30 year retirement

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AlohaBill
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30 year retirement

Post by AlohaBill »

Why did Bill Bengen pick 30 years for length of retirement,instead of say, 20 or 25 years, in forming his safe withdrawal rate? Is it because so few will live to 95?
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FiveK
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Re: 30 year retirement

Post by FiveK »

Probably something like that, combined with 30 being a nice round number. See https://www.retailinvestor.org/pdf/Bengen1.pdf for the original article.
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JoeRetire
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Re: 30 year retirement

Post by JoeRetire »

FiveK wrote: Thu Oct 07, 2021 4:00 pm Probably something like that, combined with 30 being a nice round number. See https://www.retailinvestor.org/pdf/Bengen1.pdf for the original article.
The article states (when talking about his clients): " Assuming they have normal life expectancies, they should live at least 25-30 years"
Just remember: it's not a lie if you believe it.
skierincolorado
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Re: 30 year retirement

Post by skierincolorado »

There is a 42% chance that a 60 year old non-smoker female in average health will live at least another 30 years. If current health is excellent, the probability is over 50%.

For a male, the probabilities are 32% for average health and 42% for exellent. A 60 year old male in average health has a 15% probability of living 35+ years. 21% if current health is excellent.

In my limited experience, most people live longer than they expect.

https://www.longevityillustrator.org/Profile?m=1
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AlohaBill
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Re: 30 year retirement

Post by AlohaBill »

I just don’t see why a 30 year retirement should be the assumption. At most 25 years. I asked how many bogleheads have had a 30 year retirement and two people responded. Also, life expectancy in the us has been falling since the drug epidemic and current pandemic. Very, very few people make it to 90.
One other thing, has the 4% rule ever failed in the past?
oldfatguy
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Re: 30 year retirement

Post by oldfatguy »

AlohaBill wrote: Fri Oct 08, 2021 11:26 am I just don’t see why a 30 year retirement should be the assumption. At most 25 years.
Doesn't that depend on when someone retires?
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AlohaBill
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Re: 30 year retirement

Post by AlohaBill »

Bergen’s original 4% rule had people retiring at 65. What has happened since then is people want to retire earlier. That is a whole different story.
sailaway
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Re: 30 year retirement

Post by sailaway »

AlohaBill wrote: Fri Oct 08, 2021 11:26 am I just don’t see why a 30 year retirement should be the assumption. At most 25 years. I asked how many bogleheads have had a 30 year retirement and two people responded. Also, life expectancy in the us has been falling since the drug epidemic and current pandemic. Very, very few people make it to 90.
One other thing, has the 4% rule ever failed in the past?
So you didn't find many 90yos on a specific internet forum. I bet none of the 90+ I know have ever visited here. A couple have offered to hook me up with their guy, many are living on a pension.

Let's say you are one of those people who make it to 90, how are you going to make up for short comings? Especially since the 4% rule is focused purely on worst case, which is hitting zero before you die.

4% may be too conservative for you. Look into VPW or other planning methods.
Point
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Re: 30 year retirement

Post by Point »

I’d hate to be a burden on my kids or anyone else, thus I plan for a long retirement with budget and investments aligned with this planning. My goal? Die before I run out of money. The trust will take care of any remainder.
delamer
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Re: 30 year retirement

Post by delamer »

Speaking anecdotally, I retired at age 61. My mother and both of my grandmothers lived at least 30 years passed that age.

The Trinity study included a variety of time frames: https://www.bogleheads.org/wiki/Safe_withdrawal_rates
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AlohaBill
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Re: 30 year retirement

Post by AlohaBill »

It was this forum and Taylor Larimore was one. I use his method of withdrawal. It is just as good as all the others. We’re all just whistling in the dark as it is when it comes to withdrawal methods. We don’t know what the stock market will give us and we don’t know the allotted time we have left.
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JoeRetire
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Re: 30 year retirement

Post by JoeRetire »

AlohaBill wrote: Fri Oct 08, 2021 11:26 am I just don’t see why a 30 year retirement should be the assumption. At most 25 years. I asked how many bogleheads have had a 30 year retirement and two people responded.
The level of response to a single question on bogleheads would be a poor indicator of how long a retirement people in general actually have. I know of a handful of retirees in my neighborhood currently in their 90s. I don't know what year they actually retired.

You can choose to assume anything you prefer in your planning - you aren't limited to a 30 year retirement assumption. But before you do, ask yourself: would it be better to plan financially for a short retirement or a long retirement? Would it be better to die with a bit of extra money, or run out before passing?

I planned for a 35 year retirement. I'll be fine financially if I should somehow last for 50.
Last edited by JoeRetire on Fri Oct 08, 2021 2:44 pm, edited 1 time in total.
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59Gibson
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Re: 30 year retirement

Post by 59Gibson »

95 is likely not necessary even for the "healthy"@65. I think it depends on the severity of budgeting/planning for a 30 yr retirement w/ 85-90% success rate. If it means having to work 5+ more years at 60-65..hell no. If it means holding onto your vehicle 10yrs instead of 5 and less expensive restaurants and vacations. Yes do it.
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JoeRetire
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Re: 30 year retirement

Post by JoeRetire »

AlohaBill wrote: Fri Oct 08, 2021 2:16 pm It was this forum and Taylor Larimore was one. I use his method of withdrawal. It is just as good as all the others. We’re all just whistling in the dark as it is when it comes to withdrawal methods. We don’t know what the stock market will give us and we don’t know the allotted time we have left.
And yet still we must plan...

