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Old Today, 12:10 PM
 
71,700 posts, read 71,801,099 times
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Quote:
Originally Posted by jrkliny View Post
Again, no math, no facts.

This is just fear mongering. Many advisors seem to do it to drum up business and/or to control the clients.

I try to ignore the fear mongering whether it is kitces or pfau or some other supposed expert. Firecalc seems to deal with understandable approaches to looking at the variables. It certainly supports the 4% rule and all the other studies that have done so. So why not recalc using Firecalc? That seems justified versus the unsupported warning from kitces.

I think it is also important not to worry excessively about the failure rate. When on rare occasions the 4% rule fails or is near to failing, the earth just does not open up and swallow the retiree. Dialing back just slightly is all that is needed or has been needed under the worst of the worst scenarios.

Anyway, I am off to Bayard. Let me know if there are facts instead of just fears that support the 10% kitces approach.
i don't see it that way at all , as fear mongering ? nonsense .

like i said .

you have 1 million and are taking 40k .... you hit it lucky and doubled your amount year 1 , you have 2 million ... so you double up and take 80k and plan a life around 80k ... next year is down 50% ..... you have no gains at all, and 1 million left ... what do you do ? do you still take 80k or now have to take a huge pay cut ? what if you based a lifestyle and planned around 80k now that you had 2 million ?

would you have been better off building that lifestyle around the 1 million you planned around and taking the extra over time seeing how it goes instead of committing to a budget 2x what it was ?

that has nothing to do with fear mongering anymore then the 4% safe withdrawal rate is about fear mongering ... it is simply a way designed to avoid nasty pay cuts and have anything better then worst outcomes a bonus to the plan .

Last edited by mathjak107; Today at 12:18 PM..
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Old Today, 12:28 PM
 
71,700 posts, read 71,801,099 times
Reputation: 49262
Quote:
Originally Posted by jrkliny View Post
Again, no math, no facts.

This is just fear mongering. Many advisors seem to do it to drum up business and/or to control the clients.

I try to ignore the fear mongering whether it is kitces or pfau or some other supposed expert. Firecalc seems to deal with understandable approaches to looking at the variables. It certainly supports the 4% rule and all the other studies that have done so. So why not recalc using Firecalc? That seems justified versus the unsupported warning from kitces.

I think it is also important not to worry excessively about the failure rate. When on rare occasions the 4% rule fails or is near to failing, the earth just does not open up and swallow the retiree. Dialing back just slightly is all that is needed or has been needed under the worst of the worst scenarios.

Anyway, I am off to Bayard. Let me know if there are facts instead of just fears that support the 10% kitces approach.
why not recalculate in firecalc with the larger number? you certainly could .

but again ..go back to what i said ..

we retire a year apart .. you in 2007 with 1 million and a 40k draw ....

i decide to wait a year and retire in 2008 only now i have 700k so i draw 28k .....


we recover next year .... could i recalculate in fireclc and take 40k ? sure i could ...

but i think i would not want to suddenly just jump right up to 40k .. i would likely see how it went and if things hold take more along the way .... the choice is yours ... whether you recalculate and risk a pay cut or take the money over time with no risk of a pay cut and only the odds of a pay raise is up to that person .. it is only a choice .... you can see you can go either way ....

i doubt you will see many advisers in the above scenario telling their client to jump up to 40k from 24k immediately . rather they will more then likely give them a plan to follow for increasing over time .


for that matter why don't we all recalculate our draw monthly every time it is highest ? could we not consider each month as if we just started ? just adjust the time remaining

Last edited by mathjak107; Today at 12:52 PM..
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Old Today, 12:32 PM
 
12 posts
Reputation: 23
Here is a defense of starting the clock again at age 71 and taking $80K out of a now 2 Million Dollar Portfolio:

1) I am now older and have fewer years on earth to support myself than ten years ago when I retired.

2) What if I would have stayed working until I was 71 and just retired today at age 71 and had 2 million dollars? I would have been told to take 4% out of my investment portfolio, which would be $80K

3) I could put all my money in a CD paying 3% a year and even with a 3% inflation increase each year, that money would last 25 years and I would be dead by then. Remember, I am old!
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Old Today, 12:40 PM
 
2,687 posts, read 1,545,393 times
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If only financial decision were as simple as applying some simple rule. And I wish the beloved Kitces had more of a financial and market theory background. Instead, his training is services oriented"
Quote:
MICHAEL'S GRADUATE DEGREES AND DESIGNATIONS
MSFS – Master of Science in Financial Services
MTAX – Master’s in Taxation
CFP – Certified Financial Planner
CLU – Chartered Life Underwriter
ChFC – Chartered Financial Consultant
RHU – Registered Health Underwriter
REBC – Registered Employee Benefits Consultant
CASL – Chartered Advisor of Senior Living
None of this gives him much background in financial theory. What he's not is a CFA - Chartered Financial Analyst. The theory is important to know how and why diversification works, what market variability means, how asset classes differ and interact in a portfolio, liquidity issues etc. For example, it's one thing to use a spreadsheet or more complex financial model, and another thing to understand how and why it was constructed, which includes full knowledge of underlying assumptions, limitations and such.

