WSJ Case Study on Retirement

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MMiroir
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WSJ Case Study on Retirement

Post by MMiroir »

The WSJ recently posted a case study about a couple looking at retirement in about 10 years.

https://www.wsj.com/articles/a-couple-w ... 1602884875

The retirement counselor concluded that this couple with $500,000 in savings and $300,000 in home equity is in "in good shape and on track to achieve their goals."

We are younger than this couple, have higher earnings and significantly more in savings and home equity, but we feel we need significantly more to have a comfortable retirement. Any comments on how good the WSJ's advice is?
Impatience
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Re: WSJ Case Study on Retirement

Post by Impatience »

It’s entirely subjective. If you plan on living off of a very low spend per year then your “enough for retirement” value may be very low indeed after factoring in social security. If you want to spend the rest of your life jetsetting around the globe with lots of comfy hotels and extracurricular activities you’ll need millions.

Keep in mind that the people on this forum tend to be exceptionally high earners AND exceptionally high savers. What’s “enough” for an imaginary Boglehead would appear as a vast fortune to most normal people.
lakpr
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Re: WSJ Case Study on Retirement

Post by lakpr »

Uh, so true about the English! I am an immigrant myself, and I am generally accepting of different accents and different ways of speaking English, but the language in that article sounded so foreign. "Brand new payment" (referring to the new payment after refinancing), "every ought to have at the least", "to discover long-term-care insurance" ???
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HomerJ
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Re: WSJ Case Study on Retirement

Post by HomerJ »

MMiroir wrote: Tue Oct 20, 2020 10:53 am The WSJ recently posted a case study about a couple looking at retirement in about 10 years.

https://www.wsj.com/articles/a-couple-w ... 1602884875

The retirement counselor concluded that this couple with $500,000 in savings and $300,000 in home equity is in "in good shape and on track to achieve their goals."

We are younger than this couple, have higher earnings and significantly more in savings and home equity, but we feel we need significantly more to have a comfortable retirement. Any comments on how good the WSJ's advice is?
What are the expected retirement expenses for the people in the article?

What are YOUR expected retirement expenses?

It's all about the expenses. That's the key variable and it's different for everyone.
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HueyLD
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Re: WSJ Case Study on Retirement

Post by HueyLD »

Impatience wrote: Tue Oct 20, 2020 11:20 am Keep in mind that the people on this forum tend to be exceptionally high earners AND exceptionally high savers. What’s “enough” for an imaginary Boglehead would appear as a vast fortune to most normal people.
+1.
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Kenkat
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Re: WSJ Case Study on Retirement

Post by Kenkat »

Most Bogleheads will likely die very wealthy. Income, expenses, withdraw rates are all studied in great depth and nothing less than a 95%+ chance of success is considered enough. The average person doesn’t do most of that. They retire with less and if things get tight, they figure it out as they go.

I have enough that I could retire tomorrow and “probably” be ok, but I am shooting for better than “probably” while I still have that option as still employed and in reasonably good health.
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David Jay
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Re: WSJ Case Study on Retirement

Post by David Jay »

HomerJ wrote: Tue Oct 20, 2020 11:23 am
What are the expected retirement expenses for the people in the article?

What are YOUR expected retirement expenses?

It's all about the expenses. That's the key variable and it's different for everyone.
This. If you don't have a handle on your retirement expenses it is not possible to determine what size portfolio is required.
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liynus
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Re: WSJ Case Study on Retirement

Post by liynus »

I expect the WSJ to do much better. The writing was horrible, they have better journalistic standards.
Did the article assume maximum social security payments when the couple turns 65-72?
The wife is teacher, does she has a large pension? The article may omit these findings.
Otherwise it's hard to see how 500K in retirement accounts and less than 5 years to go before retirement would allow them to achieve their stated retirement goals.
Keep in mind the returns on the retirement accounts should be depressed since it SHOULD be more conservative to match their retirement age.

No math, no real insight into what would support a good retirement.

Regular folks are going to read this article and think, "I'm good." which is the worse part.
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ruralavalon
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Re: WSJ Case Study on Retirement

Post by ruralavalon »

MMiroir wrote: Tue Oct 20, 2020 10:53 am The WSJ recently posted a case study about a couple looking at retirement in about 10 years.

https://www.wsj.com/articles/a-couple-w ... 1602884875

The retirement counselor concluded that this couple with $500,000 in savings and $300,000 in home equity is in "in good shape and on track to achieve their goals."

We are younger than this couple, have higher earnings and significantly more in savings and home equity, but we feel we need significantly more to have a comfortable retirement. Any comments on how good the WSJ's advice is?
[ quoted post removed by admin LadyGeek]
I have a subscription. On wsj.com the article is in standard English.

