Juicy SWR Thread on "Early Retirement Forum"

Research on Safe Withdrawal Rates

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hocus
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Juicy SWR Thread on "Early Retirement Forum"

Post by hocus »

Here's the thread:

http://www.early-retirement.org/cgi-bin ... 080;start=

Excerpts:

mikey: What counts is not where the hyper-emtional Mr. Market happens to value your portfolio on a given date, but the underlying long term earning power of your shares in the companies represented in that portfolio


Cut-Throat: The high value of the starting funds is already accounted for in the 4% rule analysis. Investments were overvalued in 1929 and the mid-60s too. If you are going to ignore the historical analysis whenever starting investment values were overvalued, then then we would end up with a 4.5% rule or a 5% rule.


unclemick: The ultimate 'safe withdrawal rate' is dividends and interest, reinvesting cap. gains. Thats what they used to do before computers, spreadsheets and all that stuff.

mikey: You exactly and clearly explain that once the SWR concept and method of calculation is accepted as valid, it wouldn't matter if the S&P had been 2500 or 3000 in 2000, or any other year. ...It's just that there is a very big ? regarding the phrase "assuming the validity of the 4% SWR"....

This analysis shows only a few of the most glaring problems with SWR as it has been advanced. In reality, the situation is quite a bit worse.

I am afraid that Emperor SWR has no clothes.

Telly: For that matter, are any of the Monte Carlo calculators any better? Someone had to make their own assumptions about what was "plausible" in setting up their model. Were they exceedingly, or ridiculously pessimistic in the bounds they set? I sure don't know. And what would be "too pessimistic"? What a quagmire!

mikey: To me, a useful way to think about this problem is to focus on the sustainable cash generated by the portfolio. Imagine that one is going to live on a private business....Would the amount of cash you could take out have anything to do with what valuation was put on the business?

salaryguru: I agree that there are plenty of reasons to question the validity of the 4% rule.

Bob Smith: Another significant variable in the SWR equation has to do with the makeup of the portfolio. The individual with 70% in TIPS and 30% in stocks can be far more certain about his/her SWR than the person with 30% TIPS and 70% stocks, for example.

newellcr: It's kind of interesting to me that many of you think that the application of the SWR is optimistic. I think it is a very pessimistic tool. It would be more useful to me to have a tool that allowed me to see what history did to a range of withdrawals.

cutthroat: I agree that the ability to vary withdrawal rates based on the performance of the market, would be a real eye opener.

bongo2: You have to understand that there is always a chance that your portfolio will be depleted, and once it has fallen in value by 30-50%, then that chance is going to be much greater than it was when you started. In the 130 years of history the stock market has always rallied strongly off of 30%+ drops -- are you going to count on a rally like that this time?
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Post by JWR1945 »

hocus wrote:This analysis shows only a few of the most glaring problems with SWR as it has been advanced. In reality, the situation is quite a bit worse.

I am afraid that Emperor SWR has no clothes.
I had wanted to join in on those discussions, but I decided not to. I was overwhelmed by how much effort that it would take to overcome even the simplest of errors.

We have a wealth of information on these boards that address various issues. For example:
cutthroat wrote:I agree that the ability to vary withdrawal rates based on the performance of the market, would be a real eye opener.
I can think of many threads that address this on from a variety of vantage points. There have been studies addressing the strategy of withdrawing a percentage of the current account balance. There have been hybrid strategies such as gummy's sensible withdrawal rate strategies. From the get-go, we have looked at adjusting withdrawal rates according to valuations at the beginning of retirement. More recently, we have looked at shifting portfolio allocations based upon the market's current valuations.

There is too much to say in a limited number of posts.

Have fun.

John R.
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Post by hocus »

I had wanted to join in on those discussions, but I decided not to. I was overwhelmed by how much effort that it would take to overcome even the simplest of errors.

I decided that the thing to do was to put up a post at the Early Retirement Forum letting people there know about this board and inviting them to participate here.

My post appears at the bottom (at least for now) of the thread linked to above.
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Post by hocus »

Bongo2 has put up a post at the Early Retirement Forum thread linked above that is my pick for "SWR Post of the Month." It's possible that the point he is making is something that you have been aware of for some time, JWR1945, but it's not something that I have ever seen anyone focus on before, and, for me, the point seems highly significant in light of some of our earlier findings. I would like to hear your thoughts.

