Local Finance show says:

1. Due to Living longer tablesbeing updated in 2007

2. Using the 4% WD rule ( and you may even be able to WD 5%...)

3. " Inorder to Avoid running out of $, one has to have at Least 50% in stocks"  

I took a Balanced Index Portfolio  using VFINX,VIMSX,NAESX,VGSIX,VGTSX ( Invested Equally) and VBMFX for Bonds and found :

Mix      10 yr         5 yr

70/30 = 8% apy    14.8%

60/40 = 7.7%       13.6%

50/50 = 7.4%       12.2%

40/60 = 7%          5.19%

Does this look about right?

If so, what a major difference btwn 40/60 vs the other mixes for past 5 yrs..

and comparing to a 50/50 , per 10 yrs, earning .4% less vs making +7% apy in Bull markets more would be better. Thus a 50/50 vs Less equities would be better?

Does this look about right?

My analysis shows that an allocation that varies with overall valuations is far superior to a fixed allocation. A 30-year withdrawal rate of 5% plus inflation can make sense in such circumstances.

If you insist upon a fixed allocation, at today's valuations, 20% stocks is far superior to 40% or 50% or higher. Think in terms of withdrawing 3.7% (highest safety) to 4.2% (reasonably safe).

Dividend and Income strategies can deliver a continuing withdrawal rate of 5% or 6%  plus inflation. 

Have fun.

John Walter Russell 

Dennis,

Go to smartmoney.com, type in a symbol and then go to returns and type in other symbols to compare.

I used the two vanguard total funds - stocks and bonds.  The 10 yr graph really shows the picture with the steadiness of the bonds and the decline in stocks.

10 yr total returns are only $3000 apart.  For 5 year returns, the stock return is double the bond return.

Roberta 

The basic premise in investing in retirement is to have growth and safety in the portfolio.

As the global market place changes, the investments need to be in markets that don't correlate.

Alpha and Beta are terms used to track correlation.  When comparing two investments it would be wise to measure how well they correlate.  Unfortunately, for funds the alpha and beta are used to track to an index, based for that fund style.  Comparing the alpha and beta for an emerging market fund with a US large caps is not meaningful or useful.

a web search for 'alpha' and 'correlation' did yield a hit for a site that tracks ETF across the global market.

This being said, the true ratio of % in stocks, bonds should include markets that don't correlate.  So a portfolio of 100% stocks, in the right mix would yield a higher return for less risk than one with bonds.

"If so, what a major difference btwn 40/60 vs the other mixes for past 5 yrs.."

Any difference, for ANY 5 year period, are insignificant, especially if you have no idea whether the next 5 years will be exactly like the previous 5 years.  My point is that retirement estimates typically consider much longer period of time, both in the past, but especially going forward.

For example, although Trinity (and other such Monte Carlo studies) show that the probability of success of being able to withdraw a real, inflation adjusted 5% from a portfolio was over 90% (almost regardless of the equity/debt split), and having that portfolio last 30 years, examination of the 30 year history of the stock and bond markets, starting in 1965, showed that ANY equity/debt split ran out of money before 1995.

That is, although the PREDICTED probabilty of failure, today, is ONLY 10%, the OBSERVED failure rate was 100%!

Put another way, will the next 30 years (2009 through 2039) be more like 1965 through 1995, or like 1978 through 2008, where any allocation worked?  This is a decision you (as well as all who retire this year) have to make, today, as you set your portfolio allocation, based on past performance.

"For example, although Trinity (and other such Monte Carlo studies) show that the probability of success of being able to withdraw a real, inflation adjusted 5% from a portfolio was over 90% (almost regardless of the equity/debt split), and having that portfolio last 30 years, examination of the 30 year history of the stock and bond markets, starting in 1965, showed that ANY equity/debt split ran out of money before 1995.

That is, although the PREDICTED probability of failure, today, is ONLY 10%, the OBSERVED failure rate was 100%!

