes

The fundamental problem is that the people working in this field -- with the clear exception of Bernstein and the possible exception of Pfau -- simply do not understand the behavior of stochastic processes. I say this as a card-carrying applied mathematician of some accomplishment. For the most part, economists are dim bulbs, and financial planners are even dimmer. For a real contrast read Nassim Taleb's work (The Black Swan, etc) -- this guy knows what he is talking about.

I'm really not trying to argue when I say this: As an extreme cynic, what do YOU do to plan for retirement (or what have you done. I don't know your retirement status)? Genuinely curious, which is why I started this thread.

[Hamish Forbes]

Originally Posted by psuindc

I'm really not trying to argue when I say this: As an extreme cynic, what do YOU do to plan for retirement (or what have you done. I don't know your retirement status)? Genuinely curious, which is why I started this thread.

I have been comfortably retired for some time. Fortunately, I do not yet need to draw-down my portfolio. When I do, I will use the constant-percentage method (e.g., 3% of the portfolio, recalculated each year) or an RMD-like method (portfolio value divided by a conservative estimate of joint life expectancy, recalculated each year). The paper I referenced clearly shows that these methods are more effective than the SWR approach. They inherently adapt to market performance (yes, Matt, I know that they provide a variable income, just like my earnings varied from year-to-year before I retired).

If you are trying to figure this out for the first time, by all means read William Bernstein's little books Ages of the Investor and Deep Risk, and for goodness sakes ignore most of what you see on the internet amateur hour.

[mathjak107]

as of now pfau and bernstein are at opposite ends of the spectrum.

pfau sees the greater success in increasing equities as we age, bernstein sees ditching them all together.

[Suevee]

I found an advisor with 30 yrs. expience to help me. We meet quarterly to go over my financial investments and my withdrawal basis is fluid. My goals are to provide myself income while growing my portfolio. I hope to leave an inheritance for my children.