tag:blogger.com,1999:blog-2875915890415125655.post6200593961829242838..comments2023-05-18T10:37:34.608+01:00Comments on <a href="http://www.retirementinvestingtoday.com">Retirement Investing Today</a>: Predicting Retirement Financial SuccessRetirementInvestingTodayhttp://www.blogger.com/profile/03088383743670046657noreply@blogger.comBlogger23125tag:blogger.com,1999:blog-2875915890415125655.post-72809491016862182212017-05-23T14:23:02.707+01:002017-05-23T14:23:02.707+01:00The 4% SWR is a broadly touted tool which pander t...The 4% SWR is a broadly touted tool which pander to our desire for simplicity whereas I suspect the vast majority of investors for whom a SWR is a useful consideration have portfolios of investments / income producing assets which are far from simple. When you add to that the fundamental flaw that SWR calculations are backward looking and its all but meaningless.<br /><br />My own potential Anonymoushttps://www.blogger.com/profile/01293094763105982408noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-58385382715413594432017-05-22T21:19:41.294+01:002017-05-22T21:19:41.294+01:00http://www.madfientist.com/safe-withdrawal-rate/
...http://www.madfientist.com/safe-withdrawal-rate/<br /><br />At the less academic end of the spectrum but a useful summary here. It mostly offers encouragement for early retirees.Rubyhttps://www.blogger.com/profile/15723056777618667572noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-26372649185901635682017-05-21T11:22:34.689+01:002017-05-21T11:22:34.689+01:00I have to agree with Stringvest. Whilst these post...I have to agree with Stringvest. Whilst these posts are interesting we are really looking and waiting to hear about your major moving decisions. Good luck. Tim Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-22233528241349444192017-05-20T21:44:59.104+01:002017-05-20T21:44:59.104+01:00@ Accumulator - useful information, thank you. I f...@ Accumulator - useful information, thank you. I find the SWR decreasing with a longer time horizon rather counter intuitive. After all, the longer one is in the market the more likely one is to get the market return. Rubyhttps://www.blogger.com/profile/15723056777618667572noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-5797108884913473292017-05-20T19:11:28.265+01:002017-05-20T19:11:28.265+01:00Hi Ruby,
There's no information in that artic...Hi Ruby,<br /><br />There's no information in that article about the SWR over anything other than a 30 year time horizon. You are right that the first 10 - 15 years is crucial but in that piece, Kitces is specifically tying his research to a 30-year horizon. <br /><br />Here is Kitces on declining withdrawal rates over longer horizons:<br />https://www.kitces.com/blog/The Accumulatornoreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-61958432356050361332017-05-20T10:00:21.335+01:002017-05-20T10:00:21.335+01:00I'm actually thinking that they reduce the Sta...I'm actually thinking that they reduce the State Pension to zero for some demographics only (in addition to continually raising the age). Ie means test it. If they're prepared to means test the winter fuel payment as debt worsens they'll certainly be prepared to means test the Pension itself. IMHO of course.RetirementInvestingTodayhttps://www.blogger.com/profile/03088383743670046657noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-65320900188940732032017-05-18T21:28:23.138+01:002017-05-18T21:28:23.138+01:00Articles are a bit out of date but I don't sup...Articles are a bit out of date but I don't suppose history has changed that much.Rubyhttps://www.blogger.com/profile/15723056777618667572noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-17698732608540869052017-05-18T21:24:54.014+01:002017-05-18T21:24:54.014+01:00@ Accumulator
