[411guy]

Check the threads at FWF re: SWR...and further indepth analysis are on the gummy site.

FWF? SWR? "gummy site"? What are those?

 

[411guy]

Thanks!

 

[411guy]

PS. It's become a hot topic over at the Early Retirement Forum too!

Which specific forum would that be? If you can, please share the URL. Thanks.

 

[411guy]

I am preparing for retirement and I have also found Jim's book very useful. If I were to rely solely on my financial advisor, I would never have encountered the princicples Jim is presenting.

I am most interested in SWR since outliving my retirement savings is my worst nightmare. I like the use of "aftcast" as it uses history as a model.

I just read today at the NYT ( http://www.nytimes.com/2009/08/29/your-money/individual-retirement-account-iras/29money.html?_r=1) another approach at arriving at a "safe" withdrawal rate:

"What he concluded was that the overall market’s price-earnings ratio — taking the current price for the Standard & Poor’s 500-stock index divided by the average inflation-adjusted earnings for the past 10 years before the date of withdrawal — was predictive enough to produce guidelines. Then he came up with the following suggestions for a portfolio of 60 percent stocks and 40 percent bonds meant to last through 30 years of retirement.

If the ratio was above 20, indicating that stocks were overvalued, than a 4.5 percent withdrawal rate was prudent given that the stock market was likely to fall. But if it was between 12 and 20 (the historical median is roughly 15.5), a 5 percent rate was safe, tested against every historical period for which data was available. And if it was under 12 — a level it almost got to earlier this year — a rate of 5.5 percent would work.

The most recent figure was 17.67, which suggests a 5 percent withdrawal rate for current retirees. It had been above 20 until October 2008.

Mr. Kitces gets his ratios from a set of data that the Yale professor Robert Shiller creates and stores on Yale’s Web site , at http://bit.ly/3gexz. I’ve provided a link to that data (Mr. Kitces uses column K in the Excel spreadsheet there) and to all of the other research in this column in the online version of this story."

Does anybody have any other alternative approaches/guidelines to arriving at a SWR?

 

[411guy]

Thanks!

 

[411guy]

I can't remember the statistic, but I read somewhere that the percentage of Americans who had a written financial plan (numeric-cash flow) was just over single digits.

I get either really depressed or enthusiastic about the opportunity.

Time will tell.

It seems optimistic people tend to prepare retirement plans versus pessimistic people: " Only 15% of pessimists have completed a detailed income plan to help guide their finances in retirement, compared to almost twice as many optimists (27%). Pessimists were twice as likely (25% of pessimists, 12% of optimists) to invest with the goal of preserving money, and were willing to accept much lower returns. Optimists were more likely to invest with the aim of creating an equal balance of capital preservation and growth potential (39% of optimists, 25% of pessimists)."

http://finance.yahoo.com/news/Optimists-Make-Better-Plans-tsmf-2488166123.html?x=0

 

[411guy]

A financial plan is not cast in stone, it is a continual exercise. Retirement age, rate expectations, to sell the cottage or not, leave an estate or not..... these are revisited every time something significant (external or internal) happens. As for 200 questions, I don't know about that many variables, but surely a dozen or so would not be that onerous. This is, after all, your future... are you going to be drinking imported beer, no-name beer, or no beer at all. Granted, when you are just starting out, DIY planning doesn't seem that important... you are busy raising kids, building a career, buying a house. My observation is that the mid-to-late career individuals engage in this stuff mostly.

Financial planning... tailoring your lifestyle as it is influenced by non-investment elements... tax, loans, real estate, salary/pension, CPP/OAS... is best done by you alone, at your leisure. Investment planning, depending how much you follow/understand the markets and risk, may best be farmed out to an investment adviser.

You have articulated effectively what I believe. I am a late career individual and have started seriously planning for my retirement (as opposed to following conventional wisdom) within the last 5 years.

I have crafted my financial plan (not cast in stone), but I do have an investment adviser. My relationship with my adviser is defined by: "trust, but confirm". His value comes with his organization's investment research resources and his experience dealing with retired clients, thus understanding on a practical level what works and what doesn't.

I do also now read lots of retirement documents ("Unveiling the Retirement Myth" being one of them) and ask questions on forums like this one. This way, I consider other perspectives and not only my adviser's perspective. The journey is ongoing......