Put another way, will the next 30 years (2009 through 2039) be more like 1965 through 1995, or like 1978 through 2008, where any allocation worked?  This is a decision you (as well as all who retire this year) have to make, today, as you set your portfolio allocation, based on past performance."

No one ever explains how the hundreds of thousands of folks who retired in 1965, 1966, 1967 survived.  Or why it took a study 20 years later to tell them they ran out of money.

Reality check;  Human beings are not like computers or spreadsheets and they don't just sit at the helm as the ship goes down.

If you can't afford some flexibility in your withdrawal, then you should probably keep working and save more.

best,

Bill

Imho, the most important issues are diversity among asset classes and efficiency of the investment vehicles chosen; the exact split between fixed income and equity is less important than having the right choices from both asset classes, supplemented by diverse sectors, styles and regions to best manage correlation and thus, risk through the inevitable future uncertainty.  There are low cost funds that do much of the selection process for the retiree.

There are also vast differences among these vehicles as to management and tax efficiency, transaction costs and slippage. Picking an inefficient investment company (MF, ETF, CEF, UIT, etc)  and fund sponsor can undo all other considerations over time.

Total return, rather than distribution "yield" should govern, since the latter can always be supplemented by the investor through the harvest of capital gains; the empirical  point about individuals muddling through despite theory is also an important one.

"No one ever explains how the hundreds of thousands of folks who retired in 1965, 1966, 1967 survived.  Or why it took a study 20 years later to tell them they ran out of money."

I think it's been stated many times on this forum that the majority of those who retired during the periods you site survived on pensions and social security rather than depending on a portfolio of stocks and bonds augmented by SS to fund their retirement. Those who did count on the markets for some of their retirement income did so in an equity environment where dividends were far stronger than they are today.

Billym 

Total return, rather than distribution "yield" should govern, since the latter can always be supplemented by the investor through the harvest of capital gains; the empirical  point about individuals muddling through despite theory is also an important one.

Sometimes, there are NO capital gains. Go back to 1966 and you find that owning stocks REDUCED the 30-year surviving withdrawal rate compared to owning commercial paper alone. 

Total return investors gloss over this point. When valuations are high, quite often there are capital losses to overcome, not capital gains to harvest.

Have fun.

John Walter Russell 

No one ever explains how the hundreds of thousands of folks who retired in 1965, 1966, 1967 survived. 

[/quote]

I can explain it - social security, medicare, medicaid, SSI, tapping the equity in their homes, and for many of them, living meagerly and/or being supported by their children.  For people who retired in the mid 1960's, many had at least 3 children who they looked to for help financially during retirement.

Unfortunately, many in the baby boom generation don't seem to feel they are responsible for taking care of their parents.  I can't tell you how many baby boomers with substantial incomes and assets that I know who are putting their parents in medicaid nursing homes when they could afford to pay for a place for their parents, it would just mean scaling back their lifestyle some.  Why should they when they can get medicaid to pay?

Bill,

"No one ever explains how the hundreds of thousands of folks who retired in 1965, 1966, 1967 survived."

Sure there's an explanation.  They didn't start with a withdrawal equal to 5% of the initial value of their portfolios, and INCREASE the number of dollars withdrawn, and spent, each year, by the rate of inflation.

IOW, they withdrew less then they thought the could withdraw, at the start of their retirement.  Those that didn't cut back, ran out of money.

I agree.  In the current environment, if you're not planning on limiting your expenses substantially and downsizing, you're probably not planning realistically.  Parents need help; children come back home to live or get divorced & need help; boy, it really mounts up.

Then.... comes a bad investment (we've all had one) that starts to tip the scale.  You realize that it's no longer "What would I like to buy today?", but instead "What can I avoid buying today?"

Welcome to reality.

IOW, they withdrew less then they thought the could withdraw, at the start of their retirement.  Those that didn't cut back, ran out of money.

[/quote]

IOW - they lived meagerly.  And for those who ran out of money, they relied on their children or the government for help.

