Variable Percentage Withdrawal (VPW)

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FinancialDave
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Re: Variable Percentage Withdrawal (VPW)

Post by FinancialDave » Thu Apr 24, 2014 12:48 pm

I would vote for maybe just expanding the Instructions sheet a little - where you could list the various sheets and maybe a one or two sentence description of each. Then just a quick list of the cells that need to be updated to add a new year. This is something I could probably figure out on my own, but even if I did I would need to write it down in the instructions for the next time I wanted to do it.

After looking I see the links to the Shiller data and the Simba data are on the sheets which is good.

thanks

fd
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Hexdump
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Re: Variable Percentage Withdrawal (VPW)

Post by Hexdump » Fri Apr 25, 2014 6:17 am

For myself, which is a single fund philosophy, Wellesley, would it make sense to use the Wellesley AA as the portfolio mix ?
I like the numbers that it spit out so I am guessing that there might be a misconception in my thinking.

Great tool and remarkably easy to use. Libre Office user here, so no worries about XP vanishing.

longinvest
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Re: Variable Percentage Withdrawal (VPW)

Post by longinvest » Fri Apr 25, 2014 6:33 am

Hexdump wrote:For myself, which is a single fund philosophy, Wellesley, would it make sense to use the Wellesley AA as the portfolio mix ?
I like the numbers that it spit out so I am guessing that there might be a misconception in my thinking.


Yes, I would use the fund's Asset Allocation.

The percentage is always applied to the current balance, not to the balance at start of retirement. So, there is a variation in withdrawal amount that matches the volatility of the underlying portfolio. In other words, if the portfolio drops 15%, withdrawals will drop approximately 15% too. Wellesley, with its conservative allocation, should offer a pretty smooth ride.

Great tool and remarkably easy to use. Libre Office user here, so no worries about XP vanishing.


One can easily recompute a VPW table using a simple financial calculator and the information in this thread. (Or, with some math knowledge, a simple calculator would be enough). The attractiveness of the spreadsheet is that it provides back-testing to get some intuition of how VPW would have behaved in the past.
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Cut-Throat
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Re: Variable Percentage Withdrawal (VPW)

Post by Cut-Throat » Fri Apr 25, 2014 6:38 pm

Hexdump wrote:Great tool and remarkably easy to use. Libre Office user here, so no worries about XP vanishing.


Yes, it is a great tool!

Lately there has been a lot of posts about 3% might be the new SWR...Then the real conservatives chime in that they are taking 2.5% just to be sure. Then a real pantywaist tells us he is only taking 2%

What these folks don't realize is; Yes they may be safe, but they are pretty much guaranteeing that they are depriving themselves of a bountiful retirement. They may try to convince us that they are perfectly content to stay home and pet the cat on the couch and eat Macaroni and cheese and that a Trip to Italy is really not worth the hassle, but that is not a life that I would want to live.

The big problem with a low SWR is that you are preparing for a historical worst case condition that has not happened in the last 100 years. And the fact is you don't have to prepare for it. If the worst happens VPW will tell you to ratchet down to 3% if need be. And what really happens, is that if the markets do crash, the money that they did not spend, is invested and loses value instead of being spent (This was the real epiphany to me). Being Frugal in essence, just gives you more money to lose in the markets, instead of spending it!

So, we've got a lot of folks preparing for the worst and living like it has already happened. They don't have to, they just have not figured it out yet. It's just simple math.

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Re: Variable Percentage Withdrawal (VPW)

Post by FinancialDave » Mon Apr 28, 2014 10:38 pm

What these folks don't realize is; Yes they may be safe, but they are pretty much guaranteeing that they are depriving themselves of a bountiful retirement.


What you might not realize is that their 2% is someone else's 10%!


:oops:
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Cut-Throat
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Re: Variable Percentage Withdrawal (VPW)

Post by Cut-Throat » Tue Apr 29, 2014 6:05 am

FinancialDave wrote:
What these folks don't realize is; Yes they may be safe, but they are pretty much guaranteeing that they are depriving themselves of a bountiful retirement.


