Bogleheads.org

I recommend Rick Miller the founder of Sensible Financial Planning in Waltham, MA. Rick is one of the leading financial planners in the country and works on a no-commission basis. Sensible Financial is affiliated with the National Association of Personal Financial Advisors (NAPFA), the organization ...

Hi Jim,

I couldn't get your advice to work in Firefox or Chrome, but it did work in Opera, that underused browser.

Thanks for the tip.

Best,
Bob

PS - On a related note a tip of the hat to Levett for additional info.

I can't get the link to the WSJ article to work. All I get by following the link to the WSJ is the headline and a notice that the article is, Available to WSJ.com Subscribers.

BobK

From Kimberly Blanton, writing for the Squared Away Blog at the Center for Retirement Research @ Boston College earlier this week. You can’t always get what you want. But if you try sometimes you just might find you get what you need. - Rolling Stones There is nothing better that most people can do ...

A working paper on SS claiming strategy from 2007, Rethinking Social Security Claiming in a 401(k) World , by Mahaney and Carlson writing in the Pension Research Council at the Wharton School, University of Pennsylvania. Abstract ...previous research on Social Security take-up alternatives has faile...

Our next meeting is scheduled for 1-3 PM, Sunday, May 19, in the back of the restaurant of the Washington Plaza Hotel, 10 Thomas Circle NW, Washington, DC. The hotel entrance is on Vermont Avenue on the northeast side of Thomas Circle. Thomas Circle is the intersection of Massachusetts Avenue, 14th ...

When you delay your SS benefit what you are essentially getting is an additional inflation-indexed life annuity. For example, you might go from getting about $20,000/year to about $21,600/ by delaying one year. This is tantamount to purchasing a $1,600 real life annuity for $20,000, but with your li...

When I search for the user name EDN nothing comes up. What am I missing?

BobK

Rolyatroba writes. Just because SS administration uses those rates, does not imply whatsoever that the person on the other side of the table should use them. Those rates are meaningless to a retiree that is invested in a portfolio with a different expected rate of return. ourbrooks responds. You can...

Mr. Prune or other, This is a little off topic but I'm interested in something that your diagram seems to suggest. I am single, although just a little distant from making the SS decision. I mostly will not need the SS dollars between FRA at 66 and 70 so I, at least, have the choice to wait. The dia...

The OP wrote. When I ran Firecalc, there was advantage in the modeling for taking the benefit earlier. If the OP ran Firecalc correctly and the Firecalc output showed advantage in taking SS early given these extremely low current real interest rates, then Firecalc should not be used for retirement ...

LH writes. 7 percent real 10 percent nominal Those are the figures. They are just historical. Some say 6 instead of 7. Actually the historical data say 5% real. That is the global real return since 1900. Since most people advocate a diversified portfolio of global stocks, that would appear to be the...

The OP wrote. When I ran Firecalc, there was advantage in the modeling for taking the benefit earlier. If the OP ran Firecalc correctly and the Firecalc output showed advantage in taking SS early given these extremely low current real interest rates, then Firecalc should not be used for retirement p...

The discount rate you should use is the inflation-adjusted rate of return you expect on your retirement portfolio over the horizon of your retirement. No. The discount rate to use is the real rate of return on safe assets . This is your safe retirement income. You should not be comparing it with a ...

Social Security benefits are actuarially neutral, if LT real interest rates are average. Social Security implicitly assumes the average real 10 year interest rate is about 2.8%. If LT real interest rates are below average, it is actuarially advantageous to delay SS benefits. If LT real interest rate...

For those interested, Vanguard VTSMX returned 4.9% annualized (nominal) for 15 years through 2012 - the info. readily available that I care to look for. Invested: $1,000 Compound Annual Growth Rate (CAGR): 4.9% $2,049 YEAR VTSMX COMPOUND 1998 23.26% 1,233 1999 23.81% 1,526 2000 -10.57% 1,365 2001 -...

