Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
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Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
https://www.portfoliovisualizer.com/bac ... tion2_2=40
It is really a sad state of affairs if we are going to repeat the last 20 years especially with low yields going forward.
If I plan to withdraw $50,000 with a starting total of $1M ran out of money in 2016 for 100% S&P 500 allocation.
60% stocks and 40% cash barely made it with only $197,096 as the remainder. I used cash because of the low yields we are experiencing. I do not believe the bond markets returns of last 20 years cannot be repeated.
It is really a sad state of affairs if we are going to repeat the last 20 years especially with low yields going forward.
If I plan to withdraw $50,000 with a starting total of $1M ran out of money in 2016 for 100% S&P 500 allocation.
60% stocks and 40% cash barely made it with only $197,096 as the remainder. I used cash because of the low yields we are experiencing. I do not believe the bond markets returns of last 20 years cannot be repeated.
36% (IRA) - Individual LT Corporate Bonds , 33%(taxable) - schy, 33%(taxable) - SCHD Dividend Growth
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Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
Well, hopefully you won't have to retire in 2000.
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Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
5% is way too high imo. No study I'm aware calls it safe.
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Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
You used a fixed withdrawal rate of 50,000, not 5%.
A 5% rate would fair much better.
https://www.portfoliovisualizer.com/bac ... tion2_2=40
A 5% rate would fair much better.
https://www.portfoliovisualizer.com/bac ... tion2_2=40
Rules to investing: |
1. Don't lose money. |
2. Don't forget rule number 1.
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Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
Could be worse and he has to retire in 2021
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Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
.
Would not have been the case for a global small value tilted portfolio. 2016 value > 2000 starting value. https://www.portfoliovisualizer.com/bac ... tion5_3=13
Would not have been the case for a global small value tilted portfolio. 2016 value > 2000 starting value. https://www.portfoliovisualizer.com/bac ... tion5_3=13
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Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
Bogleheads should find this highly reassuring as I’m guessing most of us have a lot of extras we can cut if required (for example luxury holidays/restaurants) and over estimate our annual expenses.Brianmcg321 wrote: ↑Sun Aug 01, 2021 1:02 am You used a fixed withdrawal rate of 50,000, not 5%.
A 5% rate would fair much better.
https://www.portfoliovisualizer.com/bac ... tion2_2=40
Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
That's not reassuring at all... In this method your withdrawal drops to 25k in one year. If that were your actual strategy you'd be eating dog food.minimalistmarc wrote: ↑Sun Aug 01, 2021 3:24 amBogleheads should find this highly reassuring as I’m guessing most of us have a lot of extras we can cut if required (for example luxury holidays/restaurants) and over estimate our annual expenses.Brianmcg321 wrote: ↑Sun Aug 01, 2021 1:02 am You used a fixed withdrawal rate of 50,000, not 5%.
A 5% rate would fair much better.
https://www.portfoliovisualizer.com/bac ... tion2_2=40
The original poster had it right: withdrawing 5% of the portfolio and adjusting for inflation.
The only thing this shows is that high withdrawal rates aren't safe, and if you have a bad sequence it will kill your portfolio.
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Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
My take is that it shows high rates are safe if you can make significant drops to your expenses (without having to resort to dog food. Let’s settle on porridge and lentil soup!)sfnerd wrote: ↑Sun Aug 01, 2021 4:00 amThat's not reassuring at all... In this method your withdrawal drops to 25k in one year. If that were your actual strategy you'd be eating dog food.minimalistmarc wrote: ↑Sun Aug 01, 2021 3:24 amBogleheads should find this highly reassuring as I’m guessing most of us have a lot of extras we can cut if required (for example luxury holidays/restaurants) and over estimate our annual expenses.Brianmcg321 wrote: ↑Sun Aug 01, 2021 1:02 am You used a fixed withdrawal rate of 50,000, not 5%.
A 5% rate would fair much better.
https://www.portfoliovisualizer.com/bac ... tion2_2=40
The original poster had it right: withdrawing 5% of the portfolio and adjusting for inflation.
The only thing this shows is that high withdrawal rates aren't safe, and if you have a bad sequence it will kill your portfolio.
Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
Just to mess around I replaced SPY with VFIAX, and suddenly the numbers look a lot better. Why is that?
Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
I got the portfolio to last up to $44,500 in annual withdrawal, which is about 10% lower withdrawal rate.
If you make withdrawal $35K it was still worth about 750K+ currently depending on portfolio
To me just illustrates the high sensitivity to market performance, timing and withdrawal rates - all of which are unknown going forward.
Makes sense to have a more nuanced withdrawal strategy - If a real person has $200K left in portfolio and 50K$ withdrawl annually, they should probably adjust lifestyle not blindly take out money.
Also would figure portfolio would do better with a bond fund instead of cash anchor of 40% but i don't know any that go back to that time period.