>>>"Sometimes, there are NO capital gains. Go back to 1966 and you find that owning stocks REDUCED the 30-year surviving withdrawal rate compared to owning commercial paper alone.   Total return investors gloss over this point. When valuations are high, quite often there are capital losses to overcome, not capital gains to harvest.   Have fun."<<

No, you've missed the point.  Total return is the sum of distributions and fund or portfolio appreciation. Portfolio diversification doesn't obviate periodic rebalancing. If there are no capital gains or even temporary  paper losses, maximizing total returns just becomes less different from income investing.    If one is going to freeze h/her portfolio for all of retirement, choosing only the currently highest yielding securities or safest commercial paper would still not be my first choice.   

I can find find times when owning only fixed income also reduced the survival withdrawal rate, but I can't find a thirty year period when owning only one or the other made best sense. 

Chamois,

"No, you've missed the point.  Total return is the sum of distributions and fund or portfolio appreciation."

No, you've missed the point.  Total return is the sum of distributions and fund or portfolio DEPRECIATION.  Sometimes!

Portfolios don't always go up in value.

Perhaps we have a semantics/terminology problem  Total return is the sum of what might include a negative number.  If the distribution rate is 8% and the fund or portfolio loses 5% in value, the fund or portfolio  total return is 3%.  Total return, not distribution rate, is the proper measure of yield and return on investment. 

Total Return 

Total return, not distribution rate, is the proper measure of yield and return on investment.

No. Not when there are withdrawals. The mathematics changes. If you keep withdrawals below the dividend yield, assuming that the payout ratio is less than 100%, you will never run out of funds. If you require selling shares, as when there are zero dividends, you can run out of funds.

Have fun.

John Walter Russell
 

" I can't tell you how many baby boomers with substantial incomes and assets that I know who are putting their parents in medicaid nursing homes when they could afford to pay for a place for their parents, it would just mean scaling back their lifestyle some.  Why should they when they can get medicaid to pay?"

RE: Well, maybe, but First hand experience?

1. The Mother-In-Law syndrome.. No way Her and my Wife got along.. always Fighting, she was more like the Mother of 2 1/2 Men TV show..and always sarcastic..We tried for a Month and never worked out.. then Off to a senior Apartment Complex and she was very Happy and then to the Nursing Home for another Yr.. before she died..

2. Dad- Insisted on staying In His ( built his own) home, had the money to do it, after my  mother died.. He lived there for next 8 yrs before getting Cancer.. Still Stayed in it for another Year with the Help of us Kids comming and going and Hospice Care... Even after neumerouds offers to come live at any of us kids homes.. We respected his Wishes... He died in HIS bed... as he wanted too..

3. Aunt- She first went from House to Retirement Complex, then got partical Companion service then 24 hr Live In Companion service until she had to had Medical supervision 24/7 and thus the Nursing Home was the Only choice..

Medicare doesn't pay for normal -maintenance care, just for If needs Medical care... you pay until then and in most cases, by the time that is needed? Most don't live beyond  a Yr or 2..

That's why these Long Term Care Ins. Plans tell you> Only need to buy a 2-4 yr pay plan.. and yes there are exceptions.. based upon each individuals situation..

And do you really want to be Around your Kids & Grandkids, 24/7 while your dying? From having Accidents in the Hallway, Living room, Throwing up at the Dinner table, etc.. And  you best both Know CPR and have the Defibulator kit as well...  Just think of the mental Impact on them that would have-for the rest of their life..I know from a Man's Point of view (of not wanting to be a burden to being embarr-assed )... at least I don't..

And although you think you can do it? The stress & depression eventually wears you down ( My sister lost it many times and my Brother just couldn't cope to start with)

And I'd rather have some Young Lady take care of me!   Those Latino girls were Great with my Dad and My Aunt..I tipped ea. of them $50 wk and Both Dad and My Aunt were very happy with them..they knew at anytime, they  could bail and come to my place, etc..but didn't want too, especiall meeting others of their own age to do things with..

