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Old 07-20-2014, 08:13 AM
 
29,782 posts, read 34,871,258 times
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Quote:
Originally Posted by mathjak107 View Post
i guess if we stop wasting money blowing up things with missles and bombs we would have quite a bit for medicaid use.

but heck , we got missles and bombs right in our national anthem.

large cash amounts are comforting to our minds and stomachs as i said and i intend to have a buffer. but from a financial standpoint they provide no real advantage.

the fact is whatever the the return on the mix of assets you hold is what you get no matter how you store it or spend it.,.. a 60/40 mix whether divided up in to spending buckets or spent from the entire pie equally keeping your origonal allocations will produce the same results.

the buckets though actually get more volatile as you spend down. as you get closer and closer to emptying cash buckets your allocation to equities gets higher and higher until the day comes you sell some off and refill.

following ray lucia's 15 year time frame for buckets you could find yourself 80-90% equities at 80 years old if you drew down your cash and bond buckets but have not refilled yet.. talk about a wild roller coaster ride.


there really is no foolproof way of drawing down. we just do what makes our mind more comfortable.
Do you really believe a 60/40 mixed composed of sector funds and High Yield domestic and international bond funds is the same as a 60/40 fund of intermediate/short term treasuries and capital appreciation funds? Remember the newsletter balances things out but not everyone picks funds as wisely. Thats what makes a balanced fund like Wellington so popular. TY for saying there is not foolproof way of drawing down that will help many lurkers sleep better. Not everyone can and should do what another person in here does. We should all just learn as best we can find a path we are comfortable with. Like I said when you kick back you will chill down and go W.T.H this is fun to chat about but it is a chat not sweat topic. AC just got fixed and is working so we can go on our way as we have a Sunday Seafood brunch with our name on it.

Last edited by TuborgP; 07-20-2014 at 08:24 AM..
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Old 07-20-2014, 08:22 AM
 
71,626 posts, read 71,751,865 times
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don't misundertand , that isn't what i said. what i said is any given mix will provide the same return and volatility no matter how you spend it down or arrainge it in buckets for spending ..

i can have x amount of years of safe money in bucket 1 , x-amount in bonds in bucket 2 ,and x amount in any equities i like in bucket 3 . if i x-ray it that mix overall will still be a certain allocation.

if i take the SAME investments and just pull my money from all pieces directly keeping the same allocation steady and i do this in good and bad times the results have been shown to be the same whether divided up in to buckes or taken directly from investments and selling pieces off.

method one spends cash first then bonds then finally equities. method two just pulls from all catagories each year and sells off what is needed regardless if an up year or a down year or asset type..

the buckets have a rising voilatility as cash buckets and bond buckets get depleted first . by the time stocks are converted to more bonds and cash YEARS LATER WHEN THEY NEED REFILLING the mix can be 80-90% equities prior.

the convenional mix will always retain its origonal allocation through spending keeping volatility where you wanted it to be in the first place.

the conventional draw down method is the biggest way planners do it. i kind of like the buckets as my brain thinks it is less volatile because i am not spending from stocks if they are down. but it is only a comfort thing.

Last edited by mathjak107; 07-20-2014 at 08:37 AM..
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Old 07-20-2014, 09:09 AM
 
29,782 posts, read 34,871,258 times
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Quote:
Originally Posted by mathjak107 View Post
don't misundertand , that isn't what i said. what i said is any given mix will provide the same return and volatility no matter how you spend it down or arrainge it in buckets for spending ..

i can have x amount of years of safe money in bucket 1 , x-amount in bonds in bucket 2 ,and x amount in any equities i like in bucket 3 . if i x-ray it that mix overall will still be a certain allocation.

if i take the SAME investments and just pull my money from all pieces directly keeping the same allocation steady and i do this in good and bad times the results have been shown to be the same whether divided up in to buckes or taken directly from investments and selling pieces off.

method one spends cash first then bonds then finally equities. method two just pulls from all catagories each year and sells off what is needed regardless if an up year or a down year or asset type..

the buckets have a rising voilatility as cash buckets and bond buckets get depleted first . by the time stocks are converted to more bonds and cash YEARS LATER WHEN THEY NEED REFILLING the mix can be 80-90% equities prior.

the convenional mix will always retain its origonal allocation through spending keeping volatility where you wanted it to be in the first place.

the conventional draw down method is the biggest way planners do it. i kind of like the buckets as my brain thinks it is less volatile because i am not spending from stocks if they are down. but it is only a comfort thing.
I know very well what you said and what you meant. I am not sure lurkers would or did and might think they can do something they might regret. You understand the allocation within the allocation. Not sure everyone does.
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Old 07-20-2014, 11:46 AM
 
3,806 posts, read 5,201,196 times
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Quote:
Originally Posted by DaveinMtAiry View Post
There is no doubt some have pensions etc. But the vast majority do not. The figures posted just confirmed my contention all along that the investment firms ( and most posters on these boards) who scream that if you do not have over a million dollars you are screwed are spewihg nonsense. Obviously there are a whole lot of people who don't have close to that figure, or a pension, retiring every day. Just as I suspected
That sounds about right to me. I mean if you ony have $120000 which is a bit higher than what looked to be median then you have a little more than four years (you'll build up some interest of the remainder as you draw down on it) of making $30000 a year. That's not a lot.
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Old 07-20-2014, 12:08 PM
 
