Poll results tmf fire board: swr

Financial Independence/Retire Early -- Learn How!
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ataloss
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Poll results tmf fire board: swr

Post by ataloss »

swr rule of thumb 94%
one correct swr 6%

with 50 responding excluding maybe/undecided answers

this was more dramatic than I anticipated
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Ataloss
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Post by wanderer »

this was more dramatic than I anticipated

your continued referral to that board is unhelpful. imo. the fact that you used a "poll" to gather "data" there is a delicious irony.
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wanderer

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WiseNLucky
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Post by WiseNLucky »

wanderer wrote:
your continued referral to that board is unhelpful. imo. the fact that you used a "poll" to gather "data" there is a delicious irony.


Actually, I must disagree with my good friend wanderer in this case. Much of the (unwanted in my case) discussion about that board here has indicated that many people there support a dogmatic "4% is the right answer" approach no matter what.

To show that 94% believe it to be a rule of thumb tells me the overall opinion of their board and our board is fairly similar. :shock:

Nice to know going forward with our discussion here. 8)
WiseNLucky

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Post by hocus »

This was more dramatic than I anticipated

I found your poll at the REHP board revealing, ataloss. It shows that many people there have lost faith in the intercst SWR claims as a result of The Great Debate. That's a good thing.

You have questioned whether May 13, 2002, was a decisive date in that board's history, but your poll shows just how significant it was. Look at threads from prior to that date, and you don't hear people discussing the SWR study as if it were a mere rule of thumb. In earlier days, people routinely referred to the study as if it were a valid reflection of what the data says about what is needed for a safe retirement.

What I would most like to know is what intercst thinks on the question. He is the author of the study, and he is the one who cites the study in SWR claims he makes on the board. Does he now agree that the 4 percent number is not what you get from a valid analysis of the data bearing on the question? I can't put up a post over there to ask him, but you can if you think it would be a good idea.

In the event that he says that he too now says that there is nothing scientific about his SWR claims, the logical follow-up would be to ask if he regrets his claims that it always takes longer to retire safely going with some allocation other than 74 percent stocks. If you were to ask the question causing him to retract that claim, I think you would have done an awful lot of good for the community of people aspiring to a safe early retirment.
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ataloss
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Post by ataloss »

hocus I am willing to post a question for him there but I am wondering about this 74% optimal stock allocation issue. If we accept that he calculated it right for 12/31 retirement starts then 74% might well have been the best allocation over the 1870-2002 period. Did he actually claim that he was sure it was certain to be the best allocation for the future? Maybe there was some terminolgy like "based on the past 130 years the optimal allocation is..... Do you have a link?
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Post by raddr »

hocus wrote: This was more dramatic than I anticipated


What I would most like to know is what intercst thinks on the question. He is the author of the study, and he is the one who cites the study in SWR claims he makes on the board. Does he now agree that the 4 percent number is not what you get from a valid analysis of the data bearing on the question? I can't put up a post over there to ask him, but you can if you think it would be a good idea.

In the event that he says that he too now says that there is nothing scientific about his SWR claims, the logical follow-up would be to ask if he regrets his claims that it always takes longer to retire safely going with some allocation other than 74 percent stocks. If you were to ask the question causing him to retract that claim, I think you would have done an awful lot of good for the community of people aspiring to a safe early retirment.


I think that he knows that some if claims are simply not supported by facts or even common sense for that matter. However, he will never admit he's wrong about anything. More importantly, he has a financial stake in his claims with TMF soapbox reports, being mentioned in Scott Burns column, etc. I believe that he's not above pedaling bogus claims that can severely damage the future financial health of retirees if it will allow him profit from it and to not have admit he's wrong. After all, he's often railed against allegedly corrupt drug companies but he owns them because they are profitable. He's all about me me me.
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Post by hocus »

Did he actually claim that he was sure it was certain to be the best allocation for the future? Maybe there was some terminolgy like "based on the past 130 years the optimal allocation is..... Do you have a link?

There are hundreds of links I could point you to. But links don't matter if we are not willing to consider the context in which he said what he said and the motive causing him to say it and the practical significance of what he said.

Let me tell you what I did to address the possibility that intercst only intended his SWR claims as a rule of thumb. My goal over there was to put up posts describing realistic strategies for putting together a Retire Early plan. I wanted to get away from the semantical debates on the intercst study. So I asked that I be permitted to post my views on threads that we all would acknolwedge from the start had absolutely nothing to do with the intercst study, that would be rooted in an entirely different approach to assessing safety. I said that I would never once refer to either intercst or his study on those threads, that I would just put forward ideas based on a differerent sort of rule of thumb or scientific assessment or whatever you want to call it, one that factored in the effects of changes in valuation levels.

