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Which is why fixed income alone scares the heck out of me when people without substantial resources try to do it with no growth vehicles
By fixed income are you talking about SS and your 401 withdraw? We have COLA and I plan to add the rate of inflation to my 4% draw going forward. But it's still fixed income which is why I like my part time job at the golf course. even a little income coming in makes me feel better.
By fixed income are you talking about SS and your 401 withdraw? We have COLA and I plan to add the rate of inflation to my 4% draw going forward. But it's still fixed income which is why I like my part time job at the golf course. even a little income coming in makes me feel better.
fixed income refers to cash instruments, bonds , bond funds and annuities. in other words no real growth vehicles in a portfolio.
safe withdrawal rates are much lower when at least 35-40% equities are not used.
even drawing 4% inflation adjusted failed to last 67 of the 129 30 year cycles we had to date .
that’s an awful success rate so draws need to be lower if no growth vehicles
Last edited by mathjak107; 03-06-2024 at 03:26 PM..
I do not actually live in a 30-year cycle at this point. I plan to average a 3.33% withdrawal rate for the first three years of retirement followed by five years of 0% until RMD's kick in at 75 (which will be mostly reinvested). I will likely retire at 67 which seems really old (except it is five years from now). I do not plan to jump into the stock market at this point it is so richly valued and even conservative 86 +/- year old famed investors are minimally invested in stocks or actively shorting them. I think I should work and my wages have kept up with about double inflation in the last 20 years. I am not married and needing to invent a lot of things for "us" to do. If I was married the plan was always to have "gone fishing" by 55. But, shxt happens.
Reently, I dug up our old financial records and entered our assets over the last 32 years in a networth tracking spreadsheet.
It was interesting to see that in spite of many dips and rises in the market and life changing events, the trendline of our NWs over the years fit a polynomial curve of power 2 (R square = 0.985).
I calculated all asset values to inflated-adjusted values for 2024. The new values still fit a a polynomial curve of power 2 (R square = 0.968).
It is a very comfortable feeling to see that our NWs have been ahead of inflation even in retirement. Our current NW is 36.9% higher than when I retired 8 years ago. There was a dip in our 2022 NW but that year value was still 16% higher than the inflated-adjusted value in 2016.
Note to Wile E. Coyote: I like math and have to agree with kavm that there was no math involved in that site. It was just plugging some numbers to get another number.
I used the website to calculate the inflation adjusted values of $100 from 1992 to 2024. The trendline for these values is linear with an R square value of 0.973 and the equation is:
I’m a Gen-Xer, so my cultural reference is the Barenaked Ladies song “If I Had $1000000”. The song came out in December 1992. To get the same spending power would take $2,173,481 now.
Did you buy a green dress? Then there's Timbuk3: Fifty thou a year will no longer buy a lotta beer. $50,000 annual salary was a lot more than I was earning in 1986. The Millionaire TV series ran from 1955-1960. In 2024 dollars, that is equivalent to $11.5 million at start, going down to $10.5 million by the end of the series.
I know. It's not our first rodeo with inflation if we were born in the 50's or early 60's. But, as a younger person you may not be thoroughly aware of it. I remember when gas went up to $1.25 a gallon back when I was in high school making $4.25 an hour. But, I had not paid rent yet and in the 1980-1981 recession I had trouble paying rent on my own. Fast forward through military service, marriage, divorce, night school, etc. life was never easy. So, it is a little hard to relate to the sudden concern now (since it always seemed that way to me). It's always been difficult and it's getting worse. Only through an extraordinary effort did I obtain any modicum of security (that and age/time). Based on personal circumstances (you had parents? big win there... you had a half million dollar house in 2007? ..another big win... kids with graduate degrees? ...they all have it over me.
It's important to understand and plan for inflation. People need to think a great deal more about it (and seriously).
Anyone who came of age in the late 1970's, thinks about inflation - a whole lot!. I made a little over $3 an hour in 1976.
I was on my own for college costs. I graduated with $7,500 in student loans at 7 1/2% interest in 1980. With inflation, my $7,500 student loan today is the equivalent of $28,000. It was manageable.
I swore my kids wouldn't have to fund their own undergraduate education. As a result, my kids were the only one of their friends to graduate without loans.
We didn't/couldn't save for grad school. We paid for their apartments and miscellaneous expenses, but they took loans out for tuition - $60,000 for two years of grad school. The big different between the generations are (1) in 1980, their jobs would not require a grad degree and (2) the 1980 tuition would be half of today's costs.
My first house cost $200,000. Two bedrooms, one bath, but very cute! Today, this house goes for $500,000.
So the two BIG expenses for today's kids - education and housing - increased more than the rate of inflation.
So I agree with "It's always been difficult and it's getting worse." I wasn't thrilled with the economy in the late 1970's but it's definitely worse for kids now.
Anyone who came of age in the late 1970's, thinks about inflation - a whole lot!. I made a little over $3 an hour in 1976.
I was on my own for college costs. I graduated with $7,500 in student loans at 7 1/2% interest in 1980. With inflation, my $7,500 student loan today is the equivalent of $28,000. It was manageable.
I swore my kids wouldn't have to fund their own undergraduate education. As a result, my kids were the only one of their friends to graduate without loans.
We didn't/couldn't save for grad school. We paid for their apartments and miscellaneous expenses, but they took loans out for tuition - $60,000 for two years of grad school. The big different between the generations are (1) in 1980, their jobs would not require a grad degree and (2) the 1980 tuition would be half of today's costs.
My first house cost $200,000. Two bedrooms, one bath, but very cute! Today, this house goes for $500,000.
So the two BIG expenses for today's kids - education and housing - increased more than the rate of inflation.
So I agree with "It's always been difficult and it's getting worse." I wasn't thrilled with the economy in the late 1970's but it's definitely worse for kids now.
I agree. I lived through it, graduated high school in 1980. However, I had so much going on it was not even at the top of my list. It was more embedded in our lifestyles (the austerity). Put me back in that element and it is super familiar. So, I just claw back my spending.
When you take the same numbers and look at the decade over decade percentage changes it's interesting. Massive jumps from 1913 to 1920 (102%); from 1970 to 1980 (112%) and from 2020 to 2024 (19%) 19% from 2020 to 2024 is the same as the entire period of 2010 to 2020 (also 19%). While we are not sure these numbers are precisely accurate we know enough about these time periods to know that they were all very inflationary. Also notable are the deflationary decades of 1920 to 1930 and 1930 to 1940 (both -16%).
most don’t understand the power of equities time and even fewer understand if they miss those biggest up days , they can never make that back because compounding is gone forever on what was given up
It's because of you that I allocated 50 percent to stock funds and 50 percent in Cd's.The last year has been good.
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