2.5% Withdrawal for 50 Years With 50/50 Portfolio?

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dbr
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by dbr » Tue Apr 17, 2018 8:48 am

Considering that you can buy an SPIA today that pays out at 4.6% why not distribute less than half that asset across a few insurance companies and leave the rest untouched.

Panhead already suggested this and also added the possibility of buying inflation indexed annuities instead.

You seem to be extraordinarily naive about inflation.

If you don't want to use SPIAs, I would say your proposal is plausible but has non-zero chance of failure and may need to be adjusted. Any assessment I have is just precisely based on tools such as FireCalc so if you want to reject those, you pretty much leave yourself without a reasoned approach to the problem.

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HomerJ
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by HomerJ » Tue Apr 17, 2018 9:10 am

VictoriaF wrote:
Mon Apr 16, 2018 7:09 pm
No, I would not be comfortable. The stock market has helped me to accumulate the assets. But I would not rely on it paying my living expenses for the rest of my life.

Victoria
You are retired now. How you are paying for your living expenses? Pension? Or something else? Do you suggest the OP should buy a SPIA?

Random Poster
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by Random Poster » Tue Apr 17, 2018 9:21 am

dbr wrote:
Tue Apr 17, 2018 8:48 am
You seem to be extraordinarily naive about inflation.
How so?

Shouldn't the underlying portfolio's balance increase (over time) in an amount equal to the inflation rate (over time), such that if I were to withdraw $75K plus inflation, the net effect is zero because I would effectively still have a $3M portfolio and a $75k withdrawal?

As in, if inflation in the first year is 2%, and the portfolio is now $3.06M (being $3M times 1.02), the withdrawal amount would be $76.5k (being $75K times 1.02), but that amount is still 2.5% of the portfolio's balance.

So as long as any percentage increase in the withdrawal amount equals the percentage increase in the underlying portfolio, how is one "losing" anything? And if the portfolio balance goes down over several years, then the withdrawal amount would either need to simply stay constant or be reduced accordingly----which I think that I would be fine with, given that our anticipated baseline expenses are in the $50k range.

VinhoVerde
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by VinhoVerde » Tue Apr 17, 2018 9:32 am

Hate to be the contrarian here but I don't see how the OP fixed income options could possibly provide the amount needed for a 50 year retirement duration. They are all nominal bonds.
I went to usinflation.com, plugged in $1,500,000 in 1968, and the result stated one would need over $10,750,000 to buy the same in goods and services today. I realize that this is the total accumulated inflation stated at the end of the 50 year period, but still, without an inflation adjusted vehicle like TIPS or IBonds I don't see how the nominal bond portion of this portfolio would retain enough real value to make this work.
What am I missing?
VinhoVerde

bigred77
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by bigred77 » Tue Apr 17, 2018 9:43 am

VinhoVerde wrote:
Tue Apr 17, 2018 9:32 am
Hate to be the contrarian here but I don't see how the OP fixed income options could possibly provide the amount needed for a 50 year retirement duration. They are all nominal bonds.
I went to usinflation.com, plugged in $1,500,000 in 1968, and the result stated one would need over $10,750,000 to buy the same in goods and services today. I realize that this is the total accumulated inflation stated at the end of the 50 year period, but still, without an inflation adjusted vehicle like TIPS or IBonds I don't see how the nominal bond portion of this portfolio would retain enough real value to make this work.
What am I missing?
VinhoVerde
Go look at the interest rates on nominal bonds in the 70s and 80s and you'll see how you could have turned $1.5M into $10M.

Interest rates and forward looking inflation expectations are both low today. I expect intermediate term nominal bonds to keep up with or slightly exceed inflation over the long term (decades).

wrongfunds
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by wrongfunds » Tue Apr 17, 2018 9:43 am

The BH standard answer to this type of questions

"You need twice the portfolio that you have"

zuma
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by zuma » Tue Apr 17, 2018 10:15 am

Random Poster wrote:
Mon Apr 16, 2018 1:32 pm
Instead, I'm asking if you personally would feel secure in taking $75K a year, for at least 50 years, from a portfolio whose initial balance is $3.0M and whose composition is as set forth above.
Yes, I would consider this a reasonable plan that may need to be adjusted sometime in the next 50 years.

No, I would not feel secure taking this amount every year for 50 years without keeping a close eye on things and possibly adjusting the plan along the way.

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randomizer
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by randomizer » Tue Apr 17, 2018 10:18 am

Random Poster wrote:
Mon Apr 16, 2018 1:32 pm
Background:

* Assume that you have $3,000,000 invested
I sure wish I could make that assumption!
87.5:12.5, EM tilt — HODL the course!

marcopolo
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by marcopolo » Tue Apr 17, 2018 11:07 am

wrongfunds wrote:
Tue Apr 17, 2018 9:43 am
The BH standard answer to this type of questions

"You need twice the portfolio that you have"
Yeah. I also find it amusing that there are so many threads accusing people of bragging when they ask "I have $3M, can I retire?" As if that is such an absurd question, the only reason you might ask it is to "humble brag" about having $3M. But, invariably when some one (like the OP) does ask that question sincerely, half the responses are, "no way", "way too risky", "have you considered this or that". The new bar seems to be 1% WR now, just a few posts up. I am not sure where the bottom is to this line of thinking.
Once in a while you get shown the light, in the strangest of places if you look at it right.

TonyDAntonio
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by TonyDAntonio » Tue Apr 17, 2018 11:15 am

Random Poster wrote:
Mon Apr 16, 2018 2:54 pm
HomerJ wrote:
Mon Apr 16, 2018 2:44 pm
Of course. That's basically just spending dividends.
Well, yes, I suppose, except that a portion of the dividends are being generated within the retirement accounts and are thus not easily accessible, and so I figure that one will have to sell some portion of the principal within the taxable account in order to obtain the $75K a year.
Easy peasy. I get dividend income out of my retirement accounts every quarter and I have yet to make an IRA withdrawal nor have I changed my asset allocation. Buy in IRA with dividend proceeds, sell same etf in taxable. Pay long term capital gains on 'dividend' income.

