Safe Withdrawal Question

[retireatbirth]

Hey guys, I'm new here and have a question about the safe withdrawal rate.

To give you some background, I've always been a pretty good saver but hated working so I'm 32 with not much work experience (I just stayed in school as much as I could) and a little over $100k NW right now, making $100K+ in NYC, and expecting to retire early 40s with a massive savings plan in place.

I built an Excel calculator to project scenarios (it does a lot, 401k and aftertax contributions, inflation, taxes, stock market volatility, cap gains tax, etc.) and I built in the safe withdrawal rate as an option, but it dawned on me that OF COURSE you can't run out of money with a SWD because, well, 4% of $100 means you still got $96 the next year!

How do we reconcile this?

I was finding in some of the scenarios I ran, if the market had a few pretty bad years prior to age 60 while you were early retired, your spending would be down 60-80+% compared to what you normally spend (inflation-adjusted) and you wouldn't be able to recover. So yes you wouldn't run out of money, but you'd be living in poverty.

I assume a 10% annual stock return with 18% standard deviation and a 4% bond return with 4% standard deviation. You are all stock until age 65+ at which time you switch your allocation to (120 - Age) in stocks.

Of course, in other scenarios, you may die with $50M+ :)

[MDM]

Not sure of your question: how do we reconcile what with what?

[retireatbirth]

Not sure of your question: how do we reconcile what with what?

My point is you don't run out of money ever with any withdrawal rate less than 100% so it seems flawed. Maybe I'm misunderstanding it...

Say you have $1M, then there's a crash and you're down to $650k so you can take out 4% = $30k. Market has another down year down 10% and you're down to about $550k so you can take out 4% = $22k. Let's say 22k is way below what you can live on so you're in poverty. If the market stagnates for a few years, you won't get out of poverty. Yeah, you technically don't run out of money, but life is no good.

($22k is a made up number, it could be really low like $12k or something to the point where you can't just budget your way out of it)

[Ynari]

It sounds you like you're asking "With a variable withdrawal of 4%, of course you'll never have money, but your buying power could go down. That would suck, right?"  Let me know if I'm interpreting you correctly.

My answer is this: usually, when people refer to a 4% SWR, they're saying that every year, they will take out 4% of the original amount, adjusted for inflation each year.  There are many types of withdrawal methods, though, as you can see here http://www.bogleheads.org/wiki/Withdrawal_methods 

The cfiresim http://www.cfiresim.com/input.php has options to allow you to test variable withdrawal, inflation adjusted, non inflation adjusted, etc.  You can even combine methods!  (Such as "4% variable with a cap at $X and a floor of $Y")  The method that works for you will depend on your expense variability, predicted behavior in market conditions, etc.  Pick the method that helps you sleep best at night, run the calculators, have some "safety" back up plans, and go for it!

[retireatbirth]

It sounds you like you're asking "With a variable withdrawal of 4%, of course you'll never have money, but your buying power could go down. That would suck, right?"  Let me know if I'm interpreting you correctly.

My answer is this: usually, when people refer to a 4% SWR, they're saying that every year, they will take out 4% of the original amount, adjusted for inflation each year.  There are many types of withdrawal methods, though, as you can see here http://www.bogleheads.org/wiki/Withdrawal_methods 

The cfiresim http://www.cfiresim.com/input.php has options to allow you to test variable withdrawal, inflation adjusted, non inflation adjusted, etc.  You can even combine methods!  (Such as "4% variable with a cap at $X and a floor of $Y")  The method that works for you will depend on your expense variability, predicted behavior in market conditions, etc.  Pick the method that helps you sleep best at night, run the calculators, have some "safety" back up plans, and go for it!

Thanks for explaining that. I was using a variable withdrawal method. However, my calculator's spending assumption is $36K and retirement starting balance is $1.2M which is less than 4% already so there will be scenarios where you end up going broke unfortunately. I'm a bit nervous I might have to work longer since I'm 32 and the market is probably going bear by my mid-30s into late 30s which will set me back.

[MDM]

Not sure of your question: how do we reconcile what with what?

My point is you don't run out of money ever with any withdrawal rate less than 100% so it seems flawed. Maybe I'm misunderstanding it...

See http://en.wikipedia.org/wiki/Trinity_study for some of the original work.  Also the links freznow provided.