The advisor's first idea is increased contributions.
Mr. Loftin believes that the couple has the disposable income to be able to put more away for retirement. Relatively speaking, they aren’t carrying lots of fixed debt, which will allow them to save more aggressively than many people, Mr. Loftin says. Maximizing their retirement contributions also will help if Mr. Rogers needs a new job and has trouble finding one.
Still not a useful article, given no discussion of retirement expenses like health care, and no discussion of Social Security or the pension of the spouse in the education field .
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mr_brightside
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Re: WSJ Case Study on Retirement

Post by mr_brightside »

Impatience wrote: Tue Oct 20, 2020 11:20 am It’s entirely subjective. If you plan on living off of a very low spend per year then your “enough for retirement” value may be very low indeed after factoring in social security. If you want to spend the rest of your life jetsetting around the globe with lots of comfy hotels and extracurricular activities you’ll need millions.

Keep in mind that the people on this forum tend to be exceptionally high earners AND exceptionally high savers. What’s “enough” for an imaginary Boglehead would appear as a vast fortune to most normal people.
very true. its a simple equation of income and expenses. which differ greatly across the spectrum.

but go to the significant majority of Americans and tell them you have $1Million and are worried about your future retirement. You'll get a lot of this I bet :shock:
remember Enron?? I do
Normchad
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Re: WSJ Case Study on Retirement

Post by Normchad »

Eh, not a great article. But the conclusion is not provably wrong. As the students would say, not enough information is given.

The couple is in their 60s, and they want 5-6K per month to spend. They can probably get 3.5-4 of that from SS.

The 500K in savings would give them 2.5K per month, for 200 months. With growth probably longer.... So they will probably be okay.....

Of course, the devil is in the details. Is 5-6K/month accurate? From the article, they sound like they like to spend money.....

Are they remembering to account for health care? The article doesn’t say, but maybe they have that covered through the spouse or prior military service, etc.
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Re: WSJ Case Study on Retirement

Post by galawdawg »

I read this article, both in print and online, and there are a number of unanswered areas that make it impossible for us to opine about whether the couple is well-prepared for retirement. Correct me if I am wrong, but these are a few things I noticed:
  • The article does not indicate the time frame for retirement. While the first sentence reads "As James and Katherine Rogers hit their 60's..." and the article later mentions that they hope to retire around ages 65 or 67, I don't see mention of their specific age or how far away ages 65 or 67 are. Is it five years, seven years or ten or more? That makes a difference.
  • The article mentions that they currently earn $200k per year, save ten percent (10%) of that, and hope to have $5,000-$6,000 of disposable income each month in retirement. However, that amount does not appear consistent with their current spending. They just refinanced their home to a fifteen (15) year mortgage but there is no mention of any plan to have that paid off prior to retirement. Absent more information about how their current spending will change in retirement, the amount they plan to spend each month may be underestimated.
  • While the article mentions that they have $500k in retirement savings, it does not mention social security or other sources of retirement income. The article notes that the wife works in education and that they live in Atlanta, so if she works in a public education setting, she will likely receive a Georgia TRS pension which can be quite generous (the monthly pension income would be calculated by multiplying 2% per year of service by the average of her highest 24 months consecutive salary) and could alone bring in $4,000 per month or more.
Whether the article omitted that information due to space limitations or other reasons, there isn't enough information in the article alone to form any conclusions. I did notice that the planner mentioned in the article observed that they have enough disposable income to contribute more to their retirement savings and recommended they do so.
Last edited by galawdawg on Tue Oct 20, 2020 12:12 pm, edited 1 time in total.
barreg
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Re: WSJ Case Study on Retirement

Post by barreg »

The free version of the article looks like it was written in another language and translated to English via Google Translate. Close enough that you get the meaning, but not the way any native English speaker would write.
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bligh
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Re: WSJ Case Study on Retirement

Post by bligh »

Kenkat wrote: Tue Oct 20, 2020 11:45 am Most Bogleheads will likely die very wealthy. Income, expenses, withdraw rates are all studied in great depth and nothing less than a 95%+ chance of success is considered enough. The average person doesn’t do most of that. They retire with less and if things get tight, they figure it out as they go.

I have enough that I could retire tomorrow and “probably” be ok, but I am shooting for better than “probably” while I still have that option as still employed and in reasonably good health.
+1 to this. I've said it before many times on this board. Generally on this board, a 95% chance of success on a 30 year retirement is counted as unacceptably low. It is natural for us all not to think about our own mortality, after all it is an unpleasant thing to think about.

However, a 60 year old male only has a 20% probability of making it to live to his 90th birthday. In other words, there is a 80% chance they won't even LIVE to see that 30 year retirement. Or put another way, that 95% success rate for a 30 year retirement, when combined with your likelihood of surviving those 30 years, is actually a 0.05 * 0.2 = 1% probability of actually running out of money.

Now combine that with the fact that only the tightest of budgets have zero wiggle room and only the most stubborn of people will actually keep blindly withdrawing the same inflation adjust amount from their portfolio year after year in the face of a major bear market. In reality most people will have wiggle room in their budget, and will start pulling back on their spending when they see major economic headwinds.

Lastly, people worry about the increased cost of care as you get older, and don't realize that the increased cost of care is mostly or completely offset by a steep drop in spending in every other area. If/when you are in an assisted living situation, how many other expenses are you really going to have?
fortunefavored
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Re: WSJ Case Study on Retirement

Post by fortunefavored »

The second link (the "free" one) is plagiarized and slightly modified. There's a whole industry around copying articles from legit sources and slightly modifying them to drive traffic from people getting around paywalls.