TonyDAntonio
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by TonyDAntonio » Tue Apr 17, 2018 11:19 am

marcopolo wrote:
Tue Apr 17, 2018 11:07 am
wrongfunds wrote:
Tue Apr 17, 2018 9:43 am
The BH standard answer to this type of questions

"You need twice the portfolio that you have"
Yeah. I also find it amusing that there are so many threads accusing people of bragging when they ask "I have $3M, can I retire?" As if that is such an absurd question, the only reason you might ask it is to "humble brag" about having $3M. But, invariably when some one (like the OP) does ask that question sincerely, half the responses are, "no way", "way too risky", "have you considered this or that". The new bar seems to be 1% WR now, just a few posts up. I am not sure where the bottom is to this line of thinking.
Thanks to this site I now worry that I don't have enough for retirement with 2 million plus and no debt including a paid off house in the SF Bay area. Thank you bogleheads. 🙄

Da5id
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by Da5id » Tue Apr 17, 2018 11:21 am

marcopolo wrote:
Tue Apr 17, 2018 11:07 am
wrongfunds wrote:
Tue Apr 17, 2018 9:43 am
The BH standard answer to this type of questions

"You need twice the portfolio that you have"
Yeah. I also find it amusing that there are so many threads accusing people of bragging when they ask "I have $3M, can I retire?" As if that is such an absurd question, the only reason you might ask it is to "humble brag" about having $3M. But, invariably when some one (like the OP) does ask that question sincerely, half the responses are, "no way", "way too risky", "have you considered this or that". The new bar seems to be 1% WR now, just a few posts up. I am not sure where the bottom is to this line of thinking.
This word, invariably, I think it doesn't mean what you believe. Survey this thread, add up responses, compare to half.

wrongfunds
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by wrongfunds » Tue Apr 17, 2018 11:38 am

Thanks to this site I now worry that I don't have enough for retirement with 2 million plus and no debt including a paid off house in the SF Bay area. Thank you bogleheads. 🙄
You need to sell your paid off house in SF Bay area and move to Detroit to have low cost of living in retirement. Or may be Fargo, North Dakota if Detroit is too industrial town for you. :oops:

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vitaflo
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by vitaflo » Tue Apr 17, 2018 11:52 am

Random Poster wrote:
Mon Apr 16, 2018 1:32 pm
Instead, I'm asking if you personally would feel secure in taking $75K a year, for at least 50 years, from a portfolio whose initial balance is $3.0M and whose composition is as set forth above.
Given your composition I would be comfortable taking $90k out for 50 years. But I'm a firm believer that 3% withdrawal basically works for any timeframe. There's no reason to go below it.

marcopolo
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by marcopolo » Tue Apr 17, 2018 12:00 pm

Da5id wrote:
Tue Apr 17, 2018 11:21 am
marcopolo wrote:
Tue Apr 17, 2018 11:07 am
wrongfunds wrote:
Tue Apr 17, 2018 9:43 am
The BH standard answer to this type of questions

"You need twice the portfolio that you have"
Yeah. I also find it amusing that there are so many threads accusing people of bragging when they ask "I have $3M, can I retire?" As if that is such an absurd question, the only reason you might ask it is to "humble brag" about having $3M. But, invariably when some one (like the OP) does ask that question sincerely, half the responses are, "no way", "way too risky", "have you considered this or that". The new bar seems to be 1% WR now, just a few posts up. I am not sure where the bottom is to this line of thinking.
This word, invariably, I think it doesn't mean what you believe. Survey this thread, add up responses, compare to half.
Fair enough. Perhaps "half" was a bit of an exaggeration.
But, I think there were a significant number of such posts that I am comfortable with with the basic point of my post.
Once in a while you get shown the light, in the strangest of places if you look at it right.

Random Poster
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by Random Poster » Tue Apr 17, 2018 12:20 pm

TonyDAntonio wrote:
Tue Apr 17, 2018 11:15 am
Easy peasy. I get dividend income out of my retirement accounts every quarter and I have yet to make an IRA withdrawal nor have I changed my asset allocation. Buy in IRA with dividend proceeds, sell same etf in taxable. Pay long term capital gains on 'dividend' income.
So---in a simplified world---I would take the dividends/interest generated from the bonds in the retirement accounts (let's say it is $1,000 a month), and instead of having those amounts reinvested in the bonds from which they came I'd use the $1,000 to buy, say, shares of the Total Stock Market fund each month, and then sell each month $1,000 worth of shares that I've held for at least a year of Total Stock Market in my taxable account, and thereby pay---conceivably---$0 in federal income tax on the sale of the $1,000 in the taxable account?

IlliniDave
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by IlliniDave » Tue Apr 17, 2018 12:24 pm

JoMoney wrote:
Tue Apr 17, 2018 6:48 am

:shock: To each their own I guess, but I'm amazed that someone could think that's just 'conservative'.
There are bank accounts earning more than 1.7% right now.
x/30years = 3.33% . You wouldn't have to make a dime on the money to guarantee it would last 30 years. You could put it in a bank account earning no interest, spend the principal (tax free assuming it's post tax money) and it would last 30 years withdrawing 3.33% of the initial balance. You could put it into TIPS guaranteed by the treasury to match an inflation index + a small amount of interest and do even better.

Are you talking about a 'safe withdrawal rate', or are you talking about trying to not spend principal and leave the biggest legacy you can?
Legacy is part of it. Risk of lifestyle "growth" is part of it. Risk in "outside" retirement income sources plays a part. Expectation of lower equity returns over the next decade or two factors in. Uncertainty of healthcare cost inflation. Uncertainty of my future health. In other words, lots of things that could easily knock X% up appreciably, some I control, some I don't. I've maybe read more of Dr Bernstein's writing than is healthy. :wink:

1.7% is just how it works out if I work until my employer's earliest retirement age, it wasn't a target. If I quit now it would be ~3% which at age 53 I'd not be comfortable with.
Don't do something. Just stand there!