With the Advent of these 3 level of care , +55 places? I think could be the Answer.. for many that can afford them..I plan on it myself..

"Using a 30 yr period"..

Well I would guess that all depends on the individual and proably how much Younger their Wife/Spouse is... seeing as the ave life expectancy is only about 15 yrs now after retirement at age 66 ( 81 ) at best and a vast majority die before then..

And for those like myself, with T1 Insulin Diabetes and had to go on SSD at age 55? I'm just kidding myself, thinking I'm going to live another 30 yrs ( 85 ) and be lucky  I make till age 75..( We die and ave of 15 yrs sooner than Non T1's  and T2's die an average of 5 yrs sooner than Non-T2's )

And I've seen people 'Going Into the Final Yrs of the Their Lives" and the last few are spent Babling in a Nursing Home, not know the time of day, let alone what day it is.. and who cares were your at, just as long as your not Neglected and/or abused..

Now my 78 yr old Unlce is a different story, with a 58 yr old Wife.. That lucky Dog..

Of course, being Italian & a couple of Million $ helps...

LOL

And for those like myself, with T1 Insulin Diabetes and had to go on SSD at age 55? I'm just kidding myself, thinking I'm going to live another 30 yrs ( 85 ) and be lucky  I make till age 75..( We die and ave of 15 yrs sooner than Non T1's  and T2's die an average of 5 yrs sooner than Non-T2's )

For Limoman, regarding Single Premium Immediate Annuities from the Vanguard site.

Clients with medical conditions that may reduce their life expectancy may qualify for a “rated age”. A rated age is older than your actual age and based on your personal life expectancy as determined by a medical underwriter. A rated age applicant can either increase their income payments or reduce the premium amount needed to generate specific payment amounts.

Have fun.

John Walter Russell 

My mother's pension was $35/month.  There was no COLA.  My father had no pension.  They had no equities.  Most people didn't during that time frame.  The discount brokerages really didn't exist and middle class and poorer people hadn't had 401k's and there was no such thing as no-load mutual funds. I think the commissions on funds was 8+%.   I earned $200/mth.  My husband about the same.  Groceries cost me $35/wk including 2 cartoons of cigarettes.

Inflation and gas prices were a major reason that none of the portfolios survived in the studies.  We had 18% CD's and they were available for periods as long as 10 years.  Savings accounts paid high rates.   Were they factored into these fancy, high faluting academic studies?  Oh, and all these people whose portfolio's didn't survive - they did..  What aspect of reality did the studies omit? 

Roberta 

Well? Thanks to all of your for your Pro's and Con's on this Subject

It just further Conviences me to stay with my Active Managed Balanced funds + FAIRX for now and Live on the Least and Just hope for the best..

I need about 3.8% on my savings currently and if those funds even do 75% as well as they have in the next 10 yrs as they did in the past 10? I'll be ok..( past 10 = +12% x 75% = 9% ) and it will beat a comparable Index Port by +3.87893527% yr... ( the #'s would have gone farther but my calulator is only a 12 digit one....LOL )

I'll let you-all know how it works out in another 20 yrs...LOL

Elect Jimmy Carter!  We need those High CD's and Treasuries that My Dad Got back then, again!   Maybe Obama will be the next Jimmy Carter.. idealist..?

They Got It Wrong

The original Safe Withdrawal Rate studies broke new ground. They advanced our knowledge of retirement finances tremendously. Yet, it is amazing how many things they got wrong.

http://www.early-retirement-planning-insights.com/they-got-it-wrong.html

Have fun.

John Walter Russell

"You might reread the Trinity report and recheck your analysis."

"Seems to me Tirnity tables make the case for 50% or higher stock allocation pretty well."