29,782 posts, read 34,871,258 times
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Quote:
Originally Posted by AuburnAL View Post
That sounds about right to me. I mean if you ony have $120000 which is a bit higher than what looked to be median then you have a little more than four years (you'll build up some interest of the remainder as you draw down on it) of making $30000 a year. That's not a lot.
Everyone is probably right. There is a reason the investment community suggest a percentage of your current income as a target as opposed to a dollar amount. They are also talking to a higher income population seeking a higher retirement net worth. Lastly just what is retirement differs with the individual. Some just see it as ceasing working and having free time. Others see it as a lifestyle and need to fund that lifestyle. For them if they can't fund it, they don't yet have enough.
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Old 07-20-2014, 01:26 PM
 
Location: San Diego CA
4,870 posts, read 3,385,719 times
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The real winners in retirement are the blue collar old timers who have minimal savings but have a gold plated union pension check every month. Contractual pay raises, compensation for overtime and free medical coverage all their working years. Pension check representing 50% of salary for your highest earning year.

Back in the day you could literally take a job sweeping floors and taking out the trash, stick it out for 30 years and wind up with a final annual salary on a level of an attorney or doctor.
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Old 07-20-2014, 02:05 PM
 
Location: Sacramento
13,784 posts, read 23,811,113 times
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Accurately computing net worth is too difficult.

For example, as some have mentioned having a defined benefit pension has some intrinsic value. But I also can point out that having Social Security has a value too, as guaranteed income.

Many who have defined benefit pensions don't have Social Security, especially many retired government workers. So how do you "net out" the net worth value of the defined benefit pension less the lack of Social Security income?

Just a rhetorical question, but showing how difficult (and somewhat meaningless) this is to compute.
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Old 07-20-2014, 02:16 PM
 
71,626 posts, read 71,751,865 times
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it reaches a point where unless you are computing for estate tax purposes the whole net worth thing is meaning less.

know what i count today ? only the assets i can use to generate income to live on .

any pension or social security is not counted at all as part of my net worth. that is income the same as the income used to be from my job. i wouldn't count that either unless it was in my account.

i look at my expenses , i look at my cash flow. i check to see if i can maybe buy something with cash flow that reduces expenses and improves cash flow even more.

i study future tax implications and see what i can do on that end to improive cash flow eventually,

that is all that really counts when all is said and done. if it isn't something that cuts expenses and it isn't something that can generate income off it then who really cares .

Last edited by mathjak107; 07-20-2014 at 03:09 PM..
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Old 07-20-2014, 02:52 PM
 
11,936 posts, read 20,392,868 times
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Quote:
Originally Posted by DaveinMtAiry View Post
We agree. So why does virtually every investment firm scare the crap out of people? Obviously to get them to invest more, with their firm. They have scared so many that some of those folks have pretty much given up on retirement, some have stopped saving altogether with a "what's the point, I'll have to work 'til I'm dead anyway" mentality and that's just wrong.
Oh -- you answered it yourself -- the more money you give them the more money they make, and the more money they make the more happy they are, which might seem bad on one hand but that also means the more money we have.... think of a snake eating it's tail.

The key is to find the balance where you aren't sacrificing today for tomorrow AND you aren't sacrificing tomorrow for today.

On the frugal board we get people who ask (usually snottily and in an I'm ever so much better than you cheapskates way) why we frugalistas are frugal and can't understand why someone would want to pennypinch -- who cares, just enjoy!

Well -- what I pennypinch on is exactly what I don't give a rats rear about. I wash ziplock bags, and foil and bulk buying some foods so I don't have to waste money on them so I can spend money on high quality thread and fabrics for the quilts I make. Quilting -- not a cheap hobby.

I reuse and repurpose lots of items and we "dumpster dive" (actually usually get paid to haul away for people) furniture, because I'd rather save money for my future, and I'd far rather reuse and repurpose than try to find small scale furniture -- let alone find stuff that isn't crap. I just went on a go round with some furniture items and unless you can fit a 95 inch long sofa that's 46 inches deep -- you're not going to get a sofa. And can someone please explain to me why a 95 inch sofa has a 42 in chair, but a loveseat that's 52 inches? It's not at all in proportion....
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Old 07-20-2014, 03:15 PM
 
2,742 posts, read 725,012 times
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Finally---that college course in Statistics paid off.

Just want to remind you all that average net worth is much different than median net worth. An average is the sum of all the wealth divided by the number of people in that population, so billionaires like Warren Buffet and Bill Gates really skew the average up. The median is the 50th percentile, where half have more and half have less. In 2012, the Federal Reserve said that the median net worth of people 55 to 64 (presumably not retired, but some could be early retirees) was $179, 400. 65 to 74 was $206,700. Even with a frugal lifestyle and Social Security, I would say those who are under the median or not much above it will be hurting...unless they get good pensions.
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