Such is life!
Just remember: it's not a lie if you believe it.
JDave
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Re: 30 year retirement

Post by JDave »

Ask yourself what would be worse - not living a life of luxury in your sixties, or living to 103 and going broke at 99?
secondopinion
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Re: 30 year retirement

Post by secondopinion »

59Gibson wrote: Fri Oct 08, 2021 2:40 pm 95 is likely not necessary even for the "healthy"@65. I think it depends on the severity of budgeting/planning for a 30 yr retirement w/ 85-90% success rate. If it means having to work 5+ more years at 60-65..*** no. If it means holding onto your vehicle 10yrs instead of 5 and less expensive restaurants and vacations. Yes do it.
That is true; of course, given my family history, I would not be too sure that 95 is effective (despite the Great Depression and health conditions that should have reduced lifespans, the average age of my great-grandparents was 90). I figure for 100.
cbeck
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Re: 30 year retirement

Post by cbeck »

This is the defect in the whole safe withdrawal rate approach, which has never made any sense to me. We don't know how long we are going to live. By selecting a life span arbitrarily you are assuming that you know the critical data point that you do not know. If you are going to pick a life span the only safe one is one that you cannot possible achieve, e.g. 110. But none of the SWRers do that.

My own approach to retirement planning is to continue to live below our means so that we could in theory live forever. The most important single step is to delay SS benefits to age 70 to maximize the only asset that we cannot outlive.
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JoeRetire
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Re: 30 year retirement

Post by JoeRetire »

cbeck wrote: Fri Oct 08, 2021 6:52 pm My own approach to retirement planning is to continue to live below our means so that we could in theory live forever. The most important single step is to delay SS benefits to age 70 to maximize the only asset that we cannot outlive.
Interesting.

Other than social security benefits, what do you count as "your means" in retirement?
(I agree about maximizing your SS benefits.)
Just remember: it's not a lie if you believe it.
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Garco
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Re: 30 year retirement

Post by Garco »

I retired at age 70. I could have retired earlier, considering my financial situation, but I was still engaged in my work, my career. So why stop early?

The fact that I waited til age 70 increased the odds that I could financially support the remainder of my life. But how many more years is that? My parents lived til their late 80's and early 90's. That gives me a range to shoot for.

I don't worry at all about the financial viability of living that long. I'm in a good financial situation. And I have outstanding health and medical services and financial support.
pasadena
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Re: 30 year retirement

Post by pasadena »

AlohaBill wrote: Fri Oct 08, 2021 11:26 am I just don’t see why a 30 year retirement should be the assumption. At most 25 years. I asked how many bogleheads have had a 30 year retirement and two people responded. Also, life expectancy in the us has been falling since the drug epidemic and current pandemic. Very, very few people make it to 90.
One other thing, has the 4% rule ever failed in the past?
Selection bias. How many 80-90+ years old people do you expect to be on an Internet forum at a given time? Especially one about investing?

Bergen based it on the age most of his clients expected to retire (or the average retiree age), and the life expectancy tables. Nowadays, with the Internet and a seemingly never-ending bull market, more and more people want to retire early, but that's still not a thing for most (again, selection bias).

I may or may not live 30 years beyond retirement, but I'd much rather risk having money left over at the end, than running out too soon.
JS-Elcano
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Re: 30 year retirement

Post by JS-Elcano »

JDave wrote: Fri Oct 08, 2021 2:48 pm Ask yourself what would be worse - not living a life of luxury in your sixties, or living to 103 and going broke at 99?
Actually, I find that hard to choose; I would say the latter is worse. My grandmother lived to above 101; she lived in her own home until the week she died, but needed some help every day with a few things here or there, like repairs, renovations, lifting heavy things, walking into the basement. She was physically fit for her age, still walking and able to move herself around the house, prepare her meals, read the news paper; mentally she was fine too. I think the only problem she had was that she was hard of hearing. I think at that later age when you are OK, but need significant help to make your life as comfortable and enjoyable as possible, for example by hiring people to clean and maintain your home, to drive you to the salon or doctor, shop for you, take you to entertainment or to a restaurant, take care of vet appointments for your cat, etc (I think you get my point) and have the nurse come to your house for routine things, have a private room in the hospital if you must go, or be in the best CCRC or assisted living facility in your city --that is worth a lot more than living in luxury in your 60s.

In my mind, there is nothing worse than ending your life on a low note, in misery, uncomfortable, neglected, wanting for basic things that you know money could have provided. The less independent I become, the more important my ability becomes to hire quality help. I rather forgo the first class flight and go with business, or buy the regular car model instead of the most expensive trim, if it means I have nothing to worry about if I live into my late 90s.
Last edited by JS-Elcano on Fri Oct 08, 2021 7:32 pm, edited 3 times in total.
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Taylor Larimore
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Re: 30 year retirement

Post by Taylor Larimore »

Bogleheads:

Be careful about using life-expectancy tables. No one knows when they will die, therefore, using an average life expectancy is dangerous (50% chance of being wrong). Much better to plan (especially if you are in good health) for an above average longevity.

