"Retiring in a Low-Return Environment"

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Topic Author
Happy2BeFree

"Retiring in a Low-Return Environment"

Post by Happy2BeFree »

This article (by David Blanchett, Michael Finke, and Wade Pfau) was sobering, especially the SWR charts on page 3. Info on lower vs. higher equity allocations and SWR was surprising.

Apologies if this has already been posted. I found it on Mike Piper's site and hadn't yet seen it here.

http://www.advisorperspectives.com/news ... onment.php
RadAudit
Posts: 4387
Joined: Mon May 26, 2008 10:20 am
Location: Second star on the right and straight on 'til morning

Re: "Retiring in a Low-Return Environment"

Post by RadAudit »

Thanks for the post.

I remember hearing a couple of years ago, just as I settled in to retirement, that the SWR of 4% for a long retirement was toast :oops: (Thanks)

I just hadn't seen the article and the data.
FI is the best revenge. LBYM. Invest the rest. Stay the course. Die anyway. - PS: The cavalry isn't coming, kids. You are on your own.
User avatar
Riprap
Posts: 798
Joined: Thu Jan 29, 2009 1:08 pm

Re: "Retiring in a Low-Return Environment"

Post by Riprap »

Well, one bright spot might be the assumption of using a 50 basis point management fee. As low cost Bogleheads whose expenses are likely 1/3 of that, I wonder how the numbers would change?
randomguy
Posts: 11295
Joined: Wed Sep 17, 2014 9:00 am

Re: "Retiring in a Low-Return Environment"

Post by randomguy »

Riprap wrote:Well, one bright spot might be the assumption of using a 50 basis point management fee. As low cost Bogleheads whose expenses are likely 1/3 of that, I wonder how the numbers would change?
Other criticism
a) Long term PE are 15 but the accounting in the early 2000 inflate the current numbers by 25% or so. A PE10 20 would make things look a lot better. You can also debate if their has been a general trend of PE10 inflation over the past 30 years. Then number of years where the PE10 has been above 20 from 1900-1993: 14 (if I counted right). From 1993-2014: 23. Are we in the middle of the biggest bubble ever (possible) or have things changed (also possible). The two mistakes you can make are a) this time is just like last time and b) this time is different.

b) I don't see any mention of the inflation assumptions. Or current inflation rate is 1.5% or so. That is about half the historical average. Do you use the historical numbers (assume reversion to mean) or do you assume that the new fed policy going forward is going to be low inflation.

You can put A+B together and ask what have been stock market returns when the PE10 has been higher than normal AND bond and inflation returns have been low but you rapidly run into the problem of having no data sets. Something like 1956 (18 PE10, 2.68%, treasury at 2.9, inflation 1.5) but that isn't exactly a close match. Reality is we don't have remotely enough info and we end up making educated guesses.

c) and I know why they didn't mention it, but how much better do results look for people investing in those lower valued international funds;)

d) yeah the .50% fee lowers results a lot when you start talking about 2-3% nominal returns. Paying 1% of 10% is much better than paying .5% of 2%.

And if you believe these numbers shouldn't you go 100% TIPS? They have a slight real return which will get you over 3.3% for 30 years. To get 2.3% type SWR, you are pretty much saying your investments are going to have negative real returns over the time period (yes sequence of returns does factor in). If you believe that to be true, load up on tips now and convert back to stocks when valuation are what you consider sane. The obvious downside to going heavy in TIPS is that you are pretty much ensuring portfolio depletion at the end of your time period.
FinancialDave
Posts: 1819
Joined: Thu May 26, 2011 9:36 pm

Re: "Retiring in a Low-Return Environment"

Post by FinancialDave »

I am just not sure how using the current CAPE ratio (something that has been in existence for how many years?) is better than 100 years of market data!

fd
I love simulated data. It turns the impossible into the possible!
randomguy
Posts: 11295
Joined: Wed Sep 17, 2014 9:00 am

Re: "Retiring in a Low-Return Environment"

Post by randomguy »

FinancialDave wrote:I am just not sure how using the current CAPE ratio (something that has been in existence for how many years?) is better than 100 years of market data!

fd
The CAPE numbers use those 100 years of market data. Over the past 100 years or so stocks have varied between 6% and 13% (average is just under 10) over 30 year periods. Using CAPE is an attempt to figure out if you are more likely to get 6% or 13%. People have calculated CAPE10 back to the 1800s. The tough part is figuring out how comparable they are as the definition of earnings has changed over the years.
User avatar
Watty
Posts: 28860
Joined: Wed Oct 10, 2007 3:55 pm

Re: "Retiring in a Low-Return Environment"

Post by Watty »

Riprap wrote:Well, one bright spot might be the assumption of using a 50 basis point management fee. As low cost Bogleheads whose expenses are likely 1/3 of that, I wonder how the numbers would change?
The difference could directly be added or subtracted from your safe withdraw rate.

The extra money is being withdrawn, it just isn't going into your pocket.
scone
Posts: 1457
Joined: Wed Jul 11, 2012 4:46 pm

Re: "Retiring in a Low-Return Environment"

Post by scone »

The really surprising result is, a higher stock allocation doesn't seem to help.
"My bond allocation is the amount of money that I cannot afford to lose." -- Taylor Larimore
User avatar
midareff
Posts: 7711
Joined: Mon Nov 29, 2010 9:43 am
Location: Biscayne Bay, South Florida

Re: "Retiring in a Low-Return Environment"

Post by midareff »

scone wrote:The really surprising result is, a higher stock allocation doesn't seem to help.

Agreed..... Folks retiring in today's investing environment should think twice before they plug in 4%. Things we don't know in their analysis is tax situation/impact and such. Agreed with a prior poster about the .50 basis points for fees. No doubt, it is going to be tough going, it's just when it starts. Two or three years more bull would make a helpful difference but with the Shiller and bond yields where they are, I have to call that doubtful at best.
flyingaway
Posts: 3908
Joined: Fri Jan 17, 2014 9:19 am

Re: "Retiring in a Low-Return Environment"

Post by flyingaway »

If 4% is not good, try 3.5%; if that is still not good, try 3%. If you have been living frugally to have reached your retirement, you know how to deal with your money, independent of a fixed number. Just enjoy your life and live according to the money you (still) have.
RadAudit
Posts: 4387
Joined: Mon May 26, 2008 10:20 am
Location: Second star on the right and straight on 'til morning

Re: "Retiring in a Low-Return Environment"