ALL allocations (from 0/100 to 100/0) failed before 30 years for a 5% (of the starting value) inflation adjusted rate of withdrawal, starting in 1965.  Now, if you know that the next 30 years (2009 to 2039) will be like 1965 through 1995, you should limit your withdrawals to a real, inflation adjusted 4%!

Failure means that the 1965 retiree ran out of money.

A much better withdrawal strategy would be to NOT adjust your withdrawals with inflation.  That is, in years where your returns are low, or negative, take less out!  That is, each year, take 4%, 5%, 6%, or 7% of the January 1 value of your portfolio out.

Just so there is no misunderstanding, here are the three strategies, by example:

The 2008 value of a retirees portfolio is $100,000, and he takes out $5,000 this year.  Inflation for 2008 turns out to be 3%, and the value of the portfolio at the end of the year is $90,000

1) The 5% real, inflation adjusted withdrawal strategy would take out $5,150 in 2009, which is 3% more (the inflation adjustment) then taken out this year.

2) The nominal (non-inflation adjusted) withdrawal strategy would take out $5000 in 2009, which is the same amount as take out in 2008.

3) My suggested strategy would be to take out $4,500 in 2009, which is 5% of the current value of the portfolio ($90,000)

 Bally-Who, you can certainly be forgiven for trying to work with JWR to understand the subtleties of asset allocation between fixed income and equities over the long haul, and it's effect on SWR, so if you like, forge right ahead.

 However, many of us determined long ago that it is futile.

If you do decide to proceed, you will probably want to study some of John's prior posts and his "research" before you invest significant time sparring with him. Good luck.

 
"RESEARCH":
 http://s162532268.onlinehome.us/Sewer/viewtopic.php?t=1331

 
 "CV":
 http://boards.fool.com/Message.asp?mid=18921196&sort=whole&terms=JWR1945&vstest=search_042607_linkdefault

 This (see link) represented the high water mark or "State of the art" in John's uber-micro-data-mining of a single very specific data set.

 If you think that the mind which produced this can be useful in a dialog about stock allocations, then go for it.

 I will, however, for the benefit of the rest of those reading, just cut to the chase and save them from having to grind through painful page after page of fudging, tweaking, fitting, and eyeballing (with no overriding model or theory in evidence at all), in order to jump right to the final outcome, that JWR independently concluded via his own 'research', as optimal:

http://s162532268.onlinehome.us/Sewer/viewtopic.php?t=1018 

JWR Concludes:

Observations

These results favored the higher stock allocation (80%).

 What does John say (in his own linked article) about annually rebalancing -- a technique nearly every finance author agrees is a terrific technique to force 'buying low and selling high'?

"This eliminates the upside and offers very little protection on the downside. Compared to using valuations, this is a horrible mistake."

I would move VERY cautiously before I took any advice from a RIF'ed government pensioner, who does not personally apply the various theories he espouses, especially if those conclusions are not backed up with other advice, information, research, and analysis that you can understand and stands the tests of both logic and of time.
 

We are traveling looking at retirement destinations and houses.  In the process, we have been seeing and visiting with friends we grew up with.  The reports, albeit anecdoctal and not an academic study, reinforces the concept of CD's and living on income.  One person did report that his sister finally had to invade principal, but she' 83 now.

Hubby making let's go sounds.  appt with realtor.

Roberta

i personally go with at least 50% equities 

A much better withdrawal strategy would be to NOT adjust your withdrawals with inflation.  That is, in years where your returns are low, or negative, take less out!  That is, each year, take 4%, 5%, 6%, or 7% of the January 1 value of your portfolio out.

I strongly disagree when using a liquidation strategy. The withdrawal rate can fall to 2.5% to 2.7% of the original balance after adjusting for inflation. That is much too low. This is why I wrote The 4% Shocker long ago.

The 4% Shocker

or

Withdrawing 4% of the Current Balance

or

How 4% turns out to be less than 2.5%!

http://www.early-retirement-planning-insights.com/4shocker.html

I much prefer to reduce the withdrawal rate from the start (my calculators allow you to specify non zero final balances) if you insist upon using a liquidation strategy. 