For me, (I'm 97) our two Single Premium Lifetime Annuities (SPIAS) turned out to be the best investments we ever made.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: [/b]"Depending on the particular circumstances, annuities are a good idea, but only annuities available at very low cost and commensurate high return."[/b]
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cbeck
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Re: 30 year retirement

Post by cbeck »

JoeRetire wrote: Fri Oct 08, 2021 7:09 pm
cbeck wrote: Fri Oct 08, 2021 6:52 pm My own approach to retirement planning is to continue to live below our means so that we could in theory live forever. The most important single step is to delay SS benefits to age 70 to maximize the only asset that we cannot outlive.
Interesting.

Other than social security benefits, what do you count as "your means" in retirement?
(I agree about maximizing your SS benefits.)
Investment portfolio a lot like others here have, some income producing, some total return. The difference is that if our means do not continue to exceed our cost of living we would adjust our cost of living downward until it does, rather than continue to spend as before and expect the law of averages to bail us out.

I think the appeal of the SWR approach is the hope of optimizing spending, rather than safety.
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Re: 30 year retirement

Post by sailaway »

cbeck wrote: Fri Oct 08, 2021 8:42 pm
JoeRetire wrote: Fri Oct 08, 2021 7:09 pm
cbeck wrote: Fri Oct 08, 2021 6:52 pm My own approach to retirement planning is to continue to live below our means so that we could in theory live forever. The most important single step is to delay SS benefits to age 70 to maximize the only asset that we cannot outlive.
Interesting.

Other than social security benefits, what do you count as "your means" in retirement?
(I agree about maximizing your SS benefits.)
Investment portfolio a lot like others here have, some income producing, some total return. The difference is that if our means do not continue to exceed our cost of living we would adjust our cost of living downward until it does, rather than continue to spend as before and expect the law of averages to bail us out.

I think the appeal of the SWR approach is the hope of optimizing spending, rather than safety.
Interesting, I would have said that was more AWR or VWR.
UpperNwGuy
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Re: 30 year retirement

Post by UpperNwGuy »

AlohaBill wrote: Fri Oct 08, 2021 11:26 am Also, life expectancy in the us has been falling since the drug epidemic and current pandemic. Very, very few people make it to 90.
Can you provide some facts to back up these assertions?
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Re: 30 year retirement

Post by pasadena »

UpperNwGuy wrote: Fri Oct 08, 2021 8:49 pm
AlohaBill wrote: Fri Oct 08, 2021 11:26 am Also, life expectancy in the us has been falling since the drug epidemic and current pandemic. Very, very few people make it to 90.
Can you provide some facts to back up these assertions?
Provisional Life Expectancy Estimates for January through June, 2020 (CDC, PDF)

Hopefully the dip caused by the pandemic will subside soon-ish.
MathWizard
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Re: 30 year retirement

Post by MathWizard »

I'm probably overly conservative.

I'm planning for a potential 37 year retirement (to 100 for my wife).

If you run out of money, you live on SS benefits. What else do you do?

I've often seen house maintenance get deferred as long as possible, as
at 90, you're likely no longer doing the maintenance yourself, and it may be too expensive
to hire it done.

Often, the final car gets driven few miles, and does not have to be replaced.

You don't vacation anymore. Kids come see you, not the other way around.

I'm saw that with both my parents and the inlaws, and am seeing it in my oldest siblings.

So there are some ways to not spend in the short term if you run low on money.
UpperNwGuy
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Re: 30 year retirement

Post by UpperNwGuy »

pasadena wrote: Fri Oct 08, 2021 9:04 pm
UpperNwGuy wrote: Fri Oct 08, 2021 8:49 pm
AlohaBill wrote: Fri Oct 08, 2021 11:26 am Also, life expectancy in the us has been falling since the drug epidemic and current pandemic. Very, very few people make it to 90.
Can you provide some facts to back up these assertions?
Provisional Life Expectancy Estimates for January through June, 2020 (CDC, PDF)

Hopefully the dip caused by the pandemic will subside soon-ish.
The article at the link shows the impact of covid on life expectancy, but doesn’t address the drug epidemic. And I don’t see data to support your statement that “very, very few people make it to 90.” I was especially interested in that last part.
Nahtanoj
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Re: 30 year retirement

Post by Nahtanoj »

OP might want to check out the tool at longevityillustrator.org. It is put out by the Society of Actuaries, and it very, very easy to use - and quick.

In my case, it says my odds of living 30 years as a male, non-smoker, age 64 in average health are 14%. Not super high, but not zero, either.