If you make withdrawal $35K it was still worth about 750K+ currently depending on portfolio
To me just illustrates the high sensitivity to market performance, timing and withdrawal rates - all of which are unknown going forward.
Makes sense to have a more nuanced withdrawal strategy - If a real person has $200K left in portfolio and 50K$ withdrawl annually, they should probably adjust lifestyle not blindly take out money.
Also would figure portfolio would do better with a bond fund instead of cash anchor of 40% but i don't know any that go back to that time period.
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Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
I was going to say 4.5% does better than 5% You beat me to it.JDonaghy wrote: ↑Sun Aug 01, 2021 6:01 am I got the portfolio to last up to $44,500 in annual withdrawal, which is about 10% lower withdrawal rate.
If you make withdrawal $35K it was still worth about 750K+ currently depending on portfolio
To me just illustrates the high sensitivity to market performance, timing and withdrawal rates - all of which are unknown going forward.
Makes sense to have a more nuanced withdrawal strategy - If a real person has $200K left in portfolio and 50K$ withdrawl annually, they should probably adjust lifestyle not blindly take out money.
Also would figure portfolio would do better with a bond fund instead of cash anchor of 40% but i don't know any that go back to that time period.
Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
5% variable is already too much, but 50,000 fixed is doomed to fail. In 2009 would a person really pull 20% of their portfolio out? I think the conservative move is 3%, 4% should be okay for most scenarios.Brianmcg321 wrote: ↑Sun Aug 01, 2021 1:02 am You used a fixed withdrawal rate of 50,000, not 5%.
A 5% rate would fair much better.
70% Global Stocks / 30% Bonds
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Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
What is the 20% reference above?z3r0c00l wrote: ↑Sun Aug 01, 2021 6:09 am5% variable is already too much, but 50,000 fixed is doomed to fail. In 2009 would a person really pull 20% of their portfolio out? I think the conservative move is 3%, 4% should be okay for most scenarios.Brianmcg321 wrote: ↑Sun Aug 01, 2021 1:02 am You used a fixed withdrawal rate of 50,000, not 5%.
A 5% rate would fair much better.
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Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
Also, some of you Debbie Downers act like your portfolio is your only source of income, when roughly 95% of Americans qualify for Social Security. Assuming you don't enter retirement with a mortgage, the Social Security benefit alone insures you won't need to eat the proverbial cat food.
Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
The estimated average Social Security retirement benefit in 2021 is only $1,543 a month.supersharpie wrote: ↑Sun Aug 01, 2021 6:12 am Also, some of you Debbie Downers act like your portfolio is your only source of income, when roughly 95% of Americans qualify for Social Security. Assuming you don't enter retirement with a mortgage, the Social Security benefit alone insures you won't need to eat the proverbial cat food.
And cat food is getting expensive.
This isn't just my wallet. It's an organizer, a memory and an old friend.
Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
That's a very misleading title. Here is the same analysis with a 60/40 portfolio consisting of Vanguard Total Stock Market and Vanguard Total Bond Market: https://www.portfoliovisualizer.com/bac ... tion4_1=40
Not only would the year 2000 retiree with 60/40 allocated as stated not have run out of money, they would still have nearly $600k in their portfolio of the original $1m.
Not only would the year 2000 retiree with 60/40 allocated as stated not have run out of money, they would still have nearly $600k in their portfolio of the original $1m.
Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
Well of course it becomes 100% during that last pull where the hypothetical retiree pulls their last 50,000. But even in the middle of this test run, as their account crashes to about $250 K, are they really going to keep pulling $50K a year? (20%)Escapevelocity wrote: ↑Sun Aug 01, 2021 6:10 amWhat is the 20% reference above?z3r0c00l wrote: ↑Sun Aug 01, 2021 6:09 am5% variable is already too much, but 50,000 fixed is doomed to fail. In 2009 would a person really pull 20% of their portfolio out? I think the conservative move is 3%, 4% should be okay for most scenarios.Brianmcg321 wrote: ↑Sun Aug 01, 2021 1:02 am You used a fixed withdrawal rate of 50,000, not 5%.
A 5% rate would fair much better.
70% Global Stocks / 30% Bonds
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Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
Yeah, but the full benefit rate for the average BH is somewhere between $2500-$3000. $50,000 to $72,000 for a married couple is some decent scratch. Two married workers who have each maxed out their FICA contributions AND wait to 70 to file are eligible for a touch over $92,000 in annual combined benefits.JoeRetire wrote: ↑Sun Aug 01, 2021 6:17 amThe estimated average Social Security retirement benefit in 2021 is only $1,543 a month.supersharpie wrote: ↑Sun Aug 01, 2021 6:12 am Also, some of you Debbie Downers act like your portfolio is your only source of income, when roughly 95% of Americans qualify for Social Security. Assuming you don't enter retirement with a mortgage, the Social Security benefit alone insures you won't need to eat the proverbial cat food.
