Waiting to 65 to retire - death risk versus finances

[Barbaraok]

2 hours ago, JimK said:

You can argue but it might make more sense to spend a few minutes online and learn about the 4% rule and how to use it.

Jim,  are you suggesting that as a woman I would not understand the 4% rule, or that my education is in some way lacking?   

[Barbaraok]

Yes, the math can get really complicated.  DiffyQ is what is needed but since the variables are so difficult to pin down, it is almost as bad as trying to determine orbital probability for any atom beyond hydrogen.

[Barbaraok]

We've been retired 12 years and with the exception of the year of the 'crash' we have made much more than the 4% on our different investments.  The key is to have a diversified portfolio and hopefully not have a huge amount in the traditional 'safe' investments for retirees.  

Edited October 29, 2018 by Barbaraok

[Big5er]

31 minutes ago, Barbaraok said:

Jim,  are you suggesting that as a woman I would not understand the 4% rule, or that my education is in some way lacking?   

I didn't see where he said anything about what sex you are. He also never questioned your education, simply your understanding of the 4% rule. 

I'm curious why you believed it was necessary to throw your sex into the mix when no one (other than you) mentioned it at all. Obviously you both have differing opinions of the 4% rule but throwing your sex out there was kind of silly. Is there a term for that? Kind of like "playing the race card" only for gender? 

[Randyretired]

Obviously the 4% rule doesn't fit everyone.  We left our full time employment in 1987.  At the time we were young enough that the probability we would live more than 30 years was high.  We were aware of inflation but the reality of it is very real.  Many of the things we buy are a lot more expensive today.   Double or more in many cases.  The loss of a spouse and their income or long term care can wreck a lot of budgets. The odds are good that we have many years left.  I am reasonably confident of our financial future but there are unknowns.   The 4% rule is an attempt to provide a reasonable probability that one's finances will last 30 years. We have to many variables to use this rule but it works for some of our friends. Any plan has so many variables and assumptions that reasonable people may not agree but inflation and medical must be considered.

[sandsys]

2 hours ago, Randyretired said:

medical must be considered.

Even that part is hard since the rules keep changing.

Linda

[Randyretired]

9 hours ago, sandsys said:

Even that part is hard since the rules keep changing.

Linda

With medical costs soaring and politicians seizing control of it and a large chunk of the money to pay for it uncertainty is virtually guaranteed. For a time we had to deal with a prescription for some pills that cost $13,000 a month.  Luckily insurance picked up a large part of it.  About the same time I read an article that stated it is critical for most retirees to have a written budget.  Where does a prescription of that cost fit?  We didn't have a written budget then and we still don't. To many variables! 

[Barbaraok]

Because of a lot of different medications that Dave takes, he has to be careful with interactions.  When his gastric reflux began interfering with his daily life, he tried different OTC remedies but he can't take  omeprazole  because it interferes with his Plavix.  However, there is a new (non-generic) drug called Dexalant that doesn't interfere with other medications and Dave was given a trial set of pills.  They seemed to help, but when we went to get the prescription filled, our Insurance denied coverage ($600/month) until the physicians wrote to justify the need to have that specific drug.     

Agreed that there is no way to have a written budget that can take into account what prescriptions you might need 6 months or a year from now!  We are lucky in that our Part D plan (paid for by our former employer) is very good and for most prescriptions it is $20 for 90 days worth of medication.    What is really galling is the pharmaceutical companies engaging in price gouging on generic meds, for example the cost increases for insulin! 

[Kirk W]

Don’t cheat yourself with the 4% rule !

[JimK]

As pointed out in the article, the 4% SWR is a guide that is especially useful when planning and at the start of retirement.  Because the 4% rule is designed to be safe, it is indeed often the case that portfolio performance is better and additional amounts can be withdrawn.  Also a great many people do not understand the 4% rule and do not apply it correctly. 

I don't understand why the Motley article did not mention there are well researched and easy to use tools for adjusting withdrawals as needed later in retirement.  I would guess they are trying to pretend that they have some special knowledge of this issue.

[JimK]

On ‎10‎/‎28‎/‎2018 at 8:00 PM, Barbaraok said:

Jim,  are you suggesting that as a woman I would not understand the 4% rule, or that my education is in some way lacking?   

Absolutely not.  As pointed out by another forum  member, I made no mention of your lack of education or lack of ability to learn.  I certainly did not mention gender.

What is apparent is that you are just throwing opinions about the 4% rule and have never researched it.

Here is a quick summary.  The 4% rule is based on historical, Monte Carlo projections and other research.  The 4% rule allows an inflation adjusted 4% withdrawal each year with a high probability that the nest egg will last for 30 years.  In order for the rule to work, the annual returns on the portfolio need to be 2% plus the rate of inflation.  That is a sort of worthless number because returns are likely to vary considerably each year.  The Firecalc internet site provides a powerful tool for accessing outcomes for different time periods, different withdrawal rates and different investment allocations.  Firecalc projections also indicate that the stock allocations in the 30-70% range are advised.  With lower allocations, the risk of running out of money increases substantially.  Over 70% does not increase the safety and means hoping for higher returns with higher volatility. 

[Barbaraok]

How do you know what I have researched?  Again, I was in academia for 40 yrs.  you think we didn’t do EXTENSIVE research when getting ready to retire?  Really?  As you noted, the 4% rule is based upon~a 2% return on VERY CONSERVATIVE investment s.  It has lead a lot of people into trouble when interest rates fell to unprecedented levels after the crash.  Are you suggesting that you’ve only gotten 2% or less returns on your investments.  Also rate of inflation has been very low the past few years.  Or are you advocating it for others but not yourself?

