5% Withdrawal Rate Recommended by US News Columnist

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CurlyDave
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by CurlyDave »

michaeljc70 wrote: Sat Sep 14, 2019 8:32 am
...Seems like a bad withdrawal strategy and I'm not sure why they didn't consider the better/more common strategy of fixed % of current portfolio (also called the endowment method). Inflation will eat away at your withdrawals taking a fixed % of the starting portfolio and not adjusting it for inflation. I could see this suitable for short retirements only. After 22 years (assuming 3% inflation) you will be getting half (in real dollars) of what you started getting.
I would not go so far as to call it a "bad" withdrawal strategy. It has been hiding in plain sight in the Trinity study, and has not received the attention and discussion I think it deserves, but it is not "bad".

As many have said before, the endowment method will never produce a failure, although it may reduce your withdrawals to a poverty level. I strongly suspect that the lack of failures is the real reason they chose the method they used. For the purpose of this academic study the method chosen will produce failures, and the withdrawals are comparable to those the the 4% plus inflation produces.

After 22 years (assuming 3% inflation) you will be getting half (in real dollars) of what you started getting. As much as this is true, the real comparison is with what the 4% plus inflation strategy produces. For the first 18 or 19 of those years the 7% fixed withdrawal produces higher withdrawals, and at 22 years your withdrawal is 91.3% of the inflation adjusted method.

I am 12 years into retirement, and our spending for trips and activities is starting to slow down, not out of financial necessity, but because our physical capabilities are diminishing.
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by Glenn »

The article is very poorly written - unclear, a self-serving ad, and loaded with useless platitudes. My favorite is the last line: "A secure retirement strategy is most certainly always the best one." Deep thought there.
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by am »

7% fixed seems like it would allow more spending earlier in retirement and less later in real dollars. This seems ideal since you can do more earlier on. 1 mil would let you spend 70k first year and 91.3% of inflated adjusted amount after 22 years according to last poster. Seems more reasonable than using 3-4% swr and becoming disabled or dying with more money than you started most of the time,
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by abuss368 »

marcopolo wrote: Sat Sep 14, 2019 11:59 am The risk is still due to sequence of returns. How it affects your life when the risk shows up is dependent on the withdrawal method. With SWR, you portfolio balance is negatively impacted, with fixed percentage, your income is negatively impacted. Either result is still due to the risk of bad sequence of returns.
The timing of any market pullback is key as well. A pullback or crisis early in life or close to retirement (or in early retirement) can have a ripple effect that may be positive or dire.
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by willthrill81 »

am wrote: Sat Sep 14, 2019 4:06 pm 7% fixed seems like it would allow more spending earlier in retirement and less later in real dollars. This seems ideal since you can do more earlier on. 1 mil would let you spend 70k first year and 91.3% of inflated adjusted amount after 22 years according to last poster. Seems more reasonable than using 3-4% swr and becoming disabled or dying with more money than you started most of the time,
I agree that front-loading withdrawals for the sake of accounting for higher discretionary spending in retirement makes sense. However, as I noted above, this would have left year 2000 retirees with a 60/40 AA with only 51% of their inflation-adjusted starting balance and, subsequently, only 51% of their starting inflation-adjusted withdrawals. Perhaps that would be fine for a retiree whose portfolio is mainly or exclusively for discretionary spending. For most others, that might not be acceptable.

Again, a 4% SWR approach is not realistically going to leave anyone being 'the richest person in the graveyard' because virtually no one is actually strictly adhering to it.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by abuss368 »

am wrote: Sat Sep 14, 2019 4:06 pm 7% fixed seems like it would allow more spending earlier in retirement and less later in real dollars. This seems ideal since you can do more earlier on. 1 mil would let you spend 70k first year and 91.3% of inflated adjusted amount after 22 years according to last poster. Seems more reasonable than using 3-4% swr and becoming disabled or dying with more money than you started most of the time,
Timing of market corrections could impact that!
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by marcopolo »

abuss368 wrote: Sat Sep 14, 2019 4:38 pm
marcopolo wrote: Sat Sep 14, 2019 11:59 am The risk is still due to sequence of returns. How it affects your life when the risk shows up is dependent on the withdrawal method. With SWR, you portfolio balance is negatively impacted, with fixed percentage, your income is negatively impacted. Either result is still due to the risk of bad sequence of returns.
The timing of any market pullback is key as well. A pullback or crisis early in life or close to retirement (or in early retirement) can have a ripple effect that may be positive or dire.
Timing of crash is what "sequence of return risk" refers to.
Poor performance in the early years of retirement is more impactful than crashes later in life. So, sequence matters.
Once in a while you get shown the light, in the strangest of places if you look at it right.
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by abuss368 »

marcopolo wrote: Sat Sep 14, 2019 5:12 pm
abuss368 wrote: Sat Sep 14, 2019 4:38 pm
marcopolo wrote: Sat Sep 14, 2019 11:59 am The risk is still due to sequence of returns. How it affects your life when the risk shows up is dependent on the withdrawal method. With SWR, you portfolio balance is negatively impacted, with fixed percentage, your income is negatively impacted. Either result is still due to the risk of bad sequence of returns.
The timing of any market pullback is key as well. A pullback or crisis early in life or close to retirement (or in early retirement) can have a ripple effect that may be positive or dire.
Timing of crash is what "sequence of return risk" refers to.
Poor performance in the early years of retirement is more impactful than crashes later in life. So, sequence matters.
Agreed.
John C. Bogle: “Simplicity is the master key to financial success."
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by michaeljc70 »

am wrote: Sat Sep 14, 2019 4:06 pm 7% fixed seems like it would allow more spending earlier in retirement and less later in real dollars. This seems ideal since you can do more earlier on. 1 mil would let you spend 70k first year and 91.3% of inflated adjusted amount after 22 years according to last poster. Seems more reasonable than using 3-4% swr and becoming disabled or dying with more money than you started most of the time,
In 18 years I will be at FRA for social security and my $$$$ needed from investments will drop substantially which makes me more interested in this method. My concern is that I would be withdrawing around 50% more than I've spent in the last 10 years on average which seems reckless (yet fun) given there could be a bad sequence of returns coming. I know there can always be a bad SOR coming, but I think it does the most damage to a plan at the beginning of retirement especially a plan that isn't conservative.
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by MnD »

Recently retired mid-50's now 57 and we're strictly following a 5% of annual portfolio balance spend with a floor of 3% inflation-adjusted.
70/30AA portfolio which provides about 50% of our total income. "Needs" are about 30% of our total income.