And cat food is getting expensive.
So it all depends.
To your point though, if you have no mortgage and are a single person, you can buy normal healthy groceries on a $1500/budget. I mean, the average grocery bill for a single person is what? Cannot be much more than $200/month, probably less for plenty of people.
The problem is that if you run out of assets you probably won't be able to do much fun stuff, like travel and dining out.
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Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
If you are eating dog food on 25k a year you must only eat golden plated steak on golden plates.sfnerd wrote: ↑Sun Aug 01, 2021 4:00 amThat's not reassuring at all... In this method your withdrawal drops to 25k in one year. If that were your actual strategy you'd be eating dog food.minimalistmarc we wrote: ↑Sun Aug 01, 2021 3:24 amBogleheads should find this highly reassuring as I’m guessing most of us have a lot of extras we can cut if required (for example luxury holidays/restaurants) and over estimate our annual expenses.Brianmcg321 wrote: ↑Sun Aug 01, 2021 1:02 am You used a fixed withdrawal rate of 50,000, not 5%.
A 5% rate would fair much better.
https://www.portfoliovisualizer.com/bac ... tion2_2=40
The original poster had it right: withdrawing 5% of the portfolio and adjusting for inflation.
The only thing this shows is that high withdrawal rates aren't safe, and if you have a bad sequence it will kill your portfolio.
Don’t go out to eat, learn to cook, and you’d still eat very very good on 25k a year. This is where the hcola living standard and keeping up with the Jones bites a lot of people in the ass.
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Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
Don’t withdraw on an inflation adjusted basis “all” years and don’t withdraw 5 percent.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Retiring in 2000 withdrawing fixed 5% never ran out of money!
Replace SPY with VOO. Problem solved.invest2bfree wrote: ↑Sun Aug 01, 2021 12:48 am https://www.portfoliovisualizer.com/bac ... tion2_2=40
It is really a sad state of affairs if we are going to repeat the last 20 years especially with low yields going forward.
If I plan to withdraw $50,000 with a starting total of $1M ran out of money in 2016 for 100% S&P 500 allocation.
60% stocks and 40% cash barely made it with only $197,096 as the remainder. I used cash because of the low yields we are experiencing. I do not believe the bond markets returns of last 20 years cannot be repeated.
You are welcome.
Tools are fun. They are even more fun with cherry-picked inputs.
"Notes on results:
Past performance is no guarantee of future results, which may vary. "
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Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
Exactly, there are plenty of folks with seven or eight figure net worths who are so far removed from the average Joe that they have forgotten that a little money goes a long way if spent wisely.Somethingwitty92912 wrote: ↑Sun Aug 01, 2021 7:20 amIf you are eating dog food on 25k a year you must only eat golden plated steak on golden plates.sfnerd wrote: ↑Sun Aug 01, 2021 4:00 amThat's not reassuring at all... In this method your withdrawal drops to 25k in one year. If that were your actual strategy you'd be eating dog food.minimalistmarc we wrote: ↑Sun Aug 01, 2021 3:24 amBogleheads should find this highly reassuring as I’m guessing most of us have a lot of extras we can cut if required (for example luxury holidays/restaurants) and over estimate our annual expenses.Brianmcg321 wrote: ↑Sun Aug 01, 2021 1:02 am You used a fixed withdrawal rate of 50,000, not 5%.
A 5% rate would fair much better.
https://www.portfoliovisualizer.com/bac ... tion2_2=40
The original poster had it right: withdrawing 5% of the portfolio and adjusting for inflation.
The only thing this shows is that high withdrawal rates aren't safe, and if you have a bad sequence it will kill your portfolio.
Don’t go out to eat, learn to cook, and you’d still eat very very good on 25k a year. This is where the hcola living standard and keeping up with the Jones bites a lot of people in the ass.
This woman cooked herself three healthy meals for $5 per day in NYC no less! It can be done. Step away from the can opener
https://youtu.be/IfWTLD1LEB0
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Re: Retiring in 2000 withdrawing fixed 5% never ran out of money!
I choose spy because VOO does not run until 2000.JoeRetire wrote: ↑Sun Aug 01, 2021 7:32 amReplace SPY with VOO. Problem solved.invest2bfree wrote: ↑Sun Aug 01, 2021 12:48 am https://www.portfoliovisualizer.com/bac ... tion2_2=40
It is really a sad state of affairs if we are going to repeat the last 20 years especially with low yields going forward.
If I plan to withdraw $50,000 with a starting total of $1M ran out of money in 2016 for 100% S&P 500 allocation.
60% stocks and 40% cash barely made it with only $197,096 as the remainder. I used cash because of the low yields we are experiencing. I do not believe the bond markets returns of last 20 years cannot be repeated.
