Author Topic: Stop worrying about the 4% rule  (Read 810719 times)

tooqk4u22

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Re: Stop worrying about the 4% rule
« Reply #1850 on: August 19, 2020, 09:48:15 PM »
FS is to Clickbait as Me taking a dump is to toilet paper.

He is so awful now, and I will admit that i felt earlier on that he did provide a good and reasonable alternative view point, sort of the anti-MMM (I think I may have posted something along these lines many many years ago), and still I think his earlier stuff wasn't bad.....it decidedly wasn't MMM but it still had merit for those that wanted to have a more spendy lifestyle.   The math is the math regardless of if you live on $40k or $400k so early on I felt he was a counterpoint to frugal but still required accountability to "hey if you want to spend this, then you need this."   

Also, if I recall he put forth his market expectations for the next year and then at the end of the year recapped them....and a lot of the times they were fairly in line.  But that was awhile ago, I haven't read his blog in years because it got so off base, ad generating, and clickbaity.  MMM has gotten off base, ad generating and clickbaity too but at least his posts are month(s) apart!


EscapeVelocity2020

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Re: Stop worrying about the 4% rule
« Reply #1851 on: August 19, 2020, 10:20:44 PM »
I agree @tooqk4u22, I used to read a bit of Financial Samurai but I'm not making that mistake again to think he's still posting anything insightful. 

nereo

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Re: Stop worrying about the 4% rule
« Reply #1852 on: August 21, 2020, 05:10:07 AM »
Somewhere along the line Sam/Financial Samuri went from writing quality articles to click-bait trash.  His early approach was to use math to make sense of finances and retirement.  Now his posts are littered with mathematical mistakes that I can only describe them as gross-negligence.  And he doesnt’ seem to care.  His articles are the epitome of confirmation bias - he starts with some conclusion (that will get clicks) and then cherry-picks odd datasets that will help him reach that conclusion.,

He monetized his blog Right around when he decided that he was bored with FIRE and didn’t like the ‘constraints’ of living off a couple million in a HCOL (SF Bay) area.

Malcat

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Re: Stop worrying about the 4% rule
« Reply #1853 on: August 21, 2020, 05:47:17 AM »
Somewhere along the line Sam/Financial Samuri went from writing quality articles to click-bait trash.  His early approach was to use math to make sense of finances and retirement.  Now his posts are littered with mathematical mistakes that I can only describe them as gross-negligence.  And he doesnt’ seem to care.  His articles are the epitome of confirmation bias - he starts with some conclusion (that will get clicks) and then cherry-picks odd datasets that will help him reach that conclusion.,

He monetized his blog Right around when he decided that he was bored with FIRE and didn’t like the ‘constraints’ of living off a couple million in a HCOL (SF Bay) area.

I've said this before when Samurai gets brought up, what I think is unfortunate is that what's driving his crap is really worth discussing.

This guy did it, he managed to FIRE, and yet, he's not happy with it and he finds its not enough, and would rather turn the fire hose of cash back on because working for him is better than living frugally compared to those around him.

He's basically the opposite of MMM who FIRED on far less, built a really exciting and rich life, ended up with massive amounts of extra money, and still really enjoys his frugal lifestyle.

But what made one of them FIRE into his best life and the other feel so let down by the whole experience? What's the cautionary tale here? I'm really quite fascinated by the whole thing, but now that he's just writing nonsense click-bait, it's hard to parse anything meaningful behind it.

It's really too bad, because I think there would be a lot of value in seeing inside why FIRE doesn't work out for some people.

nereo

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Re: Stop worrying about the 4% rule
« Reply #1854 on: August 21, 2020, 07:24:12 AM »
Somewhere along the line Sam/Financial Samuri went from writing quality articles to click-bait trash.  His early approach was to use math to make sense of finances and retirement.  Now his posts are littered with mathematical mistakes that I can only describe them as gross-negligence.  And he doesnt’ seem to care.  His articles are the epitome of confirmation bias - he starts with some conclusion (that will get clicks) and then cherry-picks odd datasets that will help him reach that conclusion.,

He monetized his blog Right around when he decided that he was bored with FIRE and didn’t like the ‘constraints’ of living off a couple million in a HCOL (SF Bay) area.