"Like many parents, the couple, who live in the metro Atlanta area" - WSJ
"Like many mother and father, the Rogers, who stay within the metro Atlanta space" - fake site

I don't know what scammy stuff those sites are up to, since I block all ads and a bunch of other stuff.. but I assume they're making money somehow.
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Re: WSJ Case Study on Retirement

Post by littlebird »

Brief retrospective case study:

My spouse and I retired 32 years ago with the equivalent of today’s $500,000, but that included our house. My spouse had a very modest pension. We had a plan B in that I was still in my 40’s with a professional degree and could have gone back to work if necessary. It never was.

We traveled domestically, as that was our interest, serially bought and furnished four homes, one a second home, lived at least as comfortably, in a wonderful “active senior” community with every imaginable ammenity, as we had done while we worked — netiher of us had expensive habits — and after many happy and fulfilling years, paid for my spouse’s three years of excellent end-of-life care by ourselves, without any financial strain at all. I think I have enough assets to live comfortably for the rest of my life, including end-of-life care, our assets having increased by more than 500% since retirement.
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Re: WSJ Case Study on Retirement

Post by Grt2bOutdoors »

Normchad wrote: Tue Oct 20, 2020 12:06 pm Eh, not a great article. But the conclusion is not provably wrong. As the students would say, not enough information is given.

The couple is in their 60s, and they want 5-6K per month to spend. They can probably get 3.5-4 of that from SS.

The 500K in savings would give them 2.5K per month, for 200 months. With growth probably longer.... So they will probably be okay.....

Of course, the devil is in the details. Is 5-6K/month accurate? From the article, they sound like they like to spend money.....

Are they remembering to account for health care? The article doesn’t say, but maybe they have that covered through the spouse or prior military service, etc.
That Porsche alone will eat up a good chunk of money. I like how they view one paid off Porsche as a “car collection”. Who wrote this? a teenager?
As for can they make it in retirement-sure but he’s going to have to ditch the Porsche and watch his expenses. Earning $200k in Atlanta is above average earnings but the article does not disclose if the 90k paycut he just experienced means they earned $290k before or they are now earning $110k. It sounds like the latter and not the former. The article really lacks substance to draw a real conclusion if they will be ready or not.
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Grt2bOutdoors
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Re: WSJ Case Study on Retirement

Post by Grt2bOutdoors »

bligh wrote: Tue Oct 20, 2020 12:11 pm
Kenkat wrote: Tue Oct 20, 2020 11:45 am Most Bogleheads will likely die very wealthy. Income, expenses, withdraw rates are all studied in great depth and nothing less than a 95%+ chance of success is considered enough. The average person doesn’t do most of that. They retire with less and if things get tight, they figure it out as they go.

I have enough that I could retire tomorrow and “probably” be ok, but I am shooting for better than “probably” while I still have that option as still employed and in reasonably good health.
+1 to this. I've said it before many times on this board. Generally on this board, a 95% chance of success on a 30 year retirement is counted as unacceptably low. It is natural for us all not to think about our own mortality, after all it is an unpleasant thing to think about.

However, a 60 year old male only has a 20% probability of making it to live to his 90th birthday. In other words, there is a 80% chance they won't even LIVE to see that 30 year retirement. Or put another way, that 95% success rate for a 30 year retirement, when combined with your likelihood of surviving those 30 years, is actually a 0.05 * 0.2 = 1% probability of actually running out of money.

Now combine that with the fact that only the tightest of budgets have zero wiggle room and only the most stubborn of people will actually keep blindly withdrawing the same inflation adjust amount from their portfolio year after year in the face of a major bear market. In reality most people will have wiggle room in their budget, and will start pulling back on their spending when they see major economic headwinds.

Lastly, people worry about the increased cost of care as you get older, and don't realize that the increased cost of care is mostly or completely offset by a steep drop in spending in every other area. If/when you are in an assisted living situation, how many other expenses are you really going to have?
+1.
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Re: WSJ Case Study on Retirement

Post by LadyGeek »

I removed a post and several replies which linked to a website that reproduced the WSJ article, which is a violation of the Subscriber Agreement (8.0 Limitations on Use.)
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Re: WSJ Case Study on Retirement

Post by dwickenh »

LadyGeek wrote: Tue Oct 20, 2020 2:26 pm I removed a post and several replies which linked to a website that reproduced the WSJ article, which is a violation of the Subscriber Agreement (8.0 Limitations on Use.)
oops, sorry was not aware.
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ofs
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Re: WSJ Case Study on Retirement

Post by ofs »

Grt2bOutdoors wrote: Tue Oct 20, 2020 1:25 pm
bligh wrote: Tue Oct 20, 2020 12:11 pm
Kenkat wrote: Tue Oct 20, 2020 11:45 am Most Bogleheads will likely die very wealthy. Income, expenses, withdraw rates are all studied in great depth and nothing less than a 95%+ chance of success is considered enough. The average person doesn’t do most of that. They retire with less and if things get tight, they figure it out as they go.

