Author Topic: START worrying about the 4% rule  (Read 8079 times)

Le Barbu

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START worrying about the 4% rule
« on: August 04, 2017, 07:49:20 AM »
Because:

CAPE is high (in case you dont know it)
Market is expansive, especially in the US
Past performance is no guarantee of future results
You do no want to work for money ever after pulling the plug (as required by the IRP)
You may outlive your stash if your blessed with good health and/or luck
Inflation and healthcare cost can go through the roof
You did not find your inner badassity yet

This list is far from being exhaustive so, feel free to add your own concerns

***disclaimer, this post does not reflect the opinion of Le Barbu***





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Clean Shaven

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Re: START worrying about the 4% rule
« Reply #1 on: August 04, 2017, 07:54:00 AM »
From a market returns perspective, the future is going to be worse than anytime in the entire history of the United States market.

Clean Shaven

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Re: START worrying about the 4% rule
« Reply #2 on: August 04, 2017, 07:59:06 AM »
If you lower your WR to 2%, you guarantee that you will never run out of money in your stash, and guarantee that your retirement will never fail.

You also guarantee that your retirement will start many years later than if you use a higher WR, and you guarantee additional years working (and not retired).

At least you won't be able to worry about the 4% rule.

Lan Mandragoran

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Re: START worrying about the 4% rule
« Reply #3 on: August 04, 2017, 08:02:07 AM »
Go hide under a couch then :P.

Maybe your right, or maybe Trumparoni doesn't get us exploded, AI progresses quickly and doesnt go all SkyNet on us, and automation leads to a kind of wealth where even the low-middle class are kings of a few centuries prior(sound familiar).

Or much more likely, its somewhere in between.

You have to put your money somewhere. I do half in real-estate as a semi "controllable" asset, and half in index funds.  If market returns suck, get flexible yo ;).  If your already retired, isnt that how you got there? Being flexible, adaptable, and proficiently skilled to achieve the goals that you have decided upon?
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markbike528CBX

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Re: START worrying about the 4% rule
« Reply #4 on: August 04, 2017, 08:06:40 AM »
From a market returns perspective, the future is going to be worse than anytime in the entire history of the United States market, to extent that any 4% rule success scenarios are excluded.

*******discaimer-this does not reflect markbike528cbx's actual opinion.

Dicey

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Re: START worrying about the 4% rule
« Reply #5 on: August 04, 2017, 08:12:56 AM »
From a market returns perspective, the future is going to be worse than anytime in the entire history of the United States market.
Hey Clean Shaven, where'd you get your crystal ball? I'd like to order one or two for presents.*

Le Barbu, thanks for doing this. Alas, runewell has decided not to follow my suggestion. I wonder if runewell will actually manage to refrain from posting here as promised. Too bad. Might have been a more interesting discussion.

☆☆DISCLAIMER: This post does not reflect the opinion of Dicey either. Dicey is happily FIRE. Dicey is not an Acutary. Dicey is at peace with a tiny bit of uncertainty in exchange for freedom from the workday slog. Yes!☆☆

*Does anyone know when runewell's birthday is?
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Le Barbu

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Re: START worrying about the 4% rule
« Reply #6 on: August 04, 2017, 08:27:01 AM »
From a market returns perspective, the future is going to be worse than anytime in the entire history of the United States market.
Hey Clean Shaven, where'd you get your crystal ball? I'd like to order one or two for presents.*

Le Barbu, thanks for doing this. Alas, runewell has decided not to follow my suggestion. I wonder if runewell will actually manage to refrain from posting here as promised. Too bad. Might have been a more interesting discussion.

☆☆DISCLAIMER: This post does not reflect the opinion of Dicey either. Dicey is happily FIRE. Dicey is not an Acutary. Dicey is at peace with a tiny bit of uncertainty in exchange for freedom from the workday slog. Dicey is a badass Yes!☆☆

*Does anyone know when runewell's birthday is?

