Search found 835 matches

by gilgamesh
Sat Sep 09, 2017 7:26 am
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36270

Re: Michael Kitces 4% rule podcast on Madfientist

I brought up the poverty level just to put things in perspective...Here "poverty" is defined by the federal government, there is no subjectivity there....however, without proper context, it can be misleading. For instance, someone for whom home and vehicles etc are paid off, is different than a fami...
by gilgamesh
Fri Sep 08, 2017 7:00 pm
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36270

Re: Michael Kitces 4% rule podcast on Madfientist

I wonder how much a family of 5 on welfare/social assistance, including Medicaid dental and health coverage get a year? I know there is qualification requirements, circumstances etc. and obviously not a financial plan... it, for those unfortunate who are in that predicament, I wonder how much they ...
by gilgamesh
Fri Sep 08, 2017 6:54 pm
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36270

Re: Michael Kitces 4% rule podcast on Madfientist

I wonder how much a family of 5 on welfare/social assistance, including Medicaid dental and health coverage get a year? I know there is qualification requirements, circumstances etc. and obviously not a financial plan... for those unfortunate who are in that predicament, I wonder how much they get t...
by gilgamesh
Thu Sep 07, 2017 11:16 am
Forum: Investing - Theory, News & General
Topic: Three Centuries of Asset Returns, 1694-2015
Replies: 35
Views: 4418

Re: Three Centuries of Asset Returns, 1694-2015

Are they less 'reliable' now than before?...if not, why the increase in equity premium?...if human impulse/psychology/behavior is a constant (apparently the basis behind factor investing), and "on the face of such steady and consistent rates of economic growth over decades and decades" (as seen in ...
by gilgamesh
Wed Sep 06, 2017 1:30 pm
Forum: Investing - Theory, News & General
Topic: Three Centuries of Asset Returns, 1694-2015
Replies: 35
Views: 4418

Re: Three Centuries of Asset Returns, 1694-2015

Despite all this, the consistency of the data over four centuries is quite compelling. So what causes this? Wonderful question. One variable that has grown rather consistently along with asset returns over several centuries is GDP per capita (world wars excepted, chart below). It’s rather amazing t...
by gilgamesh
Wed Sep 06, 2017 12:34 pm
Forum: Investing - Theory, News & General
Topic: Three Centuries of Asset Returns, 1694-2015
Replies: 35
Views: 4418

Re: Three Centuries of Asset Returns, 1694-20

The study showed how short periods (of 30-50 years) could have abnormalities, but how longer-term periods seemed to average out. This point can't be stressed enough. No one should assume that just because a 60/40 portfolio has fairly consistently provided real returns of 4%-5% over three centuries,...
by gilgamesh
Wed Sep 06, 2017 11:37 am
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36270

Re: Michael Kitces 4% rule podcast on Madfientist

I agree bucket strategy helps to hone down the AA better...true for me. In fact, I go even further. I know I won't be spending my Roth till much later, taxable first, IRA in the middle...So, I like to visualize those as separate buckets based on investment horizon too and assign their own AA and the...
by gilgamesh
Wed Sep 06, 2017 10:35 am
Forum: Investing - Theory, News & General
Topic: Safe Withdrawal Rate -> 2% or lower
Replies: 72
Views: 7998

Re: Safe Withdrawal Rate -> 2% or lower

Gilgamesh, SWR is inefficient at spending money (see my "Buy high, sell low" comment about SWR in this post ) and carries a high probability of undesirable final outcome (lots of unspent money or premature depletion). With this interpretation, lowering SWR during a market downturn is actually buyin...
by gilgamesh
Wed Sep 06, 2017 6:20 am
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36270

Re: Michael Kitces 4% rule podcast on Madfientist

P.S: the problems with buckets in the traditional sense, is when some considers it to be superior...having non-volatile bucket for immediate spending etc. and saying that's a better strategy....nothing superior about it vs overall portfolio having the same mix of asset "types". True that in the end...
by gilgamesh
Wed Sep 06, 2017 5:11 am
Forum: Investing - Theory, News & General
Topic: Safe Withdrawal Rate -> 2% or lower
Replies: 72
Views: 7998