I have enough that I could retire tomorrow and “probably” be ok, but I am shooting for better than “probably” while I still have that option as still employed and in reasonably good health.
+1 to this. I've said it before many times on this board. Generally on this board, a 95% chance of success on a 30 year retirement is counted as unacceptably low. It is natural for us all not to think about our own mortality, after all it is an unpleasant thing to think about.

However, a 60 year old male only has a 20% probability of making it to live to his 90th birthday. In other words, there is a 80% chance they won't even LIVE to see that 30 year retirement. Or put another way, that 95% success rate for a 30 year retirement, when combined with your likelihood of surviving those 30 years, is actually a 0.05 * 0.2 = 1% probability of actually running out of money.

Now combine that with the fact that only the tightest of budgets have zero wiggle room and only the most stubborn of people will actually keep blindly withdrawing the same inflation adjust amount from their portfolio year after year in the face of a major bear market. In reality most people will have wiggle room in their budget, and will start pulling back on their spending when they see major economic headwinds.

Lastly, people worry about the increased cost of care as you get older, and don't realize that the increased cost of care is mostly or completely offset by a steep drop in spending in every other area. If/when you are in an assisted living situation, how many other expenses are you really going to have?
+1.
+1
I wanted to thank bligh for the contribution as well. What's the best source for estimating one's life expectancy?
flyingaway
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Re: WSJ Case Study on Retirement

Post by flyingaway »

littlebird wrote: Tue Oct 20, 2020 12:27 pm Brief retrospective case study:

My spouse and I retired 32 years ago with the equivalent of today’s $500,000, but that included our house. My spouse had a very modest pension. We had a plan B in that I was still in my 40’s with a professional degree and could have gone back to work if necessary. It never was.

We traveled domestically, as that was our interest, serially bought and furnished four homes, one a second home, lived at least as comfortably, in a wonderful “active senior” community with every imaginable ammenity, as we had done while we worked — netiher of us had expensive habits — and after many happy and fulfilling years, paid for my spouse’s three years of excellent end-of-life care by ourselves, without any financial strain at all. I think I have enough assets to live comfortably for the rest of my life, including end-of-life care, our assets having increased by more than 500% since retirement.
Thank you for your real story that is much better than any theory discussed here.
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Re: WSJ Case Study on Retirement

Post by White Coat Investor »

bligh wrote: Tue Oct 20, 2020 12:11 pm
Kenkat wrote: Tue Oct 20, 2020 11:45 am Most Bogleheads will likely die very wealthy. Income, expenses, withdraw rates are all studied in great depth and nothing less than a 95%+ chance of success is considered enough. The average person doesn’t do most of that. They retire with less and if things get tight, they figure it out as they go.

I have enough that I could retire tomorrow and “probably” be ok, but I am shooting for better than “probably” while I still have that option as still employed and in reasonably good health.
+1 to this. I've said it before many times on this board. Generally on this board, a 95% chance of success on a 30 year retirement is counted as unacceptably low. It is natural for us all not to think about our own mortality, after all it is an unpleasant thing to think about.

However, a 60 year old male only has a 20% probability of making it to live to his 90th birthday. In other words, there is a 80% chance they won't even LIVE to see that 30 year retirement. Or put another way, that 95% success rate for a 30 year retirement, when combined with your likelihood of surviving those 30 years, is actually a 0.05 * 0.2 = 1% probability of actually running out of money.

Now combine that with the fact that only the tightest of budgets have zero wiggle room and only the most stubborn of people will actually keep blindly withdrawing the same inflation adjust amount from their portfolio year after year in the face of a major bear market. In reality most people will have wiggle room in their budget, and will start pulling back on their spending when they see major economic headwinds.

Lastly, people worry about the increased cost of care as you get older, and don't realize that the increased cost of care is mostly or completely offset by a steep drop in spending in every other area. If/when you are in an assisted living situation, how many other expenses are you really going to have?
Preach it! I've been saying this for years. Both points spot on.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
Normchad
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Re: WSJ Case Study on Retirement

Post by Normchad »

flyingaway wrote: Tue Oct 20, 2020 3:27 pm
littlebird wrote: Tue Oct 20, 2020 12:27 pm Brief retrospective case study:

My spouse and I retired 32 years ago with the equivalent of today’s $500,000, but that included our house. My spouse had a very modest pension. We had a plan B in that I was still in my 40’s with a professional degree and could have gone back to work if necessary. It never was.

We traveled domestically, as that was our interest, serially bought and furnished four homes, one a second home, lived at least as comfortably, in a wonderful “active senior” community with every imaginable ammenity, as we had done while we worked — netiher of us had expensive habits — and after many happy and fulfilling years, paid for my spouse’s three years of excellent end-of-life care by ourselves, without any financial strain at all. I think I have enough assets to live comfortably for the rest of my life, including end-of-life care, our assets having increased by more than 500% since retirement.
Thank you for your real story that is much better than any theory discussed here.
+1. It’s super helpful to hear from people that have actually retired and what their experiences have been. Thanks!
downshiftme
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Re: WSJ Case Study on Retirement

Post by downshiftme »

About the only useful information to take away from this article is that the Wall Street Journal is so desperate for content that they will publish anything. The text of this article has clearly not been reviewed by anyone. No competent editor (even from my high school student paper) would have allowed this level of writing to be published. Since even the language is so unprofessional, all of the supposed content of the article is similarly suspect and can be given no serious consideration.

