<p>Notrichenough, really? Your last post is sooooo bad. I am not going to waste my time.
Wow!!!</p>
<p>Jeez, talk about overly cranky and unnecessarily hostile this morning, dstark.</p>
<p>Just because someone states the truth, why attack them for complaining? Do we really have to accompany every kernel of truth on here with a qualifier stating that we aren’t complaining, and it’s all just for the betterment of society.</p>
<p>The truth is that notrichenough’s “bailouts” as you call them, are all available to you. And everyone else can take advantage of them. But nobody has a choice about social security, and obviously for someone who has contributed the max for 45 years, it is unlikely that it will pay out a decent return for them.</p>
<p>But I’m not complaining, and it’s all just for the betterment of society.</p>
<p>"Sure I’ve refinanced to take advantage of lower rates, along with everyone else who has a mortgage. Is this a bailout?</p>
<p>My parents had a 4% mortgage in the 60’s. Were they getting a bailout?"</p>
<p>At risk of continuing to irk the irritable, I think that dstark believes that every dollar of yours that you get to keep and not give to the government is a bailout.</p>
<p>Through bank bailouts, artificially low interest rates etc., the financial system was saved and investors were bailed out. Savers and those living on their fixed income from their savings were screwed.</p>
<p>busdriver,
This is what has been hummered down, if you spend money on your family and not on others, you are unpatreotic, (excluding of course, the DC, they are always the greatest patriots, no matter how much of out money they use to satisfy their various wishes). I am not surprized that people are thinking this way as everybody is litenning to all those speaches with such an awe, wow, what an idea, yes, take everythig from those rich, give it to everybody else, and that will insure the results of the next election. Pretty simple concept, utilized a whole century ago, but since there were no laws to implement it in practice, they took everything by force. Now no force is required, just use the system which is already in place, bend it a bit here and there and you are all set! Very slick!</p>
<p>Um, MiamiDAP, as a factual matter the rich have been getting more and more of the nation’s wealth every year of the past 30 years, not less. It’s really unclear to me how that constitutes “taking everything from those rich.” In fact, the growth in the disparity of income distribution in this country is approaching the level previously only seen in Latin American countries - and that’s a simple, objective fact. (Google “GINI”) What is actually happening is the opposite of what you’re saying. The subject of this thread is the fact that “average” Americans are likely to face more economic insecurity in retirement than their parents did - something that’s not true of the wealthy. I’m always curious how these facts get lost in the shuffle.</p>
<p>“I’m always curious how these facts get lost in the shuffle.”</p>
<p>Because people don’t know the facts, they only hear sound bites.</p>
<p>Good article on the 4% rule:</p>
<p>[Say</a> Goodbye To the 4% Rule - Yahoo! Finance](<a href=“http://finance.yahoo.com/news/goodbye-4-rule-020400626.html]Say”>http://finance.yahoo.com/news/goodbye-4-rule-020400626.html)</p>
<p>notrichenough (me neither!! LOL) thanks for the link. That article was helpful in explaining the origin of the 4% rule, but right at the end I got confused. Here is why.</p>
<p>OK, the 4% rule might not work so he offers alternatives. But in his alternative, he suggests withrawing MORE than 4% annually, ie 4.5% if stocks are overvalued, 5% if fairly valued and 5.5% if undervalued. I don’t see how that is an improvement over 4%.</p>
<p>Interesting to note that according to the P/E 10 stocks are now overvalued.</p>
<p>I think the 4% rule will still work, except for very specific, cherry-picked cases.</p>
<p>And in fact it is probably pretty conservative.</p>
<p>The rule at the end is just a little more aggressive.</p>
<p>I played around a bit with FireCalc ([FIRECalc:</a> A different kind of retirement calculator](<a href=“http://www.firecalc.com/]FIRECalc:”>http://www.firecalc.com/) , a really amazing calculator) and the 4% rule with a 60/40 split, using 30 year treasuries for fixed income, and an index fund expense rate for mutual funds is successful about 96% of the time, success meaning your money lasts 30 years. The worst case was that your money ran out in year 26. And a very high percentage of the time you end with much more than you start with.</p>
<p>A 5% rule wasn’t quite as good, lasting 30 years only 66% of the time.</p>
<p>Being 100% in bonds has a 4% rule success rate of around 40%.</p>
<p>It is extremely dangerous to project the past into the future. </p>
<p>The 4 percent rule affects a very small segment of the population. Most people don’t have enough assets to make a difference.</p>
<p>For people that retire in their
50s, 40 years is probably a better projection.</p>
<p>What FireCalc does is take your inputs and run them against every 30 year (or however long) period since 1871, and shows you for how many of those periods your scenario would have been successful.</p>
<p>It doesn’t try to predict the future, it asks what if the future was like the past.</p>
<p>What’s the minimum social security benefit, that is one that is considered the monthly “Retirement” amount?</p>
<p>There is no minimum. It depends on your work and earnings history. It could be $0 if you’ve never worked.</p>
<p>The average is about $1100/month, the max ranges from $1900 to $3300 or so, depending on how old you are when you retire.</p>
<p>I know that notrichenough </p>
<p>It’s how people use the past data to take care of their future needs that is dangerous</p>
<p>Well if you are going to run simulations, you can either make up data or use what has happened in the past. You have to use something.</p>
<p>I would think 140+ years of history would cover a pretty broad range of outcomes.</p>
<p>Circumstances change…</p>
<p>Fixed income returns are negative.
Corporate profits are higher because financing costs are lower.
Negative real interest rates increase asset valuations.
Life spans will increase?
Cost of medical care?
GDP growth?
What happens to investments the first few years of retirement?
Demographics.</p>
<p>Ok, so you are retired, right?</p>
<p>How did you calculate how much of your retirement assets to draw down every year?</p>
<p>I did not do the 4 percent rule. My circumstances are different than most. That is good for the most. </p>
<p>There is no blanket rule that works for most. That is the point. </p>
<p>The 4 percent rule does not take psychology into account.</p>
<p>I use less than 4 percent . My returns I project to match inflation. I need my assets to last more than 30 years.</p>
<p>My calculation is like this (What I need + What wife wants)/(what we have)</p>