Intercst absolutely refused. I didn't ask once. I asked many times. He was not even willing to discuss the issue. It was out of the question that anyone be permitted to put forward on that board any rules of thumb other than the One True Rule of Thumb that he put forward there.

It is as a practical matter impossible to discuss the truth about safe withdrawal rates at that board. You can put up any post you like, of course. If you put up a post telling the truth about SWRs, the thread will be turned into a circus event. Every time you try to have a reasoned discussion this will happen. I lived through it, so I know.

Now, people are going to be hurt by this. I do not care one way or the other about intercst or what he said about me or any of that other nonsense. What I care about is whether people trying to learn how to put together an effective Retire Early plan can gain access to the information they need to do so. That is the point of this. At that board they cannot. So now I amt rying to make that information available at this board.

If someone shows up here Monday morning, and says, "I retired in the year 2000 with a 4 percent withdrawal because I read a study that said that was safe, but now I am beginning to have doubts," what do we tell him? I vote for telling him the truth, that taking a 4 percent withdrawal from a plan started at those valuation levels is a high risk proposition. That person needs either to cut his spending by 50 percent or to reenter the work force. The data says that plan is not a safe plan.

If we say that, don't you think there's a good chance that this person is going to ask "Well then, what was all this stuff I heard at the time I was putting my plan together about a 4 percent withdrawal being safe? Why has everything changed so dramatically in three years?"

What is your answer to that person's question?. If it was safe when he handed in the resignation, why is it not safe now? Our assessment of the safety of that sort of plan has changed because we had it all wrong when we did the safety assessment back at the time he handed in his notice. We failed to account for all the factors that determine safety, and the answer that was given to that individual was wrong and he has suffered a life setback as a result.

We can't go back to the year 2000 and make it right by him. The book on the year 2000 has been closed. It seems to me that the responsible thing to do is to come to a consensus that we will stop making the same mistake, that we will stop telling people that an analytical approach that cannot possibly reveal what is safe in all circumstances somehow or other does. I don't care if you call it a rule of thumb or you call it a rule of toe or you call it a rule of ear, the numbers that the historical sequence approach produces are wrong. It does not tell you what is safe in many circumstances because it is not designed in such a way that it can tell you what is safe.

We know what is needed to change the tool so that it would tell you what is safe. What is the objection to making a decision that from this point forward we will start telling people the truth on this point, that there is no way to know what is safe without taking changes in valuation levels into account in the analysis?
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Post by wanderer »

hocus -

you know i agree with you on the bs that went down there esp. as it regards you.

that being said, i don't think your references to YKI are useful. i think if you phrased matters in terms of the "conventional" and "traditional" method, it would drain the emotions out of it.

Maybe an example would help. In my former profession, we would periodically take over the audits of a company (due to voluntary change in auditors, acquisition, etc.) Frequently, seniors and staff would want to look at the prior auditors' workpapers for "guidance" (ie they wanted to be lazy and copy their methodology).

In reality, a new audit, while highly risky, was a terrific opportunity to get the audit right and not be chained to the past/someone else's misinterpretation of matters. It was uncomfortable and required independence of thought but risk management was quite often paramount.

I think we have a heckuvan opportunity by eschewing any refs to that place, the transcript, etc. So throw off the bowlines. Sail away from the safe harbor. . . . Explore. Dream. (Mark Twain)

In addition, by focusing on your goals: developing a realistic estimate of the current SWR, helping FIREwannabes, etc., you would permit more on-topic discussion, not less. imho...

Please take this in the spirit in which it is offered: the facilitation of our mutual FIRE journeys.
regards,

wanderer

The field has eyes / the wood has ears / I will see / be silent and hear
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ataloss
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Post by ataloss »

What is your answer to that person's question?.


Historical analysis has limitations and "may sometimes be misleading" (or whatever Bernstein said. ) 2000 may have been one of those times.
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Post by wanderer »

torical analysis has limitations and "may sometimes be misleading" (or whatever Bernstein said. )

assuming the cite hocus provided is correct, bernstein said retirees then may not be safe with a WR of 2% (!). That's a helluva statement in my book. The RP is looking not just conservative but downright necessary. :shock:
regards,

wanderer

The field has eyes / the wood has ears / I will see / be silent and hear
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