If anything this looks like some kind of machine translation experiment, an unsupervised machine assembled article, or some other experiment in ultra low cost "content" generation. It probably isn't an unedited piece by a non-native English writer. The writing is too poor for that. It doesn't deserve spending any time even reading it, as the content is likely at least as dubious as the language.
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Re: WSJ Case Study on Retirement

Post by Grt2bOutdoors »

ofs wrote: Tue Oct 20, 2020 3:12 pm
Grt2bOutdoors wrote: Tue Oct 20, 2020 1:25 pm
bligh wrote: Tue Oct 20, 2020 12:11 pm
Kenkat wrote: Tue Oct 20, 2020 11:45 am Most Bogleheads will likely die very wealthy. Income, expenses, withdraw rates are all studied in great depth and nothing less than a 95%+ chance of success is considered enough. The average person doesn’t do most of that. They retire with less and if things get tight, they figure it out as they go.

I have enough that I could retire tomorrow and “probably” be ok, but I am shooting for better than “probably” while I still have that option as still employed and in reasonably good health.
+1 to this. I've said it before many times on this board. Generally on this board, a 95% chance of success on a 30 year retirement is counted as unacceptably low. It is natural for us all not to think about our own mortality, after all it is an unpleasant thing to think about.

However, a 60 year old male only has a 20% probability of making it to live to his 90th birthday. In other words, there is a 80% chance they won't even LIVE to see that 30 year retirement. Or put another way, that 95% success rate for a 30 year retirement, when combined with your likelihood of surviving those 30 years, is actually a 0.05 * 0.2 = 1% probability of actually running out of money.

Now combine that with the fact that only the tightest of budgets have zero wiggle room and only the most stubborn of people will actually keep blindly withdrawing the same inflation adjust amount from their portfolio year after year in the face of a major bear market. In reality most people will have wiggle room in their budget, and will start pulling back on their spending when they see major economic headwinds.

Lastly, people worry about the increased cost of care as you get older, and don't realize that the increased cost of care is mostly or completely offset by a steep drop in spending in every other area. If/when you are in an assisted living situation, how many other expenses are you really going to have?
+1.
+1
I wanted to thank bligh for the contribution as well. What's the best source for estimating one's life expectancy?
Social Security mortality tables.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
fortunefavored
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Re: WSJ Case Study on Retirement

Post by fortunefavored »

Grt2bOutdoors wrote: Tue Oct 20, 2020 4:17 pm
ofs wrote: Tue Oct 20, 2020 3:12 pm
Grt2bOutdoors wrote: Tue Oct 20, 2020 1:25 pm
bligh wrote: Tue Oct 20, 2020 12:11 pm
Kenkat wrote: Tue Oct 20, 2020 11:45 am Most Bogleheads will likely die very wealthy. Income, expenses, withdraw rates are all studied in great depth and nothing less than a 95%+ chance of success is considered enough. The average person doesn’t do most of that. They retire with less and if things get tight, they figure it out as they go.

I have enough that I could retire tomorrow and “probably” be ok, but I am shooting for better than “probably” while I still have that option as still employed and in reasonably good health.
+1 to this. I've said it before many times on this board. Generally on this board, a 95% chance of success on a 30 year retirement is counted as unacceptably low. It is natural for us all not to think about our own mortality, after all it is an unpleasant thing to think about.

However, a 60 year old male only has a 20% probability of making it to live to his 90th birthday. In other words, there is a 80% chance they won't even LIVE to see that 30 year retirement. Or put another way, that 95% success rate for a 30 year retirement, when combined with your likelihood of surviving those 30 years, is actually a 0.05 * 0.2 = 1% probability of actually running out of money.

Now combine that with the fact that only the tightest of budgets have zero wiggle room and only the most stubborn of people will actually keep blindly withdrawing the same inflation adjust amount from their portfolio year after year in the face of a major bear market. In reality most people will have wiggle room in their budget, and will start pulling back on their spending when they see major economic headwinds.

Lastly, people worry about the increased cost of care as you get older, and don't realize that the increased cost of care is mostly or completely offset by a steep drop in spending in every other area. If/when you are in an assisted living situation, how many other expenses are you really going to have?
+1.
+1
I wanted to thank bligh for the contribution as well. What's the best source for estimating one's life expectancy?
Social Security mortality tables.
I like this calculator: https://www.longevityillustrator.org/ - especially helpful for couples
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dogagility
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Re: WSJ Case Study on Retirement

Post by dogagility »

HueyLD wrote: Tue Oct 20, 2020 11:23 am
Impatience wrote: Tue Oct 20, 2020 11:20 am Keep in mind that the people on this forum tend to be exceptionally high earners AND exceptionally high savers. What’s “enough” for an imaginary Boglehead would appear as a vast fortune to most normal people.
+1.
+2
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galawdawg
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Re: WSJ Case Study on Retirement

Post by galawdawg »

downshiftme wrote: Tue Oct 20, 2020 3:43 pm About the only useful information to take away from this article is that the Wall Street Journal is so desperate for content that they will publish anything. The text of this article has clearly not been reviewed by anyone. No competent editor (even from my high school student paper) would have allowed this level of writing to be published. Since even the language is so unprofessional, all of the supposed content of the article is similarly suspect and can be given no serious consideration.