Corrected that for you

You gave me the idea and for now, this thread is indeed a lot more interesting than the other one that just became anoying lately!
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2Birds1Stone

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Re: START worrying about the 4% rule
« Reply #7 on: August 04, 2017, 08:27:19 AM »
Because:

CAPE is high (in case you dont know it)
Market is expansive, especially in the US
Past performance is no guarantee of future results
You do no want to work for money ever after pulling the plug (as required by the IRP)
You may outlive your stash if your blessed with good health and/or luck
Inflation and healthcare cost can go through the roof
You did not find your inner badassity yet

This list is far from being exhaustive so, feel free to add your own concerns

***disclaimer, this post does not reflect the opinion of Le Barbu***







The bolded is about the only thing correct in that post, and ironically it was an accident.
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Le Barbu

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Re: START worrying about the 4% rule
« Reply #8 on: August 04, 2017, 08:29:13 AM »
Because:

CAPE is high (in case you dont know it)
Market is expansive, especially in the US
Past performance is no guarantee of future results
You do no want to work for money ever after pulling the plug (as required by the IRP)
You may outlive your stash if your blessed with good health and/or luck
Inflation and healthcare cost can go through the roof
You did not find your inner badassity yet

This list is far from being exhaustive so, feel free to add your own concerns

***disclaimer, this post does not reflect the opinion of Le Barbu***







The bolded is about the only thing correct in that post, and ironically it was an accident.

Good catch 2B1S 😜
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markbike528CBX

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Re: START worrying about the 4% rule
« Reply #9 on: August 04, 2017, 08:41:14 AM »
***disclaimer, this post does not reflect the opinion of Le Barbu***. was also correct :-)

Le Barbu

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Re: START worrying about the 4% rule
« Reply #10 on: August 04, 2017, 08:50:36 AM »
Top was in 3 days ago
"The real reason this blog exists, is simply to save the entire human race from destroying itself through overconsumption of its own habitat"

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VoteCthulu

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Re: START worrying about the 4% rule
« Reply #11 on: August 04, 2017, 09:10:10 AM »
I find the inevitable heat death of the universe as the most convincing evidence that the 4% rule is bullocks.

Le Barbu

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Re: START worrying about the 4% rule
« Reply #12 on: August 04, 2017, 09:19:55 AM »
I find the inevitable heat death of the universe as the most convincing evidence that the 4% rule is bullocks.

This doom theory in not 100% sure to happen, especially considering the actual CAPE level. Be carefull with that kind of assumption!
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ChpBstrd

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Re: START worrying about the 4% rule
« Reply #13 on: August 04, 2017, 10:03:19 AM »
Here you go. Problem solved. No more excuses to sit out the market or, even worse, buy treasuries.


https://www.optionsplaybook.com/option-strategies/collar-option/

Clean Shaven

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Re: START worrying about the 4% rule
« Reply #14 on: August 04, 2017, 11:47:24 AM »
I find the inevitable heat death of the universe as the most convincing evidence that the 4% rule is bullocks.

This doom theory in not 100% sure to happen, especially considering the actual CAPE level. Be carefull with that kind of assumption!

I wouldn't pick sides against Cthulu.  He has the upper hand tentacle. 

MrMoogle

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Re: START worrying about the 4% rule
« Reply #15 on: August 04, 2017, 01:51:53 PM »
We are at the market's peak!  A crash has to come soon to get us back to average.  And of course, retiring right before a major crash is the only time the 4% rule fails.

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GenXbiker

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Re: START worrying about the 4% rule
« Reply #16 on: August 04, 2017, 02:12:34 PM »
You also guarantee that your retirement will start many years later than if you use a higher WR, and you guarantee additional years working (and not retired).
That's true unless you're almost ready to FIRE on 4% with enough stache to cover a 2% WR.   My FIRE timeline is 22 months at 4% WR, but I could get by with a 2% WR without any further delay.   But, I'm planning 4% just for the larger cushion each month.

GenXbiker

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Re: START worrying about the 4% rule
« Reply #17 on: August 04, 2017, 02:14:26 PM »
We are at the market's peak!  A crash has to come soon to get us back to average.  And of course, retiring right before a major crash is the only time the 4% rule fails.
Yeah, I think I'll wait until right "after" a major crash. :D

VoteCthulu

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Re: START worrying about the 4% rule
« Reply #18 on: August 04, 2017, 03:48:48 PM »
I find the inevitable heat death of the universe as the most convincing evidence that the 4% rule is bullocks.

