New Posts Starting April 3, 2007

Updated: May 16, 2007.

What Do I Really Think About Long-Term Timing?

Long-term timing raises today’s traditional Year 30 Safe Withdrawal Rate to 5.4% (plus inflation) of your original balance. It raises today’s traditional continuing Safe Withdrawal Rate to 4.9% (plus inflation).

Dividend strategies do better.

What Do I Really Think About Long-Term Timing?

Expanded Allocator

I have built an expanded version of the Income Stream Allocator. It includes 5 income streams and a cash management account.

Expanded Allocator

Using Weighted Averages

I examined using weighted averages on the Expanded Allocator. They almost always work well for the first 15 years. Sometimes, weighted averages work well for more than 30 years.

Using Weighted Averages

Valuations and Income Streams

The Year 30 Retirement Risk Evaluator shows us why it is best to focus on the income stream in today’s market.

Valuations and Income Streams

Expanded Allocator Insights A

In this initial investigation, I find that I can increase the Income Stream substantially. The reason? My Expanded Allocator is much easier to use than my Income Stream Allocators.

Expanded Allocator Insights A

Expanded Allocator Insights B

I tried a variety of allocations to determine the value of fine grain optimization. It is not much.

Expanded Allocator Insights B

Expanded Allocator Insights C

This time, I examined mortgages.

Once again, the BEST combination consisted of the extremes: one investment with a high initial income and the other with the fastest growth rate at a lower initial yield.

Expanded Allocator Insights C

Building on Success

Combining intermediate term timing based on valuations (i.e., delayed purchases) with an income blend approach lifts the continuing withdrawal rate to 6.1% (plus inflation).

Building on Success

Expanded Allocator Insights D

This time, I examined inflation. It doesn’t cause nearly so much damage as I had expected.

Expanded Allocator Insights D

Expanded Allocator Insights E

I continue to investigate the effect of inflation when managing income streams. It is not nearly as bad as one might fear.

Expanded Allocator Insights E

Today’s Alternatives

In February, I spoke of the Many Alternatives available to a retiree. Now he has even more.

Today’s Alternatives

Taken At Face Value: Upside

Once again, I have taken the Morningstar Dividend Investor newsletter at face value. Last time, I was conservative. This time, I assume that they meet the upside of their growth levels.

Taken At Face Value: Upside
Edited: Taken At Face Value: Upside

May 2007 Highlights

We continue to make outstanding progress. It is hard to see how we can lift the bar much higher.

May 2007 Highlights

Automatic Rebalancing Examples

If you have ever doubted the folly of automatic rebalancing, look at these retirement portfolio examples.

Automatic Rebalancing Examples

Early Retirement with a Delayed Pension

This shows what happens if you have a pension (or Social Security) ten years after you retire. Your continuing withdrawal rate will be around 6.6% to 7.4% of your original balance (plus inflation).

Early Retirement with a Delayed Pension