Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
Everyone has always been open to the research. What you are referring to is your opinions of the research. You have had ample opportunity to present your opinions. You have done so thousands of times. There are no unanswered questions. The problem for you is that people just don’t agree with you. You just can’t take no for an answer. People just grew tired of you repeating the same things, refusing to answer questions and making up stories (such as criminal acts, calling people goons and referring to John Bogle as a con-man). That type of behavior is unacceptable. We do not have to tolerate it. Thus, you are rightfully banned.
My opinion of Shiller’s research showing that valuations affect long-term returns is that Shiller’s research shows that valuations affect long-term returns. That much would certainly be fair to say.
My best wishes to you, Anonymous.
Rob
How do you adjust the withdrawal rate based on someone’s age?
The convention in the studies is to go 30 years out. The assumption is that the person will retire at 65. Having the retirement survive for 30 years gets him to age 95. Not too many live beyond that age.
It is of course possible to examine what would happen at all sorts of other ages. I think it can be useful to do that. When Greaney said that a 4 percent withdrawal is “100 percent safe,” he was directing his words at a community of people planning early retirements. I believe that Greaney left his corporate employment at age 39. If he lived to age 95, he would need a plan to survive for 56 years. That’s a lot more than 30 years.
In practical terms, that’s not as much of a problem as it appears to be on first consideration. When retirements fail, they fail because of a stock price crash in the first 10 years. A retirement that is constructed to survive 30 years is likely going to survive 56 years. If you don’t take a big early hit, you are probably going to be fine.
That’s why taking valuations into consideration is so important. The valuation level that applies on the day the retirement begins tells you how much risk there is that you will take on a big hit in the first 10 years. That’s almost the entire story of retirement safety. You don’t want to overlook that.
The safe withdrawal rate concept is great. It reveals all sorts of things that are counterintuitive, things that people would miss if they did not explore safe withdrawal rates. One of the reasons why I fell in love with Greaney’ssite when I discovered it is that he put so much focus on safe withdrawal rates.
Of course, it’s important to get the numbers right. That’s where Greaney and I part company. He does not take valuations into consideration. I believe that it is 100 percent imperative to take valuations into consideration. It is my strongly held view that valuations are the most important factor in retirement safety. Because of how they affect that vulnerable period — the first 10 years of the retirement.
Rob
Your grossly incomplete answer and minimal analysis indicates that you shouldn’t be giving out investment/retirement advice.
I naturally wish you all the best that this life has to offer a person, in any event.
I like to think that that might help at least a tiny bit.
Rob