Re: Safe Withdrawal Rate -> 2% or lower

Withdrawal amounts fluctuate with the portfolio they are taken from. A more volatile portfolio will lead to more volatile withdrawals. A smoother portfolio will deliver smoother withdrawals. A floor and side portfolio viewed as an overall portfolio is nothing but a significant portion invested in i...
by gilgamesh
Tue Sep 05, 2017 6:53 pm
Forum: Investing - Theory, News & General
Topic: Safe Withdrawal Rate -> 2% or lower
Replies: 72
Views: 7998

Re: Safe Withdrawal Rate -> 2% or lower

How does VPW know the actual market return? Don't you input that every Year? No. One only multiplies the portfolio balance with the predetermined withdrawal percentage according to one's age and the portfolio's asset allocation for the upcoming year. The beauty of it is that using the size of the p...
by gilgamesh
Tue Sep 05, 2017 6:46 pm
Forum: Investing - Theory, News & General
Topic: Safe Withdrawal Rate -> 2% or lower
Replies: 72
Views: 7998

Re: Safe Withdrawal Rate -> 2% or lower

Gilgamesh, VPW, also requires market tracking (world) and withdrawal adjustment based on that...but longinvest does that "behind the scenes", so the end user doesn't have to do anything. VPW only requires a very approximate general long-term trend for bonds and stocks. This is not a prediction of f...
by gilgamesh
Tue Sep 05, 2017 6:21 pm
Forum: Investing - Theory, News & General
Topic: Safe Withdrawal Rate -> 2% or lower
Replies: 72
Views: 7998

Re: Safe Withdrawal Rate -> 2% or lower

My personal preference is for our Wiki's Variable Percentage Withdrawal (VPW) method, a withdrawal method which adapts to the retiree's retirement horizon, asset allocation, and portfolio returns during retirement. It combines the best ideas of the constant-dollar, constant-percentage, and 1/N with...
by gilgamesh
Tue Sep 05, 2017 2:37 pm
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36270

Re: Michael Kitces 4% rule podcast on Madfientist

Transcripts for the podcast is available now...I got a free PDF emailed to me.
by gilgamesh
Tue Sep 05, 2017 11:42 am
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36270

Re: Michael Kitces 4% rule podcast on Madfientist

As someone who *would* keep it simple and use something like a 3.5% perpetual SWR to define a yearly income stream (of which I may or may not spend), I believe the answer to your question is "yes". The calculations become nearly impossible to simply run when taking into account SS income "appearing...
by gilgamesh
Tue Sep 05, 2017 11:24 am
Forum: Investing - Theory, News & General
Topic: What is the "safe, safe" withdrawal rate?
Replies: 38
Views: 4208

Re: What is the "safe, safe" withdrawal rate?

floor can SWAN much better than SWR...Floor relies on the full faith and credit of the United states government and SWR relies on our future stock markets not doing worse than the past...for me personally, I'll SWAN much better with floor. SPIA, at age 80 along with SS should fall within the state ...
by gilgamesh
Tue Sep 05, 2017 10:49 am
Forum: Investing - Theory, News & General
Topic: What is the "safe, safe" withdrawal rate?
Replies: 38
Views: 4208

Re: What is the "safe, safe" withdrawal rate?

floor can SWAN much better than SWR...Floor relies on the full faith and credit of the United states government and SWR relies on our future stock markets not doing worse than the past...for me personally, I'll SWAN much better with floor. SPIA, at age 80 along with SS should fall within the state ...
by gilgamesh
Tue Sep 05, 2017 10:34 am
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36270

Re: Michael Kitces 4% rule podcast on Madfientist

Isn't the whole concept of a "side portfolio", like "buckets", just a way of fooling yourself into taking a lower SWR (because you're not recognizing a portion of your total portfolio value)? Well! it just doesn't matter...the same as bucket strategy. The entire portfolio visualized as one is the s...
by gilgamesh
Tue Sep 05, 2017 10:11 am
Forum: Investing - Theory, News & General
Topic: What is the "safe, safe" withdrawal rate?
Replies: 38
Views: 4208

Re: What is the "safe, safe" withdrawal rate?

floor can SWAN much better than SWR...Floor relies on the full faith and credit of the United states government and SWR relies on our future stock markets not doing worse than any 30 year period before me (not too many independent 30 year periods), for the 30 years after I retire, which is a totally...
by gilgamesh
Tue Sep 05, 2017 9:45 am
Forum: Investing - Theory, News & General
Topic: What is the "safe, safe" withdrawal rate?
Replies: 38
Views: 4208

Re: What is the "safe, safe" withdrawal rate?