We are both active, healthy and having a blast having dumped the daily grind and stress of our demanding full-time jobs in favor of more enjoyable activities in the "best" years of retirement. Since we have enjoyed one year at the 5% level, I consider that we've already beaten a 3% SWR retirement plan, even if the market takes a dump, never recovers and by necessity we spend the rest of retirement at the 3% floor.

If a terrible sequence of returns arises will we automatically throttle back. If not, we will continue to enjoy a much higher income than worst-case SWR's will afford. I don't understand the appeal of working many years longer and having a poor conversion of wealth to income by locking in spending at a worse-case sequence of returns level - whether one needs to or not. I suspect for some, a large and ever growing portfolio has become melded to their identity, hence the appeal of an ultra-low SWR that will sustain that track even in retirement. We perceive the real risks to our aspirations of a long, happy and active retirement to be early demise or disability as opposed to the highly unlikely scenario of very well prepared retirees with solid financial grounding in Boglehead philosophy running their portfolio into the ground.

Our plan compared to a 3.3% inflation-adjusted SWR which historically were equally risky in terms of portfolio depletion.
All dollars in real terms. http://www.cfiresim.com/input.php

5% of annual portfolio withdrawal, 3% inflation-adjusted floor, 70/30AA, 35 years
Image

3.3% inflation-adjusted withdrawal, 70/30AA, 35 years
Image
70/30 AA for life, Global market cap equity. Rebalance if fixed income <25% or >35%. Weighted ER< .10%. 5% of annual portfolio balance SWR, Proportional (to AA) withdrawals.
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by am »

MnD wrote: Sun Sep 15, 2019 9:20 am Recently retired mid-50's now 57 and we're strictly following a 5% of annual portfolio balance spend with a floor of 3% inflation-adjusted.
70/30AA portfolio which provides about 50% of our total income. "Needs" are about 30% of our total income.

We are both active, healthy and having a blast having dumped the daily grind and stress of our demanding full-time jobs in favor of more enjoyable activities in the "best" years of retirement. Since we have enjoyed one year at the 5% level, I consider that we've already beaten a 3% SWR retirement plan, even if the market takes a dump, never recovers and by necessity we spend the rest of retirement at the 3% floor.

If a terrible sequence of returns arises will we automatically throttle back. If not, we will continue to enjoy a much higher income than worst-case SWR's will afford. I don't understand the appeal of working many years longer and having a poor conversion of wealth to income by locking in spending at a worse-case sequence of returns level - whether one needs to or not. I suspect for some, a large and ever growing portfolio has become melded to their identity, hence the appeal of an ultra-low SWR that will sustain that track even in retirement. We perceive the real risks to our aspirations of a long, happy and active retirement to be early demise or disability as opposed to the highly unlikely scenario of very well prepared retirees with solid financial grounding in Boglehead philosophy running their portfolio into the ground.

Our plan compared to a 3.3% inflation-adjusted SWR which historically were equally risky in terms of portfolio depletion.
All dollars in real terms. http://www.cfiresim.com/input.php

5% of annual portfolio withdrawal, 3% inflation-adjusted floor, 70/30AA, 35 years
Image

3.3% inflation-adjusted withdrawal, 70/30AA, 35 years
Image
Curious how you settled on 5% portfolio balance with 3% inflation adjusted floor? Why not 6-7% with 3% inflation adjusted floor?
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by yangtui »

Being a US News Columnist doesn't mean this person is worth listening to.
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by Mr. Rumples »

Across the street is an elderly couple in their 90's. He is frail and has dementia. His wife is in a wheelchair but is sharp as a tack. They now need 24/7 care. I don't know what it costs. My neighbor down the road is caring for his wife with dementia. He is paying $20 an hour for help around 8 hours a day. The assisted living facilities around here run about $6,000 a month. These numbers scare me since in my family we live into our 90's. Longevity is a risk for me. I want to stay in my house as long as possible. Therefore, I am ultra conservative and only withdraw 2% of the portfolio value each year. Two of my grandparents had to get help from their children, though when retirement started, it appeared they would be fine; and I don't want to do that. I'm lucky I know since I have a pension with a COLA, SS and savings. When my aunt went into assisted living, she could afford to hire someone to stay with her every day, all day. This ensured she got out during the day and got a bath daily (many homes only give baths every other day).

Wade Pfau has an article on this:

http://www.fa-mag.com/userfiles/stories ... paper-.pdf
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Re: 5% Withdrawal Rate Recommended by US News Columnist

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Mr. Rumples wrote: Sun Sep 15, 2019 10:22 am Across the street is an elderly couple in their 90's. He is frail and has dementia. His wife is in a wheelchair but is sharp as a tack. They now need 24/7 care. I don't know what it costs. My neighbor down the road is caring for his wife with dementia. He is paying $20 an hour for help around 8 hours a day. The assisted living facilities around here run about $6,000 a month. These numbers scare me since in my family we live into our 90's. Longevity is a risk for me. I want to stay in my house as long as possible. Therefore, I am ultra conservative and only withdraw 2% of the portfolio value each year. Two of my grandparents had to get help from their children, though when retirement started, it appeared they would be fine; and I don't want to do that. I'm lucky I know since I have a pension with a COLA, SS and savings. When my aunt went into assisted living, she could afford to hire someone to stay with her every day, all day. This ensured she got out during the day and got a bath daily (many homes only give baths every other day).

Wade Pfau has an article on this:

http://www.fa-mag.com/userfiles/stories ... paper-.pdf
Taking on such an extremely conservative withdrawal rate would only make sense to me if you believe that there is a significant possibility that your real portfolio returns will be negative for the next several decades and/or you don't believe that your current portfolio would adequately fund long-term care in the future and so you need it to grow in real dollars while you are also making withdrawals.

