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Old 12-03-2016, 12:39 PM
 
71,977 posts, read 72,020,102 times
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Quote:
Originally Posted by ohio_peasant View Post
Over the past 8 years, my portfolio has also more than doubled - despite being dragged down by European stocks. Unfortunately...



... whether we regard market-performance as spectacular, humdrum or atrocious, depends on our period of regard. Yeah, I'm grateful for the returns over the past 8 years... profoundly grateful! But the collapse from October 2007 through March of 2009 was intense. And it followed a threadbare recovery - remember that? - from the nadir of 2002-2003. Going back to 2000, the past 16 years have been merely humdrum in the American stock market, and downright disastrous for the European stock markets (in dollar-denominated terms).

Going forward, if Europe recovers and the DAX hits 20,000 and FTSE hits 12000 and the Euro rises back to $1.35, yeah, I'll be ecstatic. Until then, I'll be looking at the 0% rule.
from an average standpoint the last 16 years were really not bad when you consider the years from 1987 to 2003 averaged almost 14% cagr for 17 years .

so over all the averages just mellow out to a normal market average .

it is our investing particulars leading in to or during that 17 year bull market that can make the time frame sucky or great .

but over all the markets did what they were supposed to , they migrated back to the mean the last 16 years after getting to far ahead and pretty much returned their typical average since 1987 . the markets averaged out after that graet run up for 17 years to 10.13% cagr . pretty much its typical long term average over an accumulation stage .

so while the 16 year period looks sucky the total 30 year accumulation period is really right on track .

it may be the fact we had little money to take advange back in the 1980'-1990's but that is a different issue than what the markets did .

Last edited by mathjak107; 12-03-2016 at 01:17 PM..
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Old 12-03-2016, 02:02 PM
 
Location: Haiku
4,188 posts, read 2,610,813 times
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Quote:
Originally Posted by TuborgP View Post
Are we discussing safe withdrawal rate with preservation of capital or are we talking about a draw down that last until some future age? I ask because our evaluation of age 80ish options and preferences we fully appreciate that might be a time for increased wealth if we want the CCRC or other similar platform.
I am not sure what "we" are talking about as people usually use the SWR concept a little sloppily, but as Mathjak said, the original concept of SWR did not attempt to preserve capital.

People often seem to conflate SWR with an actual withdrawal rate. SWR is a theoretical number. Your actual withdrawal rate can be anything you want. Whether it is safe is really up to you and how you manage your withdrawals. I don't know anybody who blindly takes out a fixed amount of cash every year, which is what you would do if your actual withdrawal rate = SWR.
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Old 12-03-2016, 04:06 PM
 
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Quote:
Originally Posted by mathjak107 View Post
a safe withdrawal rate is always about providing an unbroken income stream over a specified time . what is left is not a concern of a safe withdrawal rate. it can be 1 buck at the end of 30 years and the stress test is passed .

legacy money may be a by product since 90% of the time at 4% over 30 years a 60/40 portfolio has left you with more than you started non inflation adjusted but in the other 10% some just dqueeked by using all dollars .
Yes that model has been around for some time, however so has SS and Medicare and Medicaid for when we are aged and broke. With all the hoopla around possible reform and change in those programs and with the nature of aged support evolving it is:

Perhaps time to ponder what is really safe when our capital is declining and our risk exposure may be increasing. You have covered a number of the possible problems down the road in your plan etc. Not so sure how many have.
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Old 12-03-2016, 05:43 PM
 
Location: Haiku
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Quote:
Originally Posted by TuborgP View Post
Perhaps time to ponder what is really safe when our capital is declining and our risk exposure may be increasing.
That to me is the hardest part about retirement planning.

When we put together a budget of what our expenses were going to be, it was easy to tally up the recurring expenses like food, utilities, insurance, taxes. What is harder is accounting for the unplanned expenses like a new roof, a new water heater, major car repair. Our budget really determined our average withdrawal rate (about 3.2%), but our actual normal spending rate is closer to 2.5%, not 3.2%. The difference is because the unplanned things happen very infrequently and when they do our withdrawal jumps up to 4, 5, or maybe 6%.

All of that is fine and in the planning but where it gets hard is in the later years. A big withdrawal to pay for an unplanned expense (like if one of us has to go into a LTC facility), is a much bigger fraction of assets in later years than it is in earlier years. It could be disastrous.

This is why I don't sit back and put all our money into the safest possible investment as recommended by many, such as William Bernstein (author of many investing books). I am more afraid of the unknown black swan than I am of losing money by staying with a high equity allocation (around 50-60%).
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Old 12-03-2016, 08:16 PM
 
29,838 posts, read 34,929,245 times
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Originally Posted by TwoByFour View Post
That to me is the hardest part about retirement planning.