This doom theory in not 100% sure to happen, especially considering the actual CAPE level. Be carefull with that kind of assumption!

I wouldn't pick sides against Cthulu.  He has the upper hand tentacle.
That's right, I might cause the death of the universe long before its inevitable decay, but either way the 4% rule won't survive the extinction of all life.

respond2u

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Re: START worrying about the 4% rule
« Reply #19 on: August 04, 2017, 11:48:56 PM »
Because:
...
This list is far from being exhaustive so, feel free to add your own concerns
...


I worry about it because
 - it's not a rule
 - was tested for only a 30 year retirement.

And
 - The odds of me getting a job get worse during an epic economy fail especially with time out of work.
 - I don't want to burden others more than I already do (ACA subsidy) if my money runs out.

None of those concerns have anything to do with the current state of the stock market.






Dicey

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Re: START worrying about the 4% rule
« Reply #20 on: August 05, 2017, 08:08:18 AM »
Because:
...
This list is far from being exhaustive so, feel free to add your own concerns
...


I worry about it because
 - it's not a rule
 - was tested for only a 30 year retirement.

And
 - The odds of me getting a job get worse during an epic economy fail especially with time out of work.
 - I don't want to burden others more than I already do (ACA subsidy) if my money runs out.

None of those concerns have anything to do with the current state of the stock market.
If you're worried about an "epic economy fail", this guy has a ton of useful thoughts and hacks. Better to take actionable steps than worry about things you can't control or embrace skepticism of the 4% rule.

https://granolashotgun.com


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Laserjet3051

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Re: START worrying about the 4% rule
« Reply #21 on: August 05, 2017, 10:43:32 AM »
Irrespective of outcome, worrying about ANYTHING is pointless and self-destructive.

No thank you. Today is a wonderful day to be alive.

Clean Shaven

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Re: START worrying about the 4% rule
« Reply #22 on: August 05, 2017, 10:55:13 AM »
Why I should worry about the 4% rule: because I'm a 45 year old male, and my life expectancy is 34 years. 
https://www.ssa.gov/oact/STATS/table4c6.html

The 4% rule says I might see a failure if I FIRE right now, with only a miniscule 95% chance of success over the next 30-year period.  To be safe, I'd better reduce my remaining lifespan, and work another 10 years until I'm 55, because my life expectancy at 55 is 25 years.  Only then does the 4% rule guarantee safety for me, as it has never failed over a 25-year period, and I'll be dead by the end of it.  The only thing I have to sacrifice in exchange for that safety is the next decade of my life, but whatevs.  It's better than taking any risk of failure of the 4% rule, amirite?
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Dicey

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Re: START worrying about the 4% rule
« Reply #23 on: August 05, 2017, 11:14:46 AM »
Irrespective of outcome, worrying about ANYTHING is pointless and self-destructive.

No thank you. Today is a wonderful day to be alive.
Oh, hell yes! But then, I strongly suspect neither of us are Actuaries!
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Mr. Green

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Re: START worrying about the 4% rule
« Reply #24 on: August 05, 2017, 12:52:19 PM »
I'm really confused by this whole thread. Is the whole thing sarcasm?
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Clean Shaven

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Re: START worrying about the 4% rule
« Reply #25 on: August 05, 2017, 12:56:37 PM »
I'm really confused by this whole thread. Is the whole thing sarcasm?

Pretty much.  It's a response to runewill's comments in this thread:
https://forum.mrmoneymustache.com/investor-alley/stop-worrying-about-the-4-rule/

Mighty-Dollar

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Re: START worrying about the 4% rule
« Reply #26 on: August 05, 2017, 03:09:41 PM »
The stock market went up another 75% after Alan Greespan's "irrational exuberance speech".

If you sat out all of 1987 (when we had the 33% stock market crash) then you pretty much broke even and had to prematurely pay capital gains taxes.

From 2000 to present bonds have outperformed stocks. At some point there has to be a return to the mean average. Since 1928 stocks have outperformed bonds by about 2 - 1.

