What's your retirement nut?

[gull]

[ QUOTE ]

ANy of you guys students of the markets? Do you realize that between 1966 and 1982 (that is almost a lifetime for many on these boards) the dow was FLAT in nominal terms and DOWN 40% in real terms? That is was down 90% (yes, that is not a typo) from 1929-1933? That the NDX was down 80% 00-mid 03? That long bonds were down 20-25% in 1994? Anyone here actually had to manage a portfolio and LIVE on it? Models don't pay bills. And drawdowns are MAJOR problems when you are living off the cash flow. Retiring and NEEDING 8% per year to hit your spending is insane. And people are way underreserving for inflation -- its at least 3% of whatever return you are getting. Education and healthcare, 2 major expenses, have gone up much faster than that for years.

[/ QUOTE ]

The DJIA is not an entirely accurate representation of the total market.

The S&P is a better representation, although still not totally accurate.

From 1966 to 1982, the S&P 500 (dividends reinvested) nominally returned 200.2%.

I'm looking at DJIA data right now and I'm wondering did you only count capital gains (i.e., dividends excluded)?

[ISF]

Scorpian Man,
I dont think you get that there are people that do well yet really hate working. I am not far from your example you gave of someone that will likely retire at the ~3 million mark yet currently does pretty well. Money is just not that important to quaility of life. I currently spend a ton and live in manhattan.
There is absolutly no way my utility is higher spending alot here and working alot vs. living in some relatively cool place like perth, or cape town and spending my days surfing and screwing around. It just doesnt take that much money to live well outside of the northeast or california.

[maxtower]

I just really hate working, and would rather live like a student than buy a boat that I can only enjoy on the weekends.

[Thremp]

ISF,

There are numerous things that could kill your retirement if you are on a passive income and just getting by. I'd like a cushion of 10-20% cash flow each year to feel secure if I was planning on retiring for an indefinite period off my savings (30-40).

[Scorpion Man]

[ QUOTE ]
Scorpian Man,
I dont think you get that there are people that do well yet really hate working. I am not far from your example you gave of someone that will likely retire at the ~3 million mark yet currently does pretty well. Money is just not that important to quaility of life. I currently spend a ton and live in manhattan.
There is absolutly no way my utility is higher spending alot here and working alot vs. living in some relatively cool place like perth, or cape town and spending my days surfing and screwing around. It just doesnt take that much money to live well outside of the northeast or california.

[/ QUOTE ]

Fair enough, my friend. I am curious. Are you married? Do you have children? If no, do you plan to? How old are you?

[Scorpion Man]

[ QUOTE ]
[ QUOTE ]

ANy of you guys students of the markets? Do you realize that between 1966 and 1982 (that is almost a lifetime for many on these boards) the dow was FLAT in nominal terms and DOWN 40% in real terms? That is was down 90% (yes, that is not a typo) from 1929-1933? That the NDX was down 80% 00-mid 03? That long bonds were down 20-25% in 1994? Anyone here actually had to manage a portfolio and LIVE on it? Models don't pay bills. And drawdowns are MAJOR problems when you are living off the cash flow. Retiring and NEEDING 8% per year to hit your spending is insane. And people are way underreserving for inflation -- its at least 3% of whatever return you are getting. Education and healthcare, 2 major expenses, have gone up much faster than that for years.

[/ QUOTE ]

The DJIA is not an entirely accurate representation of the total market.

The S&P is a better representation, although still not totally accurate.

From 1966 to 1982, the S&P 500 (dividends reinvested) nominally returned 200.2%.

I'm looking at DJIA data right now and I'm wondering did you only count capital gains (i.e., dividends excluded)?

[/ QUOTE ]

1) i did not look at divs that would take work. this thread is about retirement.

2) i mistyped. its 68-82 (14 yrs), not '66.

3) Specifically for you folks planning on doing it young, you really have to understand the data before making statements like you do above. I just looked at some of the S&P numbers. From 68-82, the S&P annualized at 4.6% with dividends reinvested. You after tax would have been considerably worse. Inflation was above this almost the entire time, and was double digits in some years. CPI annualized 7.6% during this peroid. It was a fking disaster. So was the early part of this decade. I am not being nitpicky on the numbers here. The DOW was down FORTY PERCENT REAL.

There are all sorts of costs that come up as you get older unless you live the life of a hermit. Having to take money out of the equity markets to fund your lifestyle while the markets are down is a killer.

[zimmer879]

[ QUOTE ]
Specifically for you folks planning on doing it young, you really have to understand the data before making statements like you do above. I just looked at some of the S&P numbers. From 68-82, the S&P annualized at 4.6% with dividends reinvested. You after tax would have been considerably worse. Inflation was above this almost the entire time, and was double digits in some years. CPI annualized 7.6% during this peroid. It was a fking disaster. So was the early part of this decade. I am not being nitpicky on the numbers here. The DOW was down FORTY PERCENT REAL.

[/ QUOTE ]

http://www.retireearlyhomepage.com/novtips.html

Remember, historically this is the worst case scenario.

[DespotInExile]

[ QUOTE ]
Remember, historically this is the worst case scenario.

[/ QUOTE ]

The point is that for somebody who retires in his early 40s, the chance of running into a worst case scenario in the next 60 years is material. Retirement is basically a bankroll management problem; sure if you run hot at the beginning, your roll is in great shape for the rest of your life. But if you hit an early downswing, and you dont have the ability to preserve your principal balances, you're crushed and eating petfood at 73.

[zimmer879]

[ QUOTE ]
The point is that for somebody who retires in his early 40s, the chance of running into a worst case scenario in the next 60 years is material.

[/ QUOTE ]

I'm not sure what you think worst case scenario means. Worst case scenario for the 20th century was retiring during 1966 and that study shows the results of what would have happened. If you had retired 10 years earlier or 10 years later, your portfolio would have performed markedly better.

[BradleyT]

[ QUOTE ]
Scotch,

We will see how long I can keep myself satisfied with this lifestyle. It starts in May.

[/ QUOTE ]

You're still in college and can't get a home loan yet you're going to retire in May? wtf?