Maybe I'm misunderstanding what you're trying to calculate/accomplish, but: Where is SS in your calculation? Is that not a "guaranteed income" (as much as TIPS are guaranteed, certainly) for as long as one lives from FRA onward? Are you assuming in your scenario that SS does not exist? If your reti...
by gilgamesh
Tue Sep 05, 2017 9:37 am
Forum: Investing - Theory, News & General
Topic: What is the "safe, safe" withdrawal rate?
Replies: 38
Views: 4208

Re: What is the "safe, safe" withdrawal rate?

What happens during a significant market decline? You don't have to do anything. Single person withdrawing at 4.22% and a couple withdrawing at 3.44%, will both prabably adjust their spending down. This to me is the biggest advantage of TIPS + SPIA Spending adjustments with SWR is not a solution, i...
by gilgamesh
Mon Sep 04, 2017 7:03 pm
Forum: Investing - Theory, News & General
Topic: What is the "safe, safe" withdrawal rate?
Replies: 38
Views: 4208

Re: What is the "safe, safe" withdrawal rate?

I looked into getting the same $10,000 of yearly CPI COLA income without doing the TIPS ladder and found a couple would have to pay $295K for a SIPA. This is very similar to your annuity +TIPS ladder. For the sake of simplicity, wouldn't just buying a SPIA be better? TIPS has liquidity where as ann...
by gilgamesh
Mon Sep 04, 2017 6:59 pm
Forum: Investing - Theory, News & General
Topic: What is the "safe, safe" withdrawal rate?
Replies: 38
Views: 4208

Re: What is the "safe, safe" withdrawal rate?

What happens during a significant market decline? You don't have to do anything. Single person withdrawing at 4.22% and a couple withdrawing at 3.44%, will both prabably adjust their spending down. This to me is the biggest advantage of TIPS + SPIA Spending adjustments with SWR is not a solution, it...
by gilgamesh
Mon Sep 04, 2017 5:26 pm
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36270

Re: Michael Kitces 4% rule podcast on Madfientist

What's going on here? LPMs have a 20% failure rate The problem with LMP is that it underestimates the costs substantially. It does this by constructing unrealistic scenarios and not actually matching liabilities. https://medium.com/@justusjp/liability-matching-portfolios-have-a-20-failure-rate-27b7...
by gilgamesh
Mon Sep 04, 2017 9:08 am
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36270

Re: Michael Kitces 4% rule podcast on Madfientist

Thanks for the reply. I guess I don't understand what portion is taken from the stable income versus the VPW. The wiki says your "base income" should come from the stable portion, which is the TIPS/CD ladder or an annuity. But it doesn't say what "base" means...is that the total of your required sp...
by gilgamesh
Mon Sep 04, 2017 9:06 am
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36270

Re: Michael Kitces 4% rule podcast on Madfientist

So from this, if I'm retiring at 35 I should buy 35 years worth of TIPS, and a single premium immediate annuity, outside of my main portfolio? Also, what percentage of my expenses should come from the stable income portion vs the VPW portion? As someone who *would* keep it simple and use something ...
by gilgamesh
Mon Sep 04, 2017 9:00 am
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36270

Re: Michael Kitces 4% rule podcast on Madfientist

Longinvest Is there any issues in using rolling TIPS ladder. I know one cannot predict exact returns, but if one assumes zero return and use TIPS solely for inflation protection. For instance, my TIPS ladder, which ignores annual returns, spans for 20 years, but entirely made up of 5 and 10 year TIP...
by gilgamesh
Mon Sep 04, 2017 8:48 am
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36270

Re: Michael Kitces 4% rule podcast on Madfientist

Thanks for the reply. I guess I don't understand what portion is taken from the stable income versus the VPW. The wiki says your "base income" should come from the stable portion, which is the TIPS/CD ladder or an annuity. But it doesn't say what "base" means...is that the total of your required sp...
by gilgamesh
Mon Sep 04, 2017 5:26 am
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36270

Re: Michael Kitces 4% rule podcast on Madfientist

Such a plan can use our Wiki's Variable Percentage Withdrawal (VPW) method, a withdrawal method which adapts to the retiree's retirement horizon, asset allocation, and portfolio returns during retirement. It combines the best ideas of the constant-dollar, constant-percentage, and 1/N withdrawal met...
by gilgamesh
Mon Sep 04, 2017 5:22 am
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36270