This is the article I was thinking ...@ Accumulator<br /><br />This is the article I was thinking of - <br />https://www.kitces.com/blog/what-returns-are-safe-withdrawal-rates-really-based-upon/<br /><br />Interestingly, he also addresses the retirement length matter as well. The returns over first 15 years seem to be what makes or breaks a portfolio and adding more time just improves the odds. He argues that 4% + SWR is achievable Rubyhttps://www.blogger.com/profile/15723056777618667572noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-26782986966993468802017-05-17T21:37:06.227+01:002017-05-17T21:37:06.227+01:00@ Ruby - I can't recall any prominent research...@ Ruby - I can't recall any prominent researcher who argues that retirement length doesn't matter. I regularly read Kitces, Pfau, Blanchett, Bengen, Guyton & Klinger, but would be happy for you to point me to contrary research as it means I could save less ;-)<br /><br />Perhaps what you're alluding to is that a retiree wouldn't really keep spending their savings down to zero The Accumulatornoreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-89421978763431725272017-05-17T13:04:47.008+01:002017-05-17T13:04:47.008+01:00Thanks for the analysis and the (as ever) thought-...Thanks for the analysis and the (as ever) thought-provoking post.<br /><br />Couple of observations: "I'm assuming in my planning that I won't receive a State Pension"<br /><br />I think this is taking caution/pessimism a little too far. The Triple Lock may well be history before long, and without a doubt the pension age will rise as the demographics dictate, however the chancesPhil Clarkenoreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-2744479048468324672017-05-16T22:38:35.859+01:002017-05-16T22:38:35.859+01:00Thanks for preparing this. I've long though ...Thanks for preparing this. I've long though about adjusting SWR to account for current stock market valuations & this supports that theory. <br />Right now, a SWR of 4% would give me a perfectly fine pension based on today's portfolio valuation. However, I doubt a 4% withdrawal rate is a safe one at current market valuations. Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-49143967649023017362017-05-15T21:02:50.791+01:002017-05-15T21:02:50.791+01:00@ Accumulator - yes, I indicated a longer term may...@ Accumulator - yes, I indicated a longer term may make a difference but equally, a number of researchers don't think it matters that much. There is a lot of good info on the Kitces site for those so inclined.<br /><br />That's not to say I'll be trying 4% myself!<br /><br />RIT's biggest risk in my view, from someone who jacked it in early, is boredom, lack of purpose and, as youRubyhttps://www.blogger.com/profile/15723056777618667572noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-36580470072652006112017-05-15T18:33:59.782+01:002017-05-15T18:33:59.782+01:00@ Ruby - the 4% rule isn't safe. It's base...@ Ruby - the 4% rule isn't safe. It's based on the historical track record of US equities and bonds and refers to a retirement of 30-years (only) without deducting investing costs or taxes. <br /><br />For a UK investor portfolio over a 40 year retirement and nicking off a bit for fees then you are looking at more like 3%. According to Morningstar research also based on historical record.The Accumulatorhttp://www.monevator.comnoreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-59174979840427121112017-05-14T19:54:16.067+01:002017-05-14T19:54:16.067+01:00Are you familiar with the research of Michael Kitc...Are you familiar with the research of Michael Kitces? If not you may well get a lot out of his work. You're a bit younger, so maybe it's a bit different, but the point about a 4% SWR is that it is just that - safe - and safe because it is based on the worst sequence of returns recorded. Sure expected returns for the next 10 years may be low (as some predict anyway) but I don't think Rubyhttps://www.blogger.com/profile/15723056777618667572noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-28159979078560171842017-05-14T10:34:30.673+01:002017-05-14T10:34:30.673+01:00Apart from the comments your post has generated I ...Apart from the comments your post has generated I don't think there is anything new here RIT. I am sure I have seen these graphs before and heard the struggles you have with knowing whether you have enough money to do the RE bit of FIRE , whether you can preserve enough of that money to give you some financial security and also provide enough money to live on..