No. of Recommendations: 2
the SAFE withdrawl rate can be much better than the % mentioned.

would you mind elaborating on:

a) % allocations with vanguard fund names, and

b) Safe withdrawal rates given your prescribed allocations

c) references, links for me to review?


I would disagree with Dr. Tarr (I rarely do) in talking about a Safe withdrawal rate.

If you want something really sophisticated about safe withdrawal rates, by somebody who does understand statistics and probability and modeling, look at Gummy's web site (I'll just give the main link, because he talks about safe withdrawal rates a lot of places):

http://gummy-stuff.org/index.html

There are two issues with safe withdrawal:

1) Average rate of return over inflation (real inflation, not to be confused with CPI);

2) Fluctuations in returns, meaning you may have assets that are losing money for periods during your withdrawal stage.

One argument made about asset allocation, which I believe is what Dr. Tarr is suggesting, is that with diversification across higher risk asset classes, you can keep a higher % of total assets in higher risk asset classes, because some will be doing well as others are doing badly. This means, assuming over time higher risk asset classes outperform lower risk asset classes, you will be able to have a higher withdrawal rate, because you will take money from the higher risk assets that are doing well not the ones that are doing badly.

Again, this works better if future market statistics repeat past market statistics.

My view continues to be to save more and that people who are relying on future markets to do their savings for them are playing with fire.
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