Here is an Excerpt from the bongo2 post:

Bongo2: If I look at 2002 (not in FireCalc, but we have the information that we need) we have spent $32k and have a year-end portfolio of $436k. We are withdrawing at a rate of about 7.5%. Now look at 1929. After three years we have a portfolio of $367k, worse right? Ahh, but because of deflation we have only spent $17k in 1931, so our withdrawal rate is 4.6%. It takes 11 years for us to reach a 7.5% withdrawal rate after 1929. 1966 is similar with a 4.7% withdrawal rate after three years. So, with the additional data of the last three years, it doesn't seem that unlikely at all that march/2000-2029 will be worse than any period in the last 130 years.

End of Bongo2 excerpt

There is no relevant data point in the historical record from which to make assessments of the safety of a 4 percent withdrawal for a retirement beginning in 2000. We have never been to those valuation levels before, so there is no comparable period.

If you want to use the most comparable year available, you go to 1929. The argument of those defending the conventional methodology is that, since 4 percent worked in this one case, it is reasonable to declare it "safe" for all other cases, even cases with significantly higher valuation levels. I say no. I say that the fact that a withdrawal rate survived in one case does not tell you that it is safe. What it tells you is that it is either safe or lucky. You need to do further investigations to determine whether the reason why the number worked is because the number is a safe number.

Those further investigations must include consideration of changes in valuation levels, I say, because the historical data shows that changes in valuation levels are a key factor in determining what is safe. But many are hung up on the fact that a 4 percent withdrawal survived for a retirement beginning in 1929. The logic seems to be: "If the withdrawal rate worked one time, it is safe, anything that worked in the historical period examined (even at lower valuation levels) must be safe."

Bongo2 is providing an explanation for why a number that is generally unsafe at high valuation levels could have survived for a retirement beginning in 1929 regardless. We have shown in our earlier work that the key factor that causes busted retirements is selling of stocks in the early years of the retirement. It is stocks that provide the long-term growth potential needed for a portolfio to survive, and, if you sell too much of your stocks in the early years, your chances of going bust in 30 years go markedly up.

You have done work showing that receving dividends in the early years is important. Why is it important? Because dividends provide the cash you need to live on, and obtaining that cash from dividends permits you to avoid selling stocks and thereby to hold on to your source of long-term portfolio growth. A high dividend payout increases the safety of a retirement portfolio, all else being equal.

If I understand things properly, Bongo2 is saying that deflation in the early years of a retirement can also increase the safety of a portolio, all else being equal. Deflation allows you to buy the same amount of goods for a smaller number of dollars. Since it takes less money to provide for your living expenses, you do not need to sell as much of your stock portfolio to do so. Deflation serves a purpose not unlike the purpose served by dividends.

This provides yet another reason for concluding that the fact that a 4 percent withdrawal survived for a retirement beginning in 1929 is not proof that such a take-out number is safe. It may be that that number was only lucky that one time, and that in fact it is not safe (as that term is defined for purposes of SWR analysis), as I have argued.

It may be that, to conclude that 4 percent is the SWR in all circumstances, you have to believe not only that changes in valuation levels have no effect on safety, but also that all retirees retiring at times of high valuation are guaranteed to experience deflation in the early years of their retirements. In the event that they do not experience deflation and a worst-case scenario pops up, retirements beginning at times of overvaluation comparable to that experienced in 1929 will fail, if the future is like the past.

Does what I am saying here make sense to you, JWR1945?
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Post by JWR1945 »

It is not really necessary to single out deflation since all of our calculations have included adjustments to match inflation. It is not a new point for us. It is a radically new point for the general public. Their perception of the 1930s has been tainted by how it has been presented in the popular media.

The worst period for starting retirement was not during the 1930s. It was during the 1960s. These two tables show the contrast and they confirm many of our observations as well.

During the 1930s there were several good opportunities for starting retirement. Notice that P/E10 dropped below 12 several times with high Historical Database Rates. A P/E10 of 12 is the closest thing that we have to a magic number. It is what I would select for switching although I have stressed that there are qualifiers. Notice that high dividends generally supported high Historical Database Rates.

These are Hardware Database Rates for 80% stock (S&P 500 index) / 20% commercial paper portfolios with a lifetime of thirty years. They were determined by using FIRECalc. Rates are in increments of 0.2%. Expenses are 0.20%. Portfolios are re-balanced annually at no cost.