<br /><br />You have still to stringvestnoreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-82553781507317255382017-05-13T20:21:24.614+01:002017-05-13T20:21:24.614+01:00Those simulation cycles are fun, but the success r...Those simulation cycles are fun, but the success rate of 96.2% might include a scenario where you shuffle off this mortal coil age 86 with £3.27 in the bank. But if you had annual spending of £30,000, do you want to reach age 85 with £30,003.27 knowing you only had enough money for 1 more year? I suspect the answer may be to purchase an annuity, perhaps in your mid 70's, that reduces your Willynoreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-79505169732125321512017-05-13T17:03:35.748+01:002017-05-13T17:03:35.748+01:00Hi RIT, Your CAPE 29 number rings alarm bells if y...Hi RIT, Your CAPE 29 number rings alarm bells if your equity allocation is 100% exposed to the US stock market. Which yours isn't. Neither is mine nor most UK investors I suspect. <br /><br />CAPE nos according to http://www.starcapital.de/research/stockmarketvaluation<br /><br />UK = 15<br />Australia = 17 (you've got heavy exposure there right?)<br />Emerging Markets = 15<br />World = Donaldohttps://www.blogger.com/profile/11769303810191952373noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-9302532775153403762017-05-13T15:20:20.977+01:002017-05-13T15:20:20.977+01:00Living off the dividends is my plan. Right now th...Living off the dividends is my plan. Right now the dividend yield of my total portfolio, less home purchase cash, is 2.5% and my WR going into FIRE is looking like (Mr Market permitting) being 2.0%. I'll also have 3 years in cash to help ride out the inevitable bears which may include real dividend cuts.<br /><br />cFIREsim doesn't make a distinction but I believe a large portion of theRetirementInvestingTodayhttps://www.blogger.com/profile/03088383743670046657noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-7987154433654541072017-05-13T14:45:20.247+01:002017-05-13T14:45:20.247+01:00Thought provoking and quite topical given current ...Thought provoking and quite topical given current valuations in the US & UK stock markets.<br /><br />I'm always wary of eating into capital. I have been thinking about this in terms of whether the income/dividends from my portfolio gives me enough to live off? In that case I shouldn't be as worried about volatility in the capital value of the index.<br /><br />Does cCFIREsim make Prospectorhttps://www.blogger.com/profile/00908257772380515160noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-32249154060219488762017-05-13T13:54:57.618+01:002017-05-13T13:54:57.618+01:00You could just use the Retirement End Year in cFIR...You could just use the Retirement End Year in cFIREsim as the year you intend to buy the annuity. Then just use the ending wealth number as the amount of capital used to buy the annuity.<br /><br />Note of caution: Remember cFIREsim uses historical US data. RetirementInvestingTodayhttps://www.blogger.com/profile/03088383743670046657noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-21042720507668411232017-05-13T13:52:01.566+01:002017-05-13T13:52:01.566+01:00Thanks.
I'm a bit younger than you at age 44 ...Thanks.<br /><br />I'm a bit younger than you at age 44 today. In contrast I'm assuming in my planning that I won't receive a State Pension - it will either be available too far in the future to be useful and/or it will be means tested. In FIRE I will however continue to pay Class 3 NI contributions as an insurance policy to my FIRE plans going badly wrong.RetirementInvestingTodayhttps://www.blogger.com/profile/03088383743670046657noreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-47914537984621388832017-05-13T12:05:40.109+01:002017-05-13T12:05:40.109+01:00It may be that once you are (say) 80 or 85 you wil...It may be that once you are (say) 80 or 85 you will have tired of managing money, or will have become too muddled to do so. You might then want to use much of your capital to buy an annuity. Is there a useful way to allow for that possibility?<br /><br />You might also have an old-age fallback position: equity release from your house.deariemenoreply@blogger.comtag:blogger.com,1999:blog-2875915890415125655.post-43021192892346352402017-05-13T11:16:52.251+01:002017-05-13T11:16:52.251+01:00Nice analysis.........the CAPE in an interesting m...Nice analysis.........the CAPE in an interesting measure of value and some have suggested it as a way of timing the market. Looking at the numbers I think it has very limited use in that respect but your use is far more interesting. <br /><br />The other issue is that when we look at a SWR, we tend to assume that, for example, the 4% rate is taken evenly over the 30 years. In most cases I don'Anonymousnoreply@blogger.com