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Subject:  Re: Community Question Date:  9/25/2013  11:39 AM
Author:  Rayvt Number:  73297 of 100168

no further employment checks coming...
2. The total of their current savings, and any remaining non-employment income expected, is no more than, and no less than, the approximate estimation of their living expenses (including elderly costs) projected out to their natural dirt nap date.

By "current savings" I assume you mean "liquid assets".

This speaks about assets ("savings"), but says nothing about how they are deccumulating, that is, how the assets are being draw down and converted to income.
Without that information, it's not possible to answer the question. Heck, it's not even possible to *pose* an answerable question.

Assets are assets and income is income. Assets != income. The question is meaningless as posed.

Question #1:
How much of their funds is it suitable for them to park in an unhedged S&P buy & hold strategy?

Short answer: Asked and answered.

Objection: The wording of the question is an attempt to smuggle in an assumption to import a specific answer.
This is a standard question asked in a completely non-standard form.

The standard wording goes something: "What is a suitable asset allocation -- what percent in stocks and the rest in bonds (or other stable-value asset class)?"

If a Financial Advisor who posed the question as above, rather than in the asset allocation form, that would be evidence that he is incompetent and ignorant of the field.
The proper response a retired person should make to this would be, "Thank you for your time, but I am looking for a FA who knows something about investing. If I wanted advise from an ignoramus, I'd ask my brother-in-law."

For one thing, the question is an oxymoron. By definition, a portfolio that is partly in S&P and partly in bonds is NOT unhedged. Unhedged means 100% in S&P, so you are asking "how much is suitable to have in the S&P, of the amount that is invested in the S&P?"

Short answer, answered again: 60% of the portfolio.

Long answer:
There are entire websites devoted the the discussion of that issue -- methods & techniques for converting an asset base to a stream of income. and specifically this board:

This question could not reasonably be asked by anyone who isn't completely ignorant of the field. The classic paper was published in 1994, "DETERMINING WITHDRAWAL RATES USING HISTORICAL DATA" by William P. Bengen, which expands on papers & books by William Bernstein. This has to be one of the most well-known and most cited papers in the field.

To even (non-rhetorically) ask the question reveals lack of pertinent knowledge.

Dave, you know all this, right? Someone who presents themself as a "Leverage Planner" could not possible not know all this. Right????? So how come you are asking this question in this form?

Question #2:
How much additional funds, beyond their projected natural living expenses, would they need to have in order to put all of the original amount into such a position?

I have no idea what this means. I do not understand the question. Is this trying to ask about the terminal value at the end of their life expectancy?

"funds" and "expenses" are two different things. A "fund" is a lump of assets. "Expenses" are periodic expenditures of cash.
A fund is not spent all at once. It is tapped a little bit at a time for paying expenses. The remaining money in the fund grows (earns interest, etc.) until it it exhausted.

I don't mean to be harsh, but really??!!??

This question is so basic that it cannot even be asked seriously. And if someone honestly did not know, then 10 seconds with google would come up with hundreds of thousands of hits.
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