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I agree with the statements but not the 3% spending. Even the 3.3% in the article or the 4% rule is lower than needed.
Bengen, who came up with the 4% rule, says based on the current environment he thinks "a new retiree should be safe if they start with a withdrawal rate of…no more than 5%. That’s what I use myself. 4.5% is the ‘worst-case scenario.'"
Also am I missing something - with a constant rate of return of 5% and a constant withdrawal of 2, 3 or 4%, money should last forever because amount going up faster than going out - is it assuming a matching 5% inflation rate?
The rates of return you are using are very low - According to JP Morgan asset management, the highest return in any 20-year period since 1950 for a 50/50 portfolio was 14% and the lowest return in any 20-year period was 5%. The average 20-year rolling return was 8.9% for a 50/50 portfolio.
I said if someone wants to be conservative... that calculation is pure rate of return and withdrawal rate and number of years. it is not a complicated calculation.
If the stock market drops 50% next year how much are you going to withdraw?
My theory is if I am 60 and I have 1,000,000 in a 1% account and I live to 80 I can spend $50,000 a year.
Last edited by Wile E. Coyote; 11-15-2021 at 03:06 PM..
I said if someone wants to be conservative... that calculation is pure rate of return and withdrawal rate and number of years. it is not a complicated calculation.
If the stock market drops 50% next year how much are you going to withdraw?
My theory is if I am 60 and I have 1,000,000 in a 1% account and I live to 80 I can spend $50,000 a year.
and if inflation goes up many times like it did to retirees in 1965 and 1966 over the years and the bills are now going to run 150,000 or more a year? .even 3% inflation can double bills. over 20 years …6 percent can do it way faster
you can see that may work out not to plan and. you will be broke way before .
you are trying to dream up scenarios defending almost no return but miss all the facts that have to be included like inflation and negative real returns
Last edited by mathjak107; 11-15-2021 at 03:32 PM..
You will know when your retirement plan won't work, when it doesn't work any longer.
And not a day before.
not true .
the math tells us that if five years in you are below a 2% real retirn a red flag should go up , retirements are effected heavily by the first five years
if it continues,by ten years in pay cuts are needed …..so you do know you are in trouble before
and if inflation goes up many times like it did to retirees in 1965 and 1966 over the years and the bills are now going to run 150,000 or more a year? .even 3% inflation can double bills. over 20 years …6 percent can do it way faster
you can see that may work out not to plan and. you will be broke way before .
you are trying to dream up scenarios but miss all the facts that have to be included
That's why I am retiring at 67, drawing SS at 70 and dying at 80.
You can control your bills (if you're not married to MathJak's wife). I expect to downsize at some point in retirement.
the problem is your story keeps changing as you paint yourself in to a corner with poor assumptions ..
all your scenarios as you posted them have been badly flawed with missing pieces or unrealistic scenarios like 5% a year every year with zero inflation or your 50k a year with zero inflation on expenses and a 1% return …
i can be like my wife , i just dont buy clothes and shoes , but cars and drums and electronics to go with them can take a lot of dough
the problem is your story keeps changing as you paint yourself in to a corner with poor assumptions ..
all your scenarios as you posted them have been badly flawed with missing pieces or unrealistic scenarios like 5% a year every year with zero inflation or your 50k a year with zero inflation on expenses and a 1% return …
i can be like my wife , i just dont buy clothes and shoes , but cars and drums and electronics to go with them can take a lot of dough
Yeah, I should not have commented because I am too conservative to talk about the 4% rule. I was just trying to point out that if you know how long you are going to live and how much money you have then you have your answer with simple math (what that money buys you is a different story). Most retirees should have their housing and major spending behind them (I guess unless they have money to burn).
Yeah, I should not have commented because I am too conservative to talk about the 4% rule. I was just trying to point out that if you know how long you are going to live and how much money you have then you have your answer with simple math (what that money buys you is a different story). Most retirees should have their housing and major spending behind them (I guess unless they have money to burn).
except simple math doesn’t work when you have inflation destroying your purchasing power , and gains and losses coming in different sequences.
simple answers to complex questions are going to be wrong answers
On which page of the study do you find math to which you object?
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