Code: Select all

Year  HDBR(80%)  P/E10  P/E  Dividends
            
1928   5.8%   18.8   15.5   4.43%
1929   4.2%   27.0   17.8   3.46%
1930   4.8%   22.3   13.9   4.47%
1931   5.6%   16.7   17.0   6.07%
1932   8.0%    9.3   14.0   9.55%
1933   8.4%    8.7   17.2   6.98%
1934   6.2%   13.0   23.7   4.19%
1935   7.6%   11.4   16.2   4.85%
1936   5.4%   17.0   17.9   3.50%
1937   4.6%   21.6   16.8   4.17%
1938   6.6%   13.5   10.5   7.02%
1939   6.0%   15.5   18.8   4.10%
1940   6.0%   16.3   13.2   5.06%
1941   7.0%   13.9   10.0   6.41%
1942   9.0%   10.1    8.0   7.87%
1943   9.2%   10.1    9.7   5.90%
1944   8.6%   11.0   12.7   5.19%
1945   8.2%   11.9   14.4   4.77%
When we look at the decade of the 1960s and the stagflation that followed, we see a much different story. There were no favorable conditions throughout the entire period. Valuations were high and dividends were low.

Code: Select all

Year  HDBR(80%)  P/E10  P/E  Dividends
            
1958   7.0%   13.7   12.5   4.33%
1959   5.4%   17.9   18.8   3.15%
1960   5.2%   18.3   17.1   3.21%
1961   5.2%   18.4   18.6   3.26%
1962   4.8%   21.1   21.3   2.93%
1963   5.0%   19.2   17.7   3.28%
1964   4.6%   21.6   18.8   3.00%
1965   4.2%   23.2   18.7   2.92%
1966   4.0%   24.0   17.8   2.93%
1967   4.4%   20.4   15.3   3.41%
1968   4.2%   21.6   17.7   3.08%
1969   4.2%   21.1   17.6   3.01%
1970   4.8%   17.0   15.8   3.50%
1971   6.8%   16.4   18.1   3.35%
1972   4.8%   17.2   18.0   2.98%
1973   4.6%   18.7   18.1   2.67%
1974   5.8%   13.5   11.7   3.53%
1975   8.2%    8.9    8.3   4.99%

I have been aware that the 1960s were worse than the Great Depression (at high stock allocations) all along. The Retire Early Safe Withdrawal Rate Study mentioned the point. BenSolar has really drawn attention to it Peteyperson has reinforced it in his discussions of intrinsic values. His source was John Bogle.

This kind of thing illustrates why I am so interested in why things happen as opposed to knowing a number in isolation. What hurts is being blindsided. Yet, that is typically what happens. When we look backwards, we see how obvious things should have been. But they were not at all obvious to the people at the time.

We are living in a very distinctive period. So far, we have identified three important differences from earlier times. Valuations are outside of the historical range (higher). Dividend yields are outside of the historical range (lower). And there are attractive long-term high yield alternatives to stocks (TIPS).

Have fun.

John R.
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Post by hocus »

The worst period for starting retirement was not during the 1930s. It was during the 1960s.

OK. But I still think that Bongo2 is making an important point.

He is saying that, even though the fall in stock prices from 2000 until today has not been as great as the fall in prices in the first few years following 1929, the take-out number for a retiree who retired in 2000 and followed the intercst recommendations is now 7.5 percent. In contrast, the take-out number for a 1929 retiree three years later was 4.6. He says that the take-out number for the 1966 retiree three years later was 4.7.

I think he is right that the safety of a retirement where you are taking out 4.6 percent or 4.7 percent is greater than the safety of a retirement where you are taking out 7.5 percent. So I think it is wrong to say that, just because the retirements that used 4.6 and 4.7 takeouts worked in the long run that the one using a 7.5 percent takeout is also going to work in the long run. I think that the fact that the drop in stock prices we experienced in 2000 was not countered by the effects of deflation may mean that we will experience nothing worse in terms of volatility and yet still see retirements using a 4 percent withdrawal go bust.

I also think that Bongo2 was right in his earlier post in which he noted that it is not reaosonable to expect prices to recover as much from the fall in 2000 as they have recoved from earlier price drops. Because of the extreme overvaluation we saw in 2000, it was possible for prices to fall markedly and yet for stocks to remain at extreme levels of overvaluation. They might go up for the next few months or the next few years. But if Bernstein is right that valuation levels affect returns as a matter of mathematical certainty, I tend to think that Bongo2 is right that you need to expect that in the long term the recovery from the 2000 price drop is going to be muted or non-existent (or even that there might be further long-term price drops).