Post by RadAudit »

flyingaway wrote: Just enjoy your life and live according to the money you (still) have.
Best advice, yet.
FI is the best revenge. LBYM. Invest the rest. Stay the course. Die anyway. - PS: The cavalry isn't coming, kids. You are on your own.
randomguy
Posts: 11295
Joined: Wed Sep 17, 2014 9:00 am

Re: "Retiring in a Low-Return Environment"

Post by randomguy »

scone wrote:The really surprising result is, a higher stock allocation doesn't seem to help.
I didn't see it in the paper but you need to figure out what the expected return of stocks is that they use For a CAPE10 of 25+ a lot people using the correlation predict a real return in the 2-3% range (call it 5% nominal). If you get returns like that, you will get killed by the volatility of holding stocks when you are withdrawing money. The average retiree is exposed for 5 or so years (if you don't get a 50% crash during that time your golden. Your portfolio will have grown big enough that a 50% crash pretty much just puts you back where you started). If you are only getting 4% nominal, you are exposed for like 12+ years. Odds of hitting a crash are much higher in the second case. When you look at the 50% success rate, you will see how the average stock market performance gives you more cash (4.6 versus 3.4 for the 80/20 versus 20/80).

It is important to note that these type of studies are very sensitive to the inputs. If you think your returns are going to be 1% higher (A lot of people also say 4%-5% real for stocks given these market conditions) or volatility slightly less, you get much different numbers. And of course fees matter a ton. In the working paper they use 1% for account fees. If you are making 3%/yr, 1% is a pretty huge chunk (or even .5) of your gains.
MoonOrb
Posts: 1506
Joined: Thu Jan 24, 2013 5:58 pm

Re: "Retiring in a Low-Return Environment"

Post by MoonOrb »

The tables suggest for most folks around here the SWR would be very close to 2%, which sounds kind of nutty to me.
randomguy
Posts: 11295
Joined: Wed Sep 17, 2014 9:00 am

Re: "Retiring in a Low-Return Environment"

Post by randomguy »

MoonOrb wrote:The tables suggest for most folks around here the SWR would be very close to 2%, which sounds kind of nutty to me.
I guess I am not even sure how that is possible for 30 year periods:). Imagine you go 40/60 stock bonds and shoved all the bonds in tips which return 0% real. At 2% you would have 30 years worth of tips. Get a juicy .5% real and you looking at 33 years. And you would still have 400k in stocks invested over 30 years. If that has 0% real after that time, you have really lost the retirement lottery:) The person who is aggressive and goes with a 3% withdrawal would run out of bonds in 20 years. Stocks losing 25% real and you would still make it to 30 years by selling them and converting to bonds.
bigred77
Posts: 2049
Joined: Sat Jun 11, 2011 4:53 pm

Re: "Retiring in a Low-Return Environment"

Post by bigred77 »

I've seen alot of talk about PE10 being our relative best tool to predict stock returns over the next 10 years but I don't think you can just extrapolate that into predicting equity returns 30 years into the future.

I've also seen studies point to PE10 having an R squared value of something around .4 when running regression analysis on the following 10 years of returns (I'm sorry, I'm too lazy to go try and find something to cite for this, please correct me if I'm wrong).

What is the R squared value of PE10 and 30 year returns? Is this a valid predictor or is 30 years long enough that we would expect reversion to the historical mean for equity reurns regardless of current valuations? Is this discussed in the working paper?
User avatar
Sheepdog
Posts: 5783
Joined: Tue Feb 27, 2007 2:05 pm
Location: Indiana, retired 1998 at age 65

Re: "Retiring in a Low-Return Environment"

Post by Sheepdog »

Sorry, I have to write this again. If you don't automatically increase your annual withdrawals by some inflation rate, but instead take your scheduled percentage withdrawals based on your portfolio balance at the end of each year, you will not run out. In fact your portfolio can grow. If your portfolio grows, you can take out more. If it fall in value in a year, then you must take out less for a short time period.
In the down years, I just don't buy more expensive discretionary items, but there can be plenty to live on and enjoy. This has worked in my 16 years retired, taking out an average of 4.5% each year....through the 2000-02 and 2008 down markets and good market years. Lower interest rates has not affected the plan. Overall balanced market growth is providing the growth in spending needs. I don't need to get caught up in these things. Who? Me worry? No.
Sorry for the repetition.
Unless you try to do something beyond what you have already mastered you will never grow. (Ralph Waldo Emerson)
kolea
Posts: 1322
Joined: Fri Jul 11, 2014 5:30 pm
Location: Maui and Columbia River Gorge

Re: "Retiring in a Low-Return Environment"

Post by kolea »

Well, for those of us that are already retired, all I can say is that it is what it is. I cannot change my assets at this point but I can tighten my belt if I have to. But what is so new about that? We have lots of discretion built in to our budget so I am not going to lose any sleep over articles like this one.
Kolea (pron. ko-lay-uh). Golden plover.
User avatar
Will do good
Posts: 1138
Joined: Fri Feb 24, 2012 7:23 pm

Re: "Retiring in a Low-Return Environment"

Post by Will do good »

Sheepdog wrote:Sorry, I have to write this again. If you don't automatically increase your annual withdrawals by some inflation rate, but instead take your scheduled percentage withdrawals based on your portfolio balance at the end of each year, you will not run out. In fact your portfolio can grow. If your portfolio grows, you can take out more. If it fall in value in a year, then you must take out less for a short time period.
In the down years, I just don't buy more expensive discretionary items, but there can be plenty to live on and enjoy. This has worked in my 16 years retired, taking out an average of 4.5% each year....through the 2000-02 and 2008 down markets and good market years. Lower interest rates has not affected the plan. Overall balanced market growth is providing the growth in spending needs. I don't need to get caught up in these things. Who? Me worry? No.
Sorry for the repetition.
Sheepdog, Thank you for your insight. Like some, I get caught up and worry about not having enough.
scone
Posts: 1457
Joined: Wed Jul 11, 2012 4:46 pm

Re: "Retiring in a Low-Return Environment"

Post by scone »

randomguy wrote:
scone wrote:The really surprising result is, a higher stock allocation doesn't seem to help.
I didn't see it in the paper but you need to figure out what the expected return of stocks is that they use For a CAPE10 of 25+ a lot people using the correlation predict a real return in the 2-3% range (call it 5% nominal). If you get returns like that, you will get killed by the volatility of holding stocks when you are withdrawing money. The average retiree is exposed for 5 or so years (if you don't get a 50% crash during that time your golden. Your portfolio will have grown big enough that a 50% crash pretty much just puts you back where you started). If you are only getting 4% nominal, you are exposed for like 12+ years. Odds of hitting a crash are much higher in the second case. When you look at the 50% success rate, you will see how the average stock market performance gives you more cash (4.6 versus 3.4 for the 80/20 versus 20/80).