You may not be doing this, but many of the people who seem to be very concerned about long-term care expenses assume that those expenses will be in addition to their spending before the LTC 'event'. Rarely is that true. Long-term care tends to reduce/eliminate one's spending on travel, vehicles, clothing, etc.
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by Mr. Rumples »

True, I am most likely too conservative, but then that's how we (I took care of the money) got to retire at 56. I also have a long term care insurance policy through my employer, but there is no guarantee that will around forever. I just don't want to have to rely on family and I want a daily bath.

Still the Pfau article gave me comfort that I wasn't being totally out of the ballpark with my 2%. I do want it to grow so that if there is any left, I can leave some to family and set up an endowed scholarship.
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by am »

Mr. Rumples wrote: Sun Sep 15, 2019 11:06 am True, I am most likely too conservative, but then that's how we (I took care of the money) got to retire at 56. I also have a long term care insurance policy through my employer, but there is no guarantee that will around forever. I just don't want to have to rely on family and I want a daily bath.

Still the Pfau article gave me comfort that I wasn't being totally out of the ballpark with my 2%. I do want it to grow so that if there is any left, I can leave some to family and set up an endowed scholarship.
1-2%? Why even bother? Most will never retire. And why think that.1-2% will work in such dire circumstances?
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by Mr. Rumples »

The 2% gives me play money for the land (gardens, trees and yard) which need significant restoration (its part of an old farm which has been around since the 1870's) and restoring the house. That 2% is about all I can handle a year in projects now. I agree its not much and the input from y'all helps me reevaluate my approach.
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by am »

http://www.fa-mag.com/userfiles/stories ... paper-.pdf

Wow, talk about a downer. If what he says is true, most Americans, pension funds, etc. are in enormous trouble with regards to their future.
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Re: 5% Withdrawal Rate Recommended by US News Columnist

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am wrote: Sun Sep 15, 2019 12:59 pm http://www.fa-mag.com/userfiles/stories ... paper-.pdf

Wow, talk about a downer. If what he says is true, most Americans, pension funds, etc. are in enormous trouble with regards to their future.
Buried in the appendix was the assumption of a 1.67% annual fee (combined AUM and ER) for stocks and 1.6% for bonds. :oops:

I don't think that many appreciate how bad things would have to be for the 30 year SWR to be below 3%, let alone 2%. People love to throw out Japan as a worst case scenario, but the 30 year SWR for a Japanese investor with a 60/40 AA invested wholly Japanese assets was 3.0%. If they split their equities 50/50 between Japan and ex-Japan, it was 3.7%.

Forecasting a 10% probability, which they did, for a 1.97% SWR for 30 years is patently absurd unless we include apocalyptic scenarios where there will be no such thing as a SWR at all.
Last edited by willthrill81 on Sun Sep 15, 2019 1:27 pm, edited 1 time in total.
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by JackoC »

donaldfair71 wrote: Tue Sep 10, 2019 9:01 am Merriman talks about and endorses this strategy IF you have substantially more than you'll ever need (defined on safely being able to live on 1-2% withdrawal, I believe).

Basically, take 5% out each and every year of the account value on a certain date. With that amount, live/give/do whatever you want. In a deep bear market you take out much less, but still within safety because you don't need much at all from the portfolio. In a bull, life is great. In a bear, cut back.

Not saying I advocate it, but he has mentioned this often on his podcast.

In practice I don't see it really happening. The same kind of people who live frugally or save 50X expenses are probably gonna have a hard time taking out and spending 5% of the portfolio.
That's interesting but I agree sort of strange and unlikely to fit with the mentality of people who have accumulated assets, and adopted a lifestyle, to end up in a position where 2% (SWR, I assume he means) meets their needs.

Also 'X% of nominal portfolio value' strips out the inflation adjustment in 'X% of first year's value then that $ amount adjuested up by inflation'. Maybe that's obvious. But the expected return has to exceed the 5% by inflation to have a constant expected real withdrawal. Which is not particularly realistic IMO at today's valuations. Maybe at a stretch it would be for 100% stocks but not a safer portfolio typical of retired people with safe bonds now yielding close to zero real. IMO 60/40 real pretax E[r] now is something like 2%* (maybe 3.5% stock, 0% bond). Call that too pessimistic if you like, but there's no way it's 5% real at today's low bond and stock earnings yields, not at the midpoint of the distribution (almost anything could happen somewhere on the distribution).

Anyway obviously almost nobody would really stick with with the inflation adjusted value of the first year's withdrawal if returns were consistently poor and the number grew ominously over time as a % of the remaining portfolio. They'd cut back, and in most scenario's here is also some baseline income (SS plus possibly pension) which isn't directly subject to market returns. In that sense % of portfolio is arguably more realistic than SWR as a thing to eventually actually do. But I still think SWR is the better metric for discussion of retirement *plans*. It just equates to X times annual expenses, the X being 1/SWR %. X% of current value is actually harder to visualize IMO. Which includes the idea how/why you'd start out withdrawing 5% if you're comfortable in year 1 with 2%. OK the 5% is partly self correcting if it shrinks the portfolio too much over time, but what's would the 2% of assets lifestyle people actually do with the first 5%? :happy

*reiterating that's my planning estimate for *expected return* of 60/40. Even at 0% real return it takes 50 yrs to exhaust a portfolio at 2% SWR. So sure, 2% SWR is quite low even with a relatively dour view of expected return, for people whose only firm goal is not to run out of money themselves. It's not particularly low IMO for people with a goal of passing on the full inflation adjusted value of their initial portfolio.
Last edited by JackoC on Sun Sep 15, 2019 1:33 pm, edited 2 times in total.
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by firebirdparts »

I don’t want to comment on the original USNews article because it was so very, very dumb and without substance.

However....
most Americans, pension funds, etc. are in enormous trouble with regards to their future.
Remember, what some predictors (who don’t know) are saying is future returns may be a bit lower. 4% has a failure rate. Down the road, we may look back and say this 4% is not going well. That is unlikely. They think it is less unlikely. 10 years into retirement you’ll have a better idea.

if you withdraw 4% and adjust for inflation you will probably get richer and richer.