Thanks for explaining that. I was using a variable withdrawal method. However, my calculator's spending assumption is $36K and retirement starting balance is $1.2M which is less than 4% already so there will be scenarios where you end up going broke unfortunately.

Needing to spend less than 4% is a good thing.

Things are better than you fear.  Some reading of the offered links should help....

[Ynari]

It sounds you like you're asking "With a variable withdrawal of 4%, of course you'll never have money, but your buying power could go down. That would suck, right?"  Let me know if I'm interpreting you correctly.

My answer is this: usually, when people refer to a 4% SWR, they're saying that every year, they will take out 4% of the original amount, adjusted for inflation each year.  There are many types of withdrawal methods, though, as you can see here http://www.bogleheads.org/wiki/Withdrawal_methods 

The cfiresim http://www.cfiresim.com/input.php has options to allow you to test variable withdrawal, inflation adjusted, non inflation adjusted, etc.  You can even combine methods!  (Such as "4% variable with a cap at $X and a floor of $Y")  The method that works for you will depend on your expense variability, predicted behavior in market conditions, etc.  Pick the method that helps you sleep best at night, run the calculators, have some "safety" back up plans, and go for it!

Thanks for explaining that. I was using a variable withdrawal method. However, my calculator's spending assumption is $36K and retirement starting balance is $1.2M which is less than 4% already so there will be scenarios where you end up going broke unfortunately. I'm a bit nervous I might have to work longer since I'm 32 and the market is probably going bear by my mid-30s into late 30s which will set me back.

You are correct: if there is a major market correction the year you retire, you will be forced to reduce your income or face the possibility of having your stash running out. The safety withdrawal rate has a success rate of about 94% historically - meaning, out of the past 100 years, if you retired in 6 of them in particular (i.e. if you retired just before the great depression), you will run out of money if you try to withdraw 4% of the original inflation adjusted amount each year.

However, you are not a robot who follows rules as programmed. You have options like reducing your spending if the market goes bad, or taking part time work, etc.  The 4% rule is the first step to FIRE - 94% of the time, you should be fine. For the other 6%, you should keep in mind other safety margins, like MMM has: http://www.mrmoneymustache.com/2011/10/17/its-all-about-the-safety-margin/

[lakemom]

Maybe I'm not reading the question right, but you do not seem to be accounting for growth of the investment.  If you have the money invested in stocks/bonds then you will be making a higher percent than you are withdrawing thus the money continues to grow even while taking money out.  If you are speaking of multiple down years in a row wiping out your principle than yes you could "go broke" even at conservative withdraw rate.  This is why many (most) financial gurus/advisors recommend that you readjust your allocations from more growth oriented to more income oriented the closer you draw to retirement.  For example if you have your money invested in dividend producing stocks you'll still have the same (or nearly the same) income whether the value of the stocks are $X or $X/5.  So if JNJ is paying a dividend this year of 2.50 (numbers are made up) and you have 100 shares you'll receive $250.00 and let's say the current value is $100 per share.  Next year the market crashes and JNJ is trading at $60 per share and paying a dividend of 2.50 so you get your $250 and you still own your 100 shares (and maybe are taking advantage and buying more during the down market) but your portfolio value is down by 40%...doesn't matter because your cash flow comes from the dividends, not the selling of stocks.  This can be done in either ETF's/mutual funds holding blue chip stocks or investing in individual stocks (funds being the 'safer' option)

[retireatbirth]

Maybe I'm not reading the question right, but you do not seem to be accounting for growth of the investment.  If you have the money invested in stocks/bonds then you will be making a higher percent than you are withdrawing thus the money continues to grow even while taking money out.  If you are speaking of multiple down years in a row wiping out your principle than yes you could "go broke" even at conservative withdraw rate.  This is why many (most) financial gurus/advisors recommend that you readjust your allocations from more growth oriented to more income oriented the closer you draw to retirement.  For example if you have your money invested in dividend producing stocks you'll still have the same (or nearly the same) income whether the value of the stocks are $X or $X/5.  So if JNJ is paying a dividend this year of 2.50 (numbers are made up) and you have 100 shares you'll receive $250.00 and let's say the current value is $100 per share.  Next year the market crashes and JNJ is trading at $60 per share and paying a dividend of 2.50 so you get your $250 and you still own your 100 shares (and maybe are taking advantage and buying more during the down market) but your portfolio value is down by 40%...doesn't matter because your cash flow comes from the dividends, not the selling of stocks.  This can be done in either ETF's/mutual funds holding blue chip stocks or investing in individual stocks (funds being the 'safer' option)

My model does account for stock market growth of 10% annually with an 18% standard deviation. You're right that multiple bad years is what can affect your retirement.