Tamalak
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by Tamalak » Tue Apr 17, 2018 1:59 pm

wrongfunds wrote:
Tue Apr 17, 2018 9:43 am
The BH standard answer to this type of questions

"You need twice the portfolio that you have"
This. In any sane community the OP here would be roasted for humble bragging. Instead people are taking his question seriously and some even urging caution! :oops: Unbelievably out of touch. I wish some divine hand could take the tens of millions of net worth in this topic and move them somewhere where they'd actually be used for prosperity and happiness instead of nervously hoarded to the grave.
Last edited by Tamalak on Tue Apr 17, 2018 2:08 pm, edited 1 time in total.

Da5id
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by Da5id » Tue Apr 17, 2018 2:07 pm

Tamalak wrote:
Tue Apr 17, 2018 1:59 pm
This. In any sane community the OP here would be roasted for humble bragging.
Interestingly, this is one of the reasons I like bogleheads. While things get a bit heated at times, it largely is fairly civil unlike the general smelly cesspool that is the unmoderated internet. Ignore threads you don't like. If you think something is a true troll, flag it and let the mods sort it out. Otherwise assume good faith and answer accordingly if you feel like it. At least that is how I see it.

I think the question of what "SWR" is good is unknowable, and highly subject to individual circumstances and temperament. I think this thread is fine. I'm not even sure OP has that amount of money, may just be raising a hypothetical.

Tamalak
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by Tamalak » Tue Apr 17, 2018 2:10 pm

Da5id wrote:
Tue Apr 17, 2018 2:07 pm
Tamalak wrote:
Tue Apr 17, 2018 1:59 pm
This. In any sane community the OP here would be roasted for humble bragging.
Otherwise assume good faith and answer accordingly if you feel like it. At least that is how I see it.
If we assume good faith, the correct answer to this OP and many others like him is "go volunteer in a soup kitchen until you get your head straightened out".

The question OP asks has nothing to do with his actual problem.

Da5id
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by Da5id » Tue Apr 17, 2018 2:17 pm

Tamalak wrote:
Tue Apr 17, 2018 2:10 pm
If we assume good faith, the correct answer to this OP and many others like him is "go volunteer in a soup kitchen until you get your head straightened out".

The question OP asks has nothing to do with his actual problem.
Giving unsolicited life coaching advice in response to a financial question isn't a good choice. IMHO. I think the answer to the question of what exactly is a good initial SWR to retire with at age 40 is murky at best, the long horizon gives lots of uncertainty. I don't object to the OP for asking whether people would personally be happy with 2.5%.

remomnyc
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by remomnyc » Tue Apr 17, 2018 2:22 pm

Random Poster wrote:
Tue Apr 17, 2018 12:20 pm
TonyDAntonio wrote:
Tue Apr 17, 2018 11:15 am
Easy peasy. I get dividend income out of my retirement accounts every quarter and I have yet to make an IRA withdrawal nor have I changed my asset allocation. Buy in IRA with dividend proceeds, sell same etf in taxable. Pay long term capital gains on 'dividend' income.
So---in a simplified world---I would take the dividends/interest generated from the bonds in the retirement accounts (let's say it is $1,000 a month), and instead of having those amounts reinvested in the bonds from which they came I'd use the $1,000 to buy, say, shares of the Total Stock Market fund each month, and then sell each month $1,000 worth of shares that I've held for at least a year of Total Stock Market in my taxable account, and thereby pay---conceivably---$0 in federal income tax on the sale of the $1,000 in the taxable account?
Yes, manage your taxable and tax deferred as one portfolio, placing assets for tax efficiency. Fixed income should be in tax deferred, which will be taxed at ordinary income tax rates, and stocks in taxable. Sell from your taxable at capital gains tax rates and rebalance in your tax deferred.

https://www.bogleheads.org/wiki/Tax-eff ... _placement

dbr
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by dbr » Tue Apr 17, 2018 3:48 pm

Random Poster wrote:
Tue Apr 17, 2018 9:21 am
dbr wrote:
Tue Apr 17, 2018 8:48 am
You seem to be extraordinarily naive about inflation.
How so?

Shouldn't the underlying portfolio's balance increase (over time) in an amount equal to the inflation rate (over time), such that if I were to withdraw $75K plus inflation, the net effect is zero because I would effectively still have a $3M portfolio and a $75k withdrawal?

How on earth would you arrive at that assumption for the asset allocation you propose? The way you can get that picture is to invest everything in TIPS and count on withdrawing the real interest payments. Right now that is about 0.9% for thirty year TIPS right now, and then you would have to count on reinvesting those TIPS for the second twenty years without knowing now what real interest you could get. You could generate more income if you are willing to sell down some of the bonds. I haven't run a calculation for fifty years but TIPS sold down completely for thirty years generate 3.33% withdrawal at real interest of 0.0% and 3.8% at real interest of 1.0%. As mentioned you could completely give up some of the portfolio for a fixed SPIA if fixed nominal is the objective or for an inflation indexed SPIA if that is your objective. I expect the inflation indexed version might get you 4% initial payout or to raise $75K/year you would pay in $1,875,000.


As in, if inflation in the first year is 2%, and the portfolio is now $3.06M (being $3M times 1.02), the withdrawal amount would be $76.5k (being $75K times 1.02), but that amount is still 2.5% of the portfolio's balance.

So as long as any percentage increase in the withdrawal amount equals the percentage increase in the underlying portfolio, how is one "losing" anything? And if the portfolio balance goes down over several years, then the withdrawal amount would either need to simply stay constant or be reduced accordingly----which I think that I would be fine with, given that our anticipated baseline expenses are in the $50k range.

If you adjust withdrawals downward when you need to you can make a balanced portfolio of stocks and bonds work, but now you are totally changing the proposition you started with. The computations that tell you what can work to what degree are exactly the ones in the simulations you don't want to look at, such as FireCalc and several other similar ones. In the case of a willingness to adjust withdrawals as you go there are several schemes for looking at how that works including FireCalc itself but most especially the Variable Percentage Withdrawal model https://www.bogleheads.org/wiki/Variabl ... withdrawal My answer to whether or not I would be comfortable with your proposal is that I would go look at the modeling and decide if the projections suggest taking the risk or not. As the author of the VPW algorithm has often suggested I would certainly include some amount of annuitization in the plan, and that appears to be totally doable.