My bottom line on all this is that it is not possible to determine the safety of a retirement plan by looking at volatility accurately but ignoring other critical factors. The conventional methodology does a good job at looking at the volatility factor. But that is not the only factor that affects long-term portfolio safety. Changes in valuation affect long-term safety, and changes in valuation are not taken into account by the conventional SWR methodology. I think that Bongo2 makes a reasonable case that whether there is delflation in the early years of a retirement can affect safety too. You can't just assume that because deflation caused a 4 percent take-out to work for retirements that began in 1929 that it will do the same for retirements that began in 2000. Those who were thinking of retiring in 2000 should have been considering the possibility that there might not be deflation in the early years of their retirements and that 1929 retirements using a 4 percent take-out would have failed had deflation not come to the rescue.

As things turned out, we did not see deflation in the first three years of a retirement beginning in 2000. I think that those who retired in 2000 with a 4 percent withdrawal need to be taking Bongo2's point to heart. Our purpose should not be only to come up with more reasonable SWR methodologies for the future. There are a lot of people who are already facing the possibility of severe life setbacks because of confidence that they placed in conventional methodology studies as providing an accurate assessment of the historical data. Those people need to be told of the many ways in which the conventional methodology studies mis-state what the historical data says, so that they can decide what to do now that they have handed in resignations from jobs that they would have held onto had they known how risky their retirement plans truly were.

If I had retired in 2000 with a 74 percent S&P stock allocation and plans to take a 4 percent withdrawal, I would be taking steps today to save my retirement. I would either be changing my stock allocation or looking for a job. That sort of allocation is not safe for a retirement beginning at the levels of overvaluation we saw in 2000, according to the historical data.

One suggestion that people have made is that those whose retirements are now in jeopardy because of misplaced confidence that they held in the conventional methodology studies should be cutting their spending levels. That's a reaonable suggestion, of course, but the Bongo2 post casts some doubt on how realistic it is to believe that retirees could cut enough spending to make their retirement safe. The reality is that the 1929 retirees were cutting spending just as a result of deflation. To make up for the higher levels of overvaluation that applied in 2000 compared to 1929, the modern-day retiree would need to cut spending by more than the amounts that the 1929 retirees cut spending. I doubt that that's a realistic option in many cases.

The retirements of those who retired at the top of the bubble and went with a 74 percent S&P allocation and a 4 percent withdrawal rate are not safe. That much is crystal clear. I believe that the FIRE community has a responsiblity to get the word out to those people that the conventional methodology looks only at some of the historical data that has a bearing on the queston of what is safe, and that, when you look at all of the relevant data, you come to very different conclusions as to the proper take-out number and the optimal allocation and everything else. Those bubble-period retirees are the primary victims of the trickery that has been done by those who exploited the analytical flaws of the conventional SWR methodology for their personal advantage. They need to get about the business of making changes in their plans now, not later. Later than now may be too late, if the historical data is a useful guide to what may happen over the long-term.

I think that Bongo2 performed a public service with his Early Retirement Forum posts. Mikey also put forward several excellent observations, and others made positive contributions too. I am encouraged that people are starting to come around to more reasonable views as to what the historical data reveals about what is safe. This thing is not going to change in a day or a week or a month, but there really are lots of encouraging signs if you take the time to look for them. I salute the Early Retirement Forum community for developing an illuminating SWR thread that has not been poisoned by the ugliness that has become typical of the REHP and FIRE boards when dealing with this subject.

It can be done! We now just have to figure out what the secret formula is and see if we can get posters at the other boards to drink some of it down!
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Post by JWR1945 »

This is an interim report.

As an aside, I will mention that I have found that there is always a there there when hocus brings up a point. I had thought that I had answered his question. But I had not. And I am finding that there is quite a bit worth looking into regarding Bongo2's comments.

Part of the reason for my delay is that I have not come up with 7.5% as the current withdrawal rate. OTOH, I am finding some interesting comparisons between today's market with those of 1929, 1930, 1966 and 1967. I am using the Retire Early Safe Withdrawal Calculator (version 1.61 of November 7, 2002 without my own modifications) because it allows me to examine the details. Unfortunately, it also slows me down because it is not identical to FIRECalc.