It is important to note that these type of studies are very sensitive to the inputs. If you think your returns are going to be 1% higher (A lot of people also say 4%-5% real for stocks given these market conditions) or volatility slightly less, you get much different numbers. And of course fees matter a ton. In the working paper they use 1% for account fees. If you are making 3%/yr, 1% is a pretty huge chunk (or even .5) of your gains.
Thanks. I do take their point about sequence of returns, which is why I chose a 30% stock allocation. I've been counting on a 2% - 2.5% SWR, which seemed pretty safe. Unfortunately there's no way to tell if this is a sure thing, so I will be saving a lot more to have a bigger margin of safety. I don't see any other way, given the unknowns, short of annuitizing, and I don't trust the insurance companies or the state backup fund. This sort of behavior isn't good for the larger economy, but what can one do?
"My bond allocation is the amount of money that I cannot afford to lose." -- Taylor Larimore
Topic Author
Happy2BeFree

Re: "Retiring in a Low-Return Environment"

Post by Happy2BeFree »

Sheepdog wrote:Sorry, I have to write this again. If you don't automatically increase your annual withdrawals by some inflation rate, but instead take your scheduled percentage withdrawals based on your portfolio balance at the end of each year, you will not run out. In fact your portfolio can grow. If your portfolio grows, you can take out more. If it fall in value in a year, then you must take out less for a short time period.
In the down years, I just don't buy more expensive discretionary items, but there can be plenty to live on and enjoy. This has worked in my 16 years retired, taking out an average of 4.5% each year....through the 2000-02 and 2008 down markets and good market years. Lower interest rates has not affected the plan. Overall balanced market growth is providing the growth in spending needs. I don't need to get caught up in these things. Who? Me worry? No.
Sorry for the repetition.
Sheepdog, do you do variable percentage withdrawals? Sorry, I haven't seen your previous posts on this. (I'm not that familiar with VPW, so I'll check the wiki.)
randomguy
Posts: 11295
Joined: Wed Sep 17, 2014 9:00 am

Re: "Retiring in a Low-Return Environment"

Post by randomguy »

Sheepdog wrote:Sorry, I have to write this again. If you don't automatically increase your annual withdrawals by some inflation rate, but instead take your scheduled percentage withdrawals based on your portfolio balance at the end of each year, you will not run out. In fact your portfolio can grow. If your portfolio grows, you can take out more. If it fall in value in a year, then you must take out less for a short time period.
In the down years, I just don't buy more expensive discretionary items, but there can be plenty to live on and enjoy. This has worked in my 16 years retired, taking out an average of 4.5% each year....through the 2000-02 and 2008 down markets and good market years. Lower interest rates has not affected the plan. Overall balanced market growth is providing the growth in spending needs. I don't need to get caught up in these things. Who? Me worry? No.
Sorry for the repetition.
Guess what? With a 4% SWR you get to take out the same real amount and 80% of the time watch your money grow,:) VPW is going to suffer the same fate as the fixed SWR in a low return environment it just has a different failure case than the fixed SWR. If your taking 5% out/yr and earning 4%, you are getting 3-4% poorer every year. At some point your income drops below what you consider liveable. Thats the VPW failure case. If you making 100k and willing to live on 20k, that is very unlikely to happen. If you making 100k and need 75k, failure can definitely occur.


All in all the past 16 years (past 14 or 18 obviously were much better) haven't been too bad for 50/50 type portfolio. The failure cases we are talking about are much worse (i.e. real returns of <1% not ~4%.)
FinancialDave
Posts: 1819
Joined: Thu May 26, 2011 9:36 pm

Re: "Retiring in a Low-Return Environment"

Post by FinancialDave »

randomguy wrote:
FinancialDave wrote:I am just not sure how using the current CAPE ratio (something that has been in existence for how many years?) is better than 100 years of market data!

fd
The CAPE numbers use those 100 years of market data. Over the past 100 years or so stocks have varied between 6% and 13% (average is just under 10) over 30 year periods. Using CAPE is an attempt to figure out if you are more likely to get 6% or 13%. People have calculated CAPE10 back to the 1800s.

The tough part is figuring out how comparable they are as the definition of earnings has changed over the years.
That's basically what I meant --- anyone that knows anything about the market could probably tell you that eventually it is going to revert to it's mean and then probably go right on through to the other side, but in 1 week, 1 year, or 10 years, who knows -- that is market volatility -- CAPE10 does (IMHO) state nothing more than the obvious, but it holds no special "magic sauce" that is going to allow you to make actionable investments from it -- unless you think you are "smarter than a Boglehead."

I think I should put that on a T-shirt, I could sell thousands and that would probably be a much better investment. :D

:sharebeer

fd
I love simulated data. It turns the impossible into the possible!
Johno
Posts: 1883
Joined: Sat May 24, 2014 4:14 pm

Re: "Retiring in a Low-Return Environment"

Post by Johno »

bigred77 wrote:I've seen alot of talk about PE10 being our relative best tool to predict stock returns over the next 10 years but I don't think you can just extrapolate that into predicting equity returns 30 years into the future.

I've also seen studies point to PE10 having an R squared value of something around .4 when running regression analysis on the following 10 years of returns (I'm sorry, I'm too lazy to go try and find something to cite for this, please correct me if I'm wrong).

What is the R squared value of PE10 and 30 year returns? Is this a valid predictor or is 30 years long enough that we would expect reversion to the historical mean for equity reurns regardless of current valuations? Is this discussed in the working paper?
The method of projecting equity returns is not well explained in the paper IMO, but it seems that the discount to equity return due to high CAPE is only applied via a decreasing series of factors (derived from regression of historical results) for high CAPE's drag on returns 1,2,3 etc years after a starting point of a given high CAPE. The factors seem to converge to zero in around 15 yrs, one of the charts in the paper. So the very long term return is less affected by today's high CAPE than near term returns. This seems reasonable in principle, but still kind of arbitrary (if I understand correctly) that the annual return over long periods wouldn't rise *above* the historical average eventually if it's below the historical average in the early years due to high initial CAPE. They are still saying that average returns over the next 30 yrs will be lower than over past ~100 yrs (or whatever similar period leads them to fix the 'long term avg' return at 9%). Again in principal not unreasonable: by the same token we might accept that CAPE's are generally higher in recent decades because the world is generally more stable and predictable (relatively), we'd have to accept that returns on equity risk might tend to decline over time, and if that apparent trend forward in the human condition is broadly reversed, it won't be pretty if you hold equities (might be great though if you're the next Joe Kennedy buying it all up after things fall apart :D ).