I earned a top school MBA with concentrations in finance and statistics, learning from the researchers who had demolished earlier "rules of thumb" and common trading practices in their careers. They also developed the theoretical frameworks that are followed by many fund managers and highly successful investors to this day.

This is why I find some of the discussion here a bit painful.

JMHO
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Old Today, 12:45 PM
 
10,064 posts, read 4,671,845 times
Reputation: 15324
Quote:
Originally Posted by old today View Post
can't I start the 4% rule distributions all over again and start pulling out $80,000 a year from my investment accounts? What are the rules about this?
Why do you have to spend it on reoccurring expenses? If you took $80k out, why would it be a perpetual $80k spend annually?

if you lived on $40k, and portfolio doubled so you take out $80k and bought a $40k toy, And the market went back down. Well you are still living on the same $40k, and the toy is paid in full, so it isn't any more of a drag on your living expenses than if you hadn't bought it.

I see anything in excess of the original $40k as "disposable", so you can spend it, but don't let your expenses go above it. That way if the market drops, your "base" is still covered, you just get to do fewer things until market goes back up.

If the market drops a lot, then the "excess" years are used to refill that "base" bucket before you can get back to the vacationing/toy buying

well, I'm really talking out my behind, because I'm decades away from putting retirement into practice. But my thinking is if you spent it on one off purchases, then it doesn't really affect your cost of living unless there is on going maintenance/taxes on it.

though at age 71, it seems like social security would cover a lot of that basic living cost
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Old Today, 12:51 PM
 
Location: Kentucky
522 posts, read 307,714 times
Reputation: 2195
I'm not really interested in financial history, I just want my money to out live me! But I'm just an engineer, not a finance guy...
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Old Today, 12:54 PM
 
71,700 posts, read 71,801,099 times
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don't we all ? if only it was that easy ... all we would need to know is the day we will die and get the same return year after year with never a negative return year . what could be simpler
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Old Today, 01:00 PM
 
71,700 posts, read 71,801,099 times
Reputation: 49262
Quote:
Originally Posted by old today View Post
Here is a defense of starting the clock again at age 71 and taking $80K out of a now 2 Million Dollar Portfolio:

1) I am now older and have fewer years on earth to support myself than ten years ago when I retired.

2) What if I would have stayed working until I was 71 and just retired today at age 71 and had 2 million dollars? I would have been told to take 4% out of my investment portfolio, which would be $80K

3) I could put all my money in a CD paying 3% a year and even with a 3% inflation increase each year, that money would last 25 years and I would be dead by then. Remember, I am old!
this thinking is not correct ... at 71 with 2 million dollars you would not be told to take just 80k.

you can take up to 93-94k planning until age 95 and 99-100k if we plan to 92 . run it in firecalc .
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Old Today, 01:02 PM
 
71,700 posts, read 71,801,099 times
Reputation: 49262
Quote:
Originally Posted by bigbear99 View Post
If only financial decision were as simple as applying some simple rule. And I wish the beloved Kitces had more of a financial and market theory background. Instead, his training is services oriented"

None of this gives him much background in financial theory. What he's not is a CFA - Chartered Financial Analyst. The theory is important to know how and why diversification works, what market variability means, how asset classes differ and interact in a portfolio, liquidity issues etc. For example, it's one thing to use a spreadsheet or more complex financial model, and another thing to understand how and why it was constructed, which includes full knowledge of underlying assumptions, limitations and such.

I earned a top school MBA with concentrations in finance and statistics, learning from the researchers who had demolished earlier "rules of thumb" and common trading practices in their careers. They also developed the theoretical frameworks that are followed by many fund managers and highly successful investors to this day.

This is why I find some of the discussion here a bit painful.

JMHO
he is skilled enough that the financial planning world hinges and reacts to his findings when it comes to retirement planning . he is the one other financial planners follow .

i have been teaching motor controls and variable frequency drives now for 4 years one day a week in retirement to engineers and i have no college degree ...

on the other hand many engineers are way behind even with their degrees .
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Old Today, 01:04 PM
 
1,068 posts, read 518,681 times
Reputation: 1824
Quote:
Originally Posted by bigbear99 View Post
If only financial decision were as simple as applying some simple rule. And I wish the beloved Kitces had more of a financial and market theory background. Instead, his training is services oriented"

None of this gives him much background in financial theory. What he's not is a CFA - Chartered Financial Analyst. The theory is important to know how and why diversification works, what market variability means, how asset classes differ and interact in a portfolio, liquidity issues etc. For example, it's one thing to use a spreadsheet or more complex financial model, and another thing to understand how and why it was constructed, which includes full knowledge of underlying assumptions, limitations and such.

I earned a top school MBA with concentrations in finance and statistics, learning from the researchers who had demolished earlier "rules of thumb" and common trading practices in their careers. They also developed the theoretical frameworks that are followed by many fund managers and highly successful investors to this day.

This is why I find some of the discussion here a bit painful.

JMHO
CFA requires real math acumen and understanding. The rest of those designations don’t.
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