If anything this looks like some kind of machine translation experiment, an unsupervised machine assembled article, or some other experiment in ultra low cost "content" generation. It probably isn't an unedited piece by a non-native English writer. The writing is too poor for that. It doesn't deserve spending any time even reading it, as the content is likely at least as dubious as the language.
Did you actually read the article as published by the WSJ in their print edition or on their subscriber site? Or are you referring to the plagiarized version, the link to which was removed by the mods?
ofs
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Re: WSJ Case Study on Retirement

Post by ofs »

Thanks Grt2bOutdoors & fortunefavored. Looks like at the moment I'm expected to live too long. I might need to increase my pizza and donut consumption.
Scooter57
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Re: WSJ Case Study on Retirement

Post by Scooter57 »

That calculator is way too simplistic. Ethnicity, kind of work done, diet, blood sugar and BP, parental ages of death and family cancer and dementia history are just a few of the factors to consider.

But having seen my parents live through their 90s I am most definitely enjoying my pizza and other treats and not stressing about: exercise. Each of them lived nearly a decade in the kind of shape no one would let their pet suffer.
DesertDiva
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Re: WSJ Case Study on Retirement

Post by DesertDiva »

MMiroir wrote: Tue Oct 20, 2020 10:53 am The WSJ recently posted a case study about a couple looking at retirement in about 10 years.

https://www.wsj.com/articles/a-couple-w ... 1602884875

The retirement counselor concluded that this couple with $500,000 in savings and $300,000 in home equity is in "in good shape and on track to achieve their goals."

We are younger than this couple, have higher earnings and significantly more in savings and home equity, but we feel we need significantly more to have a comfortable retirement. Any comments on how good the WSJ's advice is?
They are 60-ish, with an income of $200k and a net worth of $800k (not including their depreciating assets-on-wheels). Ideally they would have 6 -9 times their salary in assets at this stage (depending on who's opinion you follow). They have amassed more than some people, but by many standards, are not poised to maintain their current standard of living after they retire.
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Re: WSJ Case Study on Retirement

Post by geerhardusvos »

ofs wrote: Tue Oct 20, 2020 3:12 pm I wanted to thank bligh for the contribution as well. What's the best source for estimating one's life expectancy?
God only knows. Seriously. You can be healthy today and dead tomorrow. You can be barely hanging on today, and live another 50 years. Just make fairly good / adequate plans, look at your genetics, look at your health and habits, eat well, exercise, and try to make the most of it! It goes by quick!
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ram
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Re: WSJ Case Study on Retirement

Post by ram »

That couple would have gotten far better advice if they had asked the question here.
Ram
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anon_investor
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Re: WSJ Case Study on Retirement

Post by anon_investor »

Impatience wrote: Tue Oct 20, 2020 11:20 am Keep in mind that the people on this forum tend to be exceptionally high earners AND exceptionally high savers. What’s “enough” for an imaginary Boglehead would appear as a vast fortune to most normal people.
So true!!!
mr_brightside
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Re: WSJ Case Study on Retirement

Post by mr_brightside »

bligh wrote: Tue Oct 20, 2020 12:11 pm
Kenkat wrote: Tue Oct 20, 2020 11:45 am Most Bogleheads will likely die very wealthy. Income, expenses, withdraw rates are all studied in great depth and nothing less than a 95%+ chance of success is considered enough. The average person doesn’t do most of that. They retire with less and if things get tight, they figure it out as they go.

I have enough that I could retire tomorrow and “probably” be ok, but I am shooting for better than “probably” while I still have that option as still employed and in reasonably good health.
+1 to this. I've said it before many times on this board. Generally on this board, a 95% chance of success on a 30 year retirement is counted as unacceptably low. It is natural for us all not to think about our own mortality, after all it is an unpleasant thing to think about.

However, a 60 year old male only has a 20% probability of making it to live to his 90th birthday. In other words, there is a 80% chance they won't even LIVE to see that 30 year retirement. Or put another way, that 95% success rate for a 30 year retirement, when combined with your likelihood of surviving those 30 years, is actually a 0.05 * 0.2 = 1% probability of actually running out of money.

Now combine that with the fact that only the tightest of budgets have zero wiggle room and only the most stubborn of people will actually keep blindly withdrawing the same inflation adjust amount from their portfolio year after year in the face of a major bear market. In reality most people will have wiggle room in their budget, and will start pulling back on their spending when they see major economic headwinds.

