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Old 06-30-2019, 10:21 AM
 
Location: Whereever we have our RV parked
8,762 posts, read 7,693,193 times
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I see IRA's/401k as having worked out great. We put money in them when tax rates were higher and we made a lot more money. Now our income is very low, so we pay very little tax on that money that we withdraw.
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Old 06-30-2019, 10:54 AM
 
71,469 posts, read 71,652,652 times
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Quote:
Originally Posted by elnrgby View Post
In the first tab, I entered $55,000 for the current annual draw, 0 for the portfolio, and 21 or 61 years for the length of retirement. In the second tab, I entered 75% of what the SS projects it will start paying me at 70 in today's money, and I entered 2030 as the year when I'll start taking ss (ie, when I'm 70). In the bottom section of the second tab, under "pension", I entered the amount I get in annuities now, starting year 2019, and I unchecked "inflation-adjusted". I did the same for two additional later-starting annuities (which I entered in the two additional "pension" lines on that page). Then I clicked on "compute" at the bottom of that page. The result gives 100% of success at the age of 120, but only 54% of success at the age of 80, which makes me think that "success" pertains only to a single year, not to all the previous retirement years within the 61 year time horizon (there cannot logically be 100% success over the entire 61 years, if there has been 46% failure by 21 years of retirement).
what ever you put in with no portfolio listed is not able to compute.. are you able to send me the data you entered as a d/m ? there is an info screen you can copy that shows all the data you entered and the parameters
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Old 06-30-2019, 10:57 AM
 
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If a portfolio is allocated correctly there shouldn't be a problem withdrawing even in years where there's a bear market. Portfolio composition is supposed to take all cycles into account and where to withdraw depends on where the market is (bull or bear).
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Old 06-30-2019, 10:59 AM
 
71,469 posts, read 71,652,652 times
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Quote:
Originally Posted by lottamoxie View Post
If a portfolio is allocated correctly there shouldn't be a problem withdrawing even in years where there's a bear market. Portfolio composition is supposed to take all cycles into account and where to withdraw depends on where the market is (bull or bear).
there is no portfolio ...they are entering zero for a starting portfolio trying to use only income like ss and annuities that kick in different times . ss is inflation adjusted , annuities are not ... then running it for 21 years and 61 years trying to see a success rate just against inflation ..

i don't think it can be done because 2 out of 3 parameters are already known so it is not like stress testing for the unknown of a portfolio
.
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Old 06-30-2019, 11:15 AM
 
1,823 posts, read 782,085 times
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Quote:
Originally Posted by usual points View Post
Most everyone I know has most of their retirement money in target funds or balanced mutual funds. A significant amount of these investments is in the stock market. They withdraw their money once a year.

What should they do if the stock market crashes in the months before their annual withdrawal?

Do you have enough cash, money market or bond fund money set aside in separate accounts to cover your expenses in retirement while you wait for the stock market to recover? How much would the stock market have to fall before you access your bonds or money market funds instead of your mutual funds/ETF's that have stock market exposure?
In all honesty I don't expect we will ever touch our stocks, we will our IRA's because you are forced to. Between my pittance of a pension, my husband's pension, our social security when we start taking it, and earnings from the stock that go into a cash account then having to start taking out of the IRA's we won't have to touch anything unless something serious happens. Nice thing being debt free.
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Old 06-30-2019, 11:38 AM
Status: "Re-edit status" (set 13 days ago)
 
Location: Was Midvalley Oregon; Now Eastside Seattle area
4,135 posts, read 1,886,778 times
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needs fact check:
I read within last few weeks that current annuities (spia) has yield 20 basis LESS than previous year's.
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Old 06-30-2019, 11:55 AM
 
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as they should because rates came down , but much of a life annuity is not based on retes since it is moratlity credit .. the intermediate and long term bonds are down 1% or so , so 1/5 that is not bad
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Old 06-30-2019, 12:01 PM
 
1,692 posts, read 608,532 times
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Quote:
Originally Posted by mathjak107 View Post
there is no portfolio ...they are entering zero for a starting portfolio trying to use only income like ss and annuities that kick in different times . ss is inflation adjusted , annuities are not ... then running it for 21 years and 61 years trying to see a success rate just against inflation ..

i don't think it can be done because 2 out of 3 parameters are already known so it is not like stress testing for the unknown of a portfolio
.

Why do you think it can't be done? If the portfolio is 0, then any annual increase or decrease in portfolio is also 0 (4% of 0 is 0, while 20% or 10000% increase in the value of 0 is also 0, and any loss of value from the initial portfolio of 0 can only result in the final value of 0 :-). If anything that pertains to investment portfolio is 0, then everything that pertains to fixed income is just added to the portfolio of 0, in every year. The computation does not involve multiplying variable and fixed assets, but adding them. The portfolio and the fixed income are within two separate sets of brackets, with the "+" sign between them, ie, [(portfolio % annual market gain or loss) x inflation] + [(soc security + cola + fixed annuity) x inflation].If the value inside the first square brackets is always zero, the resulting computation shows only the effect of inflation on fixed annuity income and ss income.


