More ideally SWR measures should also include prior accumulation rate data. 30 years of monthly/yearly savings, 30 years of monthly/yearly drawdowns. I have no direct references for that however likely you'd find that using leverage in younger years, such as initially buying a home using a mortgage, adding stocks as the mortgage leverage factor declines, transitioning more to wealth preservation/lower volatility (such as thirds) at/near retirement ... to be the overall 'better' approach.I can't tell what you are suggesting.All stock 30 year SWR has higher variance/volatility in outcomes that other more balanced asset allocations. Following bad cases typically exceptionally good cases arise, those more extreme exceptions uplift the average, but where most wont achieve that distorted average. All stock Japan 1990 (lost decades (plural)), Iceland .... and numerous other examples indicate how bad all-stock/domestic can be. In contrast a balanced asset allocation (such as for a Japanese investor thirds domestic stocks/US stocks/Gold) yielded more/better results, less variance, a higher SWR (better lowest max withdrawal rate across multiple 30 year sets), similar average rewards when the exceptional all-stock cases are excluded.
Being in a room with 8 other six foot tall individuals, average height six feet, and a tenth individual enters the room of seven feet height, and 90% of the people in the room are below average height.
When do we switch to 1/3, 1/3, 1/3 and how do we start with the same sized retirement portfolio as someone with any other allocation?
Do you consider 3% of 25x expenses to be superior to 2.5-4.0% of 40x expenses?
SWR is a percentage and for different sized portfolios it tells us nothing about what we can actually spend. Pick a real savings rate, a real number of years worked, and show us how much can be spent for action A vs action B.
In my case I would have 200x expenses with 40 years in bonds at the Japan peak. That sounds better than my current US sequence.
SWR is just a guide, a historic measure of the worst case being used as the hoped for future not being as or worse than that. Nothing is guaranteed and accordingly there is no assured (predictable) superiority, that's something that can only be measured with hindsight.
Statistics: Posted by seajay — Sat Jul 06, 2024 9:09 am — Replies 143 — Views 16724