The 4% rule is still holding up fine since 2000. With a 30/70 stock/ bond mix your portfolio is up about 16% even while taking out 4% per year pegged to inflation.

Le Barbu

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Re: START worrying about the 4% rule
« Reply #27 on: August 05, 2017, 04:36:30 PM »
I'm really confused by this whole thread. Is the whole thing sarcasm?

I was just so tired to read steriles replies between posters about why we should worry about the 4% in the "Stop worrying about the 4% rule" thread. Runewell declined an offer to start this thread so I did it myself. Now, if anyone worry about the 4% rule, this is the place. Sarcastic or not, every reason why the 4% rule is not safe belong here!
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maizeman

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Re: START worrying about the 4% rule
« Reply #28 on: August 05, 2017, 04:50:47 PM »
If I was going to worry about the 4% rule, I'd worry about the potential for the invention of very effective but very expensive life extension technologies sometime between when I FIRE and when I kick the bucket.

I'd also worry that for folks with lots of dollar denominated assets, we're overdue for some significant inflation. The one big difference between the national debt situation in the USA and the debt crises in countries like Italy and Spain is that we have the ability to inflate our way out of debt. But if we do that, it'll be a bloodbath for folks heavily invested in bonds or CDs.

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Le Barbu

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Re: START worrying about the 4% rule
« Reply #29 on: August 05, 2017, 05:36:20 PM »
Any concern expressed here may occur, who knows?

Worrying does not change anything...
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GenXbiker

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Re: START worrying about the 4% rule
« Reply #30 on: August 05, 2017, 08:07:59 PM »
Why I should worry about the 4% rule: because I'm a 45 year old male, and my life expectancy is 34 years. 
https://www.ssa.gov/oact/STATS/table4c6.html

The 4% rule says I might see a failure if I FIRE right now, with only a miniscule 95% chance of success over the next 30-year period.  To be safe, I'd better reduce my remaining lifespan, and work another 10 years until I'm 55, because my life expectancy at 55 is 25 years.  Only then does the 4% rule guarantee safety for me, as it has never failed over a 25-year period, and I'll be dead by the end of it.  The only thing I have to sacrifice in exchange for that safety is the next decade of my life, but whatevs.  It's better than taking any risk of failure of the 4% rule, amirite?
https://www.bogleheads.org/wiki/File:TrinityTable3.jpg
About half of 55 year olds are expected to live longer than 25 years.  You need to plan for the worst/best case.

Le Barbu

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Re: START worrying about the 4% rule
« Reply #31 on: August 05, 2017, 08:42:28 PM »
Why I should worry about the 4% rule: because I'm a 45 year old male, and my life expectancy is 34 years. 
https://www.ssa.gov/oact/STATS/table4c6.html

The 4% rule says I might see a failure if I FIRE right now, with only a miniscule 95% chance of success over the next 30-year period.  To be safe, I'd better reduce my remaining lifespan, and work another 10 years until I'm 55, because my life expectancy at 55 is 25 years.  Only then does the 4% rule guarantee safety for me, as it has never failed over a 25-year period, and I'll be dead by the end of it.  The only thing I have to sacrifice in exchange for that safety is the next decade of my life, but whatevs.  It's better than taking any risk of failure of the 4% rule, amirite?
https://www.bogleheads.org/wiki/File:TrinityTable3.jpg
About half of 55 year olds are expected to live longer than 25 years.  You need to plan for the worst/best case.

Thats 50% chances to live less than 25 years...
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Clean Shaven

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Re: START worrying about the 4% rule
« Reply #32 on: August 05, 2017, 10:08:15 PM »
Time to start spending! #yolo

Retire-Canada

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Re: START worrying about the 4% rule
« Reply #33 on: August 06, 2017, 09:27:38 AM »
Start worrying about the 4% WR rule because you probably worked far too much and gave up the most valuable resource you have, time, for money you didn't need.

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Re: START worrying about the 4% rule
« Reply #34 on: August 06, 2017, 10:04:26 AM »
Has anyone suggested to runewell to petition Pete to change the motto on his site from "Financial Freedom through Badassity" to "Financial Slavery through Functionally Useless Worrying and Doom-and-Gloom Application of Statistics"?