Thanks for the pointer on dividend stocks - that's something I need to think about.

[Grande]

Your assumption of 10% market returns is considered optimistic by some. I understand that's the return looking backward but in this situation it may be best to be conservative. Worst case scenario you end up with more than forecast. That would be a nice surprise. Personally I assume 7-8% return on investments.

Another vote for dividend investing. But if you are new to this I would look at dividend growth investing. The growth part comes from the consistent annual hike of dividend rate (6-8% is the aim). I am not advocating this instead of index funds, just a complement. It also gives one a predictable income stream. Just be aware Bogleheads will be going for your jugular vein when they hear anything but Vanguard index funds. But the academic research is there and personally my dividend growth investments have done a bit better than my index funds over the past 15 years and with lower volatility as measured by beta. But that is just one person's results. The other side of it is they require way more work than index funds. Not a problem if you have an appetite for active investing.

All the best.

[nereo]

Thanks for explaining that. I was using a variable withdrawal method. However, my calculator's spending assumption is $36K and retirement starting balance is $1.2M which is less than 4% already so there will be scenarios where you end up going broke unfortunately. I'm a bit nervous I might have to work longer since I'm 32 and the market is probably going bear by my mid-30s into late 30s which will set me back.

Currently you have $1.2M and are planning on withdrawing $36k/year, which is a SWR of 3%.  As you pointed out earlier, if you use a variable rate withdraw, you can never, ever run out of money (as long as civilization itself doesn't end) - that's just the mathematical result of take a percentage of what's remaining.
However, if you  withdraw $36k each year and increase with inflation, historical scenarios* have give you a 0% chance of running out of money after 30 years.  In fact, in 98.3% of the simulations you wind up with more money than you started with.   This includes quite a few scenarios where retirement started just before a recession.  It also assumes $0 from social security.

So - you have a very high level of security already built in.  And as others have pointed out, you are not a robot.  You can further enhance your 'safety margin' by reducing spending slightly during down years, working part time (as little as one day/week at minimum wage), etc.

*historcal simulations from fireCalc.  To be clear, when these measure how a portfolio would have preformed in past markets.  The underlying assumption to using it as a predictor is that the future will be roughly equivalent to the past - with similar returns, recessions and inflation.

[Bateaux]

10 % Stock Market growth sounds kinda rich.   I base all my calculations on 5% growth and 3% withdrawl rate. I don't trust 4% withdrawl unless you retire late in life.

[nereo]

10 % Stock Market growth sounds kinda rich.   I base all my calculations on 5% growth and 3% withdrawl rate. I don't trust 4% withdrawl unless you retire late in life.

Long-term (30+ years) historical returns of the SP500 with dividends reinvested have averaged between 10-11% in the overwhelming majority of periods before inflation.  So I think that's where the OP got his numbers from.  However, inflation and fees brings the average adjusted returns down to the 7-8% range.  Also, the average certainly isn't to be relied upon either, as annual returns have varied from -38.5% to +45%.  As historical simulations can show you, there can be  huge differences in portfolio survival depending on the exact retirement date (and subsequent market returns); FireCal gives an extreme example of how the same retirement portfolio would have fared if it began in '73 (bankrupt), 74' (slight decrease) and '75 (very large increase).

[skyrefuge]

but your portfolio value is down by 40%...doesn't matter because your cash flow comes from the dividends, not the selling of stocks.

No. Dividends are not a free lunch. (this is why we tend to go for the jugular, because most promoters of dividend-focused strategies don't actually understand the strategy they're promoting.) Yes, there is an emotional difference between "selling stocks" and "receiving a dividend", but there is not a financial difference. By paying you a dividend, a corporation reduces the value of its share price. If they didn't pay the dividend, the share price would be higher (see Berkshire Hathaway for the most obvious example), so "selling stocks" to produce the income on your own would leave you with the same portfolio value as if the corporation had paid you the dividend itself.