What you might not realize is that their 2% is someone else's 10%!


:oops:


If you've got more money than you can spend, then yes, it's a moot point.

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Re: Variable Percentage Withdrawal (VPW)

Post by pobox2001 » Tue May 06, 2014 2:44 pm

I'm getting the following error when I try to download the file:
******************

Disabled link

Access to this link has been disabled. Please ask the owner of the shared link to send a new link to access the file or the folder.


******************

Any idea what I'm doing wrong?

Thanks,

pobox2001

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Cut-Throat
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Re: Variable Percentage Withdrawal (VPW)

Post by Cut-Throat » Tue May 06, 2014 3:22 pm

pobox2001 wrote:I'm getting the following error when I try to download the file:
******************

Disabled link

Access to this link has been disabled. Please ask the owner of the shared link to send a new link to access the file or the folder.


******************

Any idea what I'm doing wrong?

Thanks,

pobox2001


You're not doing anything wrong. This link is Broken and will have to be fixed by the Author or Someone? Expect it to happen in the next couple days.

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LadyGeek
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Re: Variable Percentage Withdrawal (VPW)

Post by LadyGeek » Tue May 06, 2014 3:54 pm

I dug into the wiki's revision history and get the same error for prior links. Perhaps something changed with dropbox, I sent longinvest a PM.
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Re: Variable Percentage Withdrawal (VPW)

Post by longinvest » Tue May 06, 2014 4:39 pm

Thanks, LadyGeek, for the PM.

I have fixed the link in the Wiki: http://www.bogleheads.org/wiki/Variable ... withdrawal

Apparently, DropBox invalidated many links yesterday due to a vulnerability (https://blog.dropbox.com/2014/05/web-vu ... red-links/).

longinvest
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ot1138
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Re: Variable Percentage Withdrawal (VPW)

Post by ot1138 » Tue May 06, 2014 5:42 pm

I have been modeling this a lot lately and have discovered a few things:

* If you have more than 33x your initial income (withdrawal amount including taxes) then you're very likely to have a large estate when you die. Between 25-33x, you are taking a risk. Below 25x and you stand a very high chance of running out of money in a 30 year timeframe.

* If you are younger, the ratio goes up. I am in my early 40s so my current ratio is around 36x. There are formulas for this.

* You can't create a plan based on the number of years until you die. You don't know this with any certainty.

* Therefore, a prudent course of action would be to take care of the bottom side scenario with a combination of social security and annuities (perhaps actual longevity insurance which I believe is now a product). I believe the only time it would not make sense to buy an annuity of some type is if you have significantly more than 33x your starting income and want to leave an estate behind.

* Best times to buy a long-term annuity are when interest rates are high. Ideally, that will be indexed to CPI but it may be cheaper to buy a fixed percentage increase annuity and keep some bonds sitting around to offset the inflation risk. You should probably also wait until retirement to do so.

* Asset allocation doesn't make a whole lot of difference in downside outcomes unless your equities are too low (<40%) in which case your portfolio may deplete unacceptably fast.

In short, save up a ton of money and take care of the downside scenario first. Then pick a reasonable withdrawal formula and you'll probably be ok. It's not rocket science (as much as I'd like to pretend otherwise sometimes).

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Cut-Throat
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Re: Variable Percentage Withdrawal (VPW)

Post by Cut-Throat » Tue May 06, 2014 6:02 pm

ot1138 wrote:* You can't create a plan based on the number of years until you die. You don't know this with any certainty.



Sure you Can !

You don't have to be completely Certain about this. If you pick age 100 you'll do Fine. Did you know that less 2/100 of 1 percent live to Age 100 in the United States?
That is pretty certain to me! Don't sweat it, you'll probably die much before age 90 and still leave money on the table!

And you forgot the most important part of your 'Plan'... Delaying S.S. to age 70 will help insure in case you do live a long time.