Random Poster
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by Random Poster » Tue Apr 17, 2018 4:26 pm

dbr wrote:
Tue Apr 17, 2018 3:48 pm
How on earth would you arrive at that assumption for the asset allocation you propose?
I don't think that I completely follow your statements.

Are you asserting that a 50/50 portfolio cannot keep up with inflation, whether with or without any withdrawals from the portfolio? Are you asserting that withdrawing 2.5% of a 50/50 portfolio will ultimately reduce the portfolio's balance to zero over a 50 year time period?
dbr wrote:
Tue Apr 17, 2018 3:48 pm
The computations that tell you what can work to what degree are exactly the ones in the simulations you don't want to look at, such as FireCalc and several other similar ones.
I've run several FireCalc (and similar) calculations, and provided that I've correctly inputted the information, they all say that taking out $75K a year, plus CPI inflation, from the given portfolio has a 100% success rate (including with the caveat that at least $1M must remain in the portfolio at all times). If I change the inflation rate to 3.0%, I get a 96.9% success rate with the $1M caveat, and a 100% success rate without the $1M caveat. At a 3.5% inflation rate, it is a 97.9% success rate without the $1M caveat. At a 4.0% inflation rate, it is a 87.6% success rate without the caveat. And so on.

But what some simulator says and what people in the real world do and believe may not be the same, and calculators can be wrong whether by input error or otherwise, and that is why I'm asking if one personally feels that taking $75K a year from the given facts is acceptable prudent.

Of course, people can be wrong too, but I'd like to think that they have more personal experience with real life than some calculator does.

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VictoriaF
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by VictoriaF » Tue Apr 17, 2018 4:56 pm

TN_Boy wrote:
Tue Apr 17, 2018 8:20 am
VictoriaF wrote:
Mon Apr 16, 2018 7:09 pm
No, I would not be comfortable. The stock market has helped me to accumulate the assets. But I would not rely on it paying my living expenses for the rest of my life.

Victoria
It's very reassuring to have SS and/or a good pension for part of retirement expenses, but do you really think a 2.5% withdrawal rate is unsafe, even for a long retirement? If so, why do you think that?
The unsafe part is not the 2.5% withdrawal rate but the 50/50 portfolio stipulated by the OP. He might fund his retirement with a mix of TIPS and annuities and keep the leftovers in the stock market.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

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VictoriaF
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by VictoriaF » Tue Apr 17, 2018 5:00 pm

HomerJ wrote:
Tue Apr 17, 2018 9:10 am
VictoriaF wrote:
Mon Apr 16, 2018 7:09 pm
No, I would not be comfortable. The stock market has helped me to accumulate the assets. But I would not rely on it paying my living expenses for the rest of my life.

Victoria
You are retired now. How you are paying for your living expenses? Pension? Or something else? Do you suggest the OP should buy a SPIA?
I have two small pensions and cash to last me until I reach the age of 70. At that time, I will get the Social Security. The pensions and SS will cover my basic expenses. I might get an SPIA when I am much older. In the mean time, I will be watching out for opportunistic purchases of TIPS.

The OP should secure his retirement with safe assets, such as Social Security, pensions if any, TIPS, I Bonds, and SPIAs.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

dbr
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by dbr » Tue Apr 17, 2018 5:59 pm

Random Poster wrote:
Tue Apr 17, 2018 4:26 pm
dbr wrote:
Tue Apr 17, 2018 3:48 pm
How on earth would you arrive at that assumption for the asset allocation you propose?
I don't think that I completely follow your statements.

Are you asserting that a 50/50 portfolio cannot keep up with inflation, whether with or without any withdrawals from the portfolio? Are you asserting that withdrawing 2.5% of a 50/50 portfolio will ultimately reduce the portfolio's balance to zero over a 50 year time period?

The models show that the outcome has to be viewed as a distribution of possible outcomes most of which are going to be successful and some of which may fail in one way or another. You don't know which outcome you are going to get. So, yes, a 50/50 portfolio might fail to keep up with inflation over fifty years with the largest consideration being the size of the withdrawals and whether or not they are inflation indexed. It would seem to be highly unlikely that such a portfolio would not have a 50 year gain on inflation without withdrawals, but there could be many years along the way where the portfolio value is significantly below starting value. With withdrawals there is more and more of a chance that the portfolio would fail to retain a certain value or might even fall to zero depending on the amount of withdrawal and how much value you demand remains. The issue is for the investor to decide in the light of these probabilities what decision he would make. There is also the fact that models are uncertain and the investor is going to have to allow for the extent the results might be too optimistic or too pessimistic.
dbr wrote:
Tue Apr 17, 2018 3:48 pm
The computations that tell you what can work to what degree are exactly the ones in the simulations you don't want to look at, such as FireCalc and several other similar ones.
I've run several FireCalc (and similar) calculations, and provided that I've correctly inputted the information, they all say that taking out $75K a year, plus CPI inflation, from the given portfolio has a 100% success rate (including with the caveat that at least $1M must remain in the portfolio at all times). If I change the inflation rate to 3.0%, I get a 96.9% success rate with the $1M caveat, and a 100% success rate without the $1M caveat. At a 3.5% inflation rate, it is a 97.9% success rate without the $1M caveat. At a 4.0% inflation rate, it is a 87.6% success rate without the caveat. And so on.

So now you can see the kind of numbers that might result. It might be you should let Firecalc model the inflation as well, which it does using historical values. Over the last 100 years annual inflation in the United States has ranged from as low as -10% to as high as +20% highly variable from year to year. What guess a person wants to make regarding whether those extremes might be experienced again I couldn't say. In my investing lifetime inflation in the US has ranged between -2% and +15%. If one wants to consider the experience that has occurred in other countries the numbers can be sobering from Weimar Germany to Argentina in this decade.