Furthermore, dividend payments aren't nearly as stable as most dividend-strategy promoters believe them to be. Replace the cherry-picked JNJ example with a cherry-picked BAC example: a $250 dividend didn't stay at $250 after the market tanked in 2008. It dropped to $3.90. Holy fucking shit. More generally, this line doesn't look particularly stable.

Finally, the basic premise of relying on dividends for your cash flow is anti-mustachian. At today's ~2% dividend yields, you'll end up working many years longer than necessary in order to build up a too-large stash to produce the income you need.

Sorry to derail the a thread that should have absolutely nothing to do with dividend investing, but since the topic was brought up for some reason, I'm constitutionally unable to hold my tongue!

[Grande]

I knew this would come up.


By paying you a dividend, a corporation reduces the value of its share price. If they didn't pay the dividend, the share price would be higher. so "selling stocks" to produce the income on your own would leave you with the same portfolio value as if the corporation had paid you the dividend itself.

I understand that. Thanks.


(see Berkshire Hathaway for the most obvious example)

One always includes a Buffett reference.



Furthermore, dividend payments aren't nearly as stable as most dividend-strategy promoters believe them to be.

Stability reflects the composition one's portfolio.

Replace the cherry-picked JNJ example with a cherry-picked BAC example: a $250 dividend didn't stay at $250 after the market tanked in 2008. It dropped to $3.90. Holy fucking shit. More generally, this line doesn't look particularly stable.

I do not understand the comment whatsoever. Are confusing cashing the S&P dividend with dividend investing?


Finally, the basic premise of relying on dividends for your cash flow is anti-mustachian.

This smells of tribalism.


At today's ~2% dividend yields, you'll end up working many years longer than necessary in order to build up a too-large stash to produce the income you need.

Composite for me is 3.9% of current value. Div hikes average 7-8%. Yielding 12-13% on cost.  The 2% you are referencing, maybe SP500 (closer to 1.9%)?


Sorry to derail the a thread that should have absolutely nothing to do with dividend investing, but since the topic was brought up for some reason, I'm constitutionally unable to hold my tongue! [/quote]



Should I let my well preforming, alpha beating, brokerage accounts know they know nothing of dividend investing as well?

[skyrefuge]

By paying you a dividend, a corporation reduces the value of its share price. If they didn't pay the dividend, the share price would be higher. so "selling stocks" to produce the income on your own would leave you with the same portfolio value as if the corporation had paid you the dividend itself.

I understand that. Thanks.

Er...you're welcome? I was responding to lakemom's post, not to yours. That was intentional, since you didn't say anything particularly dumb about dividends. From your original post, I figured you had a deeper understanding, though now your reference to yield-on-cost (a metric whose only value seems to be to make dividend-growth investors feel good about themselves) makes me question that a bit.

One always includes a Buffett reference.

heh...I generally eyeroll just as much as you when I see Buffett references, but this one had nothing to do with Buffett-the-investor or even Buffett-the-investment-adviser. I just don't know of a more-succinct way to get across the concept that paying out earnings as dividends erodes a stock's value. Since it seems to be a difficult concept to grasp for a lot of people, BH is just a nice obvious example of how retaining earnings affects share price.

Replace the cherry-picked JNJ example with a cherry-picked BAC example: a $250 dividend didn't stay at $250 after the market tanked in 2008. It dropped to $3.90. Holy fucking shit. More generally, this line doesn't look particularly stable.

I do not understand the comment whatsoever. Are confusing cashing the S&P dividend with dividend investing?

I assume you understand how dividends (of even dividend-aristocrats) can be cut dramatically, and are only confused about the S&P chart reference? treemom suggested using funds/ETFs for dividend investing, and since I couldn't easily find such a nice chart of dividend payouts for dividend funds (and definitely not for such a long time period), I figured the S&P 500 would be a reasonable proxy.

But ok, now I did the work on my own. Here is what your dividend payouts would have looked like if you owned enough SDY (S&P High Yield Dividend Aristocrats ETF) to produce $1000/mo in 2008:

2008: $1000
2009: $786 (-21%)
2010: $791 (+1%)
2011: $791 (+0%)
2012: $864 (+9%)
2013: $750 (-13%)
2014: $814 (+8%)

It's up to the individual to decide whether $750 is "the same" or "nearly the same" as $1000. I just want to put the info out there for people who are first hearing about dividend-growth investing so they can also come to their own conclusions.