In the second step, Firecalc should compare my annual inflation-adjusted fixed income (assuming historical data for inflation) with my annual inflation-adjusted spending. It does not seem to be doing that for every year during a 21-year or 61-year interval, but it seems to be doing that comparison with historic data only for the last (ie, 21st or 61st year) of the time interval.
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Old 06-30-2019, 12:08 PM
 
71,469 posts, read 71,652,652 times
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i don't think you can arrive at a success rate since it is not based on a unknown portfolio outcome ,it is a straight case case of spending down vs inflation ..not the same thing since you already know the entire income picture .. it is not based on the worst case outcomes at all .... you have only one income outcome less inflation ..

all the math that makes a 4% safe withdrawal rate hold is based on maintaining at least a 2% average real return on the portfolio for the first 15 years of a 30 year retirement ... that is the math behind it .

will your income only do that ? that is the question ... you can't answer because if inflation kicks up not all your income will rise so you have no chance of making up the down years in the up years like a portfolio. your income is your income .. there is no real success rate or worst case outcome ... i mean go find the highest inflation year you can find and use that number , but it won't work the same as portfolio's that make up lost ground in up years so you really have no cycles.

i think you are losing site of what a cycle represents and why as well as what is being determined ... see , with equities we can have higher inflation but if great markets come it can undo the damage of the extra spending ... you can't do that with a fixed income that has no chance of gains . spend more in one year because of inflation and the extra money is gone ... no make up . it isnt even like bonds where rates can rise over time .

it is very different then you think because there really is no cycle without a portfolio ... there is only spending down more or less based on only inflation .

it is no different than you have a job and get 55k a year ... if you spend 55k a year , each year you have either a diminishing balance or it stays the same ... it can never be more . it can only be less if inflation rises or expenses rise .... it can never be like a situation we have where we have been retired 4 years and pulling 6 figures yet our portfolio is hundreds of thousands of dollars higher .... so going forward our cycle has a cushion and this is how success rates are determined .

if we compare to the worst outcome on record for retirees the 1965/1966 retiree we are way ahead of worst case

Last edited by mathjak107; 06-30-2019 at 12:29 PM..
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Old 06-30-2019, 01:16 PM
 
1,692 posts, read 608,532 times
Reputation: 1756
Quote:
Originally Posted by mathjak107 View Post
i don't think you can arrive at a success rate since it is not based on a unknown portfolio outcome ,it is a straight case case of spending down vs inflation ..not the same thing since you already know the entire income picture .. it is not based on the worst case outcomes at all .... you have only one income outcome less inflation ..

all the math that makes a 4% safe withdrawal rate hold is based on maintaining at least a 2% average real return on the portfolio for the first 15 years of a 30 year retirement ... that is the math behind it .

will your income only do that ? that is the question ... you can't answer because if inflation kicks up not all your income will rise so you have no chance of making up the down years in the up years like a portfolio. your income is your income .. there is no real success rate or worst case outcome ... i mean go find the highest inflation year you can find and use that number , but it won't work the same as portfolio's that make up lost ground in up years so you really have no cycles.

i think you are losing site of what a cycle represents and why as well as what is being determined ... see , with equities we can have higher inflation but if great markets come it can undo the damage of the extra spending ... you can't do that with a fixed income that has no chance of gains . spend more in one year because of inflation and the extra money is gone ... no make up . it isnt even like bonds where rates can rise over time .

it is very different then you think because there really is no cycle without a portfolio ... there is only spending down more or less based on only inflation .

it is no different than you have a job and get 55k a year ... if you spend 55k a year , each year you have either a diminishing balance or it stays the same ... it can never be more . it can only be less if inflation rises or expenses rise .... it can never be like a situation we have where we have been retired 4 years and pulling 6 figures yet our portfolio is hundreds of thousands of dollars higher .... so going forward our cycle has a cushion and this is how success rates are determined .

if we compare to the worst outcome on record for retirees the 1965/1966 retiree we are way ahead of worst case

Well, Firecalc does return the results I described if I input the data as I described, though they could be meaningless results.



Btw, my situation is not equivalent to having a $55k/year job forever. I do anticipate inflation, and have new delayed fixed annuities added to my income at progressively later ages (the last three annuities - starting at 80, 85, and 90 - are longevity insurance annuities where I have bought a substantial annuity return, if I live long enough, for a very low premium, because I bought them many decades in advance of the payout).



I did take into account historic inflation data when planning the annuity income. My basic annuity plans assume 100% cumulative inflation in the next 20 years. Should that cumulative inflation end up being in fact just over 300% (as in the 20 years between 1965 and 1985), I have enough condos to sell and cash accounts to pull from to compensate for the massive inflation, plus if push comes to shove I COULD live normally on an equivalent of $30,000 per year in today's money (I don't absolutely have to live between Boston, San Francisco and NYC like now, and I don't have to travel abroad every year).


The point of all of this is that a person CAN retire even without any investing skills, by just working hard and distributing her savings between annuities, usable assets such as real estate, and cash accounts, with only a minor portion (or none) of savings invested in the market.
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