But what some simulator says and what people in the real world do and believe may not be the same, and calculators can be wrong whether by input error or otherwise, and that is why I'm asking if one personally feels that taking $75K a year from the given facts is acceptable prudent.

I am making the statement that you can't arrive at a judgement of prudent without doing some math. If it were me I would use what I have seen in modeling to follow the strategy of annuitizing, of being prepared to cut back on withdrawals or increase spending, and be comfortable with the proposed withdrawal.

Of course, people can be wrong too, but I'd like to think that they have more personal experience with real life than some calculator does.

I would say exactly the opposite. Calculators have far more experience of real life than any one person does if they are operated with common sense and the output is taken with appropriate perspective. Then again if you were around when inflation did run at 15% or when the DOW index lost 90% if its value in three years you might think calculators give false security.

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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by aj76er » Tue Apr 17, 2018 6:14 pm

If you don't care about leaving a large inheritance, then your are good to go.

I think 2.8% has been the historical PWR (perpetual withdrawal rate), that maintains real inflation-adjusted principle.

I would probably lean a bit more towards equities (no less than 60/40), but probably won't make a big difference. Also, I would have a healthy amount of international equities. As others have noted, have some cash (3x-5x living expenses) stored outside the portfolio to guard against "unprecedented" sequence of returns risk.

Download the Simba spreadsheet and try backtesting your withdrawal strategy in 1966, which is notoriously the worst time in recent history to retire (due to global inflation).
"Buy-and-hold, long-term, all-market-index strategies, implemented at rock-bottom cost, are the surest of all routes to the accumulation of wealth" - John C. Bogle

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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by michaeljc70 » Tue Apr 17, 2018 6:21 pm

Absolutely.

dbr
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by dbr » Tue Apr 17, 2018 6:36 pm

To add a comment, if perspective of experience is what is wanted, experience would say that the larger uncertainties are in areas other than the fate of this investing scheme. What will happen to a person over fifty years of living, even just matters of financial consequence, can be so variable, so unexpected, so subject to whims and changes and decisions that locking away an income plan for that length of time really should be viewed as highly provisional. From that point of view intuition would be to go for it but be prepared for anything.

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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by ramonsito » Tue Apr 17, 2018 6:37 pm

I would be very comfortable with this scenario. In fact, a 3% WR would likely be OK. Nevertheless, congratulations on accumulating 3M at age 40, WOW.

dbr
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by dbr » Tue Apr 17, 2018 6:44 pm

Has anyone yet made a recommendation based on person experience and intuition rather than informed by models and backtests?

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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by wrongfunds » Tue Apr 17, 2018 7:01 pm

How difficult it is to find somebody who did this for 50 years running and is a current BH contributor. Do we have any retirees who retired in 1968 and used 2.5% withdrawal for 50 years?
Then again if you were around when inflation did run at 15% or when the DOW index lost 90% if its value in three years you might think calculators give false security.
Do you think 1.0% will work in the above case? But would you really feel comfortable? Because the inflation could run 20% and DOW index could drop by 95%.

Are there any numbers which will make you comfortable?

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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by jpsc » Tue Apr 17, 2018 8:49 pm

TonyDAntonio wrote:
Tue Apr 17, 2018 11:19 am

Thanks to this site I now worry that I don't have enough for retirement with 2 million plus and no debt including a paid off house in the SF Bay area. Thank you bogleheads. 🙄
If you invest in VIG - or one of those Vanguard target retirement income trust, you can make 2.5% to 5% easily per year.

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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by michaeljc70 » Tue Apr 17, 2018 9:13 pm

wrongfunds wrote:
Tue Apr 17, 2018 7:01 pm
How difficult it is to find somebody who did this for 50 years running and is a current BH contributor. Do we have any retirees who retired in 1968 and used 2.5% withdrawal for 50 years?
Then again if you were around when inflation did run at 15% or when the DOW index lost 90% if its value in three years you might think calculators give false security.
Do you think 1.0% will work in the above case? But would you really feel comfortable? Because the inflation could run 20% and DOW index could drop by 95%.

Are there any numbers which will make you comfortable?
It wouldn't be that hard to run the numbers. Would it make you feel more confidant if someone actually says they did it in an online forum?

In the updated Trinity study you have a 100% chance of a 3% SWR over 40 years. They don't even calculate 50 years as very few people are retired 50 years. You'd have to retire at 40 and live until 90.

And what is this talk in posts of finding such a person as if it proves something (other than that someone that retired in 1968 didn't go broke)? Because someone retired in 1968 and isn't broke doesn't mean that it will work for someone retiring in 2018 (and living to 2068!)

The revised Trinity Study is discussed here:
viewtopic.php?f=10&t=247050
Last edited by michaeljc70 on Tue Apr 17, 2018 9:29 pm, edited 1 time in total.

TN_Boy
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by TN_Boy » Tue Apr 17, 2018 9:24 pm

VictoriaF wrote:
Tue Apr 17, 2018 4:56 pm
TN_Boy wrote:
Tue Apr 17, 2018 8:20 am
VictoriaF wrote:
Mon Apr 16, 2018 7:09 pm
No, I would not be comfortable. The stock market has helped me to accumulate the assets. But I would not rely on it paying my living expenses for the rest of my life.

Victoria
It's very reassuring to have SS and/or a good pension for part of retirement expenses, but do you really think a 2.5% withdrawal rate is unsafe, even for a long retirement? If so, why do you think that?
The unsafe part is not the 2.5% withdrawal rate but the 50/50 portfolio stipulated by the OP. He might fund his retirement with a mix of TIPS and annuities and keep the leftovers in the stock market.

Victoria
Okay, so you believe a 2.5% withdrawal rate over 50 years is not safe enough. I don't know that I agree but wanted to make sure I understood. Would 2.5% be safe for 30 years? 40 years? Would 1% be safe for 50 years? You sort of bypassed my question, by arguing for creating a "safe" income floor (which I don't necessarily disagree with, I just wanted to get back to what is a reasonable withdrawal).