And if you use VPW..... You'll never run out of money!

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Re: Variable Percentage Withdrawal (VPW)

Post by longinvest » Tue May 06, 2014 6:11 pm

ot1138,

VPW computes a spendable percentage appropriate for the asset allocation and remaining depletion period. You could, for example, chose to deplete an amount of money over an 8 year period to bridge a delayed Social Security pension. 33x would be inappropriate, then.

VPW is not susceptible to a bad sequence of returns. If we were to experience a Japan like scenario, it would lower withdrawals, but it wouldn't fail. Unlike taking 4%, indexing it, and hoping for the best, and changing plan only when it gets too late, VPW reacts promptly to market conditions.

Actually, the part I like best about VPW is that in the vast majority of cases when a portfolio would enable a higher SWR than 4% (which we can't know in advance), VPW does provide higher withdrawals as the portfolio grows. I like this positive outlook a lot!

Thanks for the feedback.

longinvest
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Re: Variable Percentage Withdrawal (VPW)

Post by longinvest » Tue May 06, 2014 6:32 pm

Cut-Throat wrote:
ot1138 wrote:* You can't create a plan based on the number of years until you die. You don't know this with any certainty.



Sure you Can !

You don't have to be completely Certain about this. If you pick age 100 you'll do Fine. Did you know that less 2/100 of 1 percent live to Age 100 in the United States?
That is pretty certain to me! Don't sweat it, you'll probably die much before age 90 and still leave money on the table!

And you forgot the most important part of your 'Plan'... Delaying S.S. to age 70 will help insure in case you do live a long time.

And if you use VPW..... You'll never run out of money!


Thanks, Cut-Throat.

Effectively, establishing a higher spending floor using delayed Social Security is an important step. Using a conservatively long depletion period is important, too (age 100 seems good). For a 65-years old person, that's a 35 year retirement.

I would add that revising the plan every few years is important. If you see that your health and longevity estimates are increasing, you can recompute new percentages using a longer depletion period. You'll suffer a small spending reduction which shouldn't be much noticeable through the noise of portfolio volatility.

longinvest
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Re: Variable Percentage Withdrawal (VPW)

Post by HIinvestor » Tue May 06, 2014 11:31 pm

The spreadsheet still doesn't download in Dropbox today. The idea sounds great tho.

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Re: Variable Percentage Withdrawal (VPW)

Post by longinvest » Wed May 07, 2014 5:04 am

HIinvestor wrote:The spreadsheet still doesn't download in Dropbox today. The idea sounds great tho.


Here's another link: http://goo.gl/fnnxmV

Does this link work? It points to a copy on Google Drive.
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aim-high
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Re: Variable Percentage Withdrawal (VPW)

Post by aim-high » Wed May 07, 2014 5:52 am

Just wanted to say thanks for this sheet.

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Re: Variable Percentage Withdrawal (VPW)

Post by hiosilver » Wed May 07, 2014 11:33 am

Cut-Throat,
I respect and appreciate your input on this topic. Please reflect on how you would compare VPW with your previous method referenced as “Simple, But Aggressive SWR for Not leaving a Big Pile...?” This method runs FireCalc annually using the current length of retirement and portfolio.

Here is the topic if the url works:
Simple, But Aggressive SWR for Not leaving a Big Pile...


Cut-Throat wrote:
1.) The first year you retire, Run FireCalc and decide that you can live with the spending level for your length of plan. And this is an inflation adjusted sum we will call "Amount T" for target.

2.) Each year (Jan. 1) Remove all gains from your Portfolio Balance and put the Cash into in Account S (Surplus)( Why do you think I called this Account Surplus - Ha Ha!)