To put things in historical perspective here are the real annual mean geometric equity returns from 1900-2012. Annual real return US 6.3% World 5.0% World exUS 4.4% Source: Credit Suisse Global Investment Returns Yearbook 2013 Link - http://www.investmenteurope.net/digital_assets/6305/2013_yearbook_...

A question re using the cost of an annuity as a benchmark for how much you need in safe assets. (Or is that in any assets that will eventually be converted to safe assets?) An SPIA pays a bit more than other safe assets because of mortality credits (or because the insurance company keeps what's lef...

He said that diversification used to work before people knew about diversification, but it doesn't work now because people know. He is certainly right when it comes to brief declines like we had last week. Is there any rationale to this conclusion, and if so, what is it? Thanks. I didn't write that...

The value of 5.4 percent for December 2012 is about as high as it’s ever been. ... We find that the equity risk premium is high mainly due to exceptionally low Treasury yields at all foreseeable horizons. Given that the risk free rate is today barely above zero and expected to remain exceptionally ...

You (Verde) wrote. I think those who rightly warn that stock market risk is real, and that every 50% decline will not automatically be followed by a full recovery within 5 years, fail to appreciate that where an economy contracts and resuscitation efforts fail, it is very likely that its sovereign ...

I follow the elegant logic underpinning your argument, I just don’t think it applies to the real world. My unit of account is real consumption in South African Rand, and my decision horizon is 40-50 years. The longest dated inflation linked South African government bonds are supposedly the safest i...

Real rates have been consistently negative for two years and show no sign of rising. This is just silly though -- it's the Fed. Rates will rise as soon as they take their foot off the gas, it could happen at any time. They've outlines their goals, but they can do it whenever. You won't see "si...

I read Dr Pfau's white paper on the danger of the 4% withdrawal rate when real interest rates are this low. As I recall, he suggested in today's environment that the withdrawal rate should be about 2.8%. However, he included investment expenses and management expenses to derive this number of 2.8%....

I'm composing my thesis on investment management (though my background is not in finance) and am failing to accurately calculate the standard deviation for a given data set: S&P 500 annual returns, 2003-2012. Using a software program to create portfolios, the standard deviation of the S&P 5...

Do you believe bonds are safer the longer they are held? I believe that what is determined by the length of the holding period is the safest asset. In the theory of portfolio selection the risk-free (safest) asset is defined as the security that offers a perfectly predictable rate of return in term...

Can a beginner comment? To me the risk is constant and unknown at any specific time. How you reduce the risk is by extending the time you have stocks (invest early) and reducing your exposure to stocks the closer you get to needing the money. The market goes up and the market goes down. We can't kn...

Hi Brad, I'm not sure I understand your question, but if your question is do really long dated options exist, I believe the answer is sort of. If you are a multi-millionaire (think Mitt Romney territory here), or a large enterprise, I believe an investment firm could tailor very long dated options f...

Peter Foley writes. Long term, 30 + years, the return on stocks has been higher than the return on bonds and inflation. This is not necessarily true for 5 year and 10 year periods historically. It is hardly a secret that that it is not true that stocks always outperform bonds for periods of 30 years...

I see tons of posts saying that "I have a long time horizon so I can take a lot of risk" on this forum. So there appears to be a disagreement, or at the very least a misunderstanding of the theory of risk and return. Seems to me that people who say this are talking about having a long tim...

Risk has two dimensions. There is both the probability of a bad outcome and the magnitude of a bad outcome. The longer the holding period for stocks the higher the probability that they will achieve close to their high expected return, but what also increases with time is the small chance of a real...

Risk has two dimensions. There is both the probability of a bad outcome and the magnitude of a bad outcome. The longer the holding period for stocks the higher the probability that they will achieve close to their high expected return, but what also increases with time is the small chance of a reall...

Jason Zweig writing on financial literacy education in the WSJ. In a series of brilliant polemics meticulously backed up by empirical evidence, Loyola Law School professor Lauren Willis has argued that fin lit is a colossal waste of time and money for everyone except the companies that sponsor it. ....

