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Old 11-30-2016, 06:43 PM
 
71,651 posts, read 71,777,271 times
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i don't remember kitces saying it had to be reduced . in fact he said just the opposite . clearly that is not true according to his article on it . you keep saying he is a doom and gloomer . i highly doubt that as well . he is strictly a numbers cruncher . he is not a predictor, telling you how you should invest . in fact every article i have seen just presents the data and leaves it to you to decide .

somehow i don't think you even read what he writes and are reaching your own conclusion blindly to be honest . .


https://www.kitces.com/blog/what-ret...ly-based-upon/
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Old 11-30-2016, 07:03 PM
 
Location: Haiku
4,119 posts, read 2,580,412 times
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Quote:
Originally Posted by jrkliny View Post
What poor returns over the past 8 years??? You really would have needed to make seriously poor choices not to have done well. In the past 8 years my portfolio has way more than doubled due to the excellent returns.
Now, if anything illustrates the problem of picking dates to illustrate a point about portfolio performance, it is this.

If we choose the exact last 8 years, from Nov 30, 2008 up to today, a 60/40 portfolio of total stock market and total bond market, will just about exactly double in value. But if you pick Jan 1 2008 up to Jan 1 2016, over that 8 year period the portfolio grows only 70%. By November 2008 the market was tanking and most people were fleeing, not buying.

I am not sure the time period of 11/2008 to 11/2016 is really representative of the market over the last 10 years or so. So what is the market performance over the last 10 years? It has exactly doubled for a CAGR of 7.5%. That is way below the historical average of 11%.
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Old 11-30-2016, 07:03 PM
 
6,267 posts, read 4,737,090 times
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You are indeed correct about Kitces. I checked back several years and found he has always had a reasonable approach. In fact he had a great article not long ago on "racketing" to increase withdrawal rates during retirement. I cannot say the same for Pfau, who published some real negative predictions.
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Old 11-30-2016, 07:10 PM
 
1,041 posts, read 485,775 times
Reputation: 1435
Quote:
Originally Posted by TwoByFour View Post
Now, if anything illustrates the problem of picking dates to illustrate a point about portfolio performance, it is this.

If we choose the exact last 8 years, from Nov 30, 2008 up to today, a 60/40 portfolio of total stock market and total bond market, will just about exactly double in value. But if you pick Jan 1 2008 up to Jan 1 2016, over that 8 year period the portfolio grows only 70%. By November 2008 the market was tanking and most people were fleeing, not buying.

I am not sure the time period of 11/2008 to 11/2016 is really representative of the market over the last 10 years or so. So what is the market performance over the last 10 years? It has exactly doubled for a CAGR of 7.5%. That is way below the historical average of 11%.
the post was a response to a post that said the last 8 years have yielded"very poor returns" which simply isnt the case. Maybe not as high as historical returns, but certainly not poor.
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Old 11-30-2016, 07:18 PM
 
Location: Haiku
4,119 posts, read 2,580,412 times
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If you don't like the 4% rule, go with the 3.3% rule. You will never run out of money, 100% of the time, with a withdrawal rate of 3.3% and a longevity of 30 years. Just put all your money in TIPS (bonds, not funds) to grow your portfolio at the exact rate of inflation (plus a little more although currently that little more is a paltry 0.125%).

But, no need to worry about a fickle stock market or what interest rates are doing. If you can live on 3.3%.
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Old 12-01-2016, 02:29 AM
 
71,651 posts, read 71,777,271 times
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Quote:
Originally Posted by jrkliny View Post
You are indeed correct about Kitces. I checked back several years and found he has always had a reasonable approach. In fact he had a great article not long ago on "racketing" to increase withdrawal rates during retirement. I cannot say the same for Pfau, who published some real negative predictions.
see , i could tell you were not actually reading anything he wrote or his study's and just commenting based on pretty much nothing . he is far from a fear monger and just the opposite .

kitces crunches numbers and analyzes things under the hood and just reports the good , the bad and possible work ' around's to some of the issues using modern day thinking and products .

pfau is the same kind of researcher but while i don't consider him a fear monger i do think he is far more conservative in his thinking today than he was . his numbers crunching tends to show we will have some rough goings for retiree's .

he may very well be right ! so before i call him a fear monger we have to see how the next 8-10 years play out . his research may very well be correct .

kitces actually looked at how the 2000 retiree is making out as well as the 2008 retiree . the 2008 retiree he says , is to date just fine and doing the same as any other average retiree in history this many years in . on the other hand the 2k retiree is in a bit worse shape and while still passing is more on par with where the 1929 retiree stood 16 years in

https://www.kitces.com/blog/how-has-...sis/#more-7856

Last edited by mathjak107; 12-01-2016 at 03:14 AM..
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Old 12-01-2016, 02:47 AM
 
Location: Ahmedabad
1 posts, read 867 times
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The 4% Rule has a 96% chance based on history of leaving you with more principal in your account 30 years after you retire.
It's important to note that these are nominal, not inflation-adjusted dollars.
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Old 12-01-2016, 02:52 AM
 
Location: Mount Airy, Maryland
10,464 posts, read 5,933,005 times
Reputation: 16165
Quote:
Originally Posted by TwoByFour View Post
If you don't like the 4% rule, go with the 3.3% rule. You will never run out of money, 100% of the time, with a withdrawal rate of 3.3% and a longevity of 30 years. Just put all your money in TIPS (bonds, not funds) to grow your portfolio at the exact rate of inflation (plus a little more although currently that little more is a paltry 0.125%).

But, no need to worry about a fickle stock market or what interest rates are doing. If you can live on 3.3%.

While I think TIPS are an interesting idea and a good place to put a portion of your money I would not feel comfortable putting it all in such a guaranteed low return investment.
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Old 12-01-2016, 03:09 AM
 
71,651 posts, read 71,777,271 times
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Quote:
Originally Posted by purvijain85 View Post
The 4% Rule has a 96% chance — based on history — of leaving you with more principal in your account 30 years after you retire.
It's important to note that these are nominal, not inflation-adjusted dollars.
it is in practice better odds than 96% because of two other statistical facts .

life expectancy works in to the success rate too . most of us will not last 30 years in retirement so statistically the success rate is improved . the other factor is inflation adjusting yearly is really not been the case .

spending falls off for folks with discretionary income as they age . much of what we no longer buy and do pays for the increases in what we still do .

in the middle of retirement inflation adjusting is rarely even needed . it is the beginning of retirement and end ,healthcare wise where we tend to spend more that needs more adjusting than the middle .

those two factors beef up the success rate by quite a few points .
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Old 12-01-2016, 03:11 AM
 
71,651 posts, read 71,777,271 times
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Quote:
Originally Posted by purvijain85 View Post
The 4% Rule has a 96% chance based on history of leaving you with more principal in your account 30 years after you retire.
It's important to note that these are nominal, not inflation-adjusted dollars.
there is actually a 90% chance of having more than you started with 30 years later left and a 67% chance of having 2x what you started with left after 30 years .
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