Continue to Run FireCalc until the Portfolio Balance will provide the Target Spending amount "T". If the portfolio Balance provides a number that is higher than the Target Amount, remove more of the portfolio to Account S (Surplus). If the Portfolio loses money only withdraw the Inflation Adjusted Amount T into account S. (Remember FireCalc in Step 1, already accounted for losses. You don't run FireCalc for years you have losses. And each year you have gains that would exceed producing the spending level "T", you rerun FireCalc setting the portfolio Balance to produce the spending level for the Target Amount and Sweep the excess into Account "S".
3.) All Spending comes from Account S.
4.) Subtract 1 year from the Length of your plan and repeat Steps 2-4 each year.
5.) Never let your Length of plan to fall less than 5 years(For unplanned longevity), and use the new Portfolio Balance (Which never includes Account S)

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Cut-Throat
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Re: Variable Percentage Withdrawal (VPW)

Post by Cut-Throat » Wed May 07, 2014 1:44 pm

hiosilver wrote:Cut-Throat,
I respect and appreciate your input on this topic. Please reflect on how you would compare VPW with your previous method referenced as “Simple, But Aggressive SWR for Not leaving a Big Pile...?” This method runs FireCalc annually using the current length of retirement and portfolio.

Here is the topic if the url works:
Simple, But Aggressive SWR for Not leaving a Big Pile...



VPW is much more superior tool than Firecalc as far as a Withdrawal Tool. VPW cannot Fail ever, whereas Outputs from Firecalc could fail if times are worse in the future.

I proposed this method you referred to as a Workable idea, and it would work as long as the future would never get worse than the past investment history. Somewhere in the thread I had said that I would never employ what I was proposing, but was merely laying out the math of FireCalc for all of those that 'believed' in a Firecalc Solution.

VPW however, is something that I am actually employing currently, as my wife and I are both retired.

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Re: Variable Percentage Withdrawal (VPW)

Post by hiosilver » Wed May 07, 2014 2:42 pm

Cut-Throat wrote:
Somewhere in the thread I had said that I would never employ what I was proposing, but was merely laying out the math of FireCalc for all of those that 'believed' in a Firecalc Solution.


I never knew why you didn't like the "re-use FireCalc" method but VPW is good for me. I also like having a spreadsheet in hand fully usable and adaptable with nothing to hide much like those of the missing in action bob90425.

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Re: Variable Percentage Withdrawal (VPW)

Post by hiosilver » Wed May 07, 2014 2:44 pm

So am I right to believe that VPW is a “retire every year” plan like the one I mentioned above? What this means is you take your current portfolio and life term and figure out what to withdraw that year. In theory, this works for me. A 75 year old who retired at 65 should be making the same decision as a person retiring at age 75. I never thought taking one value calculated at retirement would be good for the rest of your life.

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Re: Variable Percentage Withdrawal (VPW)

Post by Cut-Throat » Wed May 07, 2014 2:50 pm

hiosilver wrote:So am I right to believe that VPW is a “retire every year” plan like the one I mentioned above? What this means is you take your current portfolio and life term and figure out what to withdraw that year. In theory, this works for me. A 75 year old who retired at 65 should be making the same decision as a person retiring at age 75. I never thought taking one value calculated at retirement would be good for the rest of your life.


Since VPW is always taking an ever increasing Percentage from your existing Portfolio Balance, it does compute your Withdrawal Amount every year. I have a Spreadsheet that I just pre-loaded the VPW Percentages in. At the start of each year, I plug in my Portfolio Balance and the Spreadsheet tells me what I can spend that year. I then move that amount from 1 Bank Account to Another 'Spending Bank Account'.

But as you mentioned the 75 Year Old is taking 5.5% of Portfolio Amount, where the 65 year old is taking only 4.5%

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Re: Variable Percentage Withdrawal (VPW)

Post by LadyGeek » Wed May 07, 2014 3:21 pm

longinvest wrote:
HIinvestor wrote:The spreadsheet still doesn't download in Dropbox today. The idea sounds great tho.


Here's another link: http://goo.gl/fnnxmV

Does this link work? It points to a copy on Google Drive.