But more to the point of the paper, the closing paragraphs pretty much say to ignore the very long term cases in the table because people can buy annuities to at least moderate the need for a straight 'SWR' strategy to cover a very long life. Even 30 yr retirement is dying at 95 if starting at 65, here's hoping (if reasonably healthy too) but that's fairly unlikely even with today's medical tech, and thus fairly cheap to hedge against with annuities.

In general it seems the closing paragraphs (very reasonably) wave people off from taking the very low %'s literally. 2% is too low when CPI adjusted annuities for 65 yr olds pay ~4%, *if* the goal is really to live out life with your money, not leave bequests. That's the logical problem always dogging this conversation. The modeling and papers are just about the money lasting for the person/couple, but a lot of people are implicitly adding another goal not specified in the papers/models: a high likelihood of a significant bequest, or perhaps even upside potential to raise the SWR % if markets do well and 'everyone else' is living better. If some such dual mandate is the goal, then 2% might well be reasonable or perhaps even too high (how much do you want to leave with what certainty?). But 2% as max 'SWR' doesn't make sense just to live out one's own life when CPI adjusted annuities pay 4%. Somewhere between 3 and 4, just to cover own/couple's life, might well be a reasonable discussion given the limitations and risks of annuities.
garlandwhizzer
Posts: 3566
Joined: Fri Aug 06, 2010 3:42 pm

Re: "Retiring in a Low-Return Environment"

Post by garlandwhizzer »

The difficulties of actively predicting anything for the next 30 years are immense. Too much time, too many variables, too many unforeseen things happening. I think the message is basically right, lower returns expected for both stocks and bonds over the next decade or so, but I do not accept that anyone now can predict with any real accuracy at all what stock returns are going to be from 2030 - 2040. It is hard enough and inaccurate enough to try predicting what will happen in the next 5 years. Nor do I believe that higher stock allocations over this long period of time will expose you to more risk of running out of money. Nor do I think that annuities with their high fees, high sales commissions, and lack of inflation protection are the magic answer. If conditions turn out to be as bad in terms of return as the author expects, how many insurance companies currently writing up annuities will either be out of business or else increasing annual premiums so much to make up for shortfalls that they become unaffordable? I am not changing anything in my financial planing based on this article.

Garland Whizzer
User avatar
zaboomafoozarg
Posts: 2431
Joined: Sun Jun 12, 2011 12:34 pm

Re: "Retiring in a Low-Return Environment"

Post by zaboomafoozarg »

When I read these articles, sometimes it feels like I'm going to have to save 50% of my income from 25 to 65 just to afford retirement.
User avatar
Sheepdog
Posts: 5783
Joined: Tue Feb 27, 2007 2:05 pm
Location: Indiana, retired 1998 at age 65

Re: "Retiring in a Low-Return Environment"

Post by Sheepdog »

Happy2BeFree wrote: Sheepdog, do you do variable percentage withdrawals? Sorry, I haven't seen your previous posts on this. (I'm not that familiar with VPW, so I'll check the wiki.)
I said my goal was to take out an average of 4.5% and not adjust for inflation. I have taken out as low as 3.11%, but as high as 7.52%, but I maintained the average. (At the end of every year I maintain that running average calculation.) My average withdrawal from 1999 thru 2013 was 4.52, but I allowed my 1999 to 2014 average to increase somewhat to 4.56% when I took out 5.12% last year so that we could take a fairly luxurious 2 week cruise and we remodeled one bath and the laundry area.. What the heck, I am 81, after all, and my investment balance has continued to grow. (My investment's value grew more so my average withdrawal amounts was able to grow.) And this year, as I approach 82, I may do the same. :sharebeer
Not only can my withdrawal amount be affected by a drop in my portfolio value, such as after 2008, but also can affect planned large expenses such as house remodeling, new automobiles, and special expensive vacations plans. The market "tanked" in 2008, yes. So, in 2009, I took out 3.11%. That really didn't affect meeting my day to day expenses. I just didn't purchase anything especially expensive that year.. In 2007, the year before the drop, I withdrew 3.9%. In 2008, it was 6.57% because I needed a new roof that year which was bad timing due to the market drop, but it didn't hurt too bad as I was still basically close to the 4.5% average over time. In 2009, there was a very nice investment growth, so in 2010 my withdrawal was back up to 4.89'% and I did some house remodeling.
I find that we need to be flexible in funding retirement, not so much for every year normal needs, but to be able to pay for those more expensive discretionary items.
By the way, my stock allocation since I was 66 was 100 minus my age (30% stock at age 70), but when I reached 22% stock, I have remained there. That has been more than enough to maintain the nest egg and even grow somewhat.
Last edited by Sheepdog on Thu Jan 29, 2015 9:16 pm, edited 1 time in total.
Unless you try to do something beyond what you have already mastered you will never grow. (Ralph Waldo Emerson)
texasdiver
Posts: 3937
Joined: Thu Jun 25, 2009 12:50 am
Location: Vancouver WA

Re: "Retiring in a Low-Return Environment"

Post by texasdiver »

garlandwhizzer wrote:The difficulties of actively predicting anything for the next 30 years are immense. Too much time, too many variables, too many unforeseen things happening. I think the message is basically right, lower returns expected for both stocks and bonds over the next decade or so, but I do not accept that anyone now can predict with any real accuracy at all what stock returns are going to be from 2030 - 2040. It is hard enough and inaccurate enough to try predicting what will happen in the next 5 years. Nor do I believe that higher stock allocations over this long period of time will expose you to more risk of running out of money. Nor do I think that annuities with their high fees, high sales commissions, and lack of inflation protection are the magic answer. If conditions turn out to be as bad in terms of return as the author expects, how many insurance companies currently writing up annuities will either be out of business or else increasing annual premiums so much to make up for shortfalls that they become unaffordable? I am not changing anything in my financial planing based on this article.