I've said this before when Samurai gets brought up, what I think is unfortunate is that what's driving his crap is really worth discussing.

This guy did it, he managed to FIRE, and yet, he's not happy with it and he finds its not enough, and would rather turn the fire hose of cash back on because working for him is better than living frugally compared to those around him.

He's basically the opposite of MMM who FIRED on far less, built a really exciting and rich life, ended up with massive amounts of extra money, and still really enjoys his frugal lifestyle.

But what made one of them FIRE into his best life and the other feel so let down by the whole experience? What's the cautionary tale here? I'm really quite fascinated by the whole thing, but now that he's just writing nonsense click-bait, it's hard to parse anything meaningful behind it.

It's really too bad, because I think there would be a lot of value in seeing inside why FIRE doesn't work out for some people.

I see what you see, poster formerly known as Malkynn.  And the juxtaposition between Pete and Sam does fascinate me as well.
But where I really get angry at Financial Samuri is what I call blogging malpractice - using absolutely ludicrous data to prove his point*.

Here's just one example:  In his case for why a FIREd couple with one toddler cannot live comfortably on 'just' $200k/year of investment income, he inexplicably i) ignored forever $750k in retirement accounts as 'inaccessable', ii) calculated $24k/year in college savings forever and iii) assumed over $10k for child care forever.  Ironically his sample 'budget' showed a slight surplus despite a huge amount of fat.  What's head-smackingly ridiculous (and why I call it "financial-blogging malpractice") is that these calculations assume $504k invested towards higher education, the assumption that two adults with no jobs still need considerable childcare (and that childcare will not go away in a few years when toddler goes to elementary school) and that, even at 15 years later that $750k in retirement accounts should be meaningless (at a minimum it makes saving $504k for your only child's college fund a bit redundant, no?)

And that's just one example.  As Telecaster and others have pointed out, he's made a recent habit of using math to obfuscate rather than enlighten.

Malcat

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Re: Stop worrying about the 4% rule
« Reply #1855 on: August 21, 2020, 07:29:02 AM »
Somewhere along the line Sam/Financial Samuri went from writing quality articles to click-bait trash.  His early approach was to use math to make sense of finances and retirement.  Now his posts are littered with mathematical mistakes that I can only describe them as gross-negligence.  And he doesnt’ seem to care.  His articles are the epitome of confirmation bias - he starts with some conclusion (that will get clicks) and then cherry-picks odd datasets that will help him reach that conclusion.,

He monetized his blog Right around when he decided that he was bored with FIRE and didn’t like the ‘constraints’ of living off a couple million in a HCOL (SF Bay) area.

I've said this before when Samurai gets brought up, what I think is unfortunate is that what's driving his crap is really worth discussing.

This guy did it, he managed to FIRE, and yet, he's not happy with it and he finds its not enough, and would rather turn the fire hose of cash back on because working for him is better than living frugally compared to those around him.

He's basically the opposite of MMM who FIRED on far less, built a really exciting and rich life, ended up with massive amounts of extra money, and still really enjoys his frugal lifestyle.

But what made one of them FIRE into his best life and the other feel so let down by the whole experience? What's the cautionary tale here? I'm really quite fascinated by the whole thing, but now that he's just writing nonsense click-bait, it's hard to parse anything meaningful behind it.

It's really too bad, because I think there would be a lot of value in seeing inside why FIRE doesn't work out for some people.

I see what you see, poster formerly known as Malkynn.  And the juxtaposition between Pete and Sam does fascinate me as well.
But where I really get angry at Financial Samuri is what I call blogging malpractice - using absolutely ludicrous data to prove his point*.

Here's just one example:  In his case for why a FIREd couple with one toddler cannot live comfortably on 'just' $200k/year of investment income, he inexplicably i) ignored forever $750k in retirement accounts as 'inaccessable', ii) calculated $24k/year in college savings forever and iii) assumed over $10k for child care forever.  Ironically his sample 'budget' showed a slight surplus despite a huge amount of fat.  What's head-smackingly ridiculous (and why I call it "financial-blogging malpractice") is that these calculations assume $504k invested towards higher education, the assumption that two adults with no jobs still need considerable childcare (and that childcare will not go away in a few years when toddler goes to elementary school) and that, even at 15 years later that $750k in retirement accounts should be meaningless (at a minimum it makes saving $504k for your only child's college fund a bit redundant, no?)