Lastly, people worry about the increased cost of care as you get older, and don't realize that the increased cost of care is mostly or completely offset by a steep drop in spending in every other area. If/when you are in an assisted living situation, how many other expenses are you really going to have?
very well said
remember Enron?? I do
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Re: WSJ Case Study on Retirement

Post by Call_Me_Op »

Kenkat wrote: Tue Oct 20, 2020 11:45 am Most Bogleheads will likely die very wealthy. Income, expenses, withdraw rates are all studied in great depth and nothing less than a 95%+ chance of success is considered enough. The average person doesn’t do most of that. They retire with less and if things get tight, they figure it out as they go.

I have enough that I could retire tomorrow and “probably” be ok, but I am shooting for better than “probably” while I still have that option as still employed and in reasonably good health.
Right. Thinking about my parents who are in their 80's and do just fine on only their SS checks - which are not large. This includes blowing money twice per week at the casino. Bogleheads definitely overcompensate.
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HomerJ
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Re: WSJ Case Study on Retirement

Post by HomerJ »

bligh wrote: Tue Oct 20, 2020 12:11 pmNow combine that with the fact that only the tightest of budgets have zero wiggle room and only the most stubborn of people will actually keep blindly withdrawing the same inflation adjust amount from their portfolio year after year in the face of a major bear market. In reality most people will have wiggle room in their budget, and will start pulling back on their spending when they see major economic headwinds.
This is important.

That 5% chance of failure scares people because "failure" sounds pretty terrible

But for most of us here, "failure" means cutting back on luxuries, like maybe only taking 2 trips a year instead of 3 trips a year.

It doesn't mean living under a bridge, eating cat-food.

When the chance of "failure" is small, and the IMPACT of "failure" is also fairly small, it may be a bad decision to work an extra 5 years. Especially since those are likely your best healthiest 5 years remaining.

(And technically, no one knows if they even have 5 years left at any age... When your remaining lifespan is 0-35 years, one should really note the zero)
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
SchruteB&B
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Re: WSJ Case Study on Retirement

Post by SchruteB&B »

ram wrote: Tue Oct 20, 2020 7:54 pm That couple would have gotten far better advice if they had asked the question here.
I agree.
Hoosier CPA
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Re: WSJ Case Study on Retirement

Post by Hoosier CPA »

Kenkat wrote: Tue Oct 20, 2020 11:45 am Most Bogleheads will likely die very wealthy. Income, expenses, withdraw rates are all studied in great depth and nothing less than a 95%+ chance of success is considered enough. The average person doesn’t do most of that. They retire with less and if things get tight, they figure it out as they go.

I have enough that I could retire tomorrow and “probably” be ok, but I am shooting for better than “probably” while I still have that option as still employed and in reasonably good health.
I appreciate this and other similar comments. I learn a lot from this board but the guidance seems to be orientated mainly to people with very high incomes.
bradinsky
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Re: WSJ Case Study on Retirement

Post by bradinsky »

Kenkat wrote: Tue Oct 20, 2020 11:45 am Most Bogleheads will likely die very wealthy. Income, expenses, withdraw rates are all studied in great depth and nothing less than a 95%+ chance of success is considered enough. The average person doesn’t do most of that. They retire with less and if things get tight, they figure it out as they go.

I have enough that I could retire tomorrow and “probably” be ok, but I am shooting for better than “probably” while I still have that option as still employed and in reasonably good health.
+1
I love this forum & have learned a lot from everyone’s posts. DW & I are retired & comfortable, but it’s really easy to feel poor reading about the poster’s income & savings levels. I worked hard for years but never made the amount of money in a year that many 20 & 30 year olds say they do. The flip side is we are good savers & live in a relatively low cost of living area. Unless I flip out & buy a few Porsches or a Ferrari, we should be in good shape. The key, as many say, is to have control over your expenses & also your urges.
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Re: WSJ Case Study on Retirement

Post by DesertDiva »

SchruteB&B wrote: Wed Oct 21, 2020 10:07 am
ram wrote: Tue Oct 20, 2020 7:54 pm That couple would have gotten far better advice if they had asked the question here.
I agree.
+1 Yes!
bradinsky wrote: Wed Oct 21, 2020 10:32 am
Kenkat wrote: Tue Oct 20, 2020 11:45 am Most Bogleheads will likely die very wealthy. Income, expenses, withdraw rates are all studied in great depth and nothing less than a 95%+ chance of success is considered enough. The average person doesn’t do most of that. They retire with less and if things get tight, they figure it out as they go.

I have enough that I could retire tomorrow and “probably” be ok, but I am shooting for better than “probably” while I still have that option as still employed and in reasonably good health.
+1
I love this forum & have learned a lot from everyone’s posts. DW & I are retired & comfortable, but it’s really easy to feel poor reading about the poster’s income & savings levels. I worked hard for years but never made the amount of money in a year that many 20 & 30 year olds say they do. The flip side is we are good savers & live in a relatively low cost of living area. Unless I flip out & buy a few Porsches or a Ferrari, we should be in good shape. The key, as many say, is to have control over your expenses & also your urges.
+1 It's not so much about what you make... it's more about what you keep!
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Re: WSJ Case Study on Retirement

Post by Grt2bOutdoors »

Hoosier CPA wrote: Wed Oct 21, 2020 10:09 am
Kenkat wrote: Tue Oct 20, 2020 11:45 am Most Bogleheads will likely die very wealthy. Income, expenses, withdraw rates are all studied in great depth and nothing less than a 95%+ chance of success is considered enough. The average person doesn’t do most of that. They retire with less and if things get tight, they figure it out as they go.