Garland Whizzer
I agree. 30-40 years ago was the late 70s and early 80s and there was a whole lot more grim economic news in the late Carter and early Reagan days than there is now. 30-40 years before that the entire world was in flames from Europe to the Pacific. You can only do what you can do to plan for the future and the typical Boglehead with a substantial and well-managed portfolio that is ready to kick out a very comfortable life at a 4% withdrawal rate will be ahead of 98% of the American population.
User avatar
BostonBoy
Posts: 173
Joined: Thu Dec 24, 2009 10:10 pm
Location: New Smyrna Beach

Re: "Retiring in a Low-Return Environment"

Post by BostonBoy »

Sheepdog wrote:
Happy2BeFree wrote: Sheepdog, do you do variable percentage withdrawals? Sorry, I haven't seen your previous posts on this. (I'm not that familiar with VPW, so I'll check the wiki.)
I said my goal was to take out an average of 4.5% and not adjust for inflation. I have taken out as low as 3.11%, but as high as 7.52%, but I maintained the average. (At the end of every year I maintain that running average calculation.) My average withdrawal from 1999 thru 2013 was 4.52, but I allowed my 1999 to 2014 average to increase somewhat to 4.56% when I took out 5.12% last year so that we could take a fairly luxurious 2 week cruise and we remodeled one bath and the laundry area.. What the heck, I am 81, after all, and my investment balance has continued to grow. (My investment's value grew more so my average withdrawal amounts was able to grow.) And this year, as I approach 82, I may do the same. :sharebeer
Not only can my withdrawal amount be affected by a drop in my portfolio value, such as after 2008, but also can affect planned large expenses such as house remodeling, new automobiles, and special expensive vacations plans. The market "tanked" in 2008, yes. So, in 2009, I took out 3.11%. That really didn't affect meeting my day to day expenses. I just didn't purchase anything especially expensive that year.. In 2007, the year before the drop, I withdrew 3.9%. In 2008, it was 6.57% because I needed a new roof that year which was bad timing due to the market drop, but it didn't hurt too bad as I was still basically close to the 4.5% average over time. In 2009, there was a very nice investment growth, so in 2010 my withdrawal was back up to 4.89'% and I did some house remodeling.
I find that we need to be flexible in funding retirement, not so much for every year normal needs, but to be able to pay for those more expensive discretionary items.
By the way, my stock allocation since I was 66 was 100 minus my age (30% stock at age 70), but when I reached 22% stock, I have remained there. That has been more than enough to maintain the nest egg and even grow somewhat.
Sheepdog, thanks for your real-world experience. I like reading your posts. I worry less about making it through my retirement.
Topic Author
Happy2BeFree

Many Thanks, Sheepdog

Post by Happy2BeFree »

Thank you, Sheepdog. I appreciate your explaining your withdrawal rationale (and always enjoy your posts in general). It's easy to get spooked by articles such as the one I posted, so it's refreshing to read actual examples of how things can work out, even through times like 2008/09.

It's also amazing that your investments have grown while you've been withdrawing, even with your stock portion as low as 22%! Congratulations on your success. It's very inspiring! :beer
User avatar
Sheepdog
Posts: 5783
Joined: Tue Feb 27, 2007 2:05 pm
Location: Indiana, retired 1998 at age 65

Re: Many Thanks, Sheepdog

Post by Sheepdog »

Happy2BeFree wrote:

It's also amazing that your investments have grown while you've been withdrawing, even with your stock portion as low as 22%! Congratulations on your success. It's very inspiring! :beer
Thanks for the comment. When I reached retirement, I was nervous. I thought, "Would I have enough to last?" Bad markets scared me. "Could I recover from a major downturn?" I was not going to have a pension. (I took my not-so-large pension as a lump sum.) Advice from persons like Taylor Larimore at the Morningstar Vanguard Diehard forum helped me greatly with advice on conservative low cost investing and controlling expenses. The Diehard forum advisors and then the Bogleheads were my mentors. It can be yours also. Using a baseball analogy, when you are older, investing during retirement, don't try to hit home runs all the time. Invest conservatively. Singles and walks can take you around the bases as well...not as fast maybe, but you get there. Avoid strikeouts." If my plan was to take out 4.5%, and I wanted to see my withdrawals grow some as I grew older to help take care of inflation, I surmised that I really only had to earn a little more than 4.5% average. As it worked out, in the last 16 years, which had a couple of downturns, as you know, I withdrew an average of slightly over 4.5% a year while the investments earned an average of just over 5.5% which was enough positive growth to cover increasing expenses and then some.
You may be interested in this tidbit. In those years with my lowering stock allocation, my highest annual return was 12.71% (2009) and the lowest was -9.60% (2008).
Unless you try to do something beyond what you have already mastered you will never grow. (Ralph Waldo Emerson)
User avatar
Frugal Al
Posts: 1736
Joined: Fri May 28, 2010 10:09 am

Re: "Retiring in a Low-Return Environment"

Post by Frugal Al »

Johno wrote:2% is too low when CPI adjusted annuities for 65 yr olds pay ~4%...
I agree 2% is too low, but please show me where I can get a CPI (truly) adjusted annuity with a 4% payout, 65 year old, male? Not to mention that a 100% joint survivorship, inflation indexed, annuity won't come close, which many retirees would need.

I'd be curious to know how Dr. Phau reconciles the latest revelation about increasing equity allocations not providing a better SWR going forward, with the paper he and Kitces did a while back on rising equity glide paths in retirement.

I agree with Sheepdog, and Phau says as much in the paper (near the end), the key is to have flexibility in one's withdrawal rate. The real takeaway is that we shouldn't blindly assume a 4% SWR, of course most here already know that.
User avatar
midareff
Posts: 7711
Joined: Mon Nov 29, 2010 9:43 am
Location: Biscayne Bay, South Florida

Re: "Retiring in a Low-Return Environment"

Post by midareff »

Frugal Al wrote: I'd be curious to know how Dr. Phau reconciles the latest revelation about increasing equity allocations not providing a better SWR going forward, with the paper he and Kitces did a while back on rising equity glide paths in retirement.

I agree with Sheepdog, and Phau says as much in the paper (near the end), the key is to have flexibility in one's withdrawal rate. The real takeaway is that we shouldn't blindly assume a 4% SWR, of course most here already know that.
History doesn't always provide precise data on methods and plans moving forward. The key IMHO is to be a bit conservative and be flexible. Some of the data furnished in the report just doesn't seem right. I'm curious as to the withdrawal method they actually used. Did they sell equities or bonds for withdrawals in bad years? What did they use for a CPI-U? Did they rebalance and how? ... and so on.
Topic Author
Happy2BeFree

Re: Many Thanks, Sheepdog

Post by Happy2BeFree »

Sheepdog wrote:
Happy2BeFree wrote:

