How long a retirement?

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ataloss
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How long a retirement?

Post by ataloss »

median remaining life expectancy of 30 years is attained for white males at age 48 and at age 52 for females.

http://www.cdc.gov/nchs/data/lt2000.pdf

The CDC data don't allow you to look at basic risk factors (like smoking.)

Looking at 30 year portfolio survival seems inadequate to me (especially for those FIREs who are younger, have good health habits and want to provide for a spouse)

Is there a better source of data?
Have fun.

Ataloss
JWR1945
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Post by JWR1945 »

ataloss, have you looked at the website? I.e., before retrieving the document itself? It has all sorts of statistics. Visit

http://www.cdc.gov/nchs/

(I got there originally by starting from www.FirstGov.gov.)

Thirty years is a good number for data analysis. It avoids retirement sequences that have two bad periods. It helps you understand why bad things happen. It is a bad choice for actual retirement planning. raddr has it right when he uses durations of 50 years and longer.

Have fun.

John R.
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ataloss
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Post by ataloss »

amazing amount of statistics (using the yearly death probabilities I should be able to calculate a joint life expectancy as well as the age where the probability of geing alive is low - like 10%)
Have fun.

Ataloss
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ataloss
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Post by ataloss »

If I am doing excel right that 10% life expectancy (for the hypothetical 48 year old male) is age 91 ie 43 years of portfolio withdrawals
Have fun.

Ataloss
raddr
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Post by raddr »

If I am doing excel right that 10% life expectancy (for the hypothetical 48 year old male) is age 91 ie 43 years of portfolio withdrawals

I get a slightly different result: l(x) 92,629 * 0.1 = 9263 = age 92-93. For both sexes together it looks like 94-95 is the right answer - i.e. a 10% chance of 46-47 more years in retirement. It's a bad idea to be male. :cry:

What is clear is that the 30 year time frame they use over at the REHP to pump up the historical SWR to near 4% is a joke for most early retirees. A 48 y/o would have a 60+% shot at living more than 30 years. A 40 y/o would have about a 72% chance of living more than 30 years. In fact, it probably will be a bigger number than that for both since life expectancies are on the rise. I'm 48 and I'd prefer not to take a 60+% chance of eating Alpo in my golden years. ;)
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Post by raddr »

Here's a table constructed from ataloss' life expectancy data link for a couple, both 48 years old:




The life expectancies are assumed to be equal to the total population for both. As you can see, there is almost a 10% chance of at least one of them living 50 years. There is a greater than 80% chance of at least one living past 30 years!

Anything less than a 50 year retirement scenario for the hypothetical middle-aged couple is foolhardy, IMHO.
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Post by mhtyler »

I use 30 years as a target because...

a) My family seldom live past their 70's
b) It gives me a target to shoot under...that is LBYM's
c) In good years I have a w/d rate I can temp. use

I never have w/d 4% because my capital depleted from 2000 on at such an astonishing rate that I never did feel comfortable doing so.

I now have a w/d a little over 3%, and as soon as my boat sells, I'll invest that, and I'll be a bit under 3%.

I still believe that retirement is a business, and that the only sensible goal is to try and grow it ahead of your withdrawal rate. Unless you have a terminal disease, or you're very old, it seems a sensible approach.

mark
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ataloss
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Post by ataloss »

great chart (and more reason to diversify)
Have fun.

Ataloss
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