You are welcome.
Tools are fun. They are even more fun with cherry-picked inputs.
"Notes on results:
Past performance is no guarantee of future results, which may vary. "
Iam just making a point that if you are retiring at the market peak be very careful.
You are better of buying dividend focused etfs or value etfs which you dd much better.
36% (IRA) - Individual LT Corporate Bonds , 33%(taxable) - schy, 33%(taxable) - SCHD Dividend Growth
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Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
with current bond yields you will probably get returns closer to cash for the next 20 years. So you need to plan for it.JDonaghy wrote: ↑Sun Aug 01, 2021 6:01 am I got the portfolio to last up to $44,500 in annual withdrawal, which is about 10% lower withdrawal rate.
If you make withdrawal $35K it was still worth about 750K+ currently depending on portfolio
To me just illustrates the high sensitivity to market performance, timing and withdrawal rates - all of which are unknown going forward.
Makes sense to have a more nuanced withdrawal strategy - If a real person has $200K left in portfolio and 50K$ withdrawl annually, they should probably adjust lifestyle not blindly take out money.
Also would figure portfolio would do better with a bond fund instead of cash anchor of 40% but i don't know any that go back to that time period.
36% (IRA) - Individual LT Corporate Bonds , 33%(taxable) - schy, 33%(taxable) - SCHD Dividend Growth
Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
5% rate saw income more than halved in 2008. That might not be a option for some. The OP posted 5% SWR, which would have seen income maintained in inflation adjusted terms, at least up to the point of failure.minimalistmarc wrote: ↑Sun Aug 01, 2021 3:24 amBogleheads should find this highly reassuring as I’m guessing most of us have a lot of extras we can cut if required (for example luxury holidays/restaurants) and over estimate our annual expenses.Brianmcg321 wrote: ↑Sun Aug 01, 2021 1:02 am You used a fixed withdrawal rate of 50,000, not 5%.
A 5% rate would fair much better.
https://www.portfoliovisualizer.com/bac ... tion2_2=40
Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
That inflation had deflated down to $357K of the inflation adjusted $1M start date amount.galawdawg wrote: ↑Sun Aug 01, 2021 6:29 am That's a very misleading title. Here is the same analysis with a 60/40 portfolio consisting of Vanguard Total Stock Market and Vanguard Total Bond Market: https://www.portfoliovisualizer.com/bac ... tion4_1=40
Not only would the year 2000 retiree with 60/40 allocated as stated not have run out of money, they would still have nearly $600k in their portfolio of the original $1m.
Including some foreign, and gold helped - still have $766K of the inflation adjusted start date value.
Recent Covid fears has seen a flight to safety (fear), US$ and gold both up. At some point fear will subside and see outflight to 'better potential rewards elsewhere' (greed). 25% each domestic/foreign/bonds/gold takes a more neutral stance.
Re: Retiring in 2000 withdrawing fixed 5% never ran out of money!
So are we at a market peak now? Or are just the 2010's decade gains a compensation for the 0% overall 2000's Bunny decade?invest2bfree wrote: ↑Sun Aug 01, 2021 8:51 am Iam just making a point that if you are retiring at the market peak be very careful.
Retiree in 2000 using SWR of 4% adjusted for inflation still realized 30% portfolio growth
You could have chosen Vanguard Total Stock Index and Vanguard Total Bond Index, which is the two-fund portfolio many here hold.invest2bfree wrote: ↑Sun Aug 01, 2021 8:51 amI choose spy because VOO does not run until 2000.JoeRetire wrote: ↑Sun Aug 01, 2021 7:32 amReplace SPY with VOO. Problem solved.invest2bfree wrote: ↑Sun Aug 01, 2021 12:48 am https://www.portfoliovisualizer.com/bac ... tion2_2=40
It is really a sad state of affairs if we are going to repeat the last 20 years especially with low yields going forward.
If I plan to withdraw $50,000 with a starting total of $1M ran out of money in 2016 for 100% S&P 500 allocation.
60% stocks and 40% cash barely made it with only $197,096 as the remainder. I used cash because of the low yields we are experiencing. I do not believe the bond markets returns of last 20 years cannot be repeated.
You are welcome.
Tools are fun. They are even more fun with cherry-picked inputs.
"Notes on results:
Past performance is no guarantee of future results, which may vary. "
Iam just making a point that if you are retiring at the market peak be very careful.
You are better of buying dividend focused etfs or value etfs which you dd much better.
Let's see how those funds, allocated 60/40, did with a 4% withdrawal rate, adjusted for inflation, for your hypothetical year 2000 retiree with $1 million.
https://www.portfoliovisualizer.com/bac ... tion4_1=40
That retiree would today still have a portfolio balance of over $1.3 million. So your hypothetical retiree not only didn't run out of money but they have realized growth of over 30% of their portfolio since retirement despite the withdrawals. And 4% is the often-cited fixed withdrawal rate in retirement, not 5%.