It's also amazing that your investments have grown while you've been withdrawing, even with your stock portion as low as 22%! Congratulations on your success. It's very inspiring! :beer
Thanks for the comment. When I reached retirement, I was nervous. I thought, "Would I have enough to last?" Bad markets scared me. "Could I recover from a major downturn?" I was not going to have a pension. (I took my not-so-large pension as a lump sum.) Advice from persons like Taylor Larimore at the Morningstar Vanguard Diehard forum helped me greatly with advice on conservative low cost investing and controlling expenses. The Diehard forum advisors and then the Bogleheads were my mentors. It can be yours also. Using a baseball analogy, when you are older, investing during retirement, don't try to hit home runs all the time. Invest conservatively. Singles and walks can take you around the bases as well...not as fast maybe, but you get there. Avoid strikeouts." If my plan was to take out 4.5%, and I wanted to see my withdrawals grow some as I grew older to help take care of inflation, I surmised that I really only had to earn a little more than 4.5% average. As it worked out, in the last 16 years, which had a couple of downturns, as you know, I withdrew an average of slightly over 4.5% a year while the investments earned an average of just over 5.5% which was enough positive growth to cover increasing expenses and then some.
You may be interested in this tidbit. In those years with my lowering stock allocation, my highest annual return was 12.71% (2009) and the lowest was -9.60% (2008).
Wow...it is really helpful to hear this. Thank you so much for sharing your experiences. You retired at the tail end of the boom and saw two major busts in your first 10 years of retirement. You had a conservative portfolio to begin retirement and had to withdraw through two very bad markets. And it's not like you were withdrawing 2%...your lowest withdrawal rate was 3.11%! I wonder what to make of the charts and studies that strongly suggest micro-withdrawals. I'd rather look at your example and have higher hopes for all of us!

And yes, I so appreciate Taylor's down-to-earth, consistent, conservative advice, along with many others', from Morningstar to Bogleheads. And I love the baseball analogy. My AA right now (early 50s) is 40/60. I can live with that, even though I've been nervous about being too conservative at my age.

Without this forum and the wisdom within, I'd be adrift. Thanks again, Sheepdog! :happy
Last edited by Happy2BeFree on Fri Jan 30, 2015 10:27 am, edited 1 time in total.
randomguy
Posts: 11295
Joined: Wed Sep 17, 2014 9:00 am

Re: "Retiring in a Low-Return Environment"

Post by randomguy »

Frugal Al wrote:
Johno wrote:2% is too low when CPI adjusted annuities for 65 yr olds pay ~4%...
I agree 2% is too low, but please show me where I can get a CPI (truly) adjusted annuity with a 4% payout, 65 year old, male? Not to mention that a 100% joint survivorship, inflation indexed, annuity won't come close, which many retirees would need.

I'd be curious to know how Dr. Phau reconciles the latest revelation about increasing equity allocations not providing a better SWR going forward, with the paper he and Kitces did a while back on rising equity glide paths in retirement.

I agree with Sheepdog, and Phau says as much in the paper (near the end), the key is to have flexibility in one's withdrawal rate. The real takeaway is that we shouldn't blindly assume a 4% SWR, of course most here already know that.
There is nothing to reconcile. It might be a fun paper to see how rising glide path intersects with a low return environment. I am guessing pretty well as the odds are stocks will be at better valuations in the future when you start ramping up your allocation. But that is just a guess.
randomguy
Posts: 11295
Joined: Wed Sep 17, 2014 9:00 am

Re: Many Thanks, Sheepdog

Post by randomguy »

Happy2BeFree wrote: Wow...it is really helpful to hear this. Thank you so much for sharing your experiences. You retired at the tail end of the boom and saw two major busts in your first 10 years of retirement. You had a conservative portfolio to begin retirement and had to withdraw through two very bad markets. And it's not like you were withdrawing 2%...your lowest withdrawal rate was 3.11%! I wonder what to make of the charts and studies that strongly suggest micro-withdrawals. I'd rather look at your example and have higher hopes for all of us!
You can't compare that 3% withdrawal to a 2% SWR. His 3% is of the current balance. 2% SWR is an inflation adjusted number based in initial portfolio value.
Johno
Posts: 1883
Joined: Sat May 24, 2014 4:14 pm

Re: "Retiring in a Low-Return Environment"

Post by Johno »

Frugal Al wrote:
Johno wrote:2% is too low when CPI adjusted annuities for 65 yr olds pay ~4%...
I agree 2% is too low, but please show me where I can get a CPI (truly) adjusted annuity with a 4% payout, 65 year old, male? Not to mention that a 100% joint survivorship, inflation indexed, annuity won't come close, which many retirees would need.
There's a link on Vanguard's website, don't recall if it's only after you log on to your account (if you have) and takes you to an affiliated annuity quote site. I looked at it out of curiosity from another recent version of the 'Great 4% Debate', maybe last week or week before (?) and for birth dates equating to 2 65 yr olds quote from real (well known, don't recall which) company, CPI-U adjusted (not fixed step up) 100% survivor benefit was 3.8%, 50% survivor benefit 4.2%, obviously would be higher for just a single male, didn't get that quote. So like I said one could get into the details (it's not quite 4% if absolutely must be 100% survivor benefit), risks (credit) and other limitations (CPI adjusted annuities make one strictly dependent on honesty of future CPI calculation which TIPS also do, but say real estate as inflation hedge doesn't) and still say 4% is too high. But IMO a rational discussion would be in the 3's at minimum, probably mid-upper 3's. Otherwise it's just leaving too much on the table (literally, likely money on the table when you die). And it doesn't make sense to lower the % based on believing one will have an exceptionally long life: insurance co's don't pay less to such people. That is, *IF* the goal is actually just live out life with one's money. Again, if there's a value placed on leaving money to others, that's a different story.
flyingaway
Posts: 3908
Joined: Fri Jan 17, 2014 9:19 am

Re: "Retiring in a Low-Return Environment"

Post by flyingaway »

Sheepdog wrote:
Happy2BeFree wrote: Sheepdog, do you do variable percentage withdrawals? Sorry, I haven't seen your previous posts on this. (I'm not that familiar with VPW, so I'll check the wiki.)
I said my goal was to take out an average of 4.5% and not adjust for inflation. I have taken out as low as 3.11%, but as high as 7.52%, but I maintained the average. (At the end of every year I maintain that running average calculation.) My average withdrawal from 1999 thru 2013 was 4.52, but I allowed my 1999 to 2014 average to increase somewhat to 4.56% when I took out 5.12% last year so that we could take a fairly luxurious 2 week cruise and we remodeled one bath and the laundry area.. What the heck, I am 81, after all, and my investment balance has continued to grow. (My investment's value grew more so my average withdrawal amounts was able to grow.) And this year, as I approach 82, I may do the same. :sharebeer
Not only can my withdrawal amount be affected by a drop in my portfolio value, such as after 2008, but also can affect planned large expenses such as house remodeling, new automobiles, and special expensive vacations plans. The market "tanked" in 2008, yes. So, in 2009, I took out 3.11%. That really didn't affect meeting my day to day expenses. I just didn't purchase anything especially expensive that year.. In 2007, the year before the drop, I withdrew 3.9%. In 2008, it was 6.57% because I needed a new roof that year which was bad timing due to the market drop, but it didn't hurt too bad as I was still basically close to the 4.5% average over time. In 2009, there was a very nice investment growth, so in 2010 my withdrawal was back up to 4.89'% and I did some house remodeling.
I find that we need to be flexible in funding retirement, not so much for every year normal needs, but to be able to pay for those more expensive discretionary items.
By the way, my stock allocation since I was 66 was 100 minus my age (30% stock at age 70), but when I reached 22% stock, I have remained there. That has been more than enough to maintain the nest egg and even grow somewhat.
The academic papers, especially 4% rule, can be used to estimate roughly if one has enough to retire. However, this or similar flexible strategy (of Sheepdog) is the one that people should use in practice.