If you throw in my wife (female, non-smoker, age 58, in average health) the odds that at least one of us lives to the end of the same 30-year period are 63%. In other words, more likely than not. Not low at all.
Last edited by Nahtanoj on Sat Oct 09, 2021 11:24 am, edited 1 time in total.
pasadena
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Re: 30 year retirement

Post by pasadena »

UpperNwGuy wrote: Sat Oct 09, 2021 2:14 am
pasadena wrote: Fri Oct 08, 2021 9:04 pm
UpperNwGuy wrote: Fri Oct 08, 2021 8:49 pm
AlohaBill wrote: Fri Oct 08, 2021 11:26 am Also, life expectancy in the us has been falling since the drug epidemic and current pandemic. Very, very few people make it to 90.
Can you provide some facts to back up these assertions?
Provisional Life Expectancy Estimates for January through June, 2020 (CDC, PDF)

Hopefully the dip caused by the pandemic will subside soon-ish.
The article at the link shows the impact of covid on life expectancy, but doesn’t address the drug epidemic. And I don’t see data to support your statement that “very, very few people make it to 90.” I was especially interested in that last part.
It wasn't my statement, it was OP. I don't necessarily agree with that statement either. This article is interesting and addresses the question. There was a small decline in 2015-2017, but I don't think it's significant, especially in the context of this discussion (you can also see it in the graphs of my first link).

As for the odds of reaching age 90, they depend on many things, one of them being the person's current age. What's certain is that more people reach 90 these days than they did 30 years ago.
Dandy
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Re: 30 year retirement

Post by Dandy »

Better to plan for 30 years and only live 25 than plan for 25 and live for 30.
Mr.BB
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Re: 30 year retirement

Post by Mr.BB »

Dandy wrote: Sat Oct 09, 2021 1:47 pm Better to plan for 30 years and only live 25 than plan for 25 and live for 30.
:beer +1
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lws
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Re: 30 year retirement

Post by lws »

Planned a 35 year retirement.
Will have to deal with events as they come.
dbr
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Re: 30 year retirement

Post by dbr »

Withdrawal studies are not advice about what anyone in particular should do. They are information to help people think through their plan. All of the students of this problem consider that the results vary with the length of time selected. Any model that implements that kind of analysis starts with two key entries, amount of spend and how far out to look. It is also perfectly possible to multiply the odds of surviving to a certain age with the odds of running out of money by that age to get an informed probability of running out of money while still being alive. Note a probability of survival curve is not just the life expectancy but the whole probability curve. Then the retiree gets to make their own decision about when to retire and how much they can risk spending.

Life annuities exist as the obvious answer to life uncertainty. There is lots of discussion as to why so many people eschew that instrument, but, on the other hand, lots of comment about the benefits of late SS claiming.
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Garco
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Re: 30 year retirement

Post by Garco »

I retired at age 70. I can still plan for 30 years in the future, but I doubt I will live to 100. Family history favors my reaching 90, but I could be hit by a truck at any time.

Rather than using my life expectancy as the chief allocating factor, I use the status of my children. (My spouse is the same age as I am.) I want to assure that they are well provided for. That's not just in the form of inherited assets but in support for their current situations -- purchases they may make (mainly real estate), and support for their families (children's future college educations). My parents took that approach with me and my sibs. Our children got partial subsidies for college costs. We inherited a share of the estate (divided among 4 siblings).
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Re: 30 year retirement

Post by willthrill81 »

First of all, the pervasive idea that the elderly are living much longer today than they did a few generations ago is just not true. The graph below, which pertains to those living in England and Wales, demonstrates this very well. The life expectancy gains we've seen since the Industrial Revolution have been concentrated in reducing infant and childhood deaths.

Image

From 1850 to 1950, the life expectancy of a 70 year old only went up by about one year, from 79 to 80. Since 1950, that same life expectancy has gone up to about 87, roughly one additional year of life expectancy per decade of real time. Based on these data alone, if the trend since 1950 continues at that same pace, it will be about 130 years before the life expectancy of a 70 year old is age 100. And overuse of opioids (per statements made by federal agencies) and the COVID pandemic have somewhat recently brought down the life expectancies of the elderly. And beyond that, it is unrealistic to expect historic trends to continue unabated forever.

Anecdotally, I only know of about five people, all women, who survived to age 90, and 93 was oldest age that any of them reached. I know one man who is 89. OTOH, I know of many who passed away at significantly younger ages. My FiL passed at 63, a cousin at 38, my paternal grandparents both in their 40s, my maternal grandfather in his late 70s, my maternal grandmother in her early 80s. Reaching age 90 these days seems to be quite a big milestone, and nowhere near one-third of the elderly women I've known made it that far, much less men.
dbr wrote: Mon Oct 11, 2021 9:02 am Withdrawal studies are not advice about what anyone in particular should do. They are information to help people think through their plan. All of the students of this problem consider that the results vary with the length of time selected. Any model that implements that kind of analysis starts with two key entries, amount of spend and how far out to look. It is also perfectly possible to multiply the odds of surviving to a certain age with the odds of running out of money by that age to get an informed probability of running out of money while still being alive. Note a probability of survival curve is not just the life expectancy but the whole probability curve. Then the retiree gets to make their own decision about when to retire and how much they can risk spending.
Well said. Whether Bengen or anyone else modeled 25 year retirements, 30 years, or 50 years should be completely irrelevant to individuals today.
“Good and ill have not changed since yesteryear; nor are they one thing among Elves and Dwarves and another among Men.” J.R.R. Tolkien, The Lord of the Rings
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Re: 30 year retirement

Post by Sheepdog »

30 year retirement? Well, I am just beginning my 24th. (I recently reported my retirement history thru the 23rd viewtopic.php?f=9&t=228860 ) You can find my withdrawal history there as well

Thru 30?, I know I will be fine economically, the rest? Will have to rely on my creators good grace and my good fortune.