That is what the 4% “rule” is really. The point at which you would be okay In a terrible return sequence. You’ll know if the return sequence is terrible.
Last edited by firebirdparts on Sun Sep 15, 2019 1:33 pm, edited 2 times in total.
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by firebirdparts »

willthrill81 wrote: Sun Sep 15, 2019 1:20 pm
Buried in the appendix was the assumption of a 1.67% annual fee (combined AUM and ER) for stocks and 1.6% for bonds. :oops:
And prominently displayed was that this fee is “inevitable”. :happy
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by am »

firebirdparts wrote: Sun Sep 15, 2019 1:29 pm
willthrill81 wrote: Sun Sep 15, 2019 1:20 pm
Buried in the appendix was the assumption of a 1.67% annual fee (combined AUM and ER) for stocks and 1.6% for bonds. :oops:
And prominently displayed was that this fee is “inevitable”. :happy
It’s probably accurate as most people have no clue and have to use an adviser. These people who use advisers are minority as well. Many Americans have little to nothing. We are in a tiny minority here on BH.
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by willthrill81 »

am wrote: Sun Sep 15, 2019 1:52 pm
firebirdparts wrote: Sun Sep 15, 2019 1:29 pm
willthrill81 wrote: Sun Sep 15, 2019 1:20 pm
Buried in the appendix was the assumption of a 1.67% annual fee (combined AUM and ER) for stocks and 1.6% for bonds. :oops:
And prominently displayed was that this fee is “inevitable”. :happy
It’s probably accurate as most people have no clue and have to use an adviser. These people who use advisers are minority as well. Many Americans have little to nothing. We are in a tiny minority here on BH.
It's only people with considerable wealth who can even contemplate using any SWR at all. Pfau should have compared the results with the 1.6% or higher fees and with much lower fees, perhaps .1%. But financial advisers probably wouldn't have liked that.
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by trueblueky »

mptfan wrote: Mon Sep 09, 2019 4:05 pm
SGM wrote: Mon Sep 09, 2019 4:03 pm This is poor advice. 7 or 8% is ridiculous unless you have very few years left to live.
Right. And many retirees have few years left to live, so it's not ridiculous for them.

The average life expectancy for someone at age 65 is about age 85. So if you are say 80 years old, it's not ridiculous to spend 7-8% of your savings especially if you have a comfortable cushion. If you have enough income outside of your portfolio to pay most or all of your expenses (social security or a pension or an annunity) then it may be reasonable to spend (gasp) 9 or 10%.
If only we knew what the last 12 months will cost. Or when they will be.

Me? Very likely to leave money on the table, just in case.
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by delamer »

willthrill81 wrote: Sun Sep 15, 2019 10:34 am
Mr. Rumples wrote: Sun Sep 15, 2019 10:22 am Across the street is an elderly couple in their 90's. He is frail and has dementia. His wife is in a wheelchair but is sharp as a tack. They now need 24/7 care. I don't know what it costs. My neighbor down the road is caring for his wife with dementia. He is paying $20 an hour for help around 8 hours a day. The assisted living facilities around here run about $6,000 a month. These numbers scare me since in my family we live into our 90's. Longevity is a risk for me. I want to stay in my house as long as possible. Therefore, I am ultra conservative and only withdraw 2% of the portfolio value each year. Two of my grandparents had to get help from their children, though when retirement started, it appeared they would be fine; and I don't want to do that. I'm lucky I know since I have a pension with a COLA, SS and savings. When my aunt went into assisted living, she could afford to hire someone to stay with her every day, all day. This ensured she got out during the day and got a bath daily (many homes only give baths every other day).

Wade Pfau has an article on this:

http://www.fa-mag.com/userfiles/stories ... paper-.pdf
Taking on such an extremely conservative withdrawal rate would only make sense to me if you believe that there is a significant possibility that your real portfolio returns will be negative for the next several decades and/or you don't believe that your current portfolio would adequately fund long-term care in the future and so you need it to grow in real dollars while you are also making withdrawals.

You may not be doing this, but many of the people who seem to be very concerned about long-term care expenses assume that those expenses will be in addition to their spending before the LTC 'event'. Rarely is that true. Long-term care tends to reduce/eliminate one's spending on travel, vehicles, clothing, etc.
There is a huge difference between a single person requiring LTC v. half of a couple needing LTC while the other is still independent v. both partners needing care at the same time.

I don’t worry about finances in the former case. I have only minor concerns about the second case. The third case is the nightmare scenario, financially and otherwise.
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by willthrill81 »

delamer wrote: Sun Sep 15, 2019 3:05 pm
willthrill81 wrote: Sun Sep 15, 2019 10:34 am
Mr. Rumples wrote: Sun Sep 15, 2019 10:22 am Across the street is an elderly couple in their 90's. He is frail and has dementia. His wife is in a wheelchair but is sharp as a tack. They now need 24/7 care. I don't know what it costs. My neighbor down the road is caring for his wife with dementia. He is paying $20 an hour for help around 8 hours a day. The assisted living facilities around here run about $6,000 a month. These numbers scare me since in my family we live into our 90's. Longevity is a risk for me. I want to stay in my house as long as possible. Therefore, I am ultra conservative and only withdraw 2% of the portfolio value each year. Two of my grandparents had to get help from their children, though when retirement started, it appeared they would be fine; and I don't want to do that. I'm lucky I know since I have a pension with a COLA, SS and savings. When my aunt went into assisted living, she could afford to hire someone to stay with her every day, all day. This ensured she got out during the day and got a bath daily (many homes only give baths every other day).

Wade Pfau has an article on this:

http://www.fa-mag.com/userfiles/stories ... paper-.pdf
Taking on such an extremely conservative withdrawal rate would only make sense to me if you believe that there is a significant possibility that your real portfolio returns will be negative for the next several decades and/or you don't believe that your current portfolio would adequately fund long-term care in the future and so you need it to grow in real dollars while you are also making withdrawals.