Is it the duration or the withdrawal rate you don't like?

How much would you put in TIPs? Without bothering to check, I"m pretty sure trying to buy SPIAs at age 40 wouldn't work well. So the "safe" money would have to be TIPs, I think.

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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by TonyDAntonio » Tue Apr 17, 2018 9:56 pm

jpsc wrote:
Tue Apr 17, 2018 8:49 pm
TonyDAntonio wrote:
Tue Apr 17, 2018 11:19 am

Thanks to this site I now worry that I don't have enough for retirement with 2 million plus and no debt including a paid off house in the SF Bay area. Thank you bogleheads. 🙄


If you invest in VIG - or one of those Vanguard target retirement income trust, you can make 2.5% to 5% easily per year.
I figure that as soon as I switch out of my Merriman slice and dice portfolio it will flourish. I've come to grips with the fact that the day I stop worrying is the day I die or lose my last marble. It is what it is.

TonyDAntonio
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by TonyDAntonio » Tue Apr 17, 2018 9:59 pm

Random Poster wrote:
Tue Apr 17, 2018 12:20 pm
TonyDAntonio wrote:
Tue Apr 17, 2018 11:15 am
Easy peasy. I get dividend income out of my retirement accounts every quarter and I have yet to make an IRA withdrawal nor have I changed my asset allocation. Buy in IRA with dividend proceeds, sell same etf in taxable. Pay long term capital gains on 'dividend' income.
So---in a simplified world---I would take the dividends/interest generated from the bonds in the retirement accounts (let's say it is $1,000 a month), and instead of having those amounts reinvested in the bonds from which they came I'd use the $1,000 to buy, say, shares of the Total Stock Market fund each month, and then sell each month $1,000 worth of shares that I've held for at least a year of Total Stock Market in my taxable account, and thereby pay---conceivably---$0 in federal income tax on the sale of the $1,000 in the taxable account?
Yes. Not only in a simplified world but in the real one too.

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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by bltn » Tue Apr 17, 2018 10:05 pm

I m enjoying this forum. A very interesting group with diverging points of view, most of which have some merit. I just have to decide which I agree with the most.

The idea that a 50/50 portfolio of index funds in stocks and bonds couldn t support a 2.5% annuual withdrawal rate indefinitely seems ludicrous, based on the market performance of the last 100 years. Then somebody mentions Japan. A very vigorous economy whose stock market value dropped to 1/2 and has stayed there for the last 20 years. Or longer.
With a 50 year planning period anything can happen. But with 50% in bonds and cash, there will be some protection.

A big challenge is finding some balance so that so that one will enjoy the fruits of his hard earned accumulation and not just leave a huge legacy, unless that is your goal. Then, just continue to save and live frugally.

My persnal target is starting retirement with a 3% withdrwal rate when I manage our money, and possibly changing that to a 3.5% withdrawal rate to help cover expenses when assets are placed in trusts. My plans are always subject to a chnge of mind. But I believe the risk of our demise is much greater than the risk of demise for our nest egg with those withdrwal rates

Bottom line, I believe a 2.5% withdrawl rate to start, adjusted annually for inflation, with that asset allocation, is very safe.. But were I in your position, I would cosider working a few more years to allow some increased accumulation to allow for some increases in my future financial quality of life. Find work you like and continue to add to the nest egg.

All withdrawal rates mentioned above are before taxes.

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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by Sandi_k » Wed Apr 18, 2018 1:27 am

In Kitces' appearance on the Mad Fientist podcast, he said that 3.5% WR could cover basically any long-term time period you looked at. I believe he also said you needed at least a 30/70 ratio to get it done.

MikeG62
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by MikeG62 » Wed Apr 18, 2018 7:17 am

TN_Boy wrote:
Tue Apr 17, 2018 9:24 pm
VictoriaF wrote:
Tue Apr 17, 2018 4:56 pm
TN_Boy wrote:
Tue Apr 17, 2018 8:20 am
VictoriaF wrote:
Mon Apr 16, 2018 7:09 pm
No, I would not be comfortable. The stock market has helped me to accumulate the assets. But I would not rely on it paying my living expenses for the rest of my life.

Victoria
It's very reassuring to have SS and/or a good pension for part of retirement expenses, but do you really think a 2.5% withdrawal rate is unsafe, even for a long retirement? If so, why do you think that?
The unsafe part is not the 2.5% withdrawal rate but the 50/50 portfolio stipulated by the OP. He might fund his retirement with a mix of TIPS and annuities and keep the leftovers in the stock market.

Victoria
Okay, so you believe a 2.5% withdrawal rate over 50 years is not safe enough. I don't know that I agree but wanted to make sure I understood. Would 2.5% be safe for 30 years? 40 years? Would 1% be safe for 50 years? You sort of bypassed my question, by arguing for creating a "safe" income floor (which I don't necessarily disagree with, I just wanted to get back to what is a reasonable withdrawal).

Is it the duration or the withdrawal rate you don't like?

How much would you put in TIPs? Without bothering to check, I"m pretty sure trying to buy SPIAs at age 40 wouldn't work well. So the "safe" money would have to be TIPs, I think.
It seems to me that the economic environment in which a 2.5% WD rate would result in one running out of money may well result in many pension funds also failing to meet their obligations (after all, they are investing in the same markets). Same could be true of many SPIA's (which are only as good as the creditworthiness of the underlying insurer).

Point being, there is no truly "safe" outcome (I think TN_boy was making the same point). People need to plan with a reasonable set of assumptions because at some point they will retire. Being too conservative with the assumptions will delay the start of retirement and shorten the period of time one will have in retirement (and importantly reduce the number of "go-go" years).