(also, it turns out the S&P 500 dividend payout actually showed substantially less volatility.)

Finally, the basic premise of relying on dividends for your cash flow is anti-mustachian.

This smells of tribalism.

Definitely! The MMM blog was born with tribalism as a major component, so I don't think anyone should be surprised to smell the culture here reeking of it. In this case however the Mustachian scripture I was referencing was not some silly "if you don't invest like this, you're wrong" verse, but rather, a deep core tenet of Mustachianism: don't enslave yourself to working for the man any longer than necessary.

Composite for me is 3.9% of current value. Div hikes average 7-8%. Yielding 12-13% on cost.  The 2% you are referencing, maybe SP500 (closer to 1.9%)?

Yeah, VFINX (S&P500) @ 1.91%, VDAIX (Dividend Appreciation) @ 1.97%, VDIGX (Dividend Growth) @ 2.10%, and VDHYX (High Dividend Yield) @ 2.96% are all "~2%" to me, meaning they're all substantially lower than the 4% Safe Withdrawal Ratio, and thus, require an unnecessarily large stash if you intended to live solely off dividend income. Your 3.9% brings you closer to the 4% SWR, though it seems that relatively high dividend yield must come with additional risks.

Should I let my well preforming, alpha beating, brokerage accounts know they know nothing of dividend investing as well?

Definitely not! If you have a stock-picking, value-investing strategy that works for you, fantastic. I just don't like to see it pitched to novice investors as a "dividend" strategy, because it's not actually the dividends that are leading to the investing success. It's the picking of stocks that were underpriced relative to their future returns. And of course on top of that, novice investors are unlikely to repeat your stock-picking success.

[skyrefuge]

And to the OP:

I wouldn't waste too much time on the post-retirement distribution/SWR side of your spreadsheet, simply because cFIREsim has already done all that work for you and spending some time playing with that will be much more informative.

[Riff]

Finally, the basic premise of relying on dividends for your cash flow is anti-mustachian.

I thought MMM was using dividends during the last market crisis.  He talks about it in this article: http://www.mrmoneymustache.com/2012/04/12/early-retirement-its-not-as-risky-as-you-think/

Things didn’t always go smoothly.  The Great Financial crisis hit in 2008, and caused the worst recession since the Great Depression. The value of my retirement savings in stocks was sliced in half. I was also stuck with an extra house I couldn’t sell. We had been blindsided by something we never could have predicted a few years earlier.

Were our early retirement dreams shattered?

Amazingly enough, they barely took a hit! Most US companies continued to make their dividend payments at a barely-reduced level throughout 2008 and 2009. The rental market remained strong enough to keep properties from sitting vacant. Sure, the stock prices were down, but who cares about stock prices when you’re not selling them?

[nereo]

I thought MMM was using dividends during the last market crisis.  He talks about it in this article: http://www.mrmoneymustache.com/2012/04/12/early-retirement-its-not-as-risky-as-you-think/

The Great Financial crisis hit in 2008, and caused the worst recession since the Great Depression. The value of my retirement savings in stocks was sliced in half...

Amazingly enough, they barely took a hit! Most US companies continued to make their dividend payments at a barely-reduced level throughout 2008 and 2009. The rental market remained strong enough to keep properties from sitting vacant.

Read carefully - MMM relied on rental income, some side income as well as dividends.  In other words, with his other income streams he didn't need more than the 1.x% that dividends in the broader market were paying. 
BUt to use that as a general strategy - as skyrefuge pointed out, it would require a much higher 'stach and years more work to get there.

[Eric]

Why are you guys cutting skyrefuge's point in half?  Relying on dividends is anti-mustachian when it causes you to work much longer that necessary in order to fully fund your spending using only dividends.

Please stop doing that.  The original statement:

Finally, the basic premise of relying on dividends for your cash flow is anti-mustachian. At today's ~2% dividend yields, you'll end up working many years longer than necessary in order to build up a too-large stash to produce the income you need.

[brooklynguy]

Eric:  because the sacred text (i.e., MMM primary source material) has been invoked, we need to address the matter lest the force of skyrefuge's argument be overcome by the fact that ostensibly contradictory words appeared in the pages of MMM's print.

