A recent thread on the Morningstar discussion board on “Investing During Retirement” provides a good sense of what we’re up against in our effort to get the publishers of today’s retirement planning tools to correct the grave flaws in them that we have uncovered in recent years.
The thread was started by a poster who goes by the screen-name “bob09245.” Bon owns the “Bob’s Financial Website” site and is a popular poster at the Morningstar boards.
I saw that Bob had provided a link at his site to the FIRECalc retirement calculator (a calculator based on a conventional- methodology safe withdrawal rate study) and so I asked him if he would be willing to also put up a link to materials explaining why the conventional methodology numbers are so far off the mark from the numbers obtained from any of the analytically valid safe withdrawal rate methodologies.
Bob doesn’t dispute our finding that changes in valuation levels have a big effect on long-term stock returns. His view is that this finding “intuitively makes sense.”
So Bob supports our effort to let aspiring retirees know of the dangers of today’s “highly misleading” (William Bernstein’s phrase) retirement planning tools, right?
Well, actually, no.
If anything, my sense from reading the thread is that Bob is hostile to the idea of correcting the false safe withdrawal rate claims put forward in studies and calculators that he links to at his site. It sounds to me as if Bob thinks it is just fine that millions of retirements are going to go bust because of the flaws in today’s tools (I am assuming here that stocks may perform in the future somewhat in the way in which they always have in the past).
The story gets even stranger.
One of the things that seems to bother Bob about our initiative is that I am leading it and that I acknowledge that I am about as far removed from being a Numbers Guy as it is possible to be. It appears from the comments he makes in the thread (and from the materials published at his web site) that Bob is a bit of a Numbers Guy. Intuitively, I would expect a Numbers Guy to be more upset about studies reporting demonstrably false numbers. But it is me, the non-Numbers Guy, who comes across in the thread as being far more concerned.
You figure it out.
There are a number of good posts put forward in the thread by a number of people making reasonable, commonsense observations. One that shocks and astounds and amazes me (given what is said elsewhere by the same poster) is a comment put forward by a poster using the screen-name “Jason375.”
Jason argues that, given the increases in S&P valuations we saw in the late 1990s, it would have been “foolish” for any retiree to have believed that a 4 percent withdrawal rate was safe for a high-S&P portfolio used in a retirement beginning in early 2000. So Jason is offering us whatever help he can to advance our effort to get out the word about the studies that were telling investors at the time that this foolish (and exceedingly dangerous–the data shows that retirees who put their confidence in what the conventional studies said was safe in January 2000 have a better than 50 percent chance of going bust in days to come) move was in fact “100 percent safe” (yes, there are indeed retirement planning tools on the market today that make this transparently absurd claim).
Well, actually, no.
Jason asks elsewhere in the same post: “How can one be so certain that 4% is wrong….?”
Huh?
Those using the studies to plan their retirements are “foolish” for doing so, but the authors of the studies are possibly not in the wrong to put forward the highly misleading and highly dangerous claims they put forward in them? This takes the concept of blaming the victim to a whole new level.
Again, you figure it out.
The poster named “Gnobility” offers us a third illustration of what we are up against in trying to get the word out on the flaws of the dangerous conventional methodology studies and calculators. Longtime Financial Freedom Blog readers will recall that I wrote about Gnobilitys Retire Early plan in my December 12, 2005, blog entry.
Gnobility was kind enough to post for the benefit of the community a PDF document that was a 19-page write-up of his personal Retire Early plan. He said that the reason he put up the post was to get feedback and use it in conversations with his wife in which they would work the plan just a little bit harder.
Gnobility used conventional methodology numbers in his plan. I let him know that this is a dangerous thing to do. I did for the guy what he was hoping some fellow community member might do for him–I gave him constructive feedback on a point that, unless he corrects it, stands a good chance of causing his plan to fail in days to come.
So when a post with Gnobility’s name on it appears on the thread, it is to thank me for helping out a fellow community member in need, right?
Well, actually, no.
I think it would be fair to describe the words that appear in the post with Gnobility’s name on it as exceedingly strange, given the history between us.
Again, you figure it out.
If you come up with anything good, please let me know.
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