When we put together a budget of what our expenses were going to be, it was easy to tally up the recurring expenses like food, utilities, insurance, taxes. What is harder is accounting for the unplanned expenses like a new roof, a new water heater, major car repair. Our budget really determined our average withdrawal rate (about 3.2%), but our actual normal spending rate is closer to 2.5%, not 3.2%. The difference is because the unplanned things happen very infrequently and when they do our withdrawal jumps up to 4, 5, or maybe 6%.

All of that is fine and in the planning but where it gets hard is in the later years. A big withdrawal to pay for an unplanned expense (like if one of us has to go into a LTC facility), is a much bigger fraction of assets in later years than it is in earlier years. It could be disastrous.

This is why I don't sit back and put all our money into the safest possible investment as recommended by many, such as William Bernstein (author of many investing books). I am more afraid of the unknown black swan than I am of losing money by staying with a high equity allocation (around 50-60%).
I wonder after Medicare, SS, Medicaid reform occur if Bernstein will still say game over. I had said that but am pulling that thought off the table for now. In some ways it is game on regarding what to do with new money. I have targeted accumulation goals for age 80 based on visiting CCRC's and trying to estimate cost in 11 years.
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Old 12-03-2016, 11:29 PM
 
Location: Tucson for awhile longer
8,872 posts, read 13,581,680 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.
I hope you've thanked President Obama. Also for the good employment numbers. The current administration's policies have brought our economy back from the abyss it teetered on the edge of in 2008. I wonder how long we will have our economic stability back before we begin another dive.
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Old 12-04-2016, 06:36 AM
 
6,327 posts, read 4,771,440 times
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Originally Posted by Jukesgrrl View Post
I hope you've thanked President Obama.........
Some Presidents just seem to be unlucky. Poor Obama. He inherited a nasty economy but after 8 years he gets blamed for the slow rate of improvement. Trump will claim the credit for the improvements. Poor Obama. He inherited endless Middle Eastern wars. He will be remembered for spying on American citizens and foreign leaders and for using drones to assassinate people in foreign countries. Mostly he will be remembered for refusing to acknowledge the tens of millions who support radical Islamic terrorism. Poor Obama. He talked about doing something for the millions of illegal Aliens and then only had to deport hundreds of thousands. Poor Obama. He helped bring healthcare to millions of Americans but the plan blew up in his face as insurers dropped out and costs skyrocketed.


"Thanks" to Obama is best discussed in the Political Forums. Here we are indeed more concerned about the effect politics will have on our retirement. Eventually I am sure we will have more economic recessions or perhaps periods with large rates of inflation. The latter is what concerns me and it seems that the Fed and Trump will do all they can to see that happens.
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Old 12-04-2016, 03:07 PM
 
Location: Columbia SC
9,024 posts, read 7,791,206 times
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SWR is interesting. The older I get (74 now) the less I worry about it. I now base my withdrawal rate on an guessed at life expectancy (who the hell knows) of age 90 and what I need to be comfortable. If my present investments (mainly main line mutual funds) do not grow and considering a modest rate of inflation, than I am good to about age 90. If the investments grow than I am OK past age 90 plus I will up my withdrawal rate as I age. If I die before age 90, poor planning on my part......LOL
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Old 12-05-2016, 08:23 PM
 
7,982 posts, read 5,070,972 times
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Quote:
Originally Posted by TwoByFour View Post
I am not sure what "we" are talking about as people usually use the SWR concept a little sloppily, but as Mathjak said, the original concept of SWR did not attempt to preserve capital.
And that's the crux of the whole matter!

The difference between being affluent, and "merely" middle-class (in a pecuniary sense), is that the affluent aim to preserve and augment wealth across the generations, whereas the middle-class are primarily motivated by comfort/convenience/appearances/aspirations. In other words, at the very least, the affluent seek to preserve capital.

So, I would respectively submit, that the real question isn't "what's the SWR so that I don't die broke", or "what's the SWR so that I can enjoy a comfortable cash-cushion, plus reserves for emergencies". Rather, that the operative question is, "What's my SWR, so that upon my death, my children could be rich, and their children eventually very-very-rich, and their children's children's children (and so forth) rival the Rothschilds and the Rockefellers?

To be pedantic: if my investments are merely keeping up with inflation (after taxes), and I wish to preserve capital, then my SWR is 0%.

Corollary: no matter how successful we are as savers, or even as investors throughout our working years, how much we can withdraw from our investments in retirement, depends entirely on our rate of return (after inflation and taxes).
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Old 12-05-2016, 09:00 PM
 
Location: SoCal
13,391 posts, read 6,404,610 times
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Quote:
Originally Posted by Jukesgrrl View Post
I hope you've thanked President Obama. Also for the good employment numbers. The current administration's policies have brought our economy back from the abyss it teetered on the edge of in 2008. I wonder how long we will have our economic stability back before we begin another dive.
Thank the the FEDs, they had to do the heavy lifting. Obama did nothing. He plays golf most of the time. Now Trump is elected, they can now raise rate. No more easy money.
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