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BTW, the effect of earning 1 or 2% above inflation has nothing to do with learning from the past. That is simple, straight math. Many calculators will allow you to enter a fixed ROI and a fixed COL rate and calculate the effect over time. That has nothing to do with making predictions based on the past.
now you are understanding it.
if every failure in the past that resulted in the failure of the 4% rule had a 15 year average of under 2% real return associated with it then the events leading up to it don't matter. we now know if that is the condition we are seeing 15 years in to our retirement we will likely fail too without taking a pay cut..
it all boils down to simple math.
but to identify that number that will result in failure you need data like the trinity study to find those worst case scenerios so you can identify in numbers what made them fail.
you are looking at these studies from a predicting standpoint. they can't and don't predict.
they just equate to numbers that if you don't achieve x then y will fail with no adjustment.
the variables are market returns yearly /inflation/sequences . those three will always give you your real return forever. events and what those numbers were don't mean anything , only the ending result over 15 years.
if it is above 2% real return you should be fine for the next 15 , if closer to 1% it would be a good idea to take a pay cut.
that is all these calculators teach us and it holds mathamatically true over and over.
for a very good explanation read this , i think it will clear up any questions you have.
their plan isn't flawed , it is only no data is available to guide them when they ask others ..
Ummmmm, hmmmmm I meant convince you as you are the planned purposeful sort using a developed strategy etc, who is happy where they are. So why would someone try to tell you your plan is questionable and expect you to listen?
well take a look at shillers pe/10 for every single 30 year time frame to date . since the first 15 years are the all to critical time frame there has never been a time that the next 15 years in the markets have not produced lower than average returns when going into retirement pe/10 has been 20-25.
sure you could buck that but again you would be betting on the long shot.
insanity is defined on getting the same outcome time and time again but hoping next time will be different.
Does that mean sanity is getting the same outcome time and time again and hoping it remains the same?
Ummmmm, hmmmmm I meant convince you as you are the planned purposeful sort using a developed strategy etc, who is happy where they are. So why would someone try to tell you your plan is questionable and expect you to listen?
if there plan is working why are they asking others? i am confused here.
that still does not mean a thing . we can have below average returns and be just fine. in fact that was the entire basis of the trinity study and bill bengans work.
to find a level of income on day one that even if we were retiring on the eve of the 1929 crash or the day before the horrible markets and high inflation of the 70's that we would still do fine.
we just would do better if markets did better than average. but to tell you the truth even if markets did poorly i still may end with more than i started with.
now having said that ,those retiring today have two things to consider.
one is interest rates are very low and may be below average for the next 10 years and stocks have a high pe/10.
that may spell a wicked combo of low interest rates and below average returns.
i would certainly watch my real returns year after year for signs of falling bellow that 2% real return average.
that is about the extent all this data tells us.
years of research , numbers crunching and data study all boils down to telling us what to watch for so we know we can at least count on a level of income of 4% inflation adjusted income whether we draw it or not.
all the changes we make in portfolio diversification and spending hopefully would only make thinks better for us than that floor.
Last edited by mathjak107; 03-23-2014 at 08:25 AM..
that still does not mean a thing . we can have below average returns and be just fine. in fact that was the entire basis of the trinity study and bill bengans work.
to find a level of income on day one that even if we were retiring on the eve of the 1929 crash or the day before the horrible markets and high inflation of the 70's that we would still do fine.
we just would do better if markets did better than average. but to tell you the truth even if markets did poorly i still may end with more than i started with.
Let me try this again. You MathJak are happy with your beliefs/practices and results yes or no? If yes will you not continue to read and adapt your thinking based on what you consider learned thinking ( writing and talking heads)? Will you not continue to use calculators and other number crunching tools? If yes that is my point. You are happy with yourself and will disagree even with people trying to say that.
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