But as I noted before, even with a 5% withdrawal rate, the 2000 hypothetical retiree would today still have close to $600k in their portfolio.
Last edited by galawdawg on Sun Aug 01, 2021 9:18 am, edited 1 time in total.
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Re: Retiring in 2000 withdrawing fixed 5% never ran out of money!
Cannot say, we are one bad event away from a market peak.seajay wrote: ↑Sun Aug 01, 2021 9:14 amSo are we at a market peak now? Or are just the 2010's decade gains a compensation for the 0% overall 2000's Bunny decade?invest2bfree wrote: ↑Sun Aug 01, 2021 8:51 am Iam just making a point that if you are retiring at the market peak be very careful.
AAPL\TSLA and so many stocks other US Large Cap have substantial business from China.
With tensions in taiwan will China flex its muscles on US corporations?
36% (IRA) - Individual LT Corporate Bonds , 33%(taxable) - schy, 33%(taxable) - SCHD Dividend Growth
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Re: Retiree in 2000 using SWR of 4% adjusted for inflation still realized 30% portfolio growth
My opinion is your bond returns are going to be close to cash. We had 5% returns in Bonds which we may not get in the future.galawdawg wrote: ↑Sun Aug 01, 2021 9:16 amYou could have chosen Vanguard Total Stock Index and Vanguard Total Bond Index, which is the two-fund portfolio many here hold.invest2bfree wrote: ↑Sun Aug 01, 2021 8:51 amI choose spy because VOO does not run until 2000.JoeRetire wrote: ↑Sun Aug 01, 2021 7:32 amReplace SPY with VOO. Problem solved.invest2bfree wrote: ↑Sun Aug 01, 2021 12:48 am https://www.portfoliovisualizer.com/bac ... tion2_2=40
It is really a sad state of affairs if we are going to repeat the last 20 years especially with low yields going forward.
If I plan to withdraw $50,000 with a starting total of $1M ran out of money in 2016 for 100% S&P 500 allocation.
60% stocks and 40% cash barely made it with only $197,096 as the remainder. I used cash because of the low yields we are experiencing. I do not believe the bond markets returns of last 20 years cannot be repeated.
You are welcome.
Tools are fun. They are even more fun with cherry-picked inputs.
"Notes on results:
Past performance is no guarantee of future results, which may vary. "
Iam just making a point that if you are retiring at the market peak be very careful.
You are better of buying dividend focused etfs or value etfs which you dd much better.
Let's see how those funds, allocated 60/40, did with a 4% withdrawal rate, adjusted for inflation, for your hypothetical year 2000 retiree with $1 million.
https://www.portfoliovisualizer.com/bac ... tion4_1=40
That retiree would today still have a portfolio balance of over $1.3 million. So your hypothetical retiree not only didn't run out of money but they have realized growth of over 30% of their portfolio since retirement despite the withdrawals. And 4% is the often-cited fixed withdrawal rate in retirement, not 5%.
But as I noted before, even with a 5% withdrawal rate, the 2000 hypothetical retiree would today still have close to $600k in their portfolio.
This is from Vanguard.
Fixed income Return projection Median volatility
U.S. aggregate bonds 1.4%–2.4% 4.5%
U.S. Treasury bonds 1.1%–2.1% 4.7%
U.S. credit bonds 1.8%–2.8% 5.7%
U.S. high-yield corporate bonds 2.2%–3.2% 10.2%
U.S. Treasury Inflation-Protected Securities 0.8%–1.8% 7.0%
U.S. cash 1.3%–2.3% 1.3%
Global bonds ex-U.S. (hedged) 1.3%–2.3% 3.8%
Emerging markets sovereign 2.1%–3.1% 9.9%
U.S. inflation 1.4%–2.4% 2.4%
36% (IRA) - Individual LT Corporate Bonds , 33%(taxable) - schy, 33%(taxable) - SCHD Dividend Growth
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Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
Ok. But still, it is way too common on this board for people to talk about withdrawal rates with no consideration of how social security factors into taking care of most or all of the essential needs of the average retiree on THIS board. Not talking about folks with minimal assets/benefits.JoeRetire wrote: ↑Sun Aug 01, 2021 6:17 amThe estimated average Social Security retirement benefit in 2021 is only $1,543 a month.supersharpie wrote: ↑Sun Aug 01, 2021 6:12 am Also, some of you Debbie Downers act like your portfolio is your only source of income, when roughly 95% of Americans qualify for Social Security. Assuming you don't enter retirement with a mortgage, the Social Security benefit alone insures you won't need to eat the proverbial cat food.