Yes. Perhaps I didn't notice this before, but the filesize is 20 MB. The wiki link also works.
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Re: Variable Percentage Withdrawal (VPW)

Post by Bustoff » Wed May 07, 2014 4:21 pm

LadyGeek wrote:
longinvest wrote:
HIinvestor wrote:The spreadsheet still doesn't download in Dropbox today. The idea sounds great tho.


Here's another link: http://goo.gl/fnnxmV

Does this link work? It points to a copy on Google Drive.

Yes. Perhaps I didn't notice this before, but the filesize is 20 MB. The wiki link also works.


When trying to download I get this banner:
This spreadsheet is too large. Click to download or edit in Google Sheets.Dismiss
I can see all the instructions but nothing else.

When I click download I get this:
VariablePercentageWithdrawal.xls
Not Found
Error 404


Any advice?

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Re: Variable Percentage Withdrawal (VPW)

Post by LadyGeek » Wed May 07, 2014 4:30 pm

You're right, I get the same error.

Use the menu, not the link in that banner line. File --> Download should do the trick.
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Re: Variable Percentage Withdrawal (VPW)

Post by hiosilver » Wed May 07, 2014 4:36 pm

http://goo.gl/fnnxmV presently does NOT work for me. It shows screen shots of the spreadsheet instead of the file download.
I'm using Windows 7, Firefox and Excel 2007.
My most recent file was VariablePercentageWithdrawal-4.xls at 13.3MB

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Bustoff
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Re: Variable Percentage Withdrawal (VPW)

Post by Bustoff » Wed May 07, 2014 4:38 pm

LadyGeek wrote:You're right, I get the same error.

Use the menu, not the link in that banner line. File --> Download should do the trick.


That did it. Thanks LadyGeek!

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Re: Variable Percentage Withdrawal (VPW)

Post by longinvest » Wed May 07, 2014 5:00 pm

Thanks to the feedback, I have added clearer download instructions in the Wiki.

The link leads to Google Docs which can't display the file correctly. The file must be downloaded using the File->Download menu.

I recommend using LibreOffice (free!), instead of Microsoft Excel, to play with it.
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Re: Variable Percentage Withdrawal (VPW)

Post by UnclePennybags » Fri May 09, 2014 1:14 pm

I'm a new user (although not a new investor) and I just stumbled across this tool and have spend a happy hour playing with it. It is absolutely brilliant and I just wanted to my own thanks to longinvest for his hard work to build the back-testing into the tool which elevated it from interesting to indispensible.

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Re: Variable Percentage Withdrawal (VPW)

Post by Cut-Throat » Fri May 09, 2014 4:19 pm

UnclePennybags wrote:I'm a new user (although not a new investor) and I just stumbled across this tool and have spend a happy hour playing with it. It is absolutely brilliant and I just wanted to my own thanks to longinvest for his hard work to build the back-testing into the tool which elevated it from interesting to indispensible.


+1....... I echo your enthusiasm! ....... The real epiphany for me was that if you try to approach your retirement conservatively with a 2% Withdrawal Rate, you are just putting the other 2% at risk for the Market to lose for you instead of Spending it.

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Re: Variable Percentage Withdrawal (VPW)

Post by 1210sda » Sat May 10, 2014 7:14 pm

Trying to decide on which variables to use: Shiller or Simba.....and what to use as a "start year".

Simba use the funds in the three fund portfolio which I use, but it's only for 42 years while Shiller is for 142 years.

Using an early start year, brings the Great Depression into play. Using a 1950's or 1960's start year, factors in 1973-1974. While starting in the early 1980's brings the time frame up to the present.

Would appreciate any suggestions as to when to start along with your rationale for it.

1210

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Re: Variable Percentage Withdrawal (VPW)

Post by Cut-Throat » Sat May 10, 2014 7:33 pm

1210sda wrote:Trying to decide on which variables to use: Shiller or Simba.....and what to use as a "start year".