You may not be doing this, but many of the people who seem to be very concerned about long-term care expenses assume that those expenses will be in addition to their spending before the LTC 'event'. Rarely is that true. Long-term care tends to reduce/eliminate one's spending on travel, vehicles, clothing, etc.
There is a huge difference between a single person requiring LTC v. half of a couple needing LTC while the other is still independent v. both partners needing care at the same time.

I don’t worry about finances in the former case. I have only minor concerns about the second case. The third case is the nightmare scenario, financially and otherwise.
I'm not sure why both spouses needing LTC simultaneously would necessarily be a financial problem. It's very unlikely that both would need LTC for an extended period of time simply because the lion's share of those who need LTC only need it for a matter of months, perhaps up to five years or so, and then pass away. Both spouses needing LTC for five years or longer at the same time is truly rare. If it happened, it would likely result in the couple being forced to rely on Medicaid.

But I agree that there could easily be other problems due to both spouses needing LTC simultaneously. Who will make sure that both are receiving good care? Who will manage the finances? And so on.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
delamer
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by delamer »

willthrill81 wrote: Sun Sep 15, 2019 3:14 pm
delamer wrote: Sun Sep 15, 2019 3:05 pm
willthrill81 wrote: Sun Sep 15, 2019 10:34 am
Mr. Rumples wrote: Sun Sep 15, 2019 10:22 am Across the street is an elderly couple in their 90's. He is frail and has dementia. His wife is in a wheelchair but is sharp as a tack. They now need 24/7 care. I don't know what it costs. My neighbor down the road is caring for his wife with dementia. He is paying $20 an hour for help around 8 hours a day. The assisted living facilities around here run about $6,000 a month. These numbers scare me since in my family we live into our 90's. Longevity is a risk for me. I want to stay in my house as long as possible. Therefore, I am ultra conservative and only withdraw 2% of the portfolio value each year. Two of my grandparents had to get help from their children, though when retirement started, it appeared they would be fine; and I don't want to do that. I'm lucky I know since I have a pension with a COLA, SS and savings. When my aunt went into assisted living, she could afford to hire someone to stay with her every day, all day. This ensured she got out during the day and got a bath daily (many homes only give baths every other day).

Wade Pfau has an article on this:

http://www.fa-mag.com/userfiles/stories ... paper-.pdf
Taking on such an extremely conservative withdrawal rate would only make sense to me if you believe that there is a significant possibility that your real portfolio returns will be negative for the next several decades and/or you don't believe that your current portfolio would adequately fund long-term care in the future and so you need it to grow in real dollars while you are also making withdrawals.

You may not be doing this, but many of the people who seem to be very concerned about long-term care expenses assume that those expenses will be in addition to their spending before the LTC 'event'. Rarely is that true. Long-term care tends to reduce/eliminate one's spending on travel, vehicles, clothing, etc.
There is a huge difference between a single person requiring LTC v. half of a couple needing LTC while the other is still independent v. both partners needing care at the same time.

I don’t worry about finances in the former case. I have only minor concerns about the second case. The third case is the nightmare scenario, financially and otherwise.
I'm not sure why both spouses needing LTC simultaneously would necessarily be a financial problem. It's very unlikely that both would need LTC for an extended period of time simply because the lion's share of those who need LTC only need it for a matter of months, perhaps up to five years or so, and then pass away. Both spouses needing LTC for five years or longer at the same time is truly rare. If it happened, it would likely result in the couple being forced to rely on Medicaid.

But I agree that there could easily be other problems due to both spouses needing LTC simultaneously. Who will make sure that both are receiving good care? Who will manage the finances? And so on.
While I agree that an extended LTC stay for both partners is unlikely, there is no way to know how any given scenario will play out once it starts.

Both spouses coming in “off the street” at my mother’s nursing home with each requiring care for 18 months would pay a total of $432,000 (and that was as of 2016) for basic expenses. “Off the street” meaning not covered by Life Care through the CCRC.
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by willthrill81 »

delamer wrote: Sun Sep 15, 2019 3:30 pm
willthrill81 wrote: Sun Sep 15, 2019 3:14 pm
delamer wrote: Sun Sep 15, 2019 3:05 pm
willthrill81 wrote: Sun Sep 15, 2019 10:34 am
Mr. Rumples wrote: Sun Sep 15, 2019 10:22 am Across the street is an elderly couple in their 90's. He is frail and has dementia. His wife is in a wheelchair but is sharp as a tack. They now need 24/7 care. I don't know what it costs. My neighbor down the road is caring for his wife with dementia. He is paying $20 an hour for help around 8 hours a day. The assisted living facilities around here run about $6,000 a month. These numbers scare me since in my family we live into our 90's. Longevity is a risk for me. I want to stay in my house as long as possible. Therefore, I am ultra conservative and only withdraw 2% of the portfolio value each year. Two of my grandparents had to get help from their children, though when retirement started, it appeared they would be fine; and I don't want to do that. I'm lucky I know since I have a pension with a COLA, SS and savings. When my aunt went into assisted living, she could afford to hire someone to stay with her every day, all day. This ensured she got out during the day and got a bath daily (many homes only give baths every other day).

Wade Pfau has an article on this:

http://www.fa-mag.com/userfiles/stories ... paper-.pdf
Taking on such an extremely conservative withdrawal rate would only make sense to me if you believe that there is a significant possibility that your real portfolio returns will be negative for the next several decades and/or you don't believe that your current portfolio would adequately fund long-term care in the future and so you need it to grow in real dollars while you are also making withdrawals.

You may not be doing this, but many of the people who seem to be very concerned about long-term care expenses assume that those expenses will be in addition to their spending before the LTC 'event'. Rarely is that true. Long-term care tends to reduce/eliminate one's spending on travel, vehicles, clothing, etc.
There is a huge difference between a single person requiring LTC v. half of a couple needing LTC while the other is still independent v. both partners needing care at the same time.