I have enough that I could retire tomorrow and “probably” be ok, but I am shooting for better than “probably” while I still have that option as still employed and in reasonably good health.
I appreciate this and other similar comments. I learn a lot from this board but the guidance seems to be orientated mainly to people with very high incomes.
That’s probably because those with high incomes are visiting more often and asking more questions. That said, the information on the forum can be applied to most personal scenarios. You don’t need a six figure income in retirement if you are living on half that today.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
grettman
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Re: WSJ Case Study on Retirement

Post by grettman »

This article should have been written in crayon. But that would be an insult to crayon.
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ruralavalon
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Re: WSJ Case Study on Retirement

Post by ruralavalon »

Grt2bOutdoors wrote: Wed Oct 21, 2020 10:38 am
Hoosier CPA wrote: Wed Oct 21, 2020 10:09 am
Kenkat wrote: Tue Oct 20, 2020 11:45 am Most Bogleheads will likely die very wealthy. Income, expenses, withdraw rates are all studied in great depth and nothing less than a 95%+ chance of success is considered enough. The average person doesn’t do most of that. They retire with less and if things get tight, they figure it out as they go.

I have enough that I could retire tomorrow and “probably” be ok, but I am shooting for better than “probably” while I still have that option as still employed and in reasonably good health.
I appreciate this and other similar comments. I learn a lot from this board but the guidance seems to be orientated mainly to people with very high incomes.
That’s probably because those with high incomes are visiting more often and asking more questions. That said, the information on the forum can be applied to most personal scenarios. You don’t need a six figure income in retirement if you are living on half that today.
There are plenty of members here with average incomes.

Is there such as thing as a blue collar Boglehead?

Low earners - what is your profession?
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dziuniek
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Re: WSJ Case Study on Retirement

Post by dziuniek »

The article is garbage.
That being said, the couple is doing way better than the average non-boglehead folk.
Ivygirl
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Re: WSJ Case Study on Retirement

Post by Ivygirl »

I recently did a calculation as to what my own retirement might look like. I'm in my mid-50s. Retirement age of 70.

Social security income: $28,188/yr. or $2,349/mo.

Medicare Part A ($0), Part B ($145/mo.), Part D ($42/mo.), Supplement ($126/mo.) = $313/mo.

Housing: Mortgage $0 house paid off, Taxes $1,203/yr., Insurance $1,608/yr., Utilities $3,000/yr., Maintenance at 2% of home's value $2,000/yr.
Annual $7,811, divided by 12 = $651/mo.

Food using Moderate Cost USDA estimate: $263/mo.

Internet and cell phone: $105/mo.

Transportation: $2,000/yr. saved for the next car, car insurance $700/yr., car maintenance estimate $500/yr., Gasoline $840/yr.
Annual $4,040, divided by 12 = $337/mo.

Total expenses: $1,669/mo.

I will also have an estimated nest egg of $300,000, which at 4% withdrawal is another $12,000/yr. for extras.

It looks like I am going to be OK, so why wouldn't this couple be.
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Re: WSJ Case Study on Retirement

Post by Grt2bOutdoors »

Ivygirl wrote: Wed Oct 21, 2020 12:19 pm I recently did a calculation as to what my own retirement might look like. I'm in my mid-50s. Retirement age of 70.

Social security income: $28,188/yr. or $2,349/mo.

Medicare Part A ($0), Part B ($145/mo.), Part D ($42/mo.), Supplement ($126/mo.) = $313/mo.

Housing: Mortgage $0 house paid off, Taxes $1,203/yr., Insurance $1,608/yr., Utilities $3,000/yr., Maintenance at 2% of home's value $2,000/yr.
Annual $7,811, divided by 12 = $651/mo.

Food using Moderate Cost USDA estimate: $263/mo.

Internet and cell phone: $105/mo.

Transportation: $2,000/yr. saved for the next car, car insurance $700/yr., car maintenance estimate $500/yr., Gasoline $840/yr.
Annual $4,040, divided by 12 = $337/mo.

Total expenses: $1,669/mo.

I will also have an estimated nest egg of $300,000, which at 4% withdrawal is another $12,000/yr. for extras.

It looks like I am going to be OK, so why wouldn't this couple be.
They have a high rate of spend. They want 5k in disposable income. Disposable to me means after expenses. Their assets relative to requirements is low.
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ram
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Re: WSJ Case Study on Retirement

Post by ram »

Hoosier CPA wrote: Wed Oct 21, 2020 10:09 am I learn a lot from this board but the guidance seems to be orientated mainly to people with very high incomes.
The advice on this board is directed to the average person on this board who happens to have substantially higher income than the average American.

However I want to point out that if a person of modest or low income asks a question the members here give an honest answer in a respectful manner. I have not seen any evidence of snootiness on this board.

I suspect that many well heeled members on this board started out with more modest means.
Ram
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