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Fifty

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Re: Fifty

#101

Post by JoshTriplett »

fweespeech wrote: post #97
JoshTriplett wrote: post #95

Earlier quoted context omitted.

> Health insurance never provided 100% coverage Of course not; it's designed to limit liability in the case of disaster, not pay for absolutely everything. The term "Out of pocket maximum" may prove relevant here; there's a limit to your annual liability, which is what you're paying for. > Black swan events do happen to people and you have no real safety margin for them Read the article I linked about safety margin,…

> Not for over a century, including the Great Depression and the .com crash, according to various studies as well as publically available data from which anyone can make the same calculations. Evidence, please? 1) Even the author of the study doesn't say what MMM does in regards to the 4% rule. http://www.bogleheads.org/wiki/Safe_withdrawal_rates#Limitat... http://www.bogleheads.org/forum/viewtopic.php?p=717195#p7171…

The study was for the US, and never claimed to be otherwise, nor am I claiming otherwise. If you start talking about other countries, you're changing the parameters of the analysis. Get the numbers for your target market and run the analysis.

And yes, of course you have to be prepared to adjust based on conditions. You shouldn't just blindly withdraw 4% every year. Withdraw what you actually spend, and one of your many backup plans should be to spend less.

More to the point, fine, if you don't think it's safe, have other backups in place. Work a few more years, or have access to means of part-time work, or build supplementary incomes, or any number of other solutions. What's your alternative proposal? "This doesn't work perfectly in all life circumstances, so give up and plan on retiring at 65"?

Make plans to retire sooner than 65, and be prepared to adapt based on conditions. If you make a plan to retire at 40, and something goes wrong, maybe you'll retire at 45 instead. Oh no, you're only retiring 20 years sooner than everyone else; woe is you.

I'm not making optimistic assumptions; I'