I don’t worry about finances in the former case. I have only minor concerns about the second case. The third case is the nightmare scenario, financially and otherwise.
I'm not sure why both spouses needing LTC simultaneously would necessarily be a financial problem. It's very unlikely that both would need LTC for an extended period of time simply because the lion's share of those who need LTC only need it for a matter of months, perhaps up to five years or so, and then pass away. Both spouses needing LTC for five years or longer at the same time is truly rare. If it happened, it would likely result in the couple being forced to rely on Medicaid.

But I agree that there could easily be other problems due to both spouses needing LTC simultaneously. Who will make sure that both are receiving good care? Who will manage the finances? And so on.
While I agree that an extended LTC stay for both partners is unlikely, there is no way to know how any given scenario will play out once it starts.

Both spouses coming in “off the street” at my mother’s nursing home with each requiring care for 18 months would pay a total of $432,000 (and that was as of 2016) for basic expenses. “Off the street” meaning not covered by Life Care through the CCRC.
That's a pricey facility. Nursing homes in our area run $100k annually.

I'm not concerned at all about such tiny tail risk scenarios because that's what they are. There's a roughly 50% chance that any given person will not need any LTC at all. And 24/7 care is not usually necessary for those who do need it. Only a small minority of those who need LTC need 24/7 care in a facility costing $100k or more annually. And the likelihood that both spouses will need it at the same time is tiny. Yes, it could happen, but I don't worry about it. The odds of much more dire financial catastrophes seem significantly higher to me.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
delamer
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by delamer »

willthrill81 wrote: Sun Sep 15, 2019 3:37 pm
delamer wrote: Sun Sep 15, 2019 3:30 pm
willthrill81 wrote: Sun Sep 15, 2019 3:14 pm
delamer wrote: Sun Sep 15, 2019 3:05 pm
willthrill81 wrote: Sun Sep 15, 2019 10:34 am

Taking on such an extremely conservative withdrawal rate would only make sense to me if you believe that there is a significant possibility that your real portfolio returns will be negative for the next several decades and/or you don't believe that your current portfolio would adequately fund long-term care in the future and so you need it to grow in real dollars while you are also making withdrawals.

You may not be doing this, but many of the people who seem to be very concerned about long-term care expenses assume that those expenses will be in addition to their spending before the LTC 'event'. Rarely is that true. Long-term care tends to reduce/eliminate one's spending on travel, vehicles, clothing, etc.
There is a huge difference between a single person requiring LTC v. half of a couple needing LTC while the other is still independent v. both partners needing care at the same time.

I don’t worry about finances in the former case. I have only minor concerns about the second case. The third case is the nightmare scenario, financially and otherwise.
I'm not sure why both spouses needing LTC simultaneously would necessarily be a financial problem. It's very unlikely that both would need LTC for an extended period of time simply because the lion's share of those who need LTC only need it for a matter of months, perhaps up to five years or so, and then pass away. Both spouses needing LTC for five years or longer at the same time is truly rare. If it happened, it would likely result in the couple being forced to rely on Medicaid.

But I agree that there could easily be other problems due to both spouses needing LTC simultaneously. Who will make sure that both are receiving good care? Who will manage the finances? And so on.
While I agree that an extended LTC stay for both partners is unlikely, there is no way to know how any given scenario will play out once it starts.

Both spouses coming in “off the street” at my mother’s nursing home with each requiring care for 18 months would pay a total of $432,000 (and that was as of 2016) for basic expenses. “Off the street” meaning not covered by Life Care through the CCRC.
That's a pricey facility. Nursing homes in our area run $100k annually.

I'm not concerned at all about such tiny tail risk scenarios because that's what they are. There's a roughly 50% chance that any given person will not need any LTC at all. And 24/7 care is not usually necessary for those who do need it. Only a small minority of those who need LTC need 24/7 care in a facility costing $100k or more annually. And the likelihood that both spouses will need it at the same time is tiny. Yes, it could happen, but I don't worry about it. The odds of much more dire financial catastrophes seem significantly higher to me.
It isn’t a scenario that keeps me up at night either, but when I saw those numbers on a bill it sort of took my breath away. And the facility was nice, but in a MCOL area.
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by donaldfair71 »

JackoC wrote: Sun Sep 15, 2019 1:23 pm
donaldfair71 wrote: Tue Sep 10, 2019 9:01 am Merriman talks about and endorses this strategy IF you have substantially more than you'll ever need (defined on safely being able to live on 1-2% withdrawal, I believe).

Basically, take 5% out each and every year of the account value on a certain date. With that amount, live/give/do whatever you want. In a deep bear market you take out much less, but still within safety because you don't need much at all from the portfolio. In a bull, life is great. In a bear, cut back.

Not saying I advocate it, but he has mentioned this often on his podcast.

In practice I don't see it really happening. The same kind of people who live frugally or save 50X expenses are probably gonna have a hard time taking out and spending 5% of the portfolio.
That's interesting but I agree sort of strange and unlikely to fit with the mentality of people who have accumulated assets, and adopted a lifestyle, to end up in a position where 2% (SWR, I assume he means) meets their needs.

Also 'X% of nominal portfolio value' strips out the inflation adjustment in 'X% of first year's value then that $ amount adjuested up by inflation'. Maybe that's obvious. But the expected return has to exceed the 5% by inflation to have a constant expected real withdrawal. Which is not particularly realistic IMO at today's valuations. Maybe at a stretch it would be for 100% stocks but not a safer portfolio typical of retired people with safe bonds now yielding close to zero real. IMO 60/40 real pretax E[r] now is something like 2%* (maybe 3.5% stock, 0% bond). Call that too pessimistic if you like, but there's no way it's 5% real at today's low bond and stock earnings yields, not at the midpoint of the distribution (almost anything could happen somewhere on the distribution).

