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nope , 3% needs no equities ..4% needs at least 35% unless you are using something like the permanent portfolio or golden butterfly which has equally powerful asset classes that respond very strongly when it’s their day in the sun .
3% is a 25% pay cut from 4% which is a lot to most folks in income difference.
in practice we run about 3.5% .but any extra money we may have carrying over we will use for a more expensive car or something very different in trips
nope , 3% needs no equities ..4% needs at least 35% unless you are using something like the permanent portfolio or golden butterfly which has equally powerful asset classes that respond very strongly when it’s their day in the sun .
3% is a 25% pay cut from 4% which is a lot to most folks in income difference.
in practice we run about 3.5% .but any extra money we may have carrying over we will use for a more expensive car or something very different in trips
I think it was that table that you post frequently that showed that at 3% you needed 25% to have 100% assurance.
Yeah, we are all different. I became hobbled/disabled and so a tiny amount of travel goes a long way (not being able to walk much puts a damper on travel plans). When I was married travel was a priority. I have always lived somewhere beautiful and almost always had animals (who have their own doctors and dentists and eat very well). So, I spend money to live nicer than I should. However, I am not afraid of mechanics (my 15 year old Acura with 123,000 miles on it has $0 years and $3,000 years). I might have to replace it while I can still by an internal combustion engine and maybe hybrid by 2030 (maybe a Toyota or Lexus SUV built in Japan). The house needs a roof and new a/c before I retire; I imagine downsizing at some point, but, I cannot consider that before I retire (maybe downsize around 75 and maybe never until I am shoebox sized).
I could see:
67 - 3%
68 - 3%
69 - 3%
70 - 75 - 0% +/- depending on taxes and Medicare
76 +3% +/- (the 0% years I saved 15% could allow 4% (old age raise). Likely I croak at 83 and some combination of nephew, friend, cat charity benefit.
I think it was that table that you post frequently that showed that at 3% you needed 25% to have 100% assurance.
Yeah, we are all different. I became hobbled/disabled and so a tiny amount of travel goes a long way (not being able to walk much puts a damper on travel plans). When I was married travel was a priority. I have always lived somewhere beautiful and almost always had animals (who have their own doctors and dentists and eat very well). So, I spend money to live nicer than I should. However, I am not afraid of mechanics (my 15 year old Acura with 123,000 miles on it has $0 years and $3,000 years). I might have to replace it while I can still by an internal combustion engine and maybe hybrid by 2030 (maybe a Toyota or Lexus SUV built in Japan). The house needs a roof and new a/c before I retire; I imagine downsizing at some point, but, I cannot consider that before I retire (maybe downsize around 75 and maybe never until I am shoebox sized).
I could see:
67 - 3%
68 - 3%
69 - 3%
70 - 75 - 0% +/- depending on taxes and Medicare
76 +3% +/- (the 0% years I saved 15% could allow 4% (old age raise). Likely I croak at 83 and some combination of nephew, friend, cat charity benefit.
90% is a very acceptable success rate, one need not be 100% .
when coupled with the fact most of us won’t live in retirement for 30 years , 90% works out to about 99% and 80% is like 90% .
personally i would never go less then 25% even at 3% but one could , unless they were the ones to live 30 years in retirement since it has to happen to someone.
remember these success rates are also based on outcomes so bad we have not seen anything like them since 1966
Last edited by mathjak107; 09-13-2023 at 10:30 AM..
90% is a very acceptable success rate, one need not be 100% .
when coupled with the fact most of us won’t live in retirement for 30 years , 90% works out to about 99% and 80% is like 90% .
personally i would never go less then 25% even at 3% but one could , unless they were the ones to live 30 years in retirement since it has to happen to someone.
remember these success rates are also based on outcomes so bad we have not seen anything like them since 1966
I am not a 30-year in retirement person (at 25 I was pretty sure we'd still be married and retired at 55 (and have a 30 year retirement possibly)). But, that did not happen. I pray for 10 to no more than 20 (gulp) years in retirement.
I thought your chart had various years and percentages on it and I do not remember it being 30-year based. I have it downloaded on a different computer. I get your point about less time shrinking the risk.
Anything can happen with the markets. What the Fed is trying to do may or may not play out the way they plan it.
so here is a 500k portfolio , 20k a year draw which is 4% , 40% equities for a 30 year retirement
FIRECalc Results
Your spending in every year after the first year will be adjusted for inflation, so the spending power is preserved.
FIRECalc looked at the 123 possible 30 year periods in the available data, starting with a portfolio of $500,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 123 cycles. The lowest and highest portfolio balance at the end of your retirement was $-93,868 to $1,875,561, with an average at the end of $455,789. (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 93.5%.
—————————————-
if we go to a 22 year retirement because we retired at 70 instead of 62
we can increase spending to 24k. that is .048% or just under a 5% draw
FIRECalc Results
Your spending in every year after the first year will be adjusted for inflation, so the spending power is preserved.
FIRECalc looked at the 131 possible 22 year periods in the available data, starting with a portfolio of $500,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 131 cycles. The lowest and highest portfolio balance at the end of your retirement was $-66,769 to $1,327,901, with an average at the end of $355,204. (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 22 years. FIRECalc found that 11 cycles failed, for a success rate of 91.6%.
equities were increased , long term treasury’s , gold and cash instruments were reduced.
actually i ran 8 years less in retirement
A few of these finance whizzes are saying the charts look like the S&P may rally into the end of the year. But, I know you do not operate with those premises. But, maybe that newsletter you get also makes those calls...
I was doing well. I told you the story (of my bad decisions). If I had stayed on the track I was on I hate to think how much better off I would have been (financially). But, I dealt with PTSD and Depression and never truly recovered from the disabling accident. So, they told me my knee was 80 and that was 20 years ago. So, anyways, I think I lacked the perspective and also lost the time I had been committing to studying investing, etc. With all that said I will be able to have the retirement I can handle physically regardless of my portfolio balances.
A few of these finance whizzes are saying the charts look like the S&P may rally into the end of the year. But, I know you do not operate with those premises. But, maybe that newsletter you get also makes those calls...
I was doing well. I told you the story (of my bad decisions). If I had stayed on the track I was on I hate to think how much better off I would have been (financially). But, I dealt with PTSD and Depression and never truly recovered from the disabling accident. So, they told me my knee was 80 and that was 20 years ago. So, anyways, I think I lacked the perspective and also lost the time I had been committing to studying investing, etc. With all that said I will be able to have the retirement I can handle physically regardless of my portfolio balances.
the newsletter does not make calls …they attempt to just find a suitable position and ride it thru whatever.
each portfolio has a range of equities it stays within and only a fund or two may vary all year ..the percentage stays about the same though but different funds own different sector weightings.
ytd the s&p is up about 18% if an etf
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