It is worth looking at one of my older posts on the FIRE board. It is A Helpful Detour from Friday, June 13, 2003 at 12:58 pm CDT.
http://nofeeboards.com/boards/viewtopic.php?t=1000
This is my summary. It applies to an initial withdrawal rate of 5%, which is adjusted annually according to inflation.
1) If the S&P 500 price in <b>real</b> dollars falls below 50% of the initial price in the first ten years, your portfolio will always fail.
2) If the S&P 500 price in <b>real</b> dollars falls below 70% of its initial price in the first ten years, your portfolio is likely to fail.
3) If the S&P 500 price in <b>real</b> dollars stays above 70% of its initial price in the first ten years, your portfolio is likely to succeed.
4) If the S&P 500 price in <b>real</b> dollars stays above 90% of its initial price in the first ten years, your portfolio will always succeed.
In terms of January data from Professor Shiller, the S&P 500 in real dollars fell from 1425.6 in January of 2000 to 832.2 in January of 2003. That is a drop to 58.4% for a retirement that started in 2000.

That post does identify remedies. The simplest is the best: reduce the withdrawal rate below 5%.

Note: 5% is not the often quoted 4%. But it is that lower number that I have been looking at. It does not look safe either.

More will follow.

Have fun.

John R.
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Post by hocus »

I am finding that there is quite a bit worth looking into regarding Bongo2's comments.

Thanks for your response, JWR1945. It turned my mood darker than it was this morning, but enhanced my understanding of the matter under examinatiion.

You put forward the words--

If the S&P 500 price in real dollars falls below 50% of the initial price in the first ten years, your portfolio will always fail. [based on an analysis of a 5 percent withdrawal]

followed by--

In terms of January data from Professor Shiller, the S&P 500 in real dollars fell from 1425.6 in January of 2000 to 832.2 in January of 2003. That is a drop to 58.4% for a retirement that started in 2000.

My reaction is not a technical one, nor is it a wordy one. My commentary is short but not sweet.

Here goes.

The lies that people who purport to be experts have told about safe withdrawal rates on public message boards in recent years make me wanna be sick.

I guess I just don't get the joke.
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Post by JWR1945 »

Bongo2's numbers

I have determined how Bongo2 got his numbers. Things still end up bad, but not as bad as they seemed.

His 4.5% and 4.6% numbers came from FIRECalc. By necessity, he derived his 7.5% number separately. The two different methods of calculation are quite different, dramatically so.

If you look at Professor Shiller's data and select the Peak Value of the S&P 500 in real dollars and the bottom that followed, the ratio is 53.2%. The peak was 1451.1 in August 2000. The bottom was 772.2 in February 2003. (Because of some subtlety buried in Dr. Shiller's definitions, the ratio using nominal dollars is different. It is 56.4% even though the top and bottom still occur in the same months.)

If you scale the dollar amount for 4% of an initial balance to a smaller amount, you end up with 7.5%. That is, 4% / 0.532 = 7.51%. For example, if you withdraw $40, it is 4% of $1000 and it is 7.51% of $532.

Bongo2 looked at price changes only. His current numbers were for a 100% stock portfolio. He looked at the bubble's peak and its (short-term) bottom. He did not include the effects of dividends. The FIRECalc makes withdrawals in January and it does include dividends. It is likely that the FIRECalc numbers include a cash component (e.g., commercial paper) as well as stocks.

A Consistent Set of Numbers

The FIRECalc does not extend into 2003 so that it cannot provide a consistently calculated set of numbers for making comparisons. Fortunately, the Retire Early Safe Withdrawal [Rate] Calculator (version 1.61, November 7, 2002, without my own changes) does. It comes with enough data later than November 2002 to carry its results into January 2003.

My inputs were set to their default values except for the withdrawal rate, which I set to 4.1%, and the stock balance, which I set at 80%.

It turns out that this results in an actual initial withdrawal amount of $42 out of an initial $1000 balance. This is because withdrawals are divided in half and applied at the beginning and the end of the year. Internally, the computer rounds one half of $41 (which is 4.1% of $1000) to $21 and then makes two withdrawals of $21 each. This kind of thing is typical of computer calculations. I could have eliminated most of the effect by increasing the balance from $1000 to $100 000 or $1 000 000. That kind of work around is often made with computer calculations.