And that's just one example.  As Telecaster and others have pointed out, he's made a recent habit of using math to obfuscate rather than enlighten.

Agreed, what he's resorted to is really tragic, since he's decided in his rejection of FIRE, to also reject his own usefulness to others and absolutely destroy his own legacy.

Truly fascinating.

SwordGuy

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Re: Stop worrying about the 4% rule
« Reply #1856 on: August 21, 2020, 07:55:38 AM »
I thought it was bad when FS turned into a clickbait whore of an author.

But getting all WHINY about it was the last straw for me.   

I can't abide whiny people -- they bring out my inner Lizzie Borden -- and especially whiny rich people who whine about how poor they are.

It's pretty clear he wants to hang out with "the VIPs" and can't pull it off on his budget.

Everyone has an ego and everyone attaches that ego to something that makes them feel good about themselves.    It's real important to learn what your ego is attached to and move it to something else if that location isn't good for you.

vand

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Re: Stop worrying about the 4% rule
« Reply #1857 on: August 24, 2020, 05:00:38 AM »
While we debate and with each other disagree about plenty of stuff on these boards, I think we are all united in saying that FS has morphed into a less than worthless piece of unprintable trash whose current articles are a disingenuous, misleading, trolling-baiting shitshow.

Normally I would say "good luck to the guy" but on this occasion if it were possible I would have him blacklisted from the personal finance community.
« Last Edit: August 24, 2020, 05:03:05 AM by vand »

nereo

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Re: Stop worrying about the 4% rule
« Reply #1858 on: August 24, 2020, 10:22:01 AM »
While we debate and with each other disagree about plenty of stuff on these boards, I think we are all united in saying that FS has morphed into a less than worthless piece of unprintable trash whose current articles are a disingenuous, misleading, trolling-baiting shitshow.

Normally I would say "good luck to the guy" but on this occasion if it were possible I would have him blacklisted from the personal finance community.

A rare moment when I'm in full agreement with you @vand
:-)

AdrianC

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Re: Stop worrying about the 4% rule
« Reply #1859 on: September 30, 2020, 11:02:24 AM »
Bill Bengen Revisits The 4% Rule Using Shiller's CAPE Ratio, Michael Kitces's Research
https://www.fa-mag.com/news/choosing-the-highest--safe--withdrawal-rate-at-retirement-57731.html?section=40

"In summary, based on the earlier work of Michael Kitces, I have presented a tabular method to select an initial withdrawal rate for retirement portfolios, based on both recent inflation and stock market valuations. It exhibits a wide range of choices, between the “worst case” of 4.5% and a high of 13%, representing the full range of historically successful withdrawal rates. It is simple to use, though right now it applies only to tax-advantaged portfolios with a desired longevity of 30 years."

Monkey Uncle

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Re: Stop worrying about the 4% rule
« Reply #1860 on: September 30, 2020, 06:40:27 PM »
Bill Bengen Revisits The 4% Rule Using Shiller's CAPE Ratio, Michael Kitces's Research
https://www.fa-mag.com/news/choosing-the-highest--safe--withdrawal-rate-at-retirement-57731.html?section=40

"In summary, based on the earlier work of Michael Kitces, I have presented a tabular method to select an initial withdrawal rate for retirement portfolios, based on both recent inflation and stock market valuations. It exhibits a wide range of choices, between the “worst case” of 4.5% and a high of 13%, representing the full range of historically successful withdrawal rates. It is simple to use, though right now it applies only to tax-advantaged portfolios with a desired longevity of 30 years."

O.K., so I read through very quickly, and may be missing something.  But at first glance it appears that he is basing everything on CAPE values from 1926 through 1990.  CAPE behaves totally differently now that it did then.  He is considering a CAPE value over 20 to be overvalued.  Since the early 1990s, CAPE has only dipped below 20 during the Great Recession of 2008-09.  It appears that he makes no acknowledgement of the huge change in behavior of CAPE in the last 30 years.  Of course, if it were possible to take this change into account, it would argue for even greater withdrawal rates.  So perhaps he is being conservative.  But still, I have trouble giving the analysis much credence when he doesn't even acknowledge the fact that his metric of choice has been wildly inconsistent over the decades.