Real life example. I fully retired at 53 (DW was 51 and also fully retired) three years ago. Initial targeted annual WD rate was 3.25%, but due to underspend of our budget and strong stock market performance, our WD rate last year was closer to 2.6%. I remain "very confident" that our retirement funds will last until we are both gone (and very likely well beyond that). If economic circumstances going forward are such that we become less confident our money will last, we will course correct (i.e., scale back our spending (a very sizable portion of which is discretionary), including possibly moving into a lower cost living situation). If we are forced to course correct, there will be a lot of people living in a very bad situation indeed.
Real Knowledge Comes Only From Experience

Always passive
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by Always passive » Wed Apr 18, 2018 7:27 am

Who knows what will happen in 10 years, let alone 50. I can list a long number of reasons why any plan intended to be good for 20, 30, etc., can fail. So, my opinion is that you are kidding yourself thinking that you can determine now that you are ok financially no matter what your numbers are and what anyone else is saying. So my advise is to not make any long term decisions without having a backup plan.
To end, I hope your question is only academic.

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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by wrongfunds » Wed Apr 18, 2018 7:31 am

FWIW, I fully retired at 53 (DW was 51 and also fully retired) three years ago. Initial targeted annual WD rate was 3.25%, but due to underspend of our budget and strong stock market performance, our WD rate last year was closer to 2.6%. I remain "very confident" that our retirement funds will last until we are both gone (and very likely well beyond that). If economic circumstances going forward are such that we become less confident our money will last, we will course correct (i.e., scale back our spending (a very sizable portion of which is discretionary), including possibly moving into a lower cost living situation). If we are forced to course correct, there will be a lot of people living in a very bad situation indeed.
Believe it or not, there are people here on this forum which will consider dropping from the 3.25% as failure! In life there are no ironclad guarantees but only reasonable plans and their execution. Some of you get it and some just don't or at least argue as if they don't get it. May be they are arguing just to have fun?

dbr
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by dbr » Wed Apr 18, 2018 7:52 am

wrongfunds wrote:
Tue Apr 17, 2018 7:01 pm
How difficult it is to find somebody who did this for 50 years running and is a current BH contributor. Do we have any retirees who retired in 1968 and used 2.5% withdrawal for 50 years?
Then again if you were around when inflation did run at 15% or when the DOW index lost 90% if its value in three years you might think calculators give false security.
Do you think 1.0% will work in the above case? But would you really feel comfortable? Because the inflation could run 20% and DOW index could drop by 95%.

Are there any numbers which will make you comfortable?
Well I said some unnamed "you" which is not me. I would be comfortable with the original plan based on the odds being good combined with understanding that life is about managing all the things that happen to us. Also I wouldn't use the original plan because somewhere in there it seems obvious that some kind of annuitization should be used though when and how much remains to be determined. But it isn't me; it is the OP who has to decide what he wants to do. Emphasis is on "wants."

Of course the OP has already backed off the 2.5% down to possibly being willing to accept rates of spending if needed that are low enough one can hardly imagine the scenario could fail. Probably the better place to focus concern is in that amount of spending and whether that will really be how one can live for fifty years, all contingencies considered. I still think the OP is showing a wishy-washy lack of understanding of what he wants to do about inflation. The difference between an indexed 2.5% and fixed 2.5% is huge. I guess we have resolved it is indexed, or have we? On the other hand there is almost no one who can't go back and earn some money again, or get support from someone else.

Decisions regarding what you do with your life don't come down to some kind of retirement withdrawal plan. But the question in the OP is about the financial prospects for a specific retirement withdrawal plan but he wants people to say what they feel about the plan rather than what numbers can be put on it. It is extraordinarily difficult to separate the two and to talk about how one feels about a hypothetical. It is even difficult to put numbers on plans that long when the models are all notorious for lacking estimates of reliability. That includes that the error can just as easily be that the variation is in the direction of better outcomes rather than worse.

So far we have not heard from anyone who has actually started a 50 year retirement based on the conditions suggested. Maybe we should all just shut up until another person comes along who is doing or has done what the OP proposes. If I missed a post by someone like that, let me know. All the people I know who are "retired" with a prospect for a fifty year retirement are destitute, disabled, and living on various forms of public assistance. By destitute I mean they have no assets but usually there is income in the form of some pension, Social Security of different flavors, Medicaid and so on. One such individual I know is living at the $75,000 a year level based on the value of his public assistance, but I don't think that is what the OP has in mind. All that means is that really early retirees on less than large fortunes are rare birds indeed.

That actually brings up the suggestion that a good place the ask that question is probably here: http://www.early-retirement.org/forums/ It would be interesting to see if the tone of the responses is different there from here.
Last edited by dbr on Wed Apr 18, 2018 8:23 am, edited 1 time in total.

Da5id
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by Da5id » Wed Apr 18, 2018 8:12 am

wrongfunds wrote:
Wed Apr 18, 2018 7:31 am
FWIW, I fully retired at 53 (DW was 51 and also fully retired) three years ago. Initial targeted annual WD rate was 3.25%, but due to underspend of our budget and strong stock market performance, our WD rate last year was closer to 2.6%. I remain "very confident" that our retirement funds will last until we are both gone (and very likely well beyond that). If economic circumstances going forward are such that we become less confident our money will last, we will course correct (i.e., scale back our spending (a very sizable portion of which is discretionary), including possibly moving into a lower cost living situation). If we are forced to course correct, there will be a lot of people living in a very bad situation indeed.
Believe it or not, there are people here on this forum which will consider dropping from the 3.25% as failure! In life there are no ironclad guarantees but only reasonable plans and their execution. Some of you get it and some just don't or at least argue as if they don't get it. May be they are arguing just to have fun?
Seriously, can you show me a person (people?) on the forum who says spending under your target budget is a failure? I haven't seen this particular strain of argument. If one is getting all one wants, being forced to spend more to reach a budgeted amount is bizarre.

dbr
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by dbr » Wed Apr 18, 2018 8:24 am

Da5id wrote:
Wed Apr 18, 2018 8:12 am
wrongfunds wrote:
Wed Apr 18, 2018 7:31 am
FWIW, I fully retired at 53 (DW was 51 and also fully retired) three years ago. Initial targeted annual WD rate was 3.25%, but due to underspend of our budget and strong stock market performance, our WD rate last year was closer to 2.6%. I remain "very confident" that our retirement funds will last until we are both gone (and very likely well beyond that). If economic circumstances going forward are such that we become less confident our money will last, we will course correct (i.e., scale back our spending (a very sizable portion of which is discretionary), including possibly moving into a lower cost living situation). If we are forced to course correct, there will be a lot of people living in a very bad situation indeed.
Believe it or not, there are people here on this forum which will consider dropping from the 3.25% as failure! In life there are no ironclad guarantees but only reasonable plans and their execution. Some of you get it and some just don't or at least argue as if they don't get it. May be they are arguing just to have fun?
Seriously, can you show me a person (people?) on the forum who says spending under your target budget is a failure? I haven't seen this particular strain of argument. If one is getting all one wants, being forced to spend more to reach a budgeted amount is bizarre.
Yes, the OP already mentioned that if necessary he would spend less.