Woof Woof
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WyomingFIRE
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Re: 30 year retirement

Post by WyomingFIRE »

willthrill81 wrote: Mon Oct 11, 2021 11:09 am From 1850 to 1950, the life expectancy of a 70 year old only went up by about one year, from 79 to 80. Since 1950, that same life expectancy has gone up to about 87, roughly one additional year of life expectancy per decade of real time. Based on these data alone, if the trend since 1950 continues at that same pace, it will be about 130 years before the life expectancy of a 70 year old is age 100. And overuse of opioids (per statements made by federal agencies) and the COVID pandemic have somewhat recently brought down the life expectancies of the elderly. And beyond that, it is unrealistic to expect historic trends to continue unabated forever.

Anecdotally, I only know of about five people ....
A few observations on the above. LIfe expectancy projections are complicated and country-specific. There are two basic methods: cohort- and period-based: https://www.ons.gov.uk/peoplepopulation ... yexplained. The former takes into account observed and projected mortality improvements for the cohort throughout its lifetime. Period-based approaches, in contrast, don't. Id. As a result, "[p]eriod life expectancies tend to be lower than cohort life expectancies because they do not include any assumptions about future improvements in mortality rates." Id. Not surprisingly, period-based assessments are about a decade shorter than cohort-based approaches.

For those of us grey hairs reading this forum the odds of living past the year 100 likely remain low, I would agree. For a child born today, however -- and maybe even a person early in their investment career -- they might reasonably assume a longer life expectancy due to various reasons, including but not limited to ongoing improvements in medicine and continued integration of machines with homo sapiens (e.g., bioengineering). Personally, I believe it likely that cancer treatments will continue to improve in the years and decades to come, for example. I also believe that we mere mortals, sitting here in 2021, cannot begin to contemplate the coming changes to the human condition because of technology in the decades ahead.

In the words of Nick Bostrom: "If we learn to control the biochemical processes of human senescence, healthy lifespan could be radically prolonged. A person with the age-specific mortality of a 20-year-old would have a life expectancy of about a thousand years." https://www.nickbostrom.com/papers/future.pdf. Bostrom leads the Future of Humanity Institute at the University of Oxford and is the author of such notable works as "Superintelligence: Paths, Dangers and Strategies."

Tl;dr: Longer life expectancies are likely coming largely due to the unrelenting advancement of science and medicine.
Last edited by WyomingFIRE on Mon Oct 11, 2021 1:37 pm, edited 1 time in total.
delamer
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Re: 30 year retirement

Post by delamer »

willthrill81 wrote: Mon Oct 11, 2021 11:09 am First of all, the pervasive idea that the elderly are living much longer today than they did a few generations ago is just not true. The graph below, which pertains to those living in England and Wales, demonstrates this very well. The life expectancy gains we've seen since the Industrial Revolution have been concentrated in reducing infant and childhood deaths.

Image

From 1850 to 1950, the life expectancy of a 70 year old only went up by about one year, from 79 to 80. Since 1950, that same life expectancy has gone up to about 87, roughly one additional year of life expectancy per decade of real time. Based on these data alone, if the trend since 1950 continues at that same pace, it will be about 130 years before the life expectancy of a 70 year old is age 100. And overuse of opioids (per statements made by federal agencies) and the COVID pandemic have somewhat recently brought down the life expectancies of the elderly. And beyond that, it is unrealistic to expect historic trends to continue unabated forever.

Anecdotally, I only know of about five people, all women, who survived to age 90, and 93 was oldest age that any of them reached. I know one man who is 89. OTOH, I know of many who passed away at significantly younger ages. My FiL passed at 63, a cousin at 38, my paternal grandparents both in their 40s, my maternal grandfather in his late 70s, my maternal grandmother in her early 80s. Reaching age 90 these days seems to be quite a big milestone, and nowhere near one-third of the elderly women I've known made it that far, much less men.
dbr wrote: Mon Oct 11, 2021 9:02 am Withdrawal studies are not advice about what anyone in particular should do. They are information to help people think through their plan. All of the students of this problem consider that the results vary with the length of time selected. Any model that implements that kind of analysis starts with two key entries, amount of spend and how far out to look. It is also perfectly possible to multiply the odds of surviving to a certain age with the odds of running out of money by that age to get an informed probability of running out of money while still being alive. Note a probability of survival curve is not just the life expectancy but the whole probability curve. Then the retiree gets to make their own decision about when to retire and how much they can risk spending.
Well said. Whether Bengen or anyone else modeled 25 year retirements, 30 years, or 50 years should be completely irrelevant to individuals today.
Data like these and family history are what I base my planning on: https://www.hamiltonproject.org/charts/ ... x_and_year
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. | | Alexandre Dumas, fils
garlandwhizzer
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Re: 30 year retirement

Post by garlandwhizzer »

Taylor wrote:

Be careful about using life-expectancy tables. No one knows when they will die, therefore, using an average life expectancy is dangerous (50% chance of being wrong). Much better to plan (especially if you are in good health) for an above average longevity.