My biggest problem with your original statements that a $1.5M principal was required for retirees - which is always put forward by investment companies trying to get new investors.  If the average age  on these forums was in their 30s & 40s then that might be  a starting point.  But I would venture that a lot of us are (1) all ready retired, (2)  are not trying to maintain lifestyle similar to when they were working, and (3) have experiences as retirees that are worth exploring.  

 

 

Edited October 30, 2018 by Barbaraok

[Zulu]

58 minutes ago, Barbaraok said:

My biggest problem with your original statements that a $1.5M principal was required for retirees - which is always put forward by investment companies trying to get new investors.  If the average age  on these forums was in their 30s & 40s then that might be  a starting point.  But I would venture that a lot of us are (1) all ready retired, (2)  are not trying to maintain lifestyle similar to when they were working, and (3) have experiences as retirees that are worth exploring.  

QED.

[Kirk W]

2 hours ago, Zulu said:

QED.

Quote

QED is an abbreviation of the Latin words "Quod Erat Demonstrandum" which loosely translated means "that which was to be demonstrated". It is usually placed at the end of a mathematical proof to indicate that the proof is complete.

 

[RV_]

On 10/30/2018 at 3:15 PM, Barbaraok said:

But I would venture that a lot of us are (1) all ready retired, (2)  are not trying to maintain lifestyle similar to when they were working, and (3) have experiences as retirees that are worth exploring.   

 

Yep, fewer years left and terrible interest rates for savings with many funds barely keeping up with inflation. Some of us are living a better lifestyle than when we were working. One size does not fit all. For better or worse.

Oh apparently we did it wrong according to some and took SS at 62.

[Barbaraok]

We also took retirement at 62 and did it all wrong.  Guess many believe it would have been. Better for Dave to keep working so he would have been dead by 70.  Fortunately we listened to our inner. Voices and, having each survived a life threatening illness, made sure we had time to enjoy our retirement.  Turns out, retiring early helps your body to last longer. 😃

[GlennWest]

Might be true for yall but ii have seen so many people die within 2 years of retiring. Also seen many continue working and live long lives. Not saying this works for everyone but an inactive lifestyle shortens one's life.

[sandsys]

15 minutes ago, GlennWest said:

Might be true for yall but ii have seen so many people die within 2 years of retiring. Also seen many continue working and live long lives. Not saying this works for everyone but an inactive lifestyle shortens one's life.

Not many RVers are inactive. May be why RVers tend to live long and happy (read stress free) lives?

Linda

[Lou Schneider]

21 minutes ago, GlennWest said:

Might be true for yall but ii have seen so many people die within 2 years of retiring. Also seen many continue working and live long lives. Not saying this works for everyone but an inactive lifestyle shortens one's life.

I think it depends on how you view retirement.  Some people view the end of their career as the end of their active life and enter retirement without any future plans.  Others view it as an opportunity to pursue travel or other activities that were denied to them while they were working for a living.

I suspect most of the people here fall into the second catagory.

Edited November 17, 2018 by Lou Schneider

[Barbaraok]

2 hours ago, GlennWest said:

Might be true for yall but ii have seen so many people die within 2 years of retiring. Also seen many continue working and live long lives. Not saying this works for everyone but an inactive lifestyle shortens one's life.

Did I say anything about being inactive?   We may have slowed. Down a little after 12 yrs, but inactive is not something I associate with any RVer.  After decades in high Ed administration, the stress reduction was palatable.  Just being able to sleep all night with no interruptions was WONDERFUL!

[GlennWest]

I don't have a stressful job. Was in one when self employed and got out of that. Yes, we agree there, but can't see one staying in a stressful job.And I sleep better when working also. But I wasn't talking about you and stated such. What i see is what i see. 

[Barbaraok]

Loads of people stay in stressful jobs for all sorts of reasons.  And I would venture we all know people who talked of working just one more year to make  just a little more for retirement and then dropped dead never getting to enjoy what they had worked for.   I guess I’m confused by why people criticize those who take early retirement for whatever reason.

Edited November 17, 2018 by Barbaraok

[Randyretired]

My dear wife and I were lucky to retire young some 30 years ago.  We have never been so busy since and wonder how we had time to work.  Since we retired we RV when we have time but also spent a few years farming and ranching.  We built 2 houses but we do it because we want to, when we wanted.  If you think retirement is sitting watching the days go by that would be boring and not very healthy. If that was our definition of retirement we would still be punching a time clock.  We don't regret it.

[Kirk W]

7 hours ago, Barbaraok said:

We also took retirement at 62 and did it all wrong.

We were even farther off in the wrong direction than you as I retired at age 57.  😊

6 hours ago, GlennWest said:

Might be true for yall but ii have seen so many people die within 2 years of retiring. Also seen many continue working and live long lives.

  I have known people who died 2 or even 3 years before they planned to retire. We would have had more money today if I had worked another 5 or more years, but I would not trade our travels and experiences for any amount of money. 

6 hours ago, Lou Schneider said:

Some people view the end of their career as the end of their active life and enter retirement without any future plans.  Others view it as an opportunity to pursue travel or other activities that were denied to them while they were working for a living.

1

I have found that most retired fulltimers are as busy as most employed people but with far less stress because we spend our time being busy doing things that we want to do and without concern for who might be able and willing to pay us. Since my 70th birthday I have slowed some and seldom put in more than about 6 hours a day working but that leaves more time for reading and working on my hobbies. 

[GlennWest]

Amazies me that y'all speak of stress from work. Work is relaxing to me. I actually wear ear buds listening to music while I weld.