Re: Michael Kitces 4% rule podcast on Madfientist

This Kitces article is titled "Why merely mediocre returns can be worse than a market crash" https://www.kitces.com/blog/why-merely-mediocre-returns-can-be-worse-than-a-market-crash/ Some say 4% SWR endured the Great Depression, two world wars etc., another concept that tricks your mind into validat...
by gilgamesh
Mon Sep 04, 2017 4:57 am
Forum: Investing - Theory, News & General
Topic: Taxable account, all about retirement
Replies: 23
Views: 2784

Re: Taxable account, all about retirement

OP - Putting all your taxable money in cash equivalents with 10 - 15 years until retirement and no identified purchase in mind seems overly conservative to me. Keep in mind that without a mortgage payment you can simply fund a lot of spending out of cash flow. Good point, we will have extra cash fl...
by gilgamesh
Sun Sep 03, 2017 11:44 pm
Forum: Investing - Theory, News & General
Topic: Taxable account, all about retirement
Replies: 23
Views: 2784

Re: Taxable account, all about retirement

OP - Putting all your taxable money in cash equivalents with 10 - 15 years until retirement and no identified purchase in mind seems overly conservative to me. Keep in mind that without a mortgage payment you can simply fund a lot of spending out of cash flow. Good point, we will have extra cash fl...
by gilgamesh
Sun Sep 03, 2017 11:19 pm
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36270

Re: Michael Kitces 4% rule podcast on Madfientist

# cruncher, thank you for the reply. I probably didn't explain it well. I am aware the mortality graph is accurate in the first graph and what the X-axis represents in each. I was thinking something like the graph below...This is a Frankenstein image I did on Photoshop to convey what I am trying to ...
by gilgamesh
Sun Sep 03, 2017 10:21 pm
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36270

Re: Michael Kitces 4% rule podcast on Madfientist

Does this make sense? My goal is to retire at 66, use Cut-Throat's Delay Social Security to age 70 and Spend more money at 62 method to bridge the SS at 70 gap, and use the 4% SWR during those bridge years to mitigate bad sequence of returns risk. Then at age 70 shift to a 5% variable withdrawal ra...
by gilgamesh
Sun Sep 03, 2017 10:02 pm
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36270

Re: Michael Kitces 4% rule podcast on Madfientist

5% of current balance also passes the Retirement Calculator from Hell backtest. Basically, use common sense. In feast, you can withdraw more. In famine, less. What is retirement calculator from hell?...if it is the link below, the VPW is a much better method with the same objective. http://www.effi...
by gilgamesh
Sun Sep 03, 2017 2:51 pm
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36270

Re: Michael Kitces 4% rule podcast on Madfientist

Those who want to adjust spending with a 4% SWR, without a huge legacy need should rather follow VPW. It allows for more initial withdrawal percentage and gives a structure to spending adjustments, so it's spending adjustment is not arbitrary. I think Legacy needs can be factored by changing retirem...
by gilgamesh
Sun Sep 03, 2017 6:57 am
Forum: Investing - Theory, News & General
Topic: Taxable account, all about retirement
Replies: 23
Views: 2784

Re: Taxable account, all about retirement

Hello, My wife and I will be fortunate to pay off our mortgage shortly and been thinking about investing that payment into a taxable account. We view the taxable account as potential pre-retirement spending although nothing specific planned. We are also and thinking it should have a more conservati...
by gilgamesh
Sun Sep 03, 2017 5:28 am
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36270

Re: Michael Kitces 4% rule podcast on Madfientist

Can someone explain the bond/TIPS ladder? How is that income for retirement? From what I'm reading you reinvest the principal, No, you spend the principal. Each year, one bond or TIPS matures. Its value is enough to cover that year's expenses, or only your "floor" expenses if that's how you designe...
by gilgamesh
Sun Sep 03, 2017 5:17 am
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36270

Re: Michael Kitces 4% rule podcast on Madfientist

#cruncher Thank you so much for the better graphs. Your second graph with an age appropriate mortality graph next to it will give the correct perspective on evaluating mortality risk with the risk of going broke, correct? If it's not too much, could you lay two such graphs for someone retiring at ag...
by gilgamesh
Sat Sep 02, 2017 10:17 pm
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36270