For me, (I'm 97) our two Single Premium Lifetime Annuities (SPIAS) turned out to be the best investments we ever made.
1+

I also believe it best to assume that if you're in good health you should expect to live to 95 or more in terms of financial planning. The penalty for having too much money if you die sooner than expected is much less IMO than the penalty for running out of money late in life when you're unable to work.
There's also the chance that you may requiring expensive long term care. Lots of unknowns. It is quite tempting when planing to assume long term historical returns from markets going forward and also to assume your life will end at or before current longevity averages. The planning numbers look a lot more comfortable with these hopeful assumptions. Neither of these things, however, is assured and the penalty for being wrong is considerable.

Two final comments for those approaching retirement or in retirement. These are just my opinion, not gospel for all. First, continue to hold substantial equity (at least 50% of assets) when you're old. I'm 74 and currently keep between 70% and 75% in broadly diversified equity because it alone has positive expected real returns going forward long term. Bonds have current expected real returns of zero of less and they carry high levels of inflation risk except for TIPS which currently have negative real yields. If you have 8 - 10 years of living expenses in safe bonds already, you're in a position to take more equity risk if you choose to do so. Long term backtesting equity/bond mix portfolios for retirement planing is a joke for the future IMO because bond returns going backward are dominated by the greatest bond bull market in history 1982 - 2018, an event which has a zero probability of occurring going forward.

I believe most investors overestimate the risk of short term equity volatility due to its powerful emotional impact. Likewise i believe most investors underestimate the risk of running out of money decades in the future because that emotional impact is much delayed way off in the distance. Second, as for SPIAs, defer purchase as long as possible 75+ if possible. That provides dollar for dollar invested greater more reliable dollar longevity protection and also reduces the risk of cumulative inflation's potential impact on monthly distributions over a long period of years.

Taylor has done incredibly well in all regards as to financial planning. He is a long term holder through thick and thin of TSM and TBM, both of which have done beautifully in risk adjusted terms and he deferred the annuity purchase which was another big score. There are lessons to take from those who have succeeded in the real world of investing over the very long term. Making simple practical common decisions works long term. Simplicity is usually preferable to complexity and common sense assumptions are usually preferable to lengthy theoretical narratives. Hats off to Taylor.

Garland Whizzer
secondopinion
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Re: 30 year retirement

Post by secondopinion »

willthrill81 wrote: Mon Oct 11, 2021 11:09 am First of all, the pervasive idea that the elderly are living much longer today than they did a few generations ago is just not true. The graph below, which pertains to those living in England and Wales, demonstrates this very well. The life expectancy gains we've seen since the Industrial Revolution have been concentrated in reducing infant and childhood deaths.

Image

From 1850 to 1950, the life expectancy of a 70 year old only went up by about one year, from 79 to 80. Since 1950, that same life expectancy has gone up to about 87, roughly one additional year of life expectancy per decade of real time. Based on these data alone, if the trend since 1950 continues at that same pace, it will be about 130 years before the life expectancy of a 70 year old is age 100. And overuse of opioids (per statements made by federal agencies) and the COVID pandemic have somewhat recently brought down the life expectancies of the elderly. And beyond that, it is unrealistic to expect historic trends to continue unabated forever.

Anecdotally, I only know of about five people, all women, who survived to age 90, and 93 was oldest age that any of them reached. I know one man who is 89. OTOH, I know of many who passed away at significantly younger ages. My FiL passed at 63, a cousin at 38, my paternal grandparents both in their 40s, my maternal grandfather in his late 70s, my maternal grandmother in her early 80s. Reaching age 90 these days seems to be quite a big milestone, and nowhere near one-third of the elderly women I've known made it that far, much less men.
dbr wrote: Mon Oct 11, 2021 9:02 am Withdrawal studies are not advice about what anyone in particular should do. They are information to help people think through their plan. All of the students of this problem consider that the results vary with the length of time selected. Any model that implements that kind of analysis starts with two key entries, amount of spend and how far out to look. It is also perfectly possible to multiply the odds of surviving to a certain age with the odds of running out of money by that age to get an informed probability of running out of money while still being alive. Note a probability of survival curve is not just the life expectancy but the whole probability curve. Then the retiree gets to make their own decision about when to retire and how much they can risk spending.
Well said. Whether Bengen or anyone else modeled 25 year retirements, 30 years, or 50 years should be completely irrelevant to individuals today.
All eight of my great-grandparents lived to at least their mid-80s (some lived until their 90s, one is still alive); and at least three of eight had major health problems. Anything death in the family before 70 is a huge deal (and somewhat a deal if before 80).