I much prefer income and dividend approaches that involve no sales. They can produce withdrawal rates above 5% (plus inflation) without difficulty. It is a matter of due diligence and managing cash flows.

Have fun.

John Walter Russell 

10 yr total returns are only $3000 apart.  For 5 year returns, the stock return is double the bond return.

Roberta 

Thanks RB.. I have done this for other Reseraching reasons and it was Amazing, isn't it?

EG: Difference btwn a 80/20, 70/30,60/40, 50/50 and a 40/60 port  wasn't that great     70/30 = 8% vs 60/40 = 7.7%  while a 50/50 came in at 7.4%   and was alot less volatile and allowed me to sleep at nite better.

which sure defies conventional Widsom on More Equities and Less Bonds..

At least To My feeble Brain..

and showed me why so many of these Professional 's using a 60/40 Mix in there Balanced Funds as the Standard..

and they're Now Adding a REIT Fund to their mix as well...( which I think is a day late and Dollar short and if they really know as much more than We Amatures?, they would have had Reits in their Ports several Yrs ago and not just in the past couple )

Which Also? Was just another Reason on my List to Move the majority of my $ into a  Port of AMBF's (Active Managed Bal. Funds) Like FPACX,OAKBX, PRWCX and  added a Reit and a Bond fund(s) to get a 50/50 bal & let them figure it all out.. vs having to constantly keep rebalaning and Reconfiruing % allocatons in individual Asset classes.   Just wish These Bal. Funds would start adding Reits...maybe they will in the future?

Weird

A slightly later version of the Trinity study is available at

http://www.afcpe.org/doc/Vol1014.pdf

Most withdrawal studies use a roughly 60/40 market weight allocation typical of balanced funds, with the higher equity amount needed to provide the later life growth needed to offset inflation - lower equity allocations did not historically support an inflation adjusted withdrawal.

In the summary of the above study, the authors suggest lower a starting withdrawal for longer periods, higher for shorter. Simply dividing your portfolio annually over your IRS life expectancy will give a 4% withdrawal at 25 years (3.3% at 30, 5% at 20), eventually resulting in a late life spend down.  This has  the advantage over spending a fixed percent of portfolio annually (3, 4, 5, 20, 90 all work, although the last two rapidly deplete your portfolio) in that it links the withdrawal to life expectancy.

James Walter Russell 

You can continue to post without research if it pleases you, but if you had read Trinity, the original SWR study, you would understand at that at least two of your assertions are false. Trinity is based on an uderstanding of probabilities which you fail to achieve on your site. Furthermore, the "S" in SWR doesn't mean "Safe". In this world nothing, especially investing, is "safe". All investments have risk, btw, a probablistic concept.

cheer up

j  

rmark1 wrote the following post at 05-21-2008 7:25 PM:

Rmark - My comments about research were were not directed at you. They referred to references by JWR's web site - information that is neither referenced nor peer-reviewed.

OTOH your comments are well stated,and well referenced with limitations clear.

Thanks for an excellent example.

j   

JWR

615 pages just tells us you are a programmer.

As a research scientist can you tell me  the Trinity page that mentions Safe Withdrawal Rates?

keep on trucking

j

An inflation adjusted withdrawal is only available if you hold a portfolio which produces it.

-Withdrawal studies have focused on US securities, arriving at past 4% inflation adjusted withdrawals from a roughly 60/40 market weight portfolio over 30 year periods, with about a 90% success rate.

Sustainable Withdrawal Rates From Your Retirement Portfolio (1999)

Philip L. Cooley, Carl M. Hubbard and Daniel T. Walz

-However there is a whole world out there with lower returns and higher volatility. These are usually aggregated together as ‘international’, which de-emphasizes their individual nature. Lower return + more volatility suggests a lower (or more variable) withdrawal rate than US only data.