Re: Michael Kitces 4% rule podcast on Madfientist

Once you make it to say age 60, your chances of reaching higher age is much higher than how it's represented in the chart. This is my biggest problem with the mortality part of the graph. My biggest problem is outliers; or rather, outlivers . Victoria For those with such concerns, per Kitces, the s...
by gilgamesh
Sat Sep 02, 2017 9:20 pm
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36270

Re: Michael Kitces 4% rule podcast on Madfientist

This post is to just view 4% rule and spending adjustment in a different light... IMO, willing, or rather the decision to adjust spending or not is the biggest problem with 4% SWR...not many have the steel of nerves to go through with it without unnecessary adjustments...let me explain. The beauty o...
by gilgamesh
Sat Sep 02, 2017 8:56 pm
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36270

Re: Michael Kitces 4% rule podcast on Madfientist

On which page does this chart appear. I'd like to read the pursuing discussion....the whole thing is too tedious. Mortality as represented here can indeed be misleading. The chart begins at age 40. So, this is the probabilistic mortality path for a 40 year old and only applies to those retiring at ...
by gilgamesh
Sat Sep 02, 2017 3:25 pm
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36270

Re: Michael Kitces 4% rule podcast on Madfientist

The mortality is a serious problem in the graph as you can read age 80 as having ~50% chance of dying. That's only true of you retired at age 40 and looking at mortality from that date. If you are retiring at age 60, it's completely messed up. Even those who retired at age 40, as they grow older nee...
by gilgamesh
Sat Sep 02, 2017 3:15 pm
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36270

Re: Michael Kitces 4% rule podcast on Madfientist

.... However, all this greater survival to older ages appears to be pushing up against the natural limits of human life (chart below).... Whoah! The only easier bet to win than managed funds vs indexed funds is anyone betting against science and human advancement...it's failed every single time. Ye...
by gilgamesh
Sat Sep 02, 2017 3:06 pm
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36270

Re: Michael Kitces 4% rule podcast on Madfientist

Once you make it to say age 60, your chances of reaching higher age is much higher than how it's represented in the chart. This is my biggest problem with the mortality part of the graph. My biggest problem is outliers; or rather, outlivers . Victoria I was talking about the graph itself. However, ...
by gilgamesh
Sat Sep 02, 2017 2:46 pm
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36270

Re: Michael Kitces 4% rule podcast on Madfientist

https://raw.githubusercontent.com/maizeman/dead_broke/master/DAB_graphs/Example_Output.png Courtesy of maizeman on the Mr. Money Mustache forum. It combines historical stock data and social security actuarial data. It puts the odds of the 4% rule failing in the proper perspective. Blue is having an...
by gilgamesh
Sat Sep 02, 2017 9:02 am
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36270

Re: Michael Kitces 4% rule podcast on Madfientist

It is an oft-repeated (and good) point that if you start out taking 4% and the market declines significantly in year 2, that you are not going to happily take 6 or 7% going forward forever. If you thought 4% was going to give you $40K income but you in reality can only take $25K, that's not skippin...
by gilgamesh
Sat Sep 02, 2017 6:09 am
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36270

Re: Michael Kitces 4% rule podcast on Madfientis

This is the main point in the Kitces work. That by merely taking 4%, you are insuring against exactly that...a big drop in the early years. So, yes, if the market crashes in half, you can continue taking your original 4%, plus inflation, even though it's not actually 6 of 7% of your original balanc...
by gilgamesh
Sat Sep 02, 2017 5:41 am
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36270

Re: Michael Kitces 4% rule podcast on Madfientist

It is an oft-repeated (and good) point that if you start out taking 4% and the market declines significantly in year 2, that you are not going to happily take 6 or 7% going forward forever. If you thought 4% was going to give you $40K income but you in reality can only take $25K, that's not skippin...
by gilgamesh
Fri Sep 01, 2017 6:54 pm
Forum: Investing - Theory, News & General
Topic: Michael Kitces 4% rule podcast on Madfientist
Replies: 355
Views: 36270

Re: Michael Kitces 4% rule podcast on Madfientist

You are mixing up arithmetic returns (simple average) and compound returns (geometric average). Can you do the same calculations with the correct returns and show how your statement holds true, thanks! Easy. 100% / 25 = 4%. Easily achieved with 100% TIPS. Lol! Ok....but can you do it the way I did ...