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Le Barbu

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Re: START worrying about the 4% rule
« Reply #35 on: August 06, 2017, 10:40:34 AM »
Has anyone suggested to runewell to petition Pete to change the motto on his site from "Financial Freedom through Badassity" to "Financial Slavery through Functionally Useless Worrying and Doom-and-Gloom Application of Statistics"?

** Disclaimer:  It is a beautiful day to be alive, I am FIREd, and my plan is 100% guaranteed to succeed.  No, really. **

That would be the next logical step following the actual thread in wich Runewell did not participated, yet...

The MMM entire site is dedicated to get off the threadmill and how fun and easy it is...

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AdrianC

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Re: START worrying about the 4% rule
« Reply #36 on: August 06, 2017, 10:49:22 AM »
Inflation and healthcare cost can go through the roof

Healthcare cost inflation is a genuine concern. Those of us approaching FIRE in the USA and not covered by a group plan need to be sure we've built in a safety margin for healthcare costs. I demonstrated how I did it in the "Stop worrying about the 4% rule" thread here:

https://forum.mrmoneymustache.com/investor-alley/stop-worrying-about-the-4-rule/msg1649407/#msg1649407

I'd be interested in hearing how others have done it or plan to do it.

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Re: START worrying about the 4% rule
« Reply #37 on: August 06, 2017, 11:14:53 AM »
The MMM entire site is dedicated to get off the threadmill and how fun and easy it is...

Précisément.
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frugaldoc

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Re: START worrying about the 4% rule
« Reply #38 on: August 06, 2017, 01:06:45 PM »
Inflation and healthcare cost can go through the roof

Healthcare cost inflation is a genuine concern. Those of us approaching FIRE in the USA and not covered by a group plan need to be sure we've built in a safety margin for healthcare costs. I demonstrated how I did it in the "Stop worrying about the 4% rule" thread here:

https://forum.mrmoneymustache.com/investor-alley/stop-worrying-about-the-4-rule/msg1649407/#msg1649407

I'd be interested in hearing how others have done it or plan to do it.

I do not see a reasonable way to hedge against health care costs. The problem is as you approach medicare age the premiums are going up much higher than inflation, while at the same time you are statistically more likely to get serious medical problems which incur large out of pocket expenses. You can eat kale 3 times a day and ride your bike everywhere, but you still may get cancer or MS or need expensive surgery when you are in your 50s. It also may be difficult to go back to work when you are sick.

Having 10k out of pocket medical costs per year when you are living off 25k is a real problem for the 4% rule. You can either accept the risk or save more, only two options really.
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Le Barbu

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Re: START worrying about the 4% rule
« Reply #39 on: August 06, 2017, 02:32:56 PM »
Inflation and healthcare cost can go through the roof

Healthcare cost inflation is a genuine concern. Those of us approaching FIRE in the USA and not covered by a group plan need to be sure we've built in a safety margin for healthcare costs. I demonstrated how I did it in the "Stop worrying about the 4% rule" thread here:

https://forum.mrmoneymustache.com/investor-alley/stop-worrying-about-the-4-rule/msg1649407/#msg1649407

I'd be interested in hearing how others have done it or plan to do it.

I do not see a reasonable way to hedge against health care costs. The problem is as you approach medicare age the premiums are going up much higher than inflation, while at the same time you are statistically more likely to get serious medical problems which incur large out of pocket expenses. You can eat kale 3 times a day and ride your bike everywhere, but you still may get cancer or MS or need expensive surgery when you are in your 50s. It also may be difficult to go back to work when you are sick.

Having 10k out of pocket medical costs per year when you are living off 25k is a real problem for the 4% rule. You can either accept the risk or save more, only two options really.

Does investing in the healthcare sector would help hedging against health care costs?

Sure, older people have increased probability to spend higher % of their COL on healthcare. This is not directly related to retirement. In fact, if you are retired, there is more opportunity to stay in shape, get exercice everyday, cook and eat well etc. You can get struck by cancer or other serious health problem but on average, being retired or even just FI can help a lot.

