nedsaid, thank you for this. I'll look at Rob's Tools page. You're right about statistics. Statistics don't matter if you're the one falling within the bad statistic. I guess I could tweek to get to 100. Fiddle with our budget. I don't think at all that I'll need 4% so there's room there.I think you are thinking along the correct lines. I would double check with other tools, Rob Berger has a Tools page on his website. I checked outI'm retired and not collecting Social Security (age 60). I'll be glad when I start collecting as I am a nervous Nellie.
I am thinking about collecting at 62, but that's not the feedback I'm looking for. I "stress-tested" my portfolio this morning using Portfolio Visualizer. Using my current balance and asset allocation, I simulated an immediate 50% equity crash and rebalanced.
I then factored in withdrawals for the next 16 months when I turn 62 and start collecting Social Security (these withdrawals will come from T-Bills which are part of my fixed income allocation). Finally, I used the 4% withdrawal method, adjusting annually for inflation (this will meet my spending needs), and for every percentile but the 10th percentile I end up with more than I started out with after 30 years. Survival rate was 95.81%.
I'm happy with this outcome. Should I be? Is this a reasonable way to stress test a portfolio?
FI Calc and I liked working with that one. I have access to MoneyGuidePro through the Advisory service that I am using, I ran the Monte Carlo simulations today and I got a success rate of 91%, which is good. They do say that I might have to adjust my spending in really bad markets but it gives me a good idea.
https://robberger.com/category/tools/
Of course no one knows the future and these are just projections, but I believe in the process and believe this to be useful. Of course if you are one of those, the unlucky 4.19% percent, if you fail then your chances for failure are 100%. Like the basketball coach would say, if the shot goes in your chances of making it are 100%. He was joking a bit but he was trying to reinforce the concept of good shot selection. If you execute your offense, pass the ball around, make the defense move, you will likely have an open shot at some point with a good chance of converting to a score. It does take patience though. By doing the correct things, you are increasing your chances of a successful outcome.
What I am trying to say is that the very unlikely is possible. Odds are very good that you will succeed doing what you are doing. One could also say that if you miss the shot, your chances of scoring are zero.
Thanks again. Much appreciated as always.
Statistics: Posted by Charles Joseph — Sat Apr 20, 2024 4:42 pm — Replies 16 — Views 402