For me, working one more year reduces the funding need for three years in retirement ( one fewer retirement year in need of funding, putting one more year of funding into the portfolio, and the portfolio growing by one more year of funding). As you can see, the converging point is quickly approaching your current standing point.
J295
Posts: 3403
Joined: Sun Jan 01, 2012 10:40 pm

Re: "Retiring in a Low-Return Environment"

Post by J295 »

Appreciate the Sheepdog wisdom as well.
Phil. 4:12
itstoomuch
Posts: 5343
Joined: Mon Dec 15, 2014 11:17 am
Location: midValley OR

Re: "Retiring in a Low-Return Environment"

Post by itstoomuch »

revised. see further down thread.
Last edited by itstoomuch on Sat Jan 31, 2015 9:45 pm, edited 3 times in total.
Rev012718; 4 Incm stream buckets: SS+pension; dfr'd GLWB VA & FI anntys, by time & $$ laddered; Discretionary; Rentals. LTCi. Own, not asset. Tax TBT%. Early SS. FundRatio (FR) >1.1 67/70yo
User avatar
midareff
Posts: 7711
Joined: Mon Nov 29, 2010 9:43 am
Location: Biscayne Bay, South Florida

Re: "Retiring in a Low-Return Environment"

Post by midareff »

itstoomuch wrote:Inquiring Minds want to know:
How many of the Posters who are in decumulation have Pensions, Pensions with COLA, Annuities not annuitized, SPIAs, or passive income as rentals?
Or are they doing their decumulation, solely on an sufficiently large retirement pile of securities?

Disclaimer: We have a small pension, and large amount of dVA's with GLWB features, Both of which enormously determines how we currently invest remaining assets and how we withdraw/deplete those assets. We also have LTCi.
:annoyed
3% WR provides 1/3 of our income. The rest comes from a pension and SS.
john94549
Posts: 4638
Joined: Tue Jul 26, 2011 8:50 pm

Re: "Retiring in a Low-Return Environment"

Post by john94549 »

My wife and I are 67, pushing 68, and I am retired. My wife is contemplating retiring this year or next. Accordingly, we are indeed retiring in a low-return environment. We somewhat planned for this eventuality by plopping enough for the first 15 years in FDIC- or NCUA-insured IRA CDs. We plan to tap those IRA CDs first. Should we outlive those IRA CDs, we would begin to tap tax-deferred stock/bond funds, or other after-tax assets.

This strategy gives us much "wiggle room" in terms of withdrawals. If stocks and bonds both go down, and stay down, for a protracted period (not likely, but possible), we still have our fifteen years guaranteed. I always thought of it as a DIY fixed-term annuity.
User avatar
Sheepdog
Posts: 5783
Joined: Tue Feb 27, 2007 2:05 pm
Location: Indiana, retired 1998 at age 65

Re: "Retiring in a Low-Return Environment"

Post by Sheepdog »

itstoomuch wrote:Inquiring Minds want to know:
How many of the Posters who are in decumulation have Pensions, Pensions with COLA, Annuities not annuitized, SPIAs, or passive income as rentals?
Or are they doing their decumulation, solely on an sufficiently large retirement pile of securities?

Disclaimer: We have a small pension, and large amount of dVA's with GLWB features, Both of which enormously determines how we currently invest remaining assets and how we withdraw/deplete those assets. We also have LTCi.
:annoyed
I do not have a pension. Almost all of our investments are in Traditional IRAs, Roth IRAs, and I Bonds. During the last 4 years 57% of our expenses were funded by the IRA investments and 43% by Social Security
Last edited by Sheepdog on Sat Jan 31, 2015 3:45 am, edited 1 time in total.
Unless you try to do something beyond what you have already mastered you will never grow. (Ralph Waldo Emerson)
User avatar
obgyn65
Posts: 770
Joined: Sun May 06, 2012 9:11 am

Re: "Retiring in a Low-Return Environment"

Post by obgyn65 »

Exactly. This is why I will stick to 10-year CDs, munis, and some deferred annuities. Plus, I plan to work part time to help with budgets.
scone wrote:The really surprising result is, a higher stock allocation doesn't seem to help.
"The two most important days in someone's life are the day that they are born and the day they discover why." -John Maxwell
carolinaman
Posts: 5463
Joined: Wed Dec 28, 2011 8:56 am
Location: North Carolina

Re: "Retiring in a Low-Return Environment"

Post by carolinaman »

One interesting conclusion of article is that the more aggressive asset allocations resulted in lower SWRs for a given probability.
"One surprising result is that rates are lower for more aggressive asset allocations. This is inconsistent with other research showing that more aggressive portfolios allow for higher SWRs. "

If the research is close to accurate (a big assumption), then those early retirees or those nearing retirement should have a lower equity allocation.
protagonist
Posts: 9279
Joined: Sun Dec 26, 2010 11:47 am

Re: "Retiring in a Low-Return Environment"

Post by protagonist »

First, realize that a huge fraction of Americans get by just fine on their social security, and despite the relative lack of millionaires in America, the streets of your city are not teeming with starving, homeless 80-somethings. Most people's financial needs decline sharply in retirement.

If you are basically sensible about money, you will probably do ok. If you are not, no matter how much you have, your retirement is potentially at risk.

Also remember, the best laid plans of mice and men often go astray.