Anyway obviously almost nobody would really stick with with the inflation adjusted value of the first year's withdrawal if returns were consistently poor and the number grew ominously over time as a % of the remaining portfolio. They'd cut back, and in most scenario's here is also some baseline income (SS plus possibly pension) which isn't directly subject to market returns. In that sense % of portfolio is arguably more realistic than SWR as a thing to eventually actually do. But I still think SWR is the better metric for discussion of retirement *plans*. It just equates to X times annual expenses, the X being 1/SWR %. X% of current value is actually harder to visualize IMO. Which includes the idea how/why you'd start out withdrawing 5% if you're comfortable in year 1 with 2%. OK the 5% is partly self correcting if it shrinks the portfolio too much over time, but what's would the 2% of assets lifestyle people actually do with the first 5%? :happy

*reiterating that's my planning estimate for *expected return* of 60/40. Even at 0% real return it takes 50 yrs to exhaust a portfolio at 2% SWR. So sure, 2% SWR is quite low even with a relatively dour view of expected return, for people whose only firm goal is not to run out of money themselves. It's not particularly low IMO for people with a goal of passing on the full inflation adjusted value of their initial portfolio.
Nice post. I agree with your premise and take on the topic.

Merriman has some interesting and, shall we say, nontraditional takes on withdrawals if you haven't seen them. Complete with lots of spreadsheets of what would have happened historically if the strategy had been followed.

Another interesting one he's kinda mentioned on his podcast but never really put pen to paper: take out 4% nominal if the portfolio total return was less than 5%, but take out 5% nominal if the total return surpassed 5. Again, another way if you're worried about taking out too much.
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by willthrill81 »

donaldfair71 wrote: Sun Sep 15, 2019 8:15 pm Merriman has some interesting and, shall we say, nontraditional takes on withdrawals if you haven't seen them. Complete with lots of spreadsheets of what would have happened historically if the strategy had been followed.

Another interesting one he's kinda mentioned on his podcast but never really put pen to paper: take out 4% nominal if the portfolio total return was less than 5%, but take out 5% nominal if the total return surpassed 5. Again, another way if you're worried about taking out too much.
Those are plausible approaches. Although a fixed 5% of the portfolio balance each year is actually not very aggressive since it makes no adjustments for inflation. And if your portfolio drops by more than 20%, withdrawals would be less than if a 4% SWR approach was used, not even taking into account the latter's inflation adjustments.

In reality, there are literally countless plausible withdrawal methods. The choice mostly comes down to how the retiree wants to balance consistent withdrawals against the ability to make withdrawals over a sufficiently long period of time. A desire for a residual portfolio balance is often a major factor as well.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by am »

Lower swrs? We may have a huge bond bull market since negative yields have no lower limit. And what do pe 10 and stock valuations mean when bond yields are negative. Who knows what the future holds? It’s difficult to make predictions, especially about the future :D
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by michaeljc70 »

I guess if you like working going with a low SWR is fine. Although I liked my field and certain aspects of my work, a lot of it I didn't. I cannot imagine gearing my planning for the absolute worst case scenarios. Frankly, anyone at age 35 can be hit by a driver without insurance and be made a quadriplegic. Who is planning for that?? None of my grandparents or great grandparents went into assisted living. And many lived into their 90s. I guess if I had money to throw around I would plan more for that, but I am going to live my life to the frugal fullest I always have hoping there are no terribly unexpected incidents.

I am not saying I will not be able to afford a decent assisted living place. But I am not planning on the worst stock market returns AND expecting extended assisted living.
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by MathIsMyWayr »

willthrill81 wrote: Sun Sep 15, 2019 9:04 pm In reality, there are literally countless plausible withdrawal methods. The choice mostly comes down to how the retiree wants to balance consistent withdrawals against the ability to make withdrawals over a sufficiently long period of time. A desire for a residual portfolio balance is often a major factor as well.
Life is much more complicated than trying to sticking to a few man-made numbers here and there blindly. It is like relying on a self-driving car with a 1999 technology. All these withdrawal methods should be used only as a rough guide line and you need keep your eyes open and keep eyes on the ball.
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by bhsince87 »

michaeljc70 wrote: Sun Sep 15, 2019 10:16 pm I guess if you like working going with a low SWR is fine. Although I liked my field and certain aspects of my work, a lot of it I didn't. I cannot imagine gearing my planning for the absolute worst case scenarios. Frankly, anyone at age 35 can be hit by a driver without insurance and be made a quadriplegic. Who is planning for that?? None of my grandparents or great grandparents went into assisted living. And many lived into their 90s. I guess if I had money to throw around I would plan more for that, but I am going to live my life to the frugal fullest I always have hoping there are no terribly unexpected incidents.

I am not saying I will not be able to afford a decent assisted living place. But I am not planning on the worst stock market returns AND expecting extended assisted living.
ALL of my grandparents went into assisted living.

And they all did so with the government covering the cost. None of them seemed to mind.
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by MathIsMyWayr »

bhsince87 wrote: Sun Sep 15, 2019 11:08 pm
michaeljc70 wrote: Sun Sep 15, 2019 10:16 pm I guess if you like working going with a low SWR is fine. Although I liked my field and certain aspects of my work, a lot of it I didn't. I cannot imagine gearing my planning for the absolute worst case scenarios. Frankly, anyone at age 35 can be hit by a driver without insurance and be made a quadriplegic. Who is planning for that?? None of my grandparents or great grandparents went into assisted living. And many lived into their 90s. I guess if I had money to throw around I would plan more for that, but I am going to live my life to the frugal fullest I always have hoping there are no terribly unexpected incidents.

I am not saying I will not be able to afford a decent assisted living place. But I am not planning on the worst stock market returns AND expecting extended assisted living.
ALL of my grandparents went into assisted living.

And they all did so with the government covering the cost. None of them seemed to mind.
I wouldn't call ending up with government picking up the cost a plan.
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by smitcat »

bhsince87 wrote: Sun Sep 15, 2019 11:08 pm
michaeljc70 wrote: Sun Sep 15, 2019 10:16 pm I guess if you like working going with a low SWR is fine. Although I liked my field and certain aspects of my work, a lot of it I didn't. I cannot imagine gearing my planning for the absolute worst case scenarios. Frankly, anyone at age 35 can be hit by a driver without insurance and be made a quadriplegic. Who is planning for that?? None of my grandparents or great grandparents went into assisted living. And many lived into their 90s. I guess if I had money to throw around I would plan more for that, but I am going to live my life to the frugal fullest I always have hoping there are no terribly unexpected incidents.