Simba use the funds in the three fund portfolio which I use, but it's only for 42 years while Shiller is for 142 years.

Using an early start year, brings the Great Depression into play. Using a 1950's or 1960's start year, factors in 1973-1974. While starting in the early 1980's brings the time frame up to the present.

Would appreciate any suggestions as to when to start along with your rationale for it.

1210


I use Shiller. More Data. I also use 1966 and 1937 for start dates of plan. These are 'pretty bad' dates to start retirement. If you can stomach this back testing, you're good to go.

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Re: Variable Percentage Withdrawal (VPW)

Post by longinvest » Sat May 10, 2014 7:49 pm

1210sda wrote:Trying to decide on which variables to use: Shiller or Simba.....and what to use as a "start year".

Simba use the funds in the three fund portfolio which I use, but it's only for 42 years while Shiller is for 142 years.

Using an early start year, brings the Great Depression into play. Using a 1950's or 1960's start year, factors in 1973-1974. While starting in the early 1980's brings the time frame up to the present.

Would appreciate any suggestions as to when to start along with your rationale for it.

1210,

I've described the differences between both data sets in: viewtopic.php?f=10&t=120430&start=300#p1915457

longinvest
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Re: Variable Percentage Withdrawal (VPW)

Post by longinvest » Sun May 11, 2014 6:35 am

I've uploaded a new version of the spreadsheet (see: http://www.bogleheads.org/wiki/Variable ... withdrawal for the download link).

Main changes:
  • I added a Retirement Work Sheet.
  • I changed the "Worst Drop" calculation to match the intuitive interpretation. It now shows the worst fall in inflation-adjusted withdrawal below the start withdrawal amount.
Last edited by longinvest on Sun May 11, 2014 1:59 pm, edited 1 time in total.
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Re: Variable Percentage Withdrawal (VPW)

Post by midareff » Sun May 11, 2014 8:02 am

FinancialDave wrote:
What these folks don't realize is; Yes they may be safe, but they are pretty much guaranteeing that they are depriving themselves of a bountiful retirement.


What you might not realize is that their 2% is someone else's 10%!


:oops:



:oops: :oops: +1

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Re: Variable Percentage Withdrawal (VPW)

Post by longinvest » Sun May 11, 2014 8:22 am

midareff wrote:
FinancialDave wrote:
What these folks don't realize is; Yes they may be safe, but they are pretty much guaranteeing that they are depriving themselves of a bountiful retirement.


What you might not realize is that their 2% is someone else's 10%!


:oops:



:oops: :oops: +1

Of course, if you're Warren Buffet or Bill Gates, you can afford to live on way less than 1%. I suspect near deca-millionaire Bogleheads (according to the survey) to be able to live on much less than their mutual fund distributions (in addition to SS and pensions). Not all of us are as wealthy as that, though, and some of us might not get to accumulate way more than we'd need for a very comfortable retirement.

Withdrawal methods are tools for people that have enough (and probably a little more), but not loads more than that. As such, they have a role in the plans of some people, but not necessarily in everybody's plans.
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Re: Variable Percentage Withdrawal (VPW)

Post by 1210sda » Sun May 11, 2014 11:22 am

I went through the Shiller data (all 142 yrs) and found that 1929 was the start year (for a 35 year horizon) that provided the lowest total amount of withdrawals.

I plugged in "Shiller" and "1929" in the drop down boxes then use the Excel auto sum feature to find the total amount of w/d's.

This provides me with a historical worst case scenario, at least for the 1871 thru 2013 period.

Would be interested in other BH's approach to this.

1210

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Re: Variable Percentage Withdrawal (VPW)

Post by longinvest » Sun May 11, 2014 11:36 am

Just a note: I have included a "Withdrawal Statistics (for every start year)" chart to make it easier to find such worst years without having to manually test every year. The actual lowest withdrawal amount should also show in the "Statistics for All Start Years" (previously "Multi-Year") table, as long as the appropriate period is selected (From 1972 1871, To 2012).