Second, you might check out some of the comments in this recent thread, as well as numerous others: http://www.bogleheads.org/forum/viewtop ... 0&t=156706
BahamaMan
Posts: 896
Joined: Wed Oct 01, 2014 5:52 pm

Re: "Retiring in a Low-Return Environment"

Post by BahamaMan »

scone wrote: Thanks. I do take their point about sequence of returns, which is why I chose a 30% stock allocation. I've been counting on a 2% - 2.5% SWR, which seemed pretty safe. Unfortunately there's no way to tell if this is a sure thing, so I will be saving a lot more to have a bigger margin of safety. I don't see any other way, given the unknowns, short of annuitizing, and I don't trust the insurance companies or the state backup fund. This sort of behavior isn't good for the larger economy, but what can one do?
Here is what you can do:

Why don't you look at VPW, which is safer than a 2% SWR. It will probably allow you to spend a lot more money than a 2% SWR and won't go to the 2% levels unless a a 'Worse case scenario' the likes we have never seen actually happens. With a 2% SWR you are living like the Worst Case has actually happened. With VPW you don't employ it until IF and WHEN you actually need to. Portfolios aren't protected by meagerly withdrawing in Stable or up market years, they are protected by NOT withdrawing an Inflation Adjusted amount into the teeth of a Bear Market or high inflation.

http://www.bogleheads.org/forum/viewtop ... 0&t=120430
scone
Posts: 1457
Joined: Wed Jul 11, 2012 4:46 pm

Re: "Retiring in a Low-Return Environment"

Post by scone »

BahamaMan wrote:
scone wrote: Thanks. I do take their point about sequence of returns, which is why I chose a 30% stock allocation. I've been counting on a 2% - 2.5% SWR, which seemed pretty safe. Unfortunately there's no way to tell if this is a sure thing, so I will be saving a lot more to have a bigger margin of safety. I don't see any other way, given the unknowns, short of annuitizing, and I don't trust the insurance companies or the state backup fund. This sort of behavior isn't good for the larger economy, but what can one do?
Here is what you can do:

Why don't you look at VPW, which is safer than a 2% SWR. It will probably allow you to spend a lot more money than a 2% SWR and won't go to the 2% levels unless a a 'Worse case scenario' the likes we have never seen actually happens. With a 2% SWR you are living like the Worst Case has actually happened. With VPW you don't employ it until IF and WHEN you actually need to. Portfolios aren't protected by meagerly withdrawing in Stable or up market years, they are protected by NOT withdrawing an Inflation Adjusted amount into the teeth of a Bear Market or high inflation.

http://www.bogleheads.org/forum/viewtop ... 0&t=120430
You seem to have an ineradicable notion that spending more money is always better, and you assume everyone feels the same way. But that's just a preference on your part, nothing more. At 2% I'm pretty comfortable, I don't really need to spend more. My strong preference is to avoid extreme poverty in old age, particularly since I'm not inclined to entertain the solution you implied in another thread: suicide.

In fact, your suicide, or "euthanasia" notion tells me you really have not thought the problem through carefully. If your plan fails, that's it, game over. Sorry, that's not good enough. Lacks robustness.

Given the balance of risks, I'm going to pass on your suggestion, unless you are willing to put up a bond to cover my expenses if your plan fails!
"My bond allocation is the amount of money that I cannot afford to lose." -- Taylor Larimore
BahamaMan
Posts: 896
Joined: Wed Oct 01, 2014 5:52 pm

Re: "Retiring in a Low-Return Environment"

Post by BahamaMan »

scone wrote: You seem to have an ineradicable notion that spending more money is always better, and you assume everyone feels the same way. But that's just a preference on your part, nothing more. At 2% I'm pretty comfortable, I don't really need to spend more. My strong preference is to avoid extreme poverty in old age, particularly since I'm not inclined to entertain the solution you implied in another thread: suicide.

In fact, your suicide, or "euthanasia" notion tells me you really have not thought the problem through carefully. If your plan fails, that's it, game over. Sorry, that's not good enough. Lacks robustness.

Given the balance of risks, I'm going to pass on your suggestion, unless you are willing to put up a bond to cover my expenses if your plan fails!
Of course, I did not say what you indicate. End of life decisions have nothing to do with finances! They are a completely separate but important topic. You may choose to live on in an incompetent vegetable state, but not everyone agrees with you. You asked for a safer than 2% SWR and I gave you one. You seem to be quite fearful of the future. There is no need to be.
scone
Posts: 1457
Joined: Wed Jul 11, 2012 4:46 pm

Re: "Retiring in a Low-Return Environment"

Post by scone »

BahamaMan wrote:
scone wrote: You seem to have an ineradicable notion that spending more money is always better, and you assume everyone feels the same way. But that's just a preference on your part, nothing more. At 2% I'm pretty comfortable, I don't really need to spend more. My strong preference is to avoid extreme poverty in old age, particularly since I'm not inclined to entertain the solution you implied in another thread: suicide.

In fact, your suicide, or "euthanasia" notion tells me you really have not thought the problem through carefully. If your plan fails, that's it, game over. Sorry, that's not good enough. Lacks robustness.

Given the balance of risks, I'm going to pass on your suggestion, unless you are willing to put up a bond to cover my expenses if your plan fails!
Of course, I did not say what you indicate. End of life decisions have nothing to do with finances! They are a completely separate but important topic. You may choose to live on in an incompetent vegetable state, but not everyone agrees with you. You asked for a safer than 2% SWR and I gave you one. You seem to be quite fearful of the future. There is no need to be.
Pardon me, IIRC you had a convo with VictoriaF on another thread suggesting that you hoped the medical community would allow euthanasia for the elderly. AFAIK, that's suicide. In any case, the characterization of old age as "an incompetent vegetable state" suggests you don't even want to think about it in any practical way, let alone plan for it, so I don't think your "advice" is useful to me.

In fact, you seem to be quite fearful of extreme old age. There is no need to be.
"My bond allocation is the amount of money that I cannot afford to lose." -- Taylor Larimore
BahamaMan
Posts: 896
Joined: Wed Oct 01, 2014 5:52 pm

Re: "Retiring in a Low-Return Environment"

Post by BahamaMan »

scone wrote: Pardon me, IIRC you had a convo with VictoriaF on another thread suggesting that you hoped the medical community would allow euthanasia for the elderly. AFAIK, that's suicide. In any case, the characterization of old age as "an incompetent vegetable state" suggests you don't even want to think about it in any practical way, let alone plan for it, so I don't think your "advice" is useful to me.

In fact, you seem to be quite fearful of extreme old age. There is no need to be.
Your interpretation is exceptionally incorrect. End of Life issues for terminally ill people have nothing to do with finances, don't confuse the two. You are also confusing Old Age with the terminally ill. Again two completely different topics. You were relishing and even saving up for the 'Assisted Living Experience', and I merely said that I did not want to go, which is entirely different than not being able to afford to go. Please go back and read the threads as you don't recall correctly. You were asking for advice on withdrawals in a Low return environment and I gave you one.
Post Reply