Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
“Can you please explain why Greaney has not to this day correscted the study?
Can you also please explain why everyone has not insisted that he do so?”
The problem is that the number you are looking for is a different number that the one calculated by Greaney and the other studies. They all come to about 4% because they all do basically the same calculation. “What inflation adjusted withdrawal rate survived all 30 year withdrawal periods in the past and what stock percentage did that portfolio have?”
The answer turned out to be 4% from a relatively high stock percentage.
Now the data set used only had a small number of periods that started with very high stock valuations and even those valuations did not reach the level we saw in 2000. So it is reasonable to ask if we could see 4% fail for a 30 year period from 2000. It is also reasonable to ask what sort of lower withdrawal rate might be needed if from times of high valuations.
However those are different questions than the one that Greaney, Trinity etc. answered.
a) If they really had made a mistake then it would be incumbent upon them to correct their numbers.
b) If however the case is that they got their number right but there is a different better number that people should use then it is the duty of the people proposing the different number to calculate that number (or range of numbers), document how and why they chose their calculation method and argue why their number(s) should be adopted.
You found it easier to simply make the incorrect claim that “intercst got the number wrong” rather than do the heavy lifting required by proposing a new and better number.
What you should have stated instead is
a) intercst got the number right
b) however it is NOT a number you should use to plan your retirement
c) here is a better way to calculate a withdrawal rate
d) and here are the reason why it is a better way
However that would have required a lot of difficult work by you or others who support your position, work that you seemed incapable of doing and work that you were not able to get anyone else with credibility to do for you.
Therefore you went with
a) “intercst got the number wrong”
b) “<b>intercst</b> got the number wrong”
C) “INTERCST GOT THE NUMBER WRONG”
D) “INTERCST GOT THE NUMBER WRONG!!!!!!!!!!!!!!!!!!!!”
and so on ad infinitum.
And it hasn’t worked
And it won’t work.
Of course I believe that Greaney calculated the SURVIVING withdrawal rate properly. I have been saying that since the first day. Greaney claimed that a 4 percent withdrawal rate is “100 percent safe” regardless of the valuation level that applies on the day the retirement begins. I do not agree. I believe that the safe withdrawal rate CHANGES with changes in valuations (because valuations affect long-term returns).
If I were to say that a 4 percent withdrawal is always “100 percent safe” I would be engaging in financial fraud. I do not believe that. A failed retirement is a serious life setback. So I am not willing to post dishonestly re this matter. Each investor has a right to hear both sides of the story and to decide for himself or herself which withdrawal rate to employ in his or her own retirement plan.
My sincere take.
My best and warmest wishes to you and yours.
Rob
“Of course I believe that Greaney calculated the SURVIVING withdrawal rate properly. I have been saying that since the first day. ”
But you have also been saying “Greaney got the number wrong” ad nauseam since the first day. Until you realize that repeating that is counter productive you will never make any headway.
Greaney got the safe withdrawal rate wrong. People used that number to put together their retirement plans. It is important to get that number right.
Rob
“Greaney got the safe withdrawal rate wrong.”
Here is what I suggested earlier
What you should have stated instead is
a) intercst got the number right (meaning the historical number)
b) however it is NOT a number you should use to plan your retirement (you should calculate the future number)
c) here is a better way to calculate a withdrawal rate (fill in the blank)
d) and here are the reason why it is a better way (fill in the blank)
You need to work on c) and d)
Here is Greaney’s study: https://retireearlyhomepage.com/re60.html
Juicy excerpt: “100% safe historical inflation-adjusted withdrawal rate”
You ignored the key word “historical”. And as a result, you wasted two decades of your life and trashed all your real-life relationships. Catastrophically (and tragically, and stupidly) unproductive.
I 100 percent agree that Greaney calculated the historical surviving withdrawal rate properly.
It is up to each investor what number to use to plan his retirement. If some want to use 4 percent, that should be up to them. It is my job (and the job of other community members who see things as I see them) to point out the dangers of using the historical surviving withdrawal rate to plan a retirement beginning at a time of high valuations. I wouldn’t do it. But I am not God. People should listen to both sides and decide for themselves what to do.
I have posted hundreds of thousands of words on c and d. Again, it is up to each investor to decide what to do for himself or herself. The key is to open every site to honest posting so that every investor can hear both sides. To permit people access to only one side of the story is fraudulent. There is no excuse for permitting people access to only one side of the story, in my assessment.
Rob
Here is Greaney’s study: https://retireearlyhomepage.com/re60.html
Juicy excerpt: “100% safe historical inflation-adjusted withdrawal rate”
You ignored the key word “historical”. And as a result, you wasted two decades of your life and trashed all your real-life relationships. Catastrophically (and tragically, and stupidly) unproductive.
If you think this is all a joke, then you think this is all a joke. I do not think that this is all a joke. I had become friends with a number of the people who posted at the Motley Fool board during the time I posted there.
There have been many times in history when a 4 percent withdrawal was not safe. In 1929, the odds of a 4 percent withdrawal working out were only 50 percent. That ain’t safe. Greaney should have corrected the error in his study within 24 hours of the moment he learned about the error in it. Had he truly believed that he had included a valuation adjustment in the study, we never would have seen any of the behavior that we have seen over the past 19 years. His behavior shows us that he knows that the study is in error. There is no other possible explanation for that behavior.
My sincere take.
Rob