It really is the circle of individuals and family history that dictate whether you see long life. I know at least a half a dozen in my extended family. I know all my great-grandparents personally (and one of my great-great-grandparents). Most early deaths (<70) in the extended family besides child age illness were war or suicide.
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willthrill81
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Re: 30 year retirement

Post by willthrill81 »

secondopinion wrote: Mon Oct 11, 2021 6:25 pm It really is the circle of individuals and family history that dictate whether you see long life.
From the studies I've seen, family history only explains about 20-25% of individuals' longevity. That's certainly substantial, but it means that 75-80% is caused by other sources.
“Good and ill have not changed since yesteryear; nor are they one thing among Elves and Dwarves and another among Men.” J.R.R. Tolkien, The Lord of the Rings
secondopinion
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Re: 30 year retirement

Post by secondopinion »

willthrill81 wrote: Mon Oct 11, 2021 6:40 pm
secondopinion wrote: Mon Oct 11, 2021 6:25 pm It really is the circle of individuals and family history that dictate whether you see long life.
From the studies I've seen, family history only explains about 20-25% of individuals' longevity. That's certainly substantial, but it means that 75-80% is caused by other sources.
Like what exactly? There is not a lot of commonness between work, location, and such with them.
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tennisplyr
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Re: 30 year retirement

Post by tennisplyr »

AlohaBill wrote: Fri Oct 08, 2021 11:26 am I just don’t see why a 30 year retirement should be the assumption. At most 25 years. I asked how many bogleheads have had a 30 year retirement and two people responded. Also, life expectancy in the us has been falling since the drug epidemic and current pandemic. Very, very few people make it to 90.
One other thing, has the 4% rule ever failed in the past?

I agree the average years in retirement is ~18 years, why focus on the minority, why not the majority?
Those who move forward with a happy spirit will find that things always work out.
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JoeRetire
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Re: 30 year retirement

Post by JoeRetire »

tennisplyr wrote: Mon Oct 11, 2021 7:09 pm
AlohaBill wrote: Fri Oct 08, 2021 11:26 am I just don’t see why a 30 year retirement should be the assumption. At most 25 years. I asked how many bogleheads have had a 30 year retirement and two people responded. Also, life expectancy in the us has been falling since the drug epidemic and current pandemic. Very, very few people make it to 90.
One other thing, has the 4% rule ever failed in the past?

I agree the average years in retirement is ~18 years, why focus on the minority, why not the majority?
Because dying before you run out of money isn't a problem.
Running out of money before you die is.
Just remember: it's not a lie if you believe it.
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tennisplyr
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Re: 30 year retirement

Post by tennisplyr »

JoeRetire wrote: Mon Oct 11, 2021 7:13 pm
tennisplyr wrote: Mon Oct 11, 2021 7:09 pm
AlohaBill wrote: Fri Oct 08, 2021 11:26 am I just don’t see why a 30 year retirement should be the assumption. At most 25 years. I asked how many bogleheads have had a 30 year retirement and two people responded. Also, life expectancy in the us has been falling since the drug epidemic and current pandemic. Very, very few people make it to 90.
One other thing, has the 4% rule ever failed in the past?

I agree the average years in retirement is ~18 years, why focus on the minority, why not the majority?
Because dying before you run out of money isn't a problem.
Running out of money before you die is.
Put another way, if I'm way more likely to die than live long enough to run out of money, I'm not worrying about running out of money!!
Those who move forward with a happy spirit will find that things always work out.
WyomingFIRE
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Re: 30 year retirement

Post by WyomingFIRE »

willthrill81 wrote: Mon Oct 11, 2021 6:40 pm
secondopinion wrote: Mon Oct 11, 2021 6:25 pm It really is the circle of individuals and family history that dictate whether you see long life.
From the studies I've seen, family history only explains about 20-25% of individuals' longevity. That's certainly substantial, but it means that 75-80% is caused by other sources.
willthrill81:

I always appreciate your posts.

Can you provide citations for your assertions above? I’m uncertain what you are suggesting. Are you suggesting that diet and exercise can overcome genetics? And if they can, what does that mean as to mortality? Do you think improvements in medicine have stalled out?

Also further up in the chain, I provided (or tried to anyway) authorities regarding why improvements in science and medicine were apt to lead to reduced mortality. I also presented authorities for different ways to make longevity forecasts. Do you have any thoughts on that?

I think I have lost the core of your argument.
delamer
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Re: 30 year retirement

Post by delamer »

tennisplyr wrote: Mon Oct 11, 2021 7:09 pm
AlohaBill wrote: Fri Oct 08, 2021 11:26 am I just don’t see why a 30 year retirement should be the assumption. At most 25 years. I asked how many bogleheads have had a 30 year retirement and two people responded. Also, life expectancy in the us has been falling since the drug epidemic and current pandemic. Very, very few people make it to 90.
One other thing, has the 4% rule ever failed in the past?

I agree the average years in retirement is ~18 years, why focus on the minority, why not the majority?
Averages disguise a lot of information, including the “majority” experience.

An 18-year average (mean or median) could mean half die at 10 years and half die after at 26 years.

In that scenario, a lot people have long retirements.

