ochotona
Played around with the financial goals with a 25 year period and my 5 funds gave a 85 % success rate and ran out of money in year 18 on the last line (10th percentile). My only fund (prwcx) which is a 70/30 going solo was around 94% success rate. Interesting I pulled out Warren Buffet’s VOO fund and it made every example much stronger although I do not own it. Ok,I think that’s enough said from me on funds in retirement. Maybe I’ll sell some and add VOO .
85% success rate? So that’s a one-in-seven chance (actually 1-in-6.67) of running out of cash from your investment accounts. Are you OK with that? That’s not enough for me.
VOO is the Vanguard S&P500 fund, it’s not from Buffet. It is highly valued and is highly concentrated in the Magnificent Seven stocks. That’s not the direction I would turn to for risk-reduction.
Indulge me for a moment… in Financial Goals, set Portfolio Type to Asset Classes (not Tickers). Then below if you click the down-triangle next to the asterisk for Start Portfolio, you get a drop-down menu. Choose Harry Browne Permanent Portfolio and rerun your case.If you got 85% survival rate with all stocks, this choice should be noticeably higher. Then do the same for some of the others, like 60/40, or Scott Burns’ Couch Potato Portfolio. They should all be higher than 85%. Oh, then re-run using just Asset Class US Stock Market.
Probably the most most most difficult thing for investors to do as they transition from being accumulators to being spenders is to adapt to portfolios or other methods (annuities, sorry Clark, cussword) which don’t maximize wealth but maximize their quality of life and safety during retirement.
OK, I’m sitting at Portfolio Visualizer now: start with $1,000,000 30 year retirement, trying to pull $40,000 a year from it (4%), take all the defaults for now:
100% US stocks 88.84% success kinda agrees with your 85%
Scott Burns 88.81% whoa not as good as I thought
60/40 96.38%
Permanent Portfolio 96.23%
When you run in Asset Class mode, the data goes back to 1970.
If you still want to plan to an 85% survival, you could take out $1,000 more per month on a $1,000,000 portfolio with a 60/40 vs 100% US stocks. That is a huge huge uplift in possible quality of life. Or if you have half of that, you get $500 a month more. Inflation adjusted.
Being more aggressive in retirement does not mean you’ll live better. You may be richer in the end, or broke-r in the end, your kids are more likely to love you (if you die rich) or absolutely hate you (if you zero out your accounts and they have to rescue yo in your 80s, which is so common).
We kids had to rescue Dad in the years before he passed, let me tell you, it was second in terrible only to my wife’s cancer diagnosis.
ocgotona
Just did another Monte carlo.
It gave a 99% success chance.
BTW,the trulx is a large core fund that I own that I didn’t use earlier.
prhsx 33%
trulx 23%
prwcx 34%
PRMTX 10%