I thought that it might be helpful to create a thread called "Dead Posts File" where community members can engage in discussions of deleted posts and the reasons for their deletion. I do not plan to set forth the texts of all deleted posts in this thread. If SalaryGuru were to put forward the exact same post later today, I would not add his words to this thread a second time; I would delete the post and be done with it. However, in circumstances in which I think it is possible that a learning experience could follow from adding the text of a deleted post to the Deleted Posts File, I will do so.
In this case, I see two ways in which community members can learn by taking a look at the words of the deleted post.
First, looking at the words of the post may give community members a better idea of where the line is that they need to avoid crossing if they are to participate in the various discussions held here. I do not want those skeptical of my claims or the claims of JWR1945 to feel unwelcome. We need their input to improve our work and to provide balance to the discussions. So I don't want people to draw the conclusion that SalaryGuru's post was deleted because he is a skeptic. I want those who would like to offer skeptical viewpoints in a responsible way to be able to look at the words that SalaryGuru put forward, see where it is that he went wrong, and make an effort to craft their own expressions of skepticism in acceptable ways.
Two, the SalaryGuru post helps to illustrate one of the most important points that I have been making throughout the first 25 months of the Great SWR Debate. Deception is dangerous.
We talk about money questions on the various FIRE/Passion Saving/Retire Early boards. People who use these boards to learn how to achieve financial independence early in life have a right to expect that minimal levels of honesty in discourse will be honored at them. If word game posts go unchallenged, the chances are good that there are going to be community members who will fall for the trickery being practiced and suffer severe life setbacks as a result. That is a bad thing for every single member of the community. I find it impossible to believe that there is even one of us who wants to see that happen.
There are three word games being played in the SalaryGuru post.
One, he puts forward a claim that "No one has proven a 4% initial withdrawal rate (with appropriate allocation and fees) has ever failed for a 30 year retirement." No one has ever put forward a contrary statement on this point. To suggest that there is some sort of dispute on this question is to play word games. It will not be tolerated at this board.
Two, he says that "these studies have not failed," reiterating the word game described above in support of this claim. The obvious reality is that the conventional methodology studies have indeed failed. These studies purport to tell us a withdrawal rate that is safe according to the historical data. The historical data reveals the number they have given to be a high-risk withdrawal rate at the valuation levels that have applied since the late 1990s. A high-risk withdrawal rate is not a safe withdrawal rate. The studies failed to do what they purport to do.
Three, he says that "as of today, no one has proven that the 4% figure will fail." Again, this is a question not under dispute. The 4 percent number has been proven to be a high-risk withdrawal number for those with high-stock percentage portfolios. Whether it will fail or not is something that will be determined in future days. It is not something that we need to concern ourselves with at this board. Our purpose is to determine the withdrawal rate that is safe according to the historical data, presuming that stocks perform in the future somewhat in the way in which they have performed in the past.
Here is the full text of the SalaryGuru post:
Posted: Fri Jun 18, 2004 7:15 pm Post subject:
------------------------------------------------------------------------JWR1945 wrote:. . . More precisely, numerous investigations on these boards show that 4% is unsafe.
This is simply false. No one has proven a 4% initial withdrawal rate (with appropriate allocation and fees) has ever failed for a 30 year retirement. No one has ever proven that a 4% initial withdrawal rate will fail at some time in the future.
It's possible that it could happen sometime in the future, but it hasn't happened yet and you have not proven it. Statements like this is what draw the ire of logical, mathematically competent people.JWR1945 wrote:The remarks about dividends and valuations help us to understand why the earlier studies failed.
But these studies have not failed. You can not point to a single individual who has ever followed the SWR prescription and failed. You cannot point to a single person who is currently following the SWR prescriptionJWR1945 wrote:. . . In terms of a rate to withdraw, 4% is not guaranteed to be safe.
Nor is 1%. But as of today, no one has proven that the 4% figure will fail.
JWR1945Sat Jun 19, 2004 1:57 pm Po
I composed this earlier this morning and then found the original post missing:The Historical Database Rates of the past were generally bounded by 3.9% or 4.0% (over 30 years and with 50% to 80% stocks).
We draw a sharp distinction on this board between Historical Database Rates, which tell us what would have survived in the past, and Safe Withdrawal Rates, which are mathematically calculated estimates of what will be safe in the future.
I think that it was a good decision to separate this from the original thread.
If I am not mistaken, Hocus is beginning to use the phrase Historical Database Survivability Withdrawal Rate (HDSWR) as a descriptive replacement for the older phrase Historical Database Rate (HDBR).