Also, when forcasting future COL, we can factor in many aspects like travels, healthcare, having someone to take care of, selling the house, going out more or less, etc. Then, this is the spending that should be accounted for the 4% rule. Not our actual spending or the one at -1 day before retirement.

As an example, my actual stash x4% would be enough for me if no kids to support and a smaller place to live. This is not going to happen before 7-8 years. At this point, when kids go on their own and we move from our actual place, we could probably live by the Runewell rule (somewere between 3.25-3.75%) but who know where the CAPE will be then?
"The real reason this blog exists, is simply to save the entire human race from destroying itself through overconsumption of its own habitat"

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respond2u

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Re: START worrying about the 4% rule
« Reply #40 on: August 06, 2017, 07:18:55 PM »
Because:
...
This list is far from being exhaustive so, feel free to add your own concerns
...


I worry about it because
 - it's not a rule
 - was tested for only a 30 year retirement.

And
 - The odds of me getting a job get worse during an epic economy fail especially with time out of work.
 - I don't want to burden others more than I already do (ACA subsidy) if my money runs out.

None of those concerns have anything to do with the current state of the stock market.
If you're worried about an "epic economy fail", this guy has a ton of useful thoughts and hacks. Better to take actionable steps than worry about things you can't control or embrace skepticism of the 4% rule.

https://granolashotgun.com

Ha! I'm not that worried...

My actionable response to my blasphemy in not believing the 4% rule was simply to rein in my thoughtless spending, as befitting a site that speaks of "Financial Freedom through Badassity".





LAGuy

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Re: START worrying about the 4% rule
« Reply #41 on: August 06, 2017, 08:35:28 PM »
Because:

CAPE is high (in case you dont know it)
Market is expansive, especially in the US
Past performance is no guarantee of future results
You do no want to work for money ever after pulling the plug (as required by the IRP)
You may outlive your stash if your blessed with good health and/or luck
Inflation and healthcare cost can go through the roof
You did not find your inner badassity yet

This list is far from being exhaustive so, feel free to add your own concerns

***disclaimer, this post does not reflect the opinion of Le Barbu***

The things you listed would make me worry about a 6% withdrawal rate. Remember, 4% withdrawal is worst case scenario. So, to redo your list, here's things that would get me worrying about the 4% rule:

Global Pandemic
World War
Worldwide Famine
Massive Energy Shortage
Alien Invasion

Anything I forget?

Le Barbu

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Re: START worrying about the 4% rule
« Reply #42 on: August 06, 2017, 09:21:34 PM »
Because:

CAPE is high (in case you dont know it)
Market is expansive, especially in the US
Past performance is no guarantee of future results
You do no want to work for money ever after pulling the plug (as required by the IRP)
You may outlive your stash if your blessed with good health and/or luck
Inflation and healthcare cost can go through the roof
You did not find your inner badassity yet

This list is far from being exhaustive so, feel free to add your own concerns

***disclaimer, this post does not reflect the opinion of Le Barbu***

The things you listed would make me worry about a 6% withdrawal rate. Remember, 4% withdrawal is worst case scenario. So, to redo your list, here's things that would get me worrying about the 4% rule:

Global Pandemic
World War
Worldwide Famine
Massive Energy Shortage
Alien Invasion

Anything I forget?

If one of this happen, we will not be worrying about the 4% rule anyway but about some serious stuff
"The real reason this blog exists, is simply to save the entire human race from destroying itself through overconsumption of its own habitat"

-MMM

runewell

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Re: START worrying about the 4% rule
« Reply #43 on: August 07, 2017, 07:59:26 AM »
Remember, 4% withdrawal is worst case scenario.

Nonsense, how is 5% of the time a worst case scenario?
And why are there many articles that do not support 4%?
« Last Edit: August 07, 2017, 08:14:29 AM by runewell »
Please leave Dicey out of this! Have you not been paying any attention? Trolls are not welcome here!

MrMoogle

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Re: START worrying about the 4% rule
« Reply #44 on: August 07, 2017, 08:17:26 AM »
Does investing in the healthcare sector would help hedging against health care costs?