Yes, the quoted language arguably suggests that MMM has expressed a preference for dividends over capital appreciation.  That just means he's human.  Even the great skyrefuge has self-admittedly succumbed to the inexorable emotional appeal of dividends.  That doesn't make it rational.  Listen to what skyrefuge says (not what he does).  He knows what he's talking about.

[josstache]

Dividends are a company deciding when you should receive money, and how much.  You pay tax on this money.  It should be intuitively obvious that it's better for you to decide for yourself when you should receive money, and how much.

When you are building up your stash, you don't want dividends, because you are paying tax just to roll those dividends right back into the same investment.  Here is an example:

1. Bought dividend stock for $50, now worth $100.  It puts out a dividend of $5, which you reinvest because you are still working and making money.  You pay $1 of tax.  You now have stock worth $99.

OR

2. Bought no-dividend stock for $50, now worth $100.  You do nothing because you are still working and making money.  You have stock worth $100.

Even after retirement, it is preferable to use up basis in stock to reduce your taxes, and dividends do not do this.  Here is an example.

1. Bought dividend stock for $50, now worth $100.  It puts out a dividend of $5, which you intend to spend on rent because you are retired.  You pay $1 of tax.  You now have stock worth $95 (basis of $50) and $4 cash for rent.

OR

2. Bought no-dividend stock for $50, now worth $100.  You sell $5 worth of stock to pay your rent.  You pay $0.50 of tax. You now have $95 of stock (basis of $47.50), and $4.50 cash for rent.

Note that the above example assumes your dividend/capital gains tax rate is not 0% during retirement.  For a mustachian, you might be able to keep your rate at 0% under the current rates.  However, note that dividends have been taxed higher than capital gains in the past, and could be taxed higher in the future.  Also note that if your stash grows by leaps and bounds, you'll eventually be receiving more money from dividends than you intend to spend, and thus paying tax on dividends you don't want.

While it is entirely possible that certain stocks that pay high dividends are good investments nonetheless, my point is that capital appreciation is superior to dividends under current tax laws, all things being equal.  Dividends are paid because the company thinks that money is better off in the hands of shareholders, but stock buybacks accomplish the same thing without forcing buy-and-hold investors to pay tax. 

[lakemom]

Hey, I never said that its a primary strategy, just that this is what a lot of "gurus" recommend.  We invest in both blue chips and index funds.  And yes "I" do know that you need an exceptionally large stash to 'live on the dividends.'  I merely mentioned it as the op seems overly concerned about a substantial, long term market downturn.

[TomTX]

I'm a bit nervous I might have to work longer since I'm 32 and the market is probably going bear by my mid-30s into late 30s which will set me back.

A bear market in the accumulation phase is a gift,  not a drawback. You buy shares for less money.

[Louisville]

I'm a bit nervous I might have to work longer since I'm 32 and the market is probably going bear by my mid-30s into late 30s which will set me back.

A bear market in the accumulation phase is a gift,  not a drawback. You buy shares for less money.

I like he's able to predict that bear market, too.

[lauren_knows]

I've said this many times, but I'll repeat:  flexibility is key.

If you're willing to spend less money when the market is down and spend more money when the market is up, to average your typical savings, your portfolio will be more successful.  Setting a floor/ceiling spending amount helps in these situations.  Also, don't underestimate part time work.  If your spending is ~$40k/yr, even something as little as $5k/yr during a down market can help tremendously.

One of the biggest risks is sequence of returns, meaning if you have remarkably bad market shifts during the first 5 years of your retirement.  If that happens, you should definitely be mitigating the risk by working more, spending less, or everything in between.

cFIREsim provides the ability to do a couple of different variable spending methods and allows for a spending floor/ceiling which is helpful.   I find that picking an average spending amount, then making the floor/ceiling +/- 10% of that value works pretty well.

[TomTX]

Composite for me is 3.9% of current value. Div hikes average 7-8%. Yielding 12-13% on cost.  The 2% you are referencing, maybe SP500 (closer to 1.9%)?

Ugh, how can we finally get rid of this 'yield on cost' bull?

[Retire-Canada]

I've said this many times, but I'll repeat:  flexibility is key.

+100 - your retirement plan should have room for multiple ways to deal with market changes and major life events.

Using a 4% SWR is great as planning tool. When faced with each year of FI you need to review/update your plan and adjust accordingly.

-- Vik