(No, I’m not suggesting that’s realistic. Just pointing out that averages can be misleading.)
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. | | Alexandre Dumas, fils
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willthrill81
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Re: 30 year retirement

Post by willthrill81 »

secondopinion wrote: Mon Oct 11, 2021 6:53 pm
willthrill81 wrote: Mon Oct 11, 2021 6:40 pm
secondopinion wrote: Mon Oct 11, 2021 6:25 pm It really is the circle of individuals and family history that dictate whether you see long life.
From the studies I've seen, family history only explains about 20-25% of individuals' longevity. That's certainly substantial, but it means that 75-80% is caused by other sources.
Like what exactly? There is not a lot of commonness between work, location, and such with them.
WyomingFIRE wrote: Mon Oct 11, 2021 7:55 pm willthrill81:

I always appreciate your posts.

Can you provide citations for your assertions above? I’m uncertain what you are suggesting. Are you suggesting that diet and exercise can overcome genetics? And if they can, what does that mean as to mortality? Do you think improvements in medicine have stalled out?

Also further up in the chain, I provided (or tried to anyway) authorities regarding why improvements in science and medicine were apt to lead to reduced mortality. I also presented authorities for different ways to make longevity forecasts. Do you have any thoughts on that?

I think I have lost the core of your argument.
Here's are a couple of quotes from Medline Plus that may help to explain the situation (note that this is not medical advice).
The duration of human life (longevity) is influenced by genetics, the environment, and lifestyle. Environmental improvements beginning in the 1900s extended the average life span dramatically with significant improvements in the availability of food and clean water, better housing and living conditions, reduced exposure to infectious diseases, and access to medical care. Most significant were public health advances that reduced premature death by decreasing the risk of infant mortality, increasing the chances of surviving childhood, and avoiding infection and communicable disease. Now people in the United States live about 80 years on average, but some individuals survive for much longer.
The study of longevity genes is a developing science. It is estimated that about 25 percent of the variation in human life span is determined by genetics, but which genes, and how they contribute to longevity, are not well understood.
https://medlineplus.gov/genetics/unders ... understood.

So we don't yet fully know whether 'bad genetics' can be overcome by other factors, such as diet and exercise. But simply knowing how long an individual's family members have lived has, TMK, not been highly predictive of how long the individual will live. Being able to account for 25% of the variation in longevity (across many individuals) is certainly very meaningful, but it still means that 75% of the variation is due to other factors.
“Good and ill have not changed since yesteryear; nor are they one thing among Elves and Dwarves and another among Men.” J.R.R. Tolkien, The Lord of the Rings
secondopinion
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Re: 30 year retirement

Post by secondopinion »

willthrill81 wrote: Mon Oct 11, 2021 8:10 pm
secondopinion wrote: Mon Oct 11, 2021 6:53 pm
willthrill81 wrote: Mon Oct 11, 2021 6:40 pm
secondopinion wrote: Mon Oct 11, 2021 6:25 pm It really is the circle of individuals and family history that dictate whether you see long life.
From the studies I've seen, family history only explains about 20-25% of individuals' longevity. That's certainly substantial, but it means that 75-80% is caused by other sources.
Like what exactly? There is not a lot of commonness between work, location, and such with them.
WyomingFIRE wrote: Mon Oct 11, 2021 7:55 pm willthrill81:

I always appreciate your posts.

Can you provide citations for your assertions above? I’m uncertain what you are suggesting. Are you suggesting that diet and exercise can overcome genetics? And if they can, what does that mean as to mortality? Do you think improvements in medicine have stalled out?

Also further up in the chain, I provided (or tried to anyway) authorities regarding why improvements in science and medicine were apt to lead to reduced mortality. I also presented authorities for different ways to make longevity forecasts. Do you have any thoughts on that?

I think I have lost the core of your argument.
Here's are a couple of quotes from Medline Plus that may help to explain the situation (note that this is not medical advice).
The duration of human life (longevity) is influenced by genetics, the environment, and lifestyle. Environmental improvements beginning in the 1900s extended the average life span dramatically with significant improvements in the availability of food and clean water, better housing and living conditions, reduced exposure to infectious diseases, and access to medical care. Most significant were public health advances that reduced premature death by decreasing the risk of infant mortality, increasing the chances of surviving childhood, and avoiding infection and communicable disease. Now people in the United States live about 80 years on average, but some individuals survive for much longer.
The study of longevity genes is a developing science. It is estimated that about 25 percent of the variation in human life span is determined by genetics, but which genes, and how they contribute to longevity, are not well understood.
https://medlineplus.gov/genetics/unders ... understood.

So we don't yet fully know whether 'bad genetics' can be overcome by other factors, such as diet and exercise. But simply knowing how long an individual's family members have lived has, TMK, not been highly predictive of how long the individual will live. Being able to account for 25% of the variation in longevity (across many individuals) is certainly very meaningful, but it still means that 75% of the variation is due to other factors.
My guess is that I will live at least as long as my second to oldest great-grandparent (death in the 90s). So I have to figure for 100 as the run-out age (my medical is equal or better). At that point, I am either dead or I have secured someone to care for me.
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