MarketWatch article on retirement portolios

[dude]

Pretty good article.  The charts are worth looking at.

http://www.marketwatch.com/story/how-traditional-retirement-formulas-fall-short-2015-07-15

[2lazy2retire]

I find it striking the difference in ending balance between the 100% stock column - 51million as opposed to S&P500 at just below 6M, what gives, I  hear people talk about been in a SP500 index tracker or a total market index tracker as if the differences are marginal.

http://paulmerriman.com/wp-content/uploads/2015/06/Table1-2015.jpg

[forummm]

I find it striking the difference in ending balance between the 100% stock column - 51million as opposed to S&P500 at just below 6M, what gives, I  hear people talk about been in a SP500 index tracker or a total market index tracker as if the differences are marginal.

http://paulmerriman.com/wp-content/uploads/2015/06/Table1-2015.jpg

Is the 100% stock without withdrawals? The table doesn't make sense to me.

[2lazy2retire]

I find it striking the difference in ending balance between the 100% stock column - 51million as opposed to S&P500 at just below 6M, what gives, I  hear people talk about been in a SP500 index tracker or a total market index tracker as if the differences are marginal.

http://paulmerriman.com/wp-content/uploads/2015/06/Table1-2015.jpg

Is the 100% stock without withdrawals? The table doesn't make sense to me.

I guess it comes down to sequence of return risk - the average return over the 45 years for the 100% stock column is 11.8% as against the 10.5% annualized for the S&P500. Amazing that with "similar" annualized return the ending balance is close to 10 times larger.

http://paulmerriman.com/fine-tuning-asset-allocation-2015/

[dandarc]

The S&P 500 is exactly what you would expect.

The middle portfolios are heavily skewed towards small cap, value & reit.  And international for that matter - stocks are 50/50 US - International.  US Stocks are 20% each in Large Cap, Large Cap Value, Small Cap, Small Cap Value and REIT.  International varies more but by the end is even more heavily in the small-cap segment.

It would be interesting to run these charts with more starting years.  Apparently 1970 was a good time to retire with a pretty aggressive portfolio.

http://paulmerriman.com/2014-new-site/wp-content/uploads/2014/03/Fine-tuning-Data-sources-1.pdf

[forummm]

Oh. Yeah, if the other columns include overweighted small caps and REITs and value during a historically boom time for those asset classes, then of course it's going to look great in the backtest. ~1974+ was fantastic for SCV and REITs.

[dandarc]

Also, he's subtracting 1% for fees in the portfolios vs nothing for S&P.  Which is kind of the correct thing to do, but were there even 1% ER's available in the 70's and the 80's?

Honest question - too young to know the answer from experience.

[Rosy]

dude - thanks for the link, will keep me entertained for a while, learning ... better yet, bookmarked the podcast(s) by Paul Merriman this article led me to.