I am not saying I will not be able to afford a decent assisted living place. But I am not planning on the worst stock market returns AND expecting extended assisted living.
ALL of my grandparents went into assisted living.

And they all did so with the government covering the cost. None of them seemed to mind.
I am glad it worked out for them - where we are they would not have wanted to be in those facilities.
I know since we had visited many over the past 10 years. Perhaps look at a few currently and also look at the method that funds them and the current pattern of that funding and need.
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by vineviz »

willthrill81 wrote: Sat Sep 14, 2019 12:01 pm
marcopolo wrote: Sat Sep 14, 2019 11:59 am The risk is still due to sequence of returns. How it affects your life when the risk shows up is dependent on the withdrawal method. With SWR, you portfolio balance is negatively impacted, with fixed percentage, your income is negatively impacted. Either result is still due to the risk of bad sequence of returns.
Yes, but some here have suggested that we should differentiate between whether the portfolio or withdrawals are impacted for the sake of clarification.
Yes, but we don't need to redefine "sequence of returns risk" to accommodate that differentiation.

If there's a need to refer specifically to the impact of SORR on portfolio balance, something like "portfolio depletion risk" or "portfolio failure risk" should do the job. These are the terms used by financial economists.

If there's need to refer specifically to the impact of SORR on income, something like "income variability risk" would be appropriate.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by willthrill81 »

vineviz wrote: Mon Sep 16, 2019 8:05 am
willthrill81 wrote: Sat Sep 14, 2019 12:01 pm
marcopolo wrote: Sat Sep 14, 2019 11:59 am The risk is still due to sequence of returns. How it affects your life when the risk shows up is dependent on the withdrawal method. With SWR, you portfolio balance is negatively impacted, with fixed percentage, your income is negatively impacted. Either result is still due to the risk of bad sequence of returns.
Yes, but some here have suggested that we should differentiate between whether the portfolio or withdrawals are impacted for the sake of clarification.
Yes, but we don't need to redefine "sequence of returns risk" to accommodate that differentiation.

If there's a need to refer specifically to the impact of SORR on portfolio balance, something like "portfolio depletion risk" or "portfolio failure risk" should do the job. These are the terms used by financial economists.

If there's need to refer specifically to the impact of SORR on income, something like "income variability risk" would be appropriate.
That seems appropriate to me.
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by michaeljc70 »

MathIsMyWayr wrote: Sun Sep 15, 2019 11:13 pm
bhsince87 wrote: Sun Sep 15, 2019 11:08 pm
michaeljc70 wrote: Sun Sep 15, 2019 10:16 pm I guess if you like working going with a low SWR is fine. Although I liked my field and certain aspects of my work, a lot of it I didn't. I cannot imagine gearing my planning for the absolute worst case scenarios. Frankly, anyone at age 35 can be hit by a driver without insurance and be made a quadriplegic. Who is planning for that?? None of my grandparents or great grandparents went into assisted living. And many lived into their 90s. I guess if I had money to throw around I would plan more for that, but I am going to live my life to the frugal fullest I always have hoping there are no terribly unexpected incidents.

I am not saying I will not be able to afford a decent assisted living place. But I am not planning on the worst stock market returns AND expecting extended assisted living.
ALL of my grandparents went into assisted living.

And they all did so with the government covering the cost. None of them seemed to mind.
I wouldn't call ending up with government picking up the cost a plan.
There are a lot of posts on here and other sites about early retirees keeping their income low enough to get ACA subsidies. It is definitely part of their plan. This is not much different other than you have no idea if you will ever need assisted living and for how long. What percent of Americans can afford 3+ years of assisted living?

In my case, if my portfolio performs much worse than expected and if I need assisted living I can always sell my home to cover several years of assisted living. That is my plan.
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Re: 5% Withdrawal Rate Recommended by US News Columnist

Post by MnD »

am wrote: Sun Sep 15, 2019 9:47 am
MnD wrote: Sun Sep 15, 2019 9:20 am Recently retired mid-50's now 57 and we're strictly following a 5% of annual portfolio balance spend with a floor of 3% inflation-adjusted.
70/30AA portfolio which provides about 50% of our total income. "Needs" are about 30% of our total income.

We are both active, healthy and having a blast having dumped the daily grind and stress of our demanding full-time jobs in favor of more enjoyable activities in the "best" years of retirement. Since we have enjoyed one year at the 5% level, I consider that we've already beaten a 3% SWR retirement plan, even if the market takes a dump, never recovers and by necessity we spend the rest of retirement at the 3% floor.

If a terrible sequence of returns arises will we automatically throttle back. If not, we will continue to enjoy a much higher income than worst-case SWR's will afford. I don't understand the appeal of working many years longer and having a poor conversion of wealth to income by locking in spending at a worse-case sequence of returns level - whether one needs to or not. I suspect for some, a large and ever growing portfolio has become melded to their identity, hence the appeal of an ultra-low SWR that will sustain that track even in retirement. We perceive the real risks to our aspirations of a long, happy and active retirement to be early demise or disability as opposed to the highly unlikely scenario of very well prepared retirees with solid financial grounding in Boglehead philosophy running their portfolio into the ground.

Our plan compared to a 3.3% inflation-adjusted SWR which historically were equally risky in terms of portfolio depletion.
All dollars in real terms. http://www.cfiresim.com/input.php

5% of annual portfolio withdrawal, 3% inflation-adjusted floor, 70/30AA, 35 years
Image

3.3% inflation-adjusted withdrawal, 70/30AA, 35 years
Image
Curious how you settled on 5% portfolio balance with 3% inflation adjusted floor? Why not 6-7% with 3% inflation adjusted floor?
7% of annual portfolio balance with a 3% inflation-adjusted floor in historical sequences exhibits significant risk of outright portfolio failure as well as typically declining real income in each advancing decade. 5% of annual portfolio balance with 3% floor has no historical sequence of failure and typically level real income across decades and ending portfolio balance about level in real terms with were one started with.
70/30 AA for life, Global market cap equity. Rebalance if fixed income <25% or >35%. Weighted ER< .10%. 5% of annual portfolio balance SWR, Proportional (to AA) withdrawals.
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