This leads us to the following tables of balances and withdrawal rates. All are set initially to 4.1%. They match inflation in accordance with the CPI. These are the first ten values, beginning in year zero and ending in year nine. All dollars are nominal amounts. That is, they are prior to any inflation adjustment.

A retirement portfolio begun in 1929 was successful for at least 60 years. A retirement portfolio begun in 1930 failed in year 43 (i.e., in 1973).

Code: Select all

1929                                1930
$1000    4.2%                  $1000      4.2%
$1323    3.2%                  $ 901      4.2%
$1205    3.2%                  $ 722      4.7%
$ 977    3.5%                  $ 474      6.3%
$ 652    4.6%                  $ 416      7.7%
$ 583    5.5%                  $ 553      5.8%
$ 791    4.0%                  $ 489      7.0%
$ 713    4.8%                  $ 652      5.2%
$ 969    3.5%                  $ 781      4.4%
$1179    2.8%                  $ 571      6.0%
A retirement portfolio begun in 1966 failed in year 30 (i.e., in 1996). A retirement portfolio begun in 1967 failed in year 28 (i.e., in 1995).

Code: Select all

1966                                  1967
$1000      4.2%                $1000      4.2%
$1056      4.0%                $ 920      4.6%
$ 973      4.5%                $ 999      4.4%
$1057      4.4%                $1049      4.6%
$1111      4.3%                $ 953      5.2%
$1011      5.1%                $ 963      5.4%
$1023      5.1%                $1020      5.3%
$1084      5.0%                $1117      5.2%
$1189      5.0%                $ 948      6.8%
$1011      6.7%                $ 752      9.3%

I tend to focus on when portfolio withdrawals first exceed 5.0%.

Notice that the 1929 portfolio had many years with low withdrawal rates. It did much better than the unadjusted (or nominal) account balances would indicate. The 1930 portfolio had some rough years early (6.3% in 1933), but it still lasted until 1973. It ran into some good years that kept its (nominal) balance stable. But they were not good enough to cause it to grow.

The 1966 portfolio steadily deteriorated. It failed in 1996. The 1967 portfolio behaved similarly. It failed in 1995.

The 1929 and 1930 portfolios were lucky. The 1966 and 1967 portfolios were not. Withdrawal rates above 5.0% indicated the possibility of early failure. They did not guarantee failure.

Now look at recent portfolios.

Code: Select all

1999                             2000                  2001
$1000      4.2%          $1000     4.2%      $1000      4.2%
$1209      3.5%          $1089     3.9%      $ 925      4.5%
$1325      3.3%          $1010     4.4%      $ 789      5.3%
$1236      3.6%          $ 864     5.1%
$1065      4.3%         
The portfolio that began in 1999 is still doing well. The portfolio that began in 2000 is doing better than the portfolio that began in 2001. The reason is that these portfolios are lined up with January. The peak was in August of 2000, not January of 2000. The bottom was in February 2003, which is close to January of 2003.

Still, this consistent method of calculation shows a withdrawal rate of 5.3%. That is not nearly as bad as Bongo's 7.5%.

What about the Helpful Detour?

The numbers from the Helpful Detour were for 5% and 40 years. If one had planned on 4% he would be in much better shape.

As indicated above, the January 2001 portfolio was still at 78.9% of the initial balance. (This is seen as $789 in the year 2001 portfolio versus its initial balance of $1000. Both are in terms of nominal dollars, i.e., without any adjustment for inflation.)

But the numbers from the Helpful Detour were based on prices alone.

There are a lot of years remaining in that critical first decade.

It is still bad

Just because a consistent calculation makes things seem better does not necessarily mean that they are better. There are people who retired in August of 2000, not in January of either 2000 or 2001. The consistent methodology makes it seem that this is similar to how we have handled the peak in September 1929.

The Helpful Detour focused our attention on dividends. Let us look at them in more detail.

Hidden in the background are the differences in dividend yields. The decline that started in 1929 lasted several years and dividends were cut. But real dividends were still 2.3% of the 1929 peak price even when they fell to their lows. (Compare the real price in 1929 of 245.4 with the real dividend $5.585 in 1935, restricting yourself to January data.) In the 1960s and 1970s, the real dividend amounts remained within a small range while prices fluctuated greatly. Yields were around 3% or higher.

Today, even a 2.3% dividend yield looks attractive.

There are a lot of things that people can do. We have identified many of them on this board.

Have fun.

John R.
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