Irrational Optimism (2003)

Elroy Dimson, Paul Marsh, and Mike Staunton

International diversification and retirement withdrawals (2003?)                                                              Danny Ervin, Larry Filer, Joseph Smolira

-Another problem in using the academic studies in real life is investor actions. People tend to invest more (less) at the peak (trough) of the market resulting in returns lower than the market return assumed in most studies.

Dumb money: Mutual fund flows and the cross-section of stock returns (2006)

Andrea Frazzini, Owen A. Lamont

What are stock investors actual historical returns? (2004)

Ilia Dichev

-Historically you had two investing choices – actively managed mutual funds or a personal portfolio of relatively few securities. Current active management likely costs at least 1.5%, and there is no reason to believe past costs were lower. And a small personal portfolio may have had wildly non-average results.

The broad based low cost index fund with near market returns was simply was not available in the past.

John Bogle, see his speeches linked through Vanguard.com

In my opinion -the 4% of initial portfolio + annual inflation looks terribly weak once the data is expanded to include other individual markets, poor timing of investors, and actual past costs are introduced. I personally would not rely on it. I suspect Henry Hebeler’s assumption of 0% after tax net real retiree returns is closer to the historical facts. And the math is much simpler for an uninterested spouse.

The original Safe Withdrawal Rate studies broke new ground. They advanced our knowledge of retirement finances tremendously. Yet, it is amazing how many things they got wrong.

http://www.early-retirement-planning-insights.com/they-got-it-wrong.html

 Have fun.
John Walter Russell
[/quote]

 John,
Here is the content of one paragraph under the page you linked to, authored solely by you. I have numbered the statements for ease of reference. I have a couple of questions after the paragraph. 

**********************************************************
Title: What They Got Wrong

#1 Early researchers tried to avoid probability and statistics.

#2 This leads to serious errors as valuations approach extremes, as they do today.

#3 Early researchers did not attempt to find a measure of valuations, nor did they seek to exploit such a measure.

#4 Yet, introducing valuations is the most important factor by far.

#5 Early researchers treated bonds simply as single year trading vehicles, sometimes including the effect of capital gains and losses, but more often simply varying the single year interest rate.

#6 This led them to overlook the true benefits of fixed income securities.

#7 They missed out on powerful alternatives to stock portfolios.

#8 Early researchers rebalanced portfolios annually.

#9 This eliminates the upside and offers very little protection on the downside.

#10 Compared to using valuations, this is a horrible mistake.

#11 Early researchers estimated the 30-Year Safe Withdrawal Rate to be 3.9% or 4.0% (plus inflation).
 **********************************************************

JWR: The numbers below correspond to the numbered items, above:

 #1. Please give some sort of identity to these "Early researchers" so that we can research the accuracy of your claims. Use of such nebulous, non-traceable, non-specific  terms as 'early researchers', when used to deride things as 'horrible',  'serious error', etc. does not allow one to TEST the veracity of your claim. Please tell us with specificity the study(s) and or researcher(s) you mean here.

Give explicit evidence of them trying to avoid statistics and probability (where appropriate).  I never saw any quoted study that overtly attempted to avoid the proper employment of analytic methods. When we restate a precise set of past empirically measured data, for instance, while one can apply inferential statistics, that may well be out of scope for a simple description of the actual data observed. For instance, any data set will exhibit an absolute upper and lower bound. There is no need to sum, square, sigma, percentile, or otherwise CALCULATE anything. What was; was.

#2. Once you identify the studies as requested above, I think you will find that each of them set out with a defined purpose. Many (most? All?) of the time, the objective was merely to describe in finite terms WHAT HAPPENED IN THE PAST, given certain variables, such as entry time, allocation, etc. Certainly the next step of someone else, using that information, might well be to seek an optimal strategy going forward, but I think you have the cart not only before the horse, but way over on top of the roof of the barn, when you claim what you do in the next clause, for a study like, say, Trinity...
 

