Do you seriously think you can afford to retire? (sell, cheap, cost)

[slackjaw]

Originally Posted by mathjak107

The discusion was about somebody avoiding all risk and their odds of success.

The extremely conservative portfolio has risk in the form of not enough growth. If it fails more often than one with more equities then is actually has more risk from the standpoint of a retiree.

[mathjak107]

i agree. those who hid in cash instruments for safety this decade are struggling to get through and have to make some serious spending adjustments.
negative real returns on cash is nothing new and is a big risk.

but the flip side is also the fact that never confuse mathematically a given with statisticaly possible.

one plus one equals two is mathematically a given. if you bet the ranch on it you will always be right.

on the other hand statistically possible is something else. nyc where i live being hit with a sandy was 98% statistically not going to happen. well tell that to the tens of thousands here that lost their homes and possesions or to the families who had people lose their lives .

if you read the article by michael kitces he determined you need a 1-1/2% average real return minimum over the first 15 years of a 30 yer retirement to have a good chance of having the 30 year total time frame turn out successful with a 4% swr. that would match the worst case scenerios we have seen.

it was determined its the first 15 years that pretty much determine the success of the entire retirement time frame.

well 100% equities has not returned that now for 13 out of a potential 15 years for those theoretically who might have done that in 2000 because statistically 100% equities had the highest chance of success .

that shows you how complex and wrong these statistics can turn out if your the exception or new worst case scenerios appear. . there is always more beneath the surface then numbers give you on the surface.

nobody wants to be the exception to a statistic but the reality is someone has to be and the question is will it be you?

i still cant believe the damage sandy did to nyc and im here 60 years and it turned out i had to be the exception to the statistic..

the bigger question now is this the new norm and will future worst case scenerios be more common as weather patterns shift.

many folks dont care what was, they will always fear they will be the exception and so they will always take the more conservative route.

only hindsite will say which will be the riskier bet from 2000 on ..

my own feeling is i rather have the odds of at least passing the sniff test of what was already our worst case scenerios as my starting point out of the gate so hiding under a rock isnt an option for me..

ill balance what i need as a withdrawal rate with the risk needed to statistically get it but in my own plan ill have enough slack for the what if im the exception happening. i will only need a 2% withdrawal rate so if need be i can always pick up the risk a bit.


if you read the article by michael the flaw i see is he is figuring zero real return going forward on intermediate term bonds since inflation is 2 to 2.5% and the bonds pay 2 to 2-1/2% and thats how he arrives at a 1-1/2% real return needed on equities to sustain the 4% swr..

real return is the return over and above inflation.

but if inflation kicks up those 15 year bonds you hold in his example are actually going to be at negative real return rates and not just zero so the equities portion as i see it will need to work harder then 1-1/2% real return after inflation putting more demand on equities to perform.

maybe im missing something here as michael is a heck of a sharp guy.

what do you think?

What Returns Are Safe Withdrawal Rates REALLY Based Upon? - kitces.com | Nerd's Eye View

[hartford_renter]

Originally Posted by mathjak107

The discusion was about somebody avoiding all risk and their odds of success.

The bill bernstein avoid all risk portfolo in his new book has a 2% bullet proof withdrawal rate and 3% already becoming chancey.it uses zero equities.

Using at least 40 or 50% equities is a different conversation with different results from bills model which is what was being discussed

I don't think you really understand risk. You just make up what if scenarios to try to falsely prove invalid points.

For example you said insurers had partially paid insurance obligations this is false.

Your withdrawal math is also completely bogus. If someone points out an error you just make up another bogus what if like you need to increase your withdrawal rate 2%. Why not increase it 200%?

Your advice is more like chicken little crying the sky is falling

[jtur88]

Originally Posted by freemkt

I'm going to scurry over to Google.

Don't worry. Last year, that poster would have said he would live a Justin Bieber lifestyle, and before that, Ricky Martin. You're not missing anything.

[mathjak107]

Originally Posted by hartford_renter

I don't think you really understand risk. You just make up what if scenarios to try to falsely prove invalid points.

For example you said insurers had partially paid insurance obligations this is false.

Your withdrawal math is also completely bogus. If someone points out an error you just make up another bogus what if like you need to increase your withdrawal rate 2%. Why not increase it 200%?

Your advice is more like chicken little crying the sky is falling

I Have no clue what your even babbling about.

[tjarado]

If you save up enough money during your income years, when you can afford to take more risk because you can 1) outlast market declines and/or 2) bump up your savings by reducing consumption or increasing income, then you won't have to worry about "taking enough risk" to guard against loss of purchasing power in the drawdown stage. Just securing your principal would be sufficient.
Unfortunately, most people are not in this position, nor will they likely ever be.

[SOON2BNSURPRISE]

Originally Posted by freemkt

I learned something important from Prop 13 and from a property tax cut in Michigan - when you rent, property tax cuts NEVER trickle down to the renter. (Renters pay a middleman, who pockets the savings. Similarly, all that refinancing in the past five years sure saved landlords billions of dollars, but rents didn't fall.) So I proposed to my landlord that I would pay (prorated monthly) the actual property taxes in exchange for an equivalent reduction in rent. The idea was to ensure that I received the full benefit of any future property tax reductions. He was happy to accept my proposal, because his concern is his bottom line, and thus property tax increases became no longer of concern to him.