[Edited to add:] For a 50/50 portfolio, the worst year was actually 1906, with a lowest inflation-adjusted withdrawal of $23,642 from a start portfolio of $1,000,000 for a 35-year retirement.

That one is quite interesting. Look at how inflation and deflation were wild over the period!
Image
Last edited by longinvest on Sun May 11, 2014 2:22 pm, edited 1 time in total.
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Re: Variable Percentage Withdrawal (VPW)

Post by longinvest » Sun May 11, 2014 11:55 am

1210sda wrote:I went through the Shiller data (all 142 yrs) and found that 1929 was the start year (for a 35 year horizon) that provided the lowest total amount of withdrawals.

I plugged in "Shiller" and "1929" in the drop down boxes then use the Excel auto sum feature to find the total amount of w/d's.

This provides me with a historical worst case scenario, at least for the 1871 thru 2013 period.

Would be interested in other BH's approach to this.

1210

I missed the red part. Actually, one could get the same information from an average inflation-adjusted withdrawal amount over the period. Personally I prefer displaying a median inflation-adjusted withdrawal amount, as I think that it better illustrates the retiree's reality. The "Withdrawal Statistics (for every start year)" identifies, for a full 35-year retirement, 1966 as having had worst median withdrawal of $40,263.
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Re: Variable Percentage Withdrawal (VPW)

Post by 1210sda » Sun May 11, 2014 11:58 am

longinvest wrote:Just a note: I have included a "Withdrawal Statistics (for every start year)" chart to make it easier to find such worst years without having to manually test every year. The actual lowest withdrawal amount should also show in the "Statistics for All Start Years" (previously "Multi-Year") table, as long as the appropriate period is selected (From 1972, To 2012).

[Edited to add:] For a 50/50 portfolio, the worst year was actually 1906, with a lowest inflation-adjusted withdrawal of $23,642 from a start portfolio of $1,000,000 for a 35-year retirement.

That one is quite interesting. Look at how inflation and deflation were wild over the period!
Image


Longinvest,

My withdrawals chart doesn't show the start year. Instead, it shows from year "0" to year "40" in 10 year increments.
1210

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Re: Variable Percentage Withdrawal (VPW)

Post by longinvest » Sun May 11, 2014 12:03 pm

1210,

Are you using LibreOffice Calc? I know that some people reported problems with the charts using Microsoft Excel. Also, if you're using an old version of the VPW spreadsheet, you should download the latest (May 11th!) version from http://www.bogleheads.org/wiki/Variable ... withdrawal .

longinvest
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Re: Variable Percentage Withdrawal (VPW)

Post by 1210sda » Sun May 11, 2014 12:35 pm

Longinvest,

I'm using Excel. I really like using Excel, therefore, I'll just accept the charts as they are.

BTW, for the umpteenth time :happy .....thanks a lot for all your work. I'm sure this spreadsheet will help a lot of folks in their retirement planning.

I do suspect that you really enjoy doing this and are challenged by it.

1210

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Re: Variable Percentage Withdrawal (VPW)

Post by LadyGeek » Sun May 11, 2014 1:04 pm

Longinvest,

I concur with 1210sda using MS Excel 2010. The X-axis format is showing a count (starts at 0), but the SERIES function appears to be pointing to the right data (years). All of the charts on that page are hosed.

I'll take a look at it when I get a chance.

Update: I looked. Possibility: Excel is using the unfilled cells as Year = 0. This may be the same quirk as the one in the Simba Backtesting spreadsheet. I fixed that one, let's see if it works here.

Further update: The fix has been incorporated and tested in MS Excel and LibreOffice 4.2. longinvest - check your email.
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Re: Variable Percentage Withdrawal (VPW)

Post by longinvest » Sun May 11, 2014 1:56 pm

1210sda wrote:BTW, for the umpteenth time :happy .....thanks a lot for all your work. I'm sure this spreadsheet will help a lot of folks in their retirement planning.

