Anyone limit sequence risk during first 10 years of retirement by using CD's alone (no stocks)? (date, wife)
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
we learned that up here with sandy .we were unscathed where i am even though we are 2 blocks from little neck bay . but the battles others had with insurers were insane and they could not live in their homes .
we learned that up here with sandy .we were unscathed where i am even though we are 2 blocks from little neck bay . but the battles others had with insurers were insane and they could not live in their homes .
my own opinion is that since fixed income alone has failed to last so many times already as to be considered unsafe at a 4% draw and a 50/50 mix has survived 96% of them just fine , sitting in fixed income and having to take a reduced draw on my money in fixed income is inefficient use of my savings .
40-60% equities works the best and is the most efficient use of your money with the lowest risk of failures. that includes all the worst of times including the likes of which we have not seen since 1966
I'm sure you mentioned other mixes before but I don't quite remember -- Has a 100% stock strategy or predominantly stocks like Buffett's recommendation of 90% stock index funds and 10% bonds survived 100% of all times?
100% equities has a very good track record as far as lasting . mentally is another story .
over 30 year retirements it has done almost as well as 50/50 . it has failed to last only 8 of 118 30 year cycles .
50/50 fail to last 6 cycles but they are very close .
what does vary is the balances left . 100% equities ranges from the largest balance to the smallest balance depending on outcomes .
100% equity
FIRECalc looked at the 118 possible 30 year periods in the available data, starting with a portfolio of $1,000,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 118 cycles. The lowest and highest portfolio balance at the end of your retirement was $-931,017 to $8,509,297, with an average at the end of $2,708,840. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)
For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 8 cycles failed, for a success rate of 93.2%.
50/50
FIRECalc looked at the 118 possible 30 year periods in the available data, starting with a portfolio of $1,000,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 118 cycles. The lowest and highest portfolio balance at the end of your retirement was $-223,952 to $4,145,063, with an average at the end of $1,142,660. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)
For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 6 cycles failed, for a success rate of 94.9%.
on the other hand fixed income is terribly risky unless draw rates are lower . at 4% it is totally unsafe
100% fixed income
FIRECalc looked at the 118 possible 30 year periods in the available data, starting with a portfolio of $1,000,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 118 cycles. The lowest and highest portfolio balance at the end of your retirement was $-517,560 to $2,349,575, with an average at the end of $189,136. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)
For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 64 cycles failed, for a success rate of 45.8%.
Last edited by mathjak107; 09-23-2018 at 09:54 AM..
100% fixed income ...wow didn't realize how bad the returns are....
If your goal is to leave some money behind or to see your money grow to afford you more flexibility in spending 100% equity does substantially better for you and in looking at those numbers your risk of running out of money is minuscule
yeah you might "sleep better" at 50/50 , but you pay an enormous price for that comfort if you want some growth
fixed income at 4% has a horrible record . it is as unsafe as you get . sure you can draw less and improve success but with 50/50 running 95% i would never want to take a pay cut and have to go to a lower draw rate and not use my savings efficiently
100% fixed income ...wow didn't realize how bad the returns are....
If your goal is to leave some money behind or to see your money grow to afford you more flexibility in spending 100% equity does substantially better for you and in looking at those numbers your risk of running out of money is minuscule
yeah you might "sleep better" at 50/50 , but you pay an enormous price for that comfort if you want some growth
depends on your exact outcome . last 18 years saw 30/70 leave a retiree with a bigger balance while spending down then 100% equities or 60/40. last 10 years was not as strong for 60/40 as some of the more defensive portfolio's with 25% equities .
so it varies . there is no such thing as more equities will always produce better results when spending down . volatility and sequences can turn some pretty decent average returns in to not so good outcomes while spending down . different parameters
depends on your exact outcome . last 18 years saw 30/70 leave a retiree with a bigger balance while spending down then 100% equities or 60/40. last 10 years was not as strong for 60/40 as some of the more defensive portfolio's with 25% equities .
so it varies . there is no such thing as more equities will always produce better results when spending down . volatility and sequences can turn some pretty decent average returns in to not so good outcomes while spending down . different parameters
We have had this conversation before and I come up with a drastically different outcome than you do....
if in 2000 I put 15% in IWM , 15% in SPY and 70% in TLT with a 4% withdrawal rate the balance today is almost zero
If in 2000 I put 50% in IWM and 50% in SPY with a 4% withdrawal rate I have over 1.4 million today adjusted for inflation...
and my answer to you is we can all cherry pick funds and combinations of different index's that pan out differently so personal combinations are never used to benchmark .
as an example fidelity total bond did much better than vanguard total bond over every time frame . vanguard total fund adheres to an index , fidelity total bond does not .
a total market fund or s&p 500 are the typical benchmarks . your own personal mileage may vary including the fact treasuries beat equities for 15 years. so 50/50 did out perform 60/40 . the s&p 500 and total market fund are so close as to be less then a fraction of a percent apart most of the time .
i doubt there is any time frame i could not find in retrospect , some combo's that beat a broad index like the s&p 500 or total market fund .
in fact the butterfly portfolio was founded exactly by doing that . it was molded and tweaked to perform with the best balance based on the outcomes we already had . it was conceived in a laboratory i guess you can say .
the results i posted are based on the S&P 500 Index, including dividends, to represent stocks and the Bloomberg Barclay’s U.S. Aggregate Bond Index to represent bonds.
those are the accepted benchmarks for studies and not personal combo's .
Last edited by mathjak107; 09-23-2018 at 11:30 AM..
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