This brings up an interesting point: we see safe withdrawal rates based on long periods and that they would have worked in X% of those periods. So we say 'this is 90% likely to work'. But, as you hint, the 90% really means 'this is likely to work in 90% of possible scenarios'. But we aren't blind, ...

"You state the problem very clearly: two goals require two instruments. You raise an interesting philosophical question in your second paragraph: that is, how should one think about arriving at a value for the "safe" asset proportion in the aspirational portfolio? Without having yet ...

This brings up an interesting point: we see safe withdrawal rates based on long periods and that they would have worked in X% of those periods. So we say 'this is 90% likely to work'. But, as you hint, the 90% really means 'this is likely to work in 90% of possible scenarios'. But we aren't blind, ...

I need some help with an annuity. I have a financial planner wanting me to invest in one. He says it will pay 6% guaranteed. But how can these companies payout so much? I assume it's a return of principal? I don’t know of an investment paying 6% guaranteed. A nominal life annuity (SPIA) could easil...

I hate to be the bearer of sad tidings, but at today's super low real interest rates the 4% rule will have a very high failure rate. The studies of SWR's that have looked at past historical periods don't include extended periods where real LT interest rates are negative, as they are today. :( :( Bo...

If you were to extend the graph into 2012 & 2013 it would show that nominal 10 year rates are consistently between 1.5% and 2% since the end of 2011. That is far below any period on the graph. Every day this year is below the lowest single day on the graph going back to the 1800s. Real rates hav...

Way back in the distant past, I recall taking a Math of Finance college course which did give some basic information of compounding. I don't recall the teacher or book trying to tie it directly to personal finance. That avoided dealing with instructors who either have an agenda or don't know much t...

I think the most serious risk with an annuity is not being able to estimate one's needs. It is certainly not reasonable to annuitize everything. The very concept of a "floor" together with "at risk" discretionary income strikes me as a very odd way to conceive of one's income ne...

Let us assume that for a certain retiree at a certain point in time a 4% WR is appropriate when life expectancy is T at retirement and real interest rates are R. It follows that if life expectancy increases and R stays the same then the 4% rate is too high. It also follows that if life expectancy re...

You can check out the price of real life annuities online at the Income Solutions platform at Vanguard. Link to Income Solutions platform at Vanguard. https://investor.vanguard.com/what-we-offer/annuities/get-guaranteed-income Sad but true - if you want safe income in retirement you have to invest i...

I hate to be the bearer of sad tidings, but at today's super low real interest rates the 4% rule will have a very high failure rate. The studies of SWR's that have looked at past historical periods don't include extended periods where real LT interest rates are negative, as they are today. :( :( Bo...

Just to be clear, I am not saying you have to buy a real life annuity at your retirement age. But I am saying that is the best way to price how much in safe assets you need at retirement to fund a given safe floor of retirement income, is to use the price of a real life annuity at your retirement ag...

Jason Zweig writing on financial literacy education in the WSJ.

[Content in excess of copyright fair use removed by admin LadyGeek]

Link to article - http://blogs.wsj.com/totalreturn/2013/05/01/financial-literacy-month-is-so-over/

BobK

Pick the floor level of real income you want your portfolio to provide in retirement. See how much a real life annuity (real SPIA) for that much annual real income costs today at your future retirement age for your gender. That is your estimate of how much safe assets you need at retirement. Calcula...

I hate to be the bearer of sad tidings, but at today's super low real interest rates the 4% rule will have a very high failure rate. The studies of SWR's that have looked at past historical periods don't include extended periods where real LT interest rates are negative, as they are today. :( :( BobK

You can also hold bonds to match their maturities to future liabilities you are expecting to incur. In that case it does matter what type of bonds you hold. If the liability is nominal, you want to hold nominal bonds. If the liability is real, you want to hold real bonds. Individual investors are ty...

Taleb portfolio 1. Based on the interview, [Taleb] is very risk adverse and said he doesn't really understand the stock market. I don't know enough about him to know if he is simply being modest. He said that diversification used to work before people knew about diversification, but it doesn't work...