It's a group effort; even if I'm implementing the spreadsheet, you have to thank all the Bogleheads that have commented on the initial idea, helped improve it, and suggested most of the ideas that I have implemented.
I do suspect that you really enjoy doing this and are challenged by it.

Yes and yes. :D
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Re: Variable Percentage Withdrawal (VPW)

Post by longinvest » Mon May 12, 2014 7:28 pm

LadyGeek sent me a solution for making the charts work under Microsoft Excel. I have implemented the solution in the spreadsheet and uploaded a new version on http://www.bogleheads.org/wiki/Variable ... withdrawal .

If I did it right, the charts should look similar to this:
Image
Image
Image

Please, let me know if the charts are finally OK in Microsoft Excel (or if I failed to implement LadyGeek's solution correctly).
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Re: Variable Percentage Withdrawal (VPW)

Post by LadyGeek » Mon May 12, 2014 8:35 pm

You did it right, the charts look exactly as shown.

Sorry, I didn't see this until today. Both the Portfolio Balance and Worst Drop Statistics position the X-axis labels inside the chart area, which is not a good location. Let's fix that:

In each chart, select the X-axis --> Right click --> Format Axis... --> Axis Options --> Axis Labels --> "Low" for Portfolio Balance, "High" for Worst Drop Statistics.

The spreadsheet works OK in LibreOffice Calc 4.2, including the suggested X-Axis chart label formatting.

===============================
The filesize downloaded from Google Drive is 15.6 MB. When I saved the file in MS Excel (as .xls), the filesize dropped to 9.5 MB. The heavy contributor is the MultiPath tab - about 9 MB.

Excel has a reputation for saving excessive data "under the hood" which can increase the filesize well beyond what's normally expected. I've seen this before, where the solution is to create a new spreadsheet and copy the data over - the filesize is back to normal.

In this case, all I could do to reduce the size was to delete the unused rows and columns (beyond the 42 entries x 36 years). However, this will break the spreadsheet implementation, as it's designed to handle 150 entries. If memory size isn't a concern, I'd leave this alone. I'm not suggesting to do anything; I'm just commenting on this observation.
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Re: Variable Percentage Withdrawal (VPW)

Post by longinvest » Mon May 12, 2014 9:00 pm

LadyGeek, thanks again for your help. You're really a spreadsheet wizard!
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Re: Variable Percentage Withdrawal (VPW)

Post by LadyGeek » Mon May 12, 2014 10:22 pm

You're welcome. Can you check the chart legends?

Withdrawals - The right-hand side legend appears compressed. If you see this effect, I recommend putting the legend on the "top" side.
Withdrawal Statistics - Legend is missing. I recommend the "top" side.

At this point, these are very minor comments. Slow down and wait a few days for more feedback, then decide if you want to do an update.
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Re: Variable Percentage Withdrawal (VPW)

Post by longinvest » Sat May 17, 2014 3:32 pm

I have uploaded a new version of the VPW spreadsheet on http://www.bogleheads.org/wiki/Variable ... withdrawal .

Changes:
  • The range is now automatically set for Withdrawal Statistics based on the selected data set (Simba / Shiller).
  • The charts were regenerated, hopefully improving legend display (based on LadyGeek's comment in the previous post).
  • The "Worst Drop" statistics (which were meant for evaluating volatility, not for comparing VPW with other methods) were removed, as they confused users. Instead, users should use the inflation-adjusted "Minimum Withdrawal" and "Median Withdrawal" to compare VPW with other methods.

Please let me know if everything displays OK now.
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Re: Variable Percentage Withdrawal (VPW)

Post by 1210sda » Sat May 17, 2014 3:49 pm

Longinvest,

Here's my quick feedback.

On the "withdrawals" chart, there is no legend for the red line. The same is true for the "withdrawal statistics" chart.

On the "portfolio balance" chart, the blue line legend only shows B..

Small stuff, OK

1210

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