Sure, older people have increased probability to spend higher % of their COL on healthcare. This is not directly related to retirement. In fact, if you are retired, there is more opportunity to stay in shape, get exercice everyday, cook and eat well etc. You can get struck by cancer or other serious health problem but on average, being retired or even just FI can help a lot.
The healthcare index fund would have get the healthcare inflation + ~7% each year for this to work.  It's definitely not getting this. 

The average Joe is getting more healthcare and therefore spends more, so the average cost goes up, therefore premiums go up.  In order to reverse this trend, the majority of people would have to get less, not just us.  So even if you are a perfect healthy specimen, you're paying more than you were 10 years ago.

I do have some ambiguous concern about another Obamacare event after I retire, something that drastically changes your planned expenses.  If you retired in the early 2000's and were planning on using catastrophic only health insurance, then your healthcare expenses could have drastically (depending on your income) increased after Obamacare.  Whether it's good or bad for the country, that can be discussed elsewhere, but for some early retirees it could have caused trouble.

The two times I've had major health problems I was the fittest and eating the healthiest I had in my whole life.  There's only so much those things can do.  I'm probably a bit unlucky, but still.

runewell

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Re: START worrying about the 4% rule
« Reply #45 on: August 07, 2017, 08:19:08 AM »
My actionable response to my blasphemy in not believing the 4% rule was simply to rein in my thoughtless spending, as befitting a site that speaks of "Financial Freedom through Badassity".

That begs the question, "Why isn't your thoughtless spending should already be reined in?" 
Answer: "Because my plans for retirement included thoughtless spending"

Then the 5% (or more or less) scenario occurs.

"I'm reining in my thoughtless spending, as befitting a site that speaks of Financial Freedom through Badassity."
Translation: "The retirement I really wanted is gone now."

You'll probably survive with a cushion and Mustachian ways, but I would still consider that a failed retirement.
Please leave Dicey out of this! Have you not been paying any attention? Trolls are not welcome here!

Retire-Canada

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Re: START worrying about the 4% rule
« Reply #46 on: August 07, 2017, 08:25:47 AM »
You'll probably survive with a cushion and Mustachian ways, but I would still consider that a failed retirement.

Working extra years at the prime of your life chasing after a small % risk is a failed retirement in my opinion. If you are down to a 4-5% failure rate in cFIREsim and are not satisfied with that level of risk you have other issues besides actually running out of money you need to deal with.

frugaldoc

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Re: START worrying about the 4% rule
« Reply #47 on: August 07, 2017, 08:39:46 AM »
Investing in health care stocks is not a good hedge because health care costs and insurance costs dramatically rise as your age increases. Health care stocks are not correlated with personal health care costs which can be massive. Insurance is really the only way to hedge against potential catastrophic expenses. My issue is that the cost of insurance massively increases as well (and most of the insurance that is affordable without massive subsidies has very high out of pocket costs/deductible). Working in health care I see the effects of this on peoples finances. It's tragic really.
http://thehappyphilosopher.com/
Enlightened Awesomeness - A Guide to Freedom and Happiness

MrMoogle

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Re: START worrying about the 4% rule
« Reply #48 on: August 07, 2017, 08:48:51 AM »
Remember, 4% withdrawal is worst case scenario.

Nonsense, how is 5% of the time a worst case scenario?
And why are there many articles that do not support 4%?
The only articles I've seen that do not support the 4% rule have one of these two assumptions:
  • You're paying 1+% expense ratios
  • The future is going to be drastically worse than any time in the last ~130 years for both the US and the world

If you've spent enough time on here, you know that 1 is ridiculous for us.
2 is possible, but pessimistic, and has no bottom.  If you're planning on the theoretically worst case, you can never retire.

BNgarden

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Re: START worrying about the 4% rule
« Reply #49 on: August 07, 2017, 09:27:15 AM »
Working extra years at the prime of your life chasing after a small % risk is a failed retirement in my opinion. If you are down to a 4-5% failure rate in cFIREsim and are not satisfied with that level of risk you have other issues besides actually running out of money you need to deal with.

+1
« Last Edit: August 07, 2017, 09:29:22 AM by BNgarden »