Once you do that, please state (with specificity) what the ERROR is with the specifically identified study, within it's own stated bounds of purpose. Once you do this, I will happily stand with you to vigorously try to get any such errors admitted and corrected. That is the right thing to do, isn't it?

#3 Well, here we go. Unless you know the mind, scope and intent of such "Early Researchers" (which you will precisely identify, of course), how can a limitation on what the elect to investigate be in and of itself construed as an 'error', sir? I put it to you that it simply can not, on it's face. Scope, sir. Scope.

Think of it this way:  If I were to say that all of the research on your website is fatally flawed because you clearly failed to ever determine the best barbecue sauce, even after all that writing, and linking, and time -- you still simply and completely failed to ever say what the best BBQ sauce was, and therefore, you clearly wasted your time and my time and the website is useless. That would be silly, wouldn't it? Of course it would.
 
#4 This statement is meaningless without context. 'Valuations' are more important than... life? Oxygen? adequate funds to invest? Health? Return on the asset class? Unless you rework this to provide meaning and context it is, currently, simply without meaning. 

#5 Scope, again. Definition and purpose of the specific study will determine if this is of any import whatsoever. Many times, variables are modeled at the first order approximation, or ignored altogether if a researcher can make a determination they are likely not critical to the findings. Plainly, if we do not limit our need to control number of variables, we will forever be in a pool of changing conditions... lost peering into eddies of water, leafs, cloud, sun, birds on the horizon, frozen & apparently unable to start our controlled journey, when all we needed to do was note a strong continuous breeze for our sails, hoist, and begin...

#6-#11 are all similarly not ripe for discussion, as in #1-#5 until you have explicated to which studies you mean, and the specific issues you have with them. 

Please do not misunderstand the fact I stopped at #5 -- I am ENORMOUSLY willing to undertake dialog on this topic, but we must first be precise, in order to understand one another. No arm waving and generalities, if you please. 

DG 

I do not see the advantage of rehashing history.

There are many good alternatives. Simply go to the Guidelines section of my site. My own preference is using dividend and income approaches.

http://www.early-retirement-planning-insights.com/guidelines.html

Have fun.

John Walter Russell

 When directed to JWR's website which indicted 'prior researchers' and 'prior studies' as having 'avoided statistics' and therefore being 'invalid', I invited JWR to explain:

"...which studies you mean, and the specific issues you have with them."

 Here is the nub of his reply:

 JWR1945a  Post #2521688
I do not see the advantage of rehashing history.

That's exactly what I figured I would see.

QED. 

I was willing to invest whatever it took to carefully, fact by fact build until we obtain mutual clarity, but clearly that is not your goal. 

I don't begrudge you the perfect right to spout without reference to fact, but please do expect an occasional friendly "point of order" from time to time to make sure silence is not mistaken for acquiescence.

I only hope young investors just starting out will take a broad draw of available materials, and then parse it all using logic, common sense, and a skeptical eye to wild claims.

Signing off this thread,
 DS - sad but not surprised to see JWR refuse to rise to defend his written attacks on other's works. For those interested in learning about JWR's theories and past 'work', here is a link:

http://s162532268.onlinehome.us/Sewer/viewforum.php?f=1 

Post note: I think there is just too much using this "30 yr Period" and most are just Hoping and Wishing , while facts say otherwise for a Reality check..

1. I just read that only 7% of Americans lived beyond age 87

2. Ave age for men? age 78 ( 13 yrs after retiring at age 65 )

3. Of the one's that Do live Older? Are the Wealthy/Celberties, etc. who have Top $ health care available to them.

And Many of these so called Studies are done by those who have Hidden Agenda's and Want to Support Investing More into the Stock Market.. ( many are paid for by The Big Brokerage Houses )

If that Isn't true, then tell it to the Insurance Co.'s

If you live another 20 yrs? ( age 86 ) you just beat the High Odds against you..

and most by that age could care less were they live, since they are pretty much out of it by then anyway..