Da5id
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by Da5id » Wed Apr 18, 2018 8:34 am

dbr wrote:
Wed Apr 18, 2018 8:24 am
Da5id wrote:
Wed Apr 18, 2018 8:12 am
wrongfunds wrote:
Wed Apr 18, 2018 7:31 am
FWIW, I fully retired at 53 (DW was 51 and also fully retired) three years ago. Initial targeted annual WD rate was 3.25%, but due to underspend of our budget and strong stock market performance, our WD rate last year was closer to 2.6%. I remain "very confident" that our retirement funds will last until we are both gone (and very likely well beyond that). If economic circumstances going forward are such that we become less confident our money will last, we will course correct (i.e., scale back our spending (a very sizable portion of which is discretionary), including possibly moving into a lower cost living situation). If we are forced to course correct, there will be a lot of people living in a very bad situation indeed.
Believe it or not, there are people here on this forum which will consider dropping from the 3.25% as failure! In life there are no ironclad guarantees but only reasonable plans and their execution. Some of you get it and some just don't or at least argue as if they don't get it. May be they are arguing just to have fun?
Seriously, can you show me a person (people?) on the forum who says spending under your target budget is a failure? I haven't seen this particular strain of argument. If one is getting all one wants, being forced to spend more to reach a budgeted amount is bizarre.
Yes, the OP already mentioned that if necessary he would spend less.
OP is already spending less than 3.25%, not out of necessity but because he doesn't need to spend that much. He said he would drop below that if things get bad some day. My question is who are these people who say that is a "failure". Those would be presumably the same people who think SWR is an actual withdrawal plan (does anyone think that?).

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1210sda
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by 1210sda » Wed Apr 18, 2018 9:28 am

1. SWR takes inflation into account.
2. Based on 4% SWR for 30 years, 2.5% SWR seems acceptable for 50 years.
3. You have no desire to leave an inheritance. (unless your portfolio does better)
4. You'll be getting social security at age 62 to 70.
5. You'll be on medicare at age 65
6. Hopefully you have factored in the enormous cost of medical insurance till you reach medicare age.

So yes, I would be comfortable with your approach.

1210

P.S. How old is your spouse ?

Random Poster
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by Random Poster » Wed Apr 18, 2018 10:08 am

1210sda wrote:
Wed Apr 18, 2018 9:28 am
1. SWR takes inflation into account.
2. Based on 4% SWR for 30 years, 2.5% SWR seems acceptable for 50 years.
3. You have no desire to leave an inheritance. (unless your portfolio does better)
4. You'll be getting social security at age 62 to 70.
5. You'll be on medicare at age 65
6. Hopefully you have factored in the enormous cost of medical insurance till you reach medicare age.

So yes, I would be comfortable with your approach.

1210

P.S. How old is your spouse ?
My spouse is 38. I'm 41.

Our six year average annual spending amount is $48,883, and if and when I leave paid employment, we will buy a house outright (using cash that is not included in the investment portfolio amounts).

I figure that the health insurance costs and property taxes and maintenance on the house would roughly equal or slightly exceed our current rental expenses, so that the annual spending amount should remain in the low $50k a year range. But, if needed or desired, the annual expenses could increase to $75k---perhaps not every year, but maybe every few years---and that is how I came up with the $75K annual withdrawal amount.

You are correct in that there is no desire to leave an inheritance. We don't have any children, and are pretty much the last "tails" of our ancestral line.

TN_Boy
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Re: 2.5% Withdrawal for 50 Years With 50/50 Portfolio?

Post by TN_Boy » Wed Apr 18, 2018 10:45 am

Random Poster wrote:
Wed Apr 18, 2018 10:08 am
1210sda wrote:
Wed Apr 18, 2018 9:28 am
1. SWR takes inflation into account.
2. Based on 4% SWR for 30 years, 2.5% SWR seems acceptable for 50 years.
3. You have no desire to leave an inheritance. (unless your portfolio does better)
4. You'll be getting social security at age 62 to 70.
5. You'll be on medicare at age 65
6. Hopefully you have factored in the enormous cost of medical insurance till you reach medicare age.

So yes, I would be comfortable with your approach.

1210

P.S. How old is your spouse ?
My spouse is 38. I'm 41.

Our six year average annual spending amount is $48,883, and if and when I leave paid employment, we will buy a house outright (using cash that is not included in the investment portfolio amounts).

I figure that the health insurance costs and property taxes and maintenance on the house would roughly equal or slightly exceed our current rental expenses, so that the annual spending amount should remain in the low $50k a year range. But, if needed or desired, the annual expenses could increase to $75k---perhaps not every year, but maybe every few years---and that is how I came up with the $75K annual withdrawal amount.

You are correct in that there is no desire to leave an inheritance. We don't have any children, and are pretty much the last "tails" of our ancestral line.
I don't know what your rental expenses are, but where I live, a nice two bedroom apartment would be cheaper, probably a lot cheaper, than:

health insurance premiums for two
property taxes
homeowners insurance (you didn't mention this, but it is more expensive than renters insurance)
home maintenance (price roof replacement, HVAC replacement, etc)

But perhaps you have carefully priced all the above out and the result is better than I think. The full cost of decent health insurance for two people, even people your age, is pretty high (and goes up, of course, as you age).

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