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Old 08-23-2017, 08:59 AM
 
Location: Florida
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I have not seen this before. My leaning was SWR lower than 4% due to rising interest rates and probably increasing years in retirement.
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Old 08-23-2017, 09:01 AM
 
72,136 posts, read 72,121,987 times
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a swr is already based on the nastiest of times we ever had . nothing has been worse since the 1960's .

mathematically it would take less than a 2% real return average over the first 15 years of a 30 year retirement to fail

Last edited by mathjak107; 08-23-2017 at 09:13 AM..
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Old 08-23-2017, 10:00 AM
 
52,109 posts, read 41,945,215 times
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Quote:
Originally Posted by FREE866 View Post
and if inflation is the "retiree's worst enemy" that reinforces the fact that stocks should be a significant portion of one's plan!
Yeah, when I was right out of school we had an older guy at our company who had a decent pension with a prior company...utterly destroyed by the inflation of the 1970's.

I have a number of smallish pensions but I'm in the 401k is most of my retirement boat.

The big factor to me is let's say hypothetically "Bob" was retiring today with the following...

401k = 2mil
Annual financial need 60k

IMO, Bob should have a fairly stock heavy "risky" portfolio because he can absorb the ups and downs since he only needs 3%.

Now if Bob has 2mil and an annual financial need of 90k then Bob has to start worrying about volatility and giving up some long term returns to do so.

Just a rough example.

My personal plan is to try to keep my principal (inflation adjusted) intact and eventually pass it along to my kids as the bulk of their inheritance. I'm about 9 years from being able to pull money from my 401k so I'll have to see what the future brings and how long I keep working etc.

I'm currently 100% stock market and don't intend to change that unless situations warrant.
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Old 08-23-2017, 10:07 AM
 
Location: Central IL
15,249 posts, read 8,597,478 times
Reputation: 35712
Quote:
Originally Posted by mathjak107 View Post
it is just a way of ball parking day 1. no one spends like a robot .

we use bob clyatt's method based on each years balance and we just set maximum goal posts each year we try not to exceed
Exactly...I'm planning on delaying SS so I'll be taking far more than 4% out until I hit 70. Then after that when I have both SS and pension I'll be taking out far less, though that amount will slowly increase as my pension has no COL. But since I'm not a robot and do have a brain, there are more nuanced tools to let you take those things into account so I feel pretty prepared.

But it's good to see that 4% holds with even some wiggle room. That flies in the face of more recent nay-sayers who seem to pride themselves in being super-conservative and not thinking they can retire until they're able to only withdraw 3% or even 2.5%! ...seems like humblebragging to me.
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Old 08-23-2017, 10:38 AM
 
72,136 posts, read 72,121,987 times
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over 116 rolling 30 year periods of all sorts of outcomes from great to the absolute worst a 4% draw inflation adjusted has ended with more than you started with 90% of the time , more than 2x what you started with 67% of the time and more than 3x what you started with 50% of the time .
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Old 08-23-2017, 10:42 AM
 
72,136 posts, read 72,121,987 times
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Quote:
Originally Posted by Mathguy View Post
Yeah, when I was right out of school we had an older guy at our company who had a decent pension with a prior company...utterly destroyed by the inflation of the 1970's.

I have a number of smallish pensions but I'm in the 401k is most of my retirement boat.

The big factor to me is let's say hypothetically "Bob" was retiring today with the following...

401k = 2mil
Annual financial need 60k

IMO, Bob should have a fairly stock heavy "risky" portfolio because he can absorb the ups and downs since he only needs 3%.

Now if Bob has 2mil and an annual financial need of 90k then Bob has to start worrying about volatility and giving up some long term returns to do so.

Just a rough example.

My personal plan is to try to keep my principal (inflation adjusted) intact and eventually pass it along to my kids as the bulk of their inheritance. I'm about 9 years from being able to pull money from my 401k so I'll have to see what the future brings and how long I keep working etc.

I'm currently 100% stock market and don't intend to change that unless situations warrant.
100% equities has done very well spending down in good and bad markets regardless .
it has a 94% success rate . the up years with no weight of bonds and cash go up so much more so the cushion in the down years is much greater .

100% equity would certainly be a wild ride but the only danger would be an extended hit early on before your first up leg .
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Old 08-23-2017, 11:46 AM
 
Location: Grove City, Ohio
10,150 posts, read 12,425,062 times
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This, talking about withdrawal rates, is something I don't have to worry about which is a good thing because we really don't have that much saved.

We got some but it sure isn't six figures. This is the biggest reason why I am putting off collecting social security benefits until 70. Now I suffer, I am counting down the days.

Right now, if I go another year.... sob...., I don't think we would need any savings but we'll take the absolute minimum out and leave the rest for an "emergency" whatever that might be.

But what is the minimum? Say we have $50,000 saved how much will we be required to take out every year at 70.5 years of age?
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Old 08-23-2017, 11:51 AM
 
72,136 posts, read 72,121,987 times
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there is a chart . it is based on your age and spouses age too . if there is less than 10 years difference divide the balance by 27.40 years for year 1 .

it changes yearly . next year divide by 26.50 . but remember , by 70-1/2 your balance may be way larger

http://www.bankrate.com/finance/mone...ons-table.aspx

Last edited by mathjak107; 08-23-2017 at 12:01 PM..
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Old 08-23-2017, 12:08 PM
 
1,214 posts, read 715,609 times
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That the money won't run out is great, but I think, with no kids or family to look after us, we need to have a big chunk left in our last years. What if I try to spend my last dollar on my last day and than, surprise, 90+ years old, $5000 left, and need a nursing home.
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Old 08-23-2017, 12:13 PM
 
Location: Grove City, Ohio
10,150 posts, read 12,425,062 times
Reputation: 14013
Quote:
Originally Posted by mathjak107 View Post
there is a chart . it is based on your age and spouses age too . if there is less than 10 years difference divide the balance by 27.40 years for year 1 .

it changes yearly . next year divide by 26.50 . but remember , by 70-1/2 your balance may be way larger

IRA Required Minimum Distributions Table | Bankrate.com
So at 70 if I had $50,000 I am required to take out $50,000/27.4=$1,825/year or $152/month?
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