My degree is in liberal arts, which was decidedly NOT in high demand at the time, and the supply was much greater than the demand.

I considered grad school and decided that would only be delaying entry into the real world, and didn't have the money to start a business. Law school was even more expensive (and thus out of reach) than a grad program.

But it should not have been necessary to fund 2 houses when I wanted and needed only one. There's something wrong when government prevents the private sector from providing affordable ownership options to burger flippers. Can you imagine the outrage if government prevented the private sector from providing affordable ownership options to the middle class?

Why should property tax cuts trickle down to the renter? The renter does not own the property for one thing. Secondly these transactions are two very differant items.

Rents are based on the market rate of what renters are willing to pay. In the past few years the rental market has fluxuated because of ever changing market conditions. Lets take those that lose a home. Many of these people had to rent a home or apartment. For some areas what you had was more demand than supply allowing owners to increase rents. Many former renters have found that with the increases they could purchase homes for less than the rental market was asking. If you have enough renters purchasing homes that would place downward pressure on the amount that owners can charge for rent.

Changing prices may not always change the amount a property owner pays in property taxes, in California at least. In California the owners may have maintained the tax rate that they were paying all along from market changes. Lets say that you have a long time owner, the assessed amount could be for a property that the owner purchased for far less than current market conditions. With California their would be nothing to change. Not sure on other states. Something that an owner may do is decide to reduce the rent in a declining market to keep a unit rented. It is a business and the owner of the asset has every right to do this. On good years the income from the rental would be a benefit.

It is so nice of you to make a proposal to your landlord, but it is not required for the landlord to take any deals.

Another liberal arts degree. Yippee. Yes I know other burger flippers that have similar degrees.

You considered grad school but changed your mind because it kept you from entering the real world. So, do you think that burger flipping is a job that someone in the real world accepts?

No one is keeping anyone from buying anything. Most realize that their income keeps them from buying things and they take the steps needed to make more money.

[slackjaw]

Originally Posted by SOON2BNSURPRISE

No one is keeping anyone from buying anything.

Exactly. I more finely tuned sense of victimization is rarely seen.

I can't believe the government is preventing public school teachers from owning beach front homes in Malibu.

[piyf]

I have a 401k that I just started 4 yrs ago. But I don't plan on retiring. Not because I don't want to or because I can't afford to later but I've seen plenty of people that do who die shortly after. I don't mind working at all and enjoy it most of the time.

[mathjak107]

Originally Posted by SOON2BNSURPRISE

Why should property tax cuts trickle down to the renter? The renter does not own the property for one thing. Secondly these transactions are two very differant items.

Rents are based on the market rate of what renters are willing to pay. In the past few years the rental market has fluxuated because of ever changing market conditions. Lets take those that lose a home. Many of these people had to rent a home or apartment. For some areas what you had was more demand than supply allowing owners to increase rents. Many former renters have found that with the increases they could purchase homes for less than the rental market was asking. If you have enough renters purchasing homes that would place downward pressure on the amount that owners can charge for rent.

Changing prices may not always change the amount a property owner pays in property taxes, in California at least. In California the owners may have maintained the tax rate that they were paying all along from market changes. Lets say that you have a long time owner, the assessed amount could be for a property that the owner purchased for far less than current market conditions. With California their would be nothing to change. Not sure on other states. Something that an owner may do is decide to reduce the rent in a declining market to keep a unit rented. It is a business and the owner of the asset has every right to do this. On good years the income from the rental would be a benefit.

It is so nice of you to make a proposal to your landlord, but it is not required for the landlord to take any deals.

Another liberal arts degree. Yippee. Yes I know other burger flippers that have similar degrees.

You considered grad school but changed your mind because it kept you from entering the real world. So, do you think that burger flipping is a job that someone in the real world accepts?

No one is keeping anyone from buying anything. Most realize that their income keeps them from buying things and they take the steps needed to make more money.

its a given that put a group of people in that very same burger flipping position and some will make sure they find a way out and go on to be successful and others will remain burger flippers forever.

good jobs dont depend as much on technical skills or degrees as they do just finding the jobs that do what people dont want to do.

in the land of the blind the one eyed man is king.

if we all had some disease that prevented us from moving our arms and a lucky few didnt have that disease, they can make big money just pouring coffee for the rest of us..

no one is going to get ahead doing things most of us can do for ourselves . thats the key to job demand. find the areas folks cant or wont do for themselves.

when i started out as a young struggling drummer i realized i would eventually need a real job as my drumming career went from fabulous to struggling to fabulous and i had no idea how long my professional career as a drummer would last at the rate i was going.

i thought long and hard about what could i do that others shy away from.

short of cleaning cesspools or delivering chinese food on a bicycle in the winter i realized most home owners and contractors will just not fool around with refrigeration or air conditioning issues.

they will re-wire an entire house but the black box that made the refrigerator work was off limits and looked at like some black art.

so thats the direction i went off in. took loans,went to apex technical school and lied about my experience to get into my first job.

the rest is history as that launched me into a career now spanning 40 years as an industrial motor control specialist.

99% of my skills came from working for companies in other capacities but taking advantage of factory training schools and training seminars those companies i worked for paid for .

you have to find the food, the food isnt coming to you.