And cat food is getting expensive.
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Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
Exactly! BHs often act as though if they exhaust their savings that they will be flat broke. Thanks to FDR, that is not the reality for American senior citizens.Escapevelocity wrote: ↑Sun Aug 01, 2021 9:24 amOk. But still, it is way too common on this board for people to talk about withdrawal rates with no consideration of how social security factors into taking care of most or all of the essential needs of the average retiree on THIS board. Not talking about folks with minimal assets/benefits.JoeRetire wrote: ↑Sun Aug 01, 2021 6:17 amThe estimated average Social Security retirement benefit in 2021 is only $1,543 a month.supersharpie wrote: ↑Sun Aug 01, 2021 6:12 am Also, some of you Debbie Downers act like your portfolio is your only source of income, when roughly 95% of Americans qualify for Social Security. Assuming you don't enter retirement with a mortgage, the Social Security benefit alone insures you won't need to eat the proverbial cat food.
And cat food is getting expensive.
A middle class person’s Social Security benefit easily covers food, clothing, utilities, and healthcare. If you own your own home, what else do you truly need to live comfortably? Billions of people can only dream of that sort of financial security.
I think there is another element at play here. BHs rightfully pride themselves on being financially savvy. I think many view exhausting one’s assets as a personal, and perhaps even moral, failure.
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Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
Withdrawing a fixed 5% in the first year and maintaining that, without making adjustments as the portfolio depleted, would have been foolhardy (and an unlikely course for an investor with even average common sense).invest2bfree wrote: ↑Sun Aug 01, 2021 12:48 am https://www.portfoliovisualizer.com/bac ... tion2_2=40
It is really a sad state of affairs if we are going to repeat the last 20 years especially with low yields going forward.
If I plan to withdraw $50,000 with a starting total of $1M ran out of money in 2016 for 100% S&P 500 allocation.
60% stocks and 40% cash barely made it with only $197,096 as the remainder. I used cash because of the low yields we are experiencing. I do not believe the bond markets returns of last 20 years cannot be repeated.
A simple set-it-and-forget-it investment in Vanguard Balanced Index Fund (VBINX) in 2000 provided the following returns with a 5% yearly account balance withdrawal https://tinyurl.com/h2j8zjq
Retirement is best when you have a lot to live on, and a lot to live for. * None of what I post is investment advice.* |
FIRE'd July 2023
Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
I don’t understand the OP’s concern/outrage.iamblessed wrote: ↑Sun Aug 01, 2021 6:07 amI was going to say 4.5% does better than 5% You beat me to it.JDonaghy wrote: ↑Sun Aug 01, 2021 6:01 am I got the portfolio to last up to $44,500 in annual withdrawal, which is about 10% lower withdrawal rate.
If you make withdrawal $35K it was still worth about 750K+ currently depending on portfolio
To me just illustrates the high sensitivity to market performance, timing and withdrawal rates - all of which are unknown going forward.
Makes sense to have a more nuanced withdrawal strategy - If a real person has $200K left in portfolio and 50K$ withdrawl annually, they should probably adjust lifestyle not blindly take out money.
Also would figure portfolio would do better with a bond fund instead of cash anchor of 40% but i don't know any that go back to that time period.
Use the frequently-recommended SWR of 4% of the initial balance, inflation adjusted.
Both portfolios have an ending balance of about $500,000.
Remember that a 5% withdrawal is 25% larger than a 4% withdrawal. One percentage point is a huge deal in this context.
Knock the withdrawal back to 3% — a 40% decrease from 5% — and the ending balances are well over $1 million.
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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Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
Either that or dying with less than $5 million to your heirs is a failure.supersharpie wrote: ↑Sun Aug 01, 2021 9:37 amI think there is another element at play here. BHs rightfully pride themselves on being financially savvy. I think many view exhausting one’s assets as a personal, and perhaps even moral, failure.Escapevelocity wrote: ↑Sun Aug 01, 2021 9:24 amOk. But still, it is way too common on this board for people to talk about withdrawal rates with no consideration of how social security factors into taking care of most or all of the essential needs of the average retiree on THIS board. Not talking about folks with minimal assets/benefits.JoeRetire wrote: ↑Sun Aug 01, 2021 6:17 amThe estimated average Social Security retirement benefit in 2021 is only $1,543 a month.supersharpie wrote: ↑Sun Aug 01, 2021 6:12 am Also, some of you Debbie Downers act like your portfolio is your only source of income, when roughly 95% of Americans qualify for Social Security. Assuming you don't enter retirement with a mortgage, the Social Security benefit alone insures you won't need to eat the proverbial cat food.
And cat food is getting expensive.
Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
You can save by making your own cat food minus the meat products. Also, a lot of grocery stores throw away an amazing amount of very good food. You just need to know which times of day to hang around out back.