TomTX

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Re: Stop worrying about the 4% rule
« Reply #1861 on: October 01, 2020, 04:58:15 AM »
Bill Bengen Revisits The 4% Rule Using Shiller's CAPE Ratio, Michael Kitces's Research
https://www.fa-mag.com/news/choosing-the-highest--safe--withdrawal-rate-at-retirement-57731.html?section=40

"In summary, based on the earlier work of Michael Kitces, I have presented a tabular method to select an initial withdrawal rate for retirement portfolios, based on both recent inflation and stock market valuations. It exhibits a wide range of choices, between the “worst case” of 4.5% and a high of 13%, representing the full range of historically successful withdrawal rates. It is simple to use, though right now it applies only to tax-advantaged portfolios with a desired longevity of 30 years."

O.K., so I read through very quickly, and may be missing something.  But at first glance it appears that he is basing everything on CAPE values from 1926 through 1990.  CAPE behaves totally differently now that it did then.  He is considering a CAPE value over 20 to be overvalued.  Since the early 1990s, CAPE has only dipped below 20 during the Great Recession of 2008-09.  It appears that he makes no acknowledgement of the huge change in behavior of CAPE in the last 30 years.  Of course, if it were possible to take this change into account, it would argue for even greater withdrawal rates.  So perhaps he is being conservative.  But still, I have trouble giving the analysis much credence when he doesn't even acknowledge the fact that his metric of choice has been wildly inconsistent over the decades.

Modern GAAP accounting has noticeably tightened down in recent decades - with the likely effect of pushing down reported earnings compared to how they were reported historically.  "Earnings" reported today are significantly different than how the same exact operation would have reported earnings in 1985.

Unless these changes are accounted for, CAPE is questionable and would tend to report higher values in more recent years.

Retire-Canada

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Re: Stop worrying about the 4% rule
« Reply #1862 on: October 01, 2020, 08:22:23 AM »
Unless these changes are accounted for, CAPE is questionable and would tend to report higher values in more recent years.


Yes. This article is worth a read if the topic interests you. It discusses CAPE, the change in accounting methods and the likelihood of reversion to historical mean levels.

http://www.philosophicaleconomics.com/2013/12/shiller/

AdrianC

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Re: Stop worrying about the 4% rule
« Reply #1863 on: October 06, 2020, 09:43:13 AM »
Bill Bengen Revisits The 4% Rule Using Shiller's CAPE Ratio, Michael Kitces's Research
https://www.fa-mag.com/news/choosing-the-highest--safe--withdrawal-rate-at-retirement-57731.html?section=40

"In summary, based on the earlier work of Michael Kitces, I have presented a tabular method to select an initial withdrawal rate for retirement portfolios, based on both recent inflation and stock market valuations. It exhibits a wide range of choices, between the “worst case” of 4.5% and a high of 13%, representing the full range of historically successful withdrawal rates. It is simple to use, though right now it applies only to tax-advantaged portfolios with a desired longevity of 30 years."

O.K., so I read through very quickly, and may be missing something.  But at first glance it appears that he is basing everything on CAPE values from 1926 through 1990.  CAPE behaves totally differently now that it did then.  He is considering a CAPE value over 20 to be overvalued.  Since the early 1990s, CAPE has only dipped below 20 during the Great Recession of 2008-09.  It appears that he makes no acknowledgement of the huge change in behavior of CAPE in the last 30 years.  Of course, if it were possible to take this change into account, it would argue for even greater withdrawal rates.  So perhaps he is being conservative.  But still, I have trouble giving the analysis much credence when he doesn't even acknowledge the fact that his metric of choice has been wildly inconsistent over the decades.
On the flip side, half his example portfolio is intermediate treasuries. Good luck with that.

The Bogleheads thread on it is quite interesting:
https://www.bogleheads.org/forum/viewtopic.php?f=10&t=326680

I especially liked the contributions by "vineviz"

If the the expectation of real yield from half the portfolio is -1.5%...