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Posted: Thu Jun 05, 2003 5:54 am
by gummy
wanderer:
If I provide chapter and verse, I am engaging in "game-playing" (right?).

Why do you assume that I'm talking about you?

Posted: Thu Jun 05, 2003 9:50 pm
by [KenM]
I don't enjoy participating until I know what the discussion is about......I feel like asking the participants to define "avita-gargoyle" and "certo-mosivich", feeling that, if they could, the definitions themselves would settle the issue.

.....but if you know what the discussion is about.....and you could quickly settle the issue.....dosn't that spoil the fun of the debate?
The zen of SWRs (contemplation of one's essential nature to the exclusion of all else is the only way of achieving pure enlightenment ) 8)8)8)
I don't understand why anybuddy would argue that some SWR is "95% safe" ...

I admit I've probably been guilty of saying "95% safe" :oops:....but only as shorthand for some sort of long phrase using long words like probability......Sam and Sally would understand?

Posted: Thu Jun 05, 2003 11:23 pm
by gummy
KenM ... you're one wise fella :shock:

"zen of SWRs", eh?
Gotta put that here:
http://home.golden.net/~pjponzo/SWR-3.htm

Posted: Fri Jun 06, 2003 4:03 am
by wanderer
In particular, are we talking about a "safe" withdrawal rate calculation for:

[1] the person who's just retired? If so, is it to be some fixed SWR (until he drops dead)?
[2] Is it for the person who's planning to retire in 30 years (and contributing monthly to her portfolio)? If so, is she supposed to reevaluate periodically and readjust her investments in light of a newly calculated SWR?
[3] Are we looking for a "method of calculation" (for either/both [1]/[2]) or are we looking for a definition of "safe" or are we looking for a "current" SWR calculation or ... ***

I think this is a useful distinction. It sounds like most folks should plan on being able to absorb a 50% haircut. We are planning on being able to absorb a 75% haircut.

I hope folks will continue to pursue the various angles. That being said, I'm not sure how useful the SWR stuff is.

Pregunta: "What's the SWR?"

Antwort: "Pretty frickin' low, whatever it is."

Maybe it's just another way of saying flexibility is critical for survival. Maybe I just worked waaay too long...

Posted: Fri Jun 06, 2003 5:19 am
by ataloss
I occurred to me that (based on 1966/Bernstein) if I split a 1M portfolio and took 4% inflation adjusted withdrawals from half and 5% variable withdrawls from the other half my minimum real takeout would have been 30k in 1974 but would have been above 40 k for a number of years at the beginning and end of the 30 year period. I think flexibility is important :wink:

http://www.efficientfrontier.com/ef/998/hell.htm

Posted: Fri Jun 06, 2003 10:35 am
by JWR1945
wanderer
I think this is a useful distinction. It sounds like most folks should plan on being able to absorb a 50% haircut. We are planning on being able to absorb a 75% haircut.

I hope folks will continue to pursue the various angles. That being said, I'm not sure how useful the SWR stuff is.

Pregunta: "What's the SWR?"

Antwort: "Pretty frickin' low, whatever it is."

Maybe it's just another way of saying flexibility is critical for survival. Maybe I just worked waaay too long...

If you think in terms of a single number for making withdrawals and/or a single number for an allocation, SWR research is not that useful. If you are looking for insights and understandings, it is quite valuable.

It is similar to accounting. It is not a single snapshot that is so important. It is the story that you learn from looking at a series of snapshots.

Consider what KenM and ben are telling us. They would never dream of calculating a single number and then gritting their teeth and closing their eyes from then on. That is radically different than what we would have expected to hear less than one year ago. They have benefited greatly by their past ignorance! They did not learn the wrong lessons.

That in itself is tremendous progress. The fact that people are looking at a large variety of approaches shows tremendous progress.

Have fun.

John R.

Posted: Sat Jun 07, 2003 2:21 am
by ataloss
They would never dream of calculating a single number and then gritting their teeth and closing their eyes from then on. That is radically different than what we would have expected to hear less than one year ago.


Although I think this excessive reliance on a definitive swr would not have occurred if people listen to Bogle (and others) link from Stubblejumper in post 787:
"The first step is to measure what can be easily measured. This is okay as far as it goes. The second step is to disregard that which cannot be measured, or give it an arbitrary quantitative value. This is artificial and misleading. The third step is to presume that what cannot be measured really is not very important. This is blindness. The fourth step is to say that what cannot be measured does not really exist. This is suicide."


http://www.vanguard.com/bogle_site/sp20021018.html

Posted: Sat Jun 07, 2003 1:17 pm
by dbphd
I just came from reading postings on TMF FIRE board, and was refreshed by the absense of this pointless debate. Now I see a really excellent board in danger of being despoiled. I contend that the only true SWR is exactly 3.26595% and that exactly 5 billion angels can dance on the head of a pin. So there's the one true answer.

db

Posted: Sat Jun 07, 2003 10:23 pm
by ben
Hi JWR,
A year ago I would have said exactly the same thing - so not really enlightenend (but maybe re-confirmed?) by the looong SWR chats here.

I used my simple 50% stock/50% bond historical avg. performance 8% - inflation (3-4%) leading to the 4% SWR. This method has lots of holes as already discussed in the Ben's SWR "study" post - but combined with the traditional SWR studys and COMMON SENSE/flexibility when actually implement the withdrawals, it is a good as it gets for me. :D

Posted: Mon Feb 09, 2004 2:04 pm
by ataloss
hocus took offense at the idea that there were alternatives to deciding on a fixed % of assets withdrawal and then adjusting for inflation
Why adjust for inflation, Ataloss? And why adjust for volatility? Ignore those factors and you can report a SWR of about 10 percent. Isn't that a lot better than 4 percent?


but hocus seemed comfortable taking a withdrawal from a 100% fixed income portfolio that exceeded the earnings
While I use a 4 percent annual return assumption, you'll note that most of my investments do not earn a full 4 percent. The CDs do because they were purchsed at high yields (many between 6 and 7 percent) that result in a real return over 4 percent in today's low-inflation environment.) But the ibonds are at 3.4 percent and the TIPS at 3.5 percent.

I make up this difference with a technique I think of as "the personal inflation rate." The inflation adjustment for the TIPS and ibonds are done according to government estimates of inflation. For purposes of my own records, I use a personal inflation measure instead.


http://boards.fool.com/Message.asp?mid=17246781

interesting