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Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
Given current Shiller PE and interest rates, SWR is around 3.25-3.5% for retiring under age 40. Assumes you can stick to your plan and have at least some flexibility if expenses change for some reason (medical) like picking up a couple shifts at fun gig.
https://i0.wp.com/earlyretirementnow.co ... C849&ssl=1
https://i0.wp.com/earlyretirementnow.co ... C849&ssl=1
Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
Awesome reply, would not be surprised about a cat going vegetariannamajones wrote: ↑Sun Aug 01, 2021 11:03 amYou can save by making your own cat food minus the meat products. Also, a lot of grocery stores throw away an amazing amount of very good food. You just need to know which times of day to hang around out back.
"PSX will always go up 20%, why invest in anything else?!" -Father-in-law early retired.
Re: Retiring in 2000 withdrawing fixed 5% never ran out of money!
OP, your thread is so very right on point. You should work until you die, because that would be the only way to not run out of money.invest2bfree wrote: ↑Sun Aug 01, 2021 9:18 amCannot say, we are one bad event away from a market peak.seajay wrote: ↑Sun Aug 01, 2021 9:14 amSo are we at a market peak now? Or are just the 2010's decade gains a compensation for the 0% overall 2000's Bunny decade?invest2bfree wrote: ↑Sun Aug 01, 2021 8:51 am Iam just making a point that if you are retiring at the market peak be very careful.
AAPL\TSLA and so many stocks other US Large Cap have substantial business from China.
With tensions in taiwan will China flex its muscles on US corporations?
"invest2bfree" is that an ironic username?
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Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
That too! In fairness, I do understand the mindset that inherited wealth should be preserved and passed on. That is what I like about being a self-made millionaire. There is no pressure to pass it on. You make it, you spend it as you see fit is my philosophy.Escapevelocity wrote: ↑Sun Aug 01, 2021 11:01 amEither that or dying with less than $5 million to your heirs is a failure.supersharpie wrote: ↑Sun Aug 01, 2021 9:37 amI think there is another element at play here. BHs rightfully pride themselves on being financially savvy. I think many view exhausting one’s assets as a personal, and perhaps even moral, failure.Escapevelocity wrote: ↑Sun Aug 01, 2021 9:24 amOk. But still, it is way too common on this board for people to talk about withdrawal rates with no consideration of how social security factors into taking care of most or all of the essential needs of the average retiree on THIS board. Not talking about folks with minimal assets/benefits.JoeRetire wrote: ↑Sun Aug 01, 2021 6:17 amThe estimated average Social Security retirement benefit in 2021 is only $1,543 a month.supersharpie wrote: ↑Sun Aug 01, 2021 6:12 am Also, some of you Debbie Downers act like your portfolio is your only source of income, when roughly 95% of Americans qualify for Social Security. Assuming you don't enter retirement with a mortgage, the Social Security benefit alone insures you won't need to eat the proverbial cat food.
And cat food is getting expensive.
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Re: Retiring in 2000 withdrawing fixed 5% never ran out of money!
China would be toast without American consumers buying their products. Neither side has a clear upper hand on the other. It is a co-dependent relationship.invest2bfree wrote: ↑Sun Aug 01, 2021 9:18 amCannot say, we are one bad event away from a market peak.seajay wrote: ↑Sun Aug 01, 2021 9:14 amSo are we at a market peak now? Or are just the 2010's decade gains a compensation for the 0% overall 2000's Bunny decade?invest2bfree wrote: ↑Sun Aug 01, 2021 8:51 am Iam just making a point that if you are retiring at the market peak be very careful.
AAPL\TSLA and so many stocks other US Large Cap have substantial business from China.
With tensions in taiwan will China flex its muscles on US corporations?
Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
Actually, as I noted above, using Vanguard Total Stock Index and Vanguard Total Bond Index allocated 60/40 is even better than that. Forget the SPY used by OP to support his theory...how many here hold SPY and cash rather than a two or three-fund portfolio of Vanguard index funds???delamer wrote: ↑Sun Aug 01, 2021 10:59 am I don’t understand the OP’s concern/outrage.
Use the frequently-recommended SWR of 4% of the initial balance, inflation adjusted.
Both portfolios have an ending balance of about $500,000.
Remember that a 5% withdrawal is 25% larger than a 4% withdrawal. One percentage point is a huge deal in this context.
Knock the withdrawal back to 3% — a 40% decrease from 5% — and the ending balances are well over $1 million.
Using a 60/40 allocation of Vanguard Total Stock Index and Vanguard Total Bond Index, with a 4% withdrawal rate adjusted for inflation, for the hypothetical year 2000 retiree with $1 million results in a current
portfolio balance of over $1.3 million! A growth of over 30% since retirement despite the withdrawals.
https://www.portfoliovisualizer.com/bac ... tion4_1=40
And as I pointed out earlier in the tread, even with a 5% withdrawal rate adjusted annually for inflation, the 2000 hypothetical retiree invested 60/40 in Vanguard Total Stock Index and Vanguard Total Bond Index would today still have close to $600k in their portfolio. https://www.portfoliovisualizer.com/bac ... tion4_1=40
Run the numbers using Taylor's three-fund portfolio (allocated 50/10/40), instead using the two-fund portolio. leaves the same retiree with over $550k with a 5% inflation adjusted withdrawal rate1 and nearly $1.25m with a 4% inflation adjusted withdrawal rate2.
Of course, planning on the 5% withdrawal rate in retirement that OP selected for his theory goes against the vast weight of intelligent investment advice. I prefer VPW myself but for a fixed withdrawal rate, a wise investor should plan on no greater than the most often recommended 4%.
1https://www.portfoliovisualizer.com/bac ... tion5_2=10
2https://www.portfoliovisualizer.com/bac ... tion5_2=10
Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
Yep. But if you:
- Use $40k (4% rule), you still have about $500k in 2021:
- Use VTSAX instead of SPY to cover the whole market, you still have $800k in 2021 (and that's with $50k withdrawal).
- use VTSAX and $40k withdrawal, you have $1.7M in 2021.
I don't think I ever saw anyone recommend a 5% withdrawal rate (adjusted for inflation) and a 100% stocks portfolio in retirement.
tl;dr: your problem isn't bond yields (!), it's your withdrawal rate and/or fund choice (also, frankly, the AA is really not safe at all)
- Use $40k (4% rule), you still have about $500k in 2021:
- Use VTSAX instead of SPY to cover the whole market, you still have $800k in 2021 (and that's with $50k withdrawal).
- use VTSAX and $40k withdrawal, you have $1.7M in 2021.
I don't think I ever saw anyone recommend a 5% withdrawal rate (adjusted for inflation) and a 100% stocks portfolio in retirement.
tl;dr: your problem isn't bond yields (!), it's your withdrawal rate and/or fund choice (also, frankly, the AA is really not safe at all)
Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
Run your numbers with either Wellington or Wellesley. You come out looking much better.
Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
Lots and lots of flaws here as have been pointed out. Your thread title reminds me of the type of stuff Marketwatch or Yahoo finance might post.invest2bfree wrote: ↑Sun Aug 01, 2021 12:48 am https://www.portfoliovisualizer.com/bac ... tion2_2=40
It is really a sad state of affairs if we are going to repeat the last 20 years especially with low yields going forward.
If I plan to withdraw $50,000 with a starting total of $1M ran out of money in 2016 for 100% S&P 500 allocation.
60% stocks and 40% cash barely made it with only $197,096 as the remainder. I used cash because of the low yields we are experiencing. I do not believe the bond markets returns of last 20 years cannot be repeated.
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Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
Another post driving forwards and looking backwards.
Wellington and Wellsey funds performance cannot be reproduced the next 20 years because they are bond heavy.
If we get 1966-1982 all bets are off.
36% (IRA) - Individual LT Corporate Bonds , 33%(taxable) - schy, 33%(taxable) - SCHD Dividend Growth
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Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
VTSAX is not a right comparison because it starts in 2001, spy started in 2000.pasadena wrote: ↑Sun Aug 01, 2021 12:00 pm Yep. But if you:
- Use $40k (4% rule), you still have about $500k in 2021:
- Use VTSAX instead of SPY to cover the whole market, you still have $800k in 2021 (and that's with $50k withdrawal).
- use VTSAX and $40k withdrawal, you have $1.7M in 2021.
I don't think I ever saw anyone recommend a 5% withdrawal rate (adjusted for inflation) and a 100% stocks portfolio in retirement.
tl;dr: your problem isn't bond yields (!), it's your withdrawal rate and/or fund choice (also, frankly, the AA is really not safe at all)
it is like comparing starting from 2009 instead of 2008.
36% (IRA) - Individual LT Corporate Bonds , 33%(taxable) - schy, 33%(taxable) - SCHD Dividend Growth
Re: Retiring in 2000 withdrawing fixed 5% ran out of money in 2016
I may have misunderstood your original post.
You did reference the year 2000 going forward and did state you ran out in year 2016. So all I did was take your original statement and ran it with different investments. You more than likely can pick a 20 year period and run out of money with either Wellington or Wellesley but their track record does hold up fairly well over the long run and it's true past performance is no guarantee of the future but what else have we got to work with?
You did reference the year 2000 going forward and did state you ran out in year 2016. So all I did was take your original statement and ran it with different investments. You more than likely can pick a 20 year period and run out of money with either Wellington or Wellesley but their track record does hold up fairly well over the long run and it's true past performance is no guarantee of the future but what else have we got to work with?