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ha ha ha .. it isn't an easy concept to understand and most don't actually realize that events and conditions do not have to be the same.
all that counts is whether yearly returns/inflation/sequences of gains and losses give you more than 2% real return the first 15 years or less.
it all boils down to those 2 numbers as to whether in theory the 4%swr will hold or not.
it took almost two decades from bill bengens work to figure that out . finally Michael kitces crunched 146 years of numbers and realized every time the rule failed it was because we fell below that 2% real return average over the first 15 years of a 30 plus year retirement. .
there was not one period where it did not hold true going back 146 years.
that's why the past does not have to repeat , all that matters is whatever happens gets you to that final destination above 2% real return.
that is very very useful info . that means we can monitor how we are doing along the way and adjust spending up or down depending on how we do those first 15 years.
I can tell you if I was not averaging at least a 2% real return 10 years in or so I would certainly reduce my draw.
on the other hand if I was well above I would increase it.
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Last edited by mathjak107; 03-21-2014 at 02:09 PM..
My objection to the calculators is that everything is based on past resultsand that is not an indication of the future. The great majority of people at retirement age will not have anywhere near even 500k and pensions, social security and Medicaid are additional wild cards. People are living longer. We do not know what the next 30 years will look like but it seems that change is necessary whatever it may be.
It is impossible to refute the logic of your two statements which I placed in bold type above. Indeed, no one has a crystal ball and life has no absolute guarantees.
However, what do YOU propose which is any better than the extensive looks backward which have been compiled by some careful and thorough thinkers?
Isn't it pretty much impossible to plan to protect oneself against the worst imaginable scenario, such as a repeat of the 1929 (and 1930's) Great Depression, which was world-wide to a large extent? Or suppose a nuclear war or asteroid strike ends life as we know it? Certainly you are not talking about those kinds of disasters? Do you think you know what the future will bring?
Maybe I'm just dense, but I don't get your point in this thread.
we can never know what will work off in the future but we do know what things didn't work well already as well as we know when things are not working and that is just as important. we then can adjust and hopefully still make it through .
It is impossible to refute the logic of your two statements which I placed in bold type above. Indeed, no one has a crystal ball and life has no absolute guarantees.
However, what do YOU propose which is any better than the extensive looks backward which have been compiled by some careful and thorough thinkers?
Isn't it pretty much impossible to plan to protect oneself against the worst imaginable scenario, such as a repeat of the 1929 (and 1930's) Great Depression, which was world-wide to a large extent? Or suppose a nuclear war or asteroid strike ends life as we know it? Certainly you are not talking about those kinds of disasters? Do you think you know what the future will bring?
Maybe I'm just dense, but I don't get your point in this thread.
No I do not know the future but I have an opinion based on what I see today, worldwide.
I suggest an allocation other than the norm such as suggested in Bernstein's Deep Risk.
No I do not know the future but I have an opinion based on what I see today, worldwide.
I suggest an allocation other than the norm such as suggested in Bernstein's Deep Risk.
O.K., fair enough. But what IS your opinion as to what we can reasonably expect in the future? I suppose I could go read Bernstein to find out, but I confess I am too lazy.
I ask that not only out of curiosity (although I am curious about your opinion), but also because stating what you think the future may well hold is germane to this thread as it explains the basis and reasoning for "an allocation other than the norm".
O.K., fair enough. But what IS your opinion as to what we can reasonably expect in the future? I suppose I could go read Bernstein to find out, but I confess I am too lazy.
I ask that not only out of curiosity (although I am curious about your opinion), but also because stating what you think the future may well hold is germane to this thread as it explains the basis and reasoning for "an allocation other than the norm".
Deep Risk is a short read and only $5, a good investment. I do not want to get into political issues but Bernstein is looking at the US as possibly changing and relates to other countries that have gone through such changes based on inflation, confiscation, devastation, and deflation and how likely each may be.
My original post somewhat hypothetical asks how much you think a 62 year old single retiree would need until age 85-90 with expenses of $3000 a month plus an additional 25k for a new car every 8 or 10 years and SS at 66. That's from 2014 to 2034 give or take. That's today's dollars. That's with SS as we know it, an average check. Most would give the standard answer based on past results.
My opinion is that this norm stock/bond allocation is not the best for a 62 year old over the next 30 years, Bernstein's ideas are and should require a lesser amount of today's dollars to live the lifestyle $3000 a month plus buys today.
In some ways retirement is a lifestyle decision and opportunity to many. Retiring on our own early without having reached our desired lifestyle level can be selling our selves short. So much of it is timing and my own personal philosophy is that as long as the net wealth in retirement is growing things are at least in part on track. Each year into retirement that trend continues or the pace of picks up all the better.
What is a "lifestyle" level? Eating at expensive restaurants every day, belonging to the best country clubs, traveling the world, most expensive resorts, etc? There are millions of retirees who couldn't care less about these things and are perfectly happy and well adjusted and living within their means. I think the comments on here about the amount of wealth "needed" are skewed....if that's not true, most retirees are screwed.
Deep Risk is a short read and only $5, a good investment. I do not want to get into political issues but Bernstein is looking at the US as possibly changing and relates to other countries that have gone through such changes based on inflation, confiscation, devastation, and deflation and how likely each may be.
My original post somewhat hypothetical asks how much you think a 62 year old single retiree would need until age 85-90 with expenses of $3000 a month plus an additional 25k for a new car every 8 or 10 years and SS at 66. That's from 2014 to 2034 give or take. That's today's dollars. That's with SS as we know it, an average check. Most would give the standard answer based on past results.
My opinion is that this norm stock/bond allocation is not the best for a 62 year old over the next 30 years, Bernstein's ideas are and should require a lesser amount of today's dollars to live the lifestyle $3000 a month plus buys today.
Thanks for your answer. I completely understand your reluctance to get into the political thicket in the Retirement Forum. That normally results in a thread going downhill quickly with lots of angry and polemical posts, which is why we have the Politics and Other Controversies Forum.
Deep Risk is a short read and only $5, a good investment. I do not want to get into political issues but Bernstein is looking at the US as possibly changing and relates to other countries that have gone through such changes based on inflation, confiscation, devastation, and deflation and how likely each may be.
My original post somewhat hypothetical asks how much you think a 62 year old single retiree would need until age 85-90 with expenses of $3000 a month plus an additional 25k for a new car every 8 or 10 years and SS at 66. That's from 2014 to 2034 give or take. That's today's dollars. That's with SS as we know it, an average check. Most would give the standard answer based on past results.
My opinion is that this norm stock/bond allocation is not the best for a 62 year old over the next 30 years, Bernstein's ideas are and should require a lesser amount of today's dollars to live the lifestyle $3000 a month plus buys today.
but keep in mind bernstein does not think anything over a 2% withdrawal rate with no equities is bullet proof either. 3% is pushing it and 4% may leave you under the bridge in his own words.
What is a "lifestyle" level? Eating at expensive restaurants every day, belonging to the best country clubs, traveling the world, most expensive resorts, etc? There are millions of retirees who couldn't care less about these things and are perfectly happy and well adjusted and living within their means. I think the comments on here about the amount of wealth "needed" are skewed....if that's not true, most retirees are screwed.
Lifestyle is not dollar defined but how you want to spend your life . Once you are able to reach that point then voluntary retirement is around the affordable point. If you keep working and saving or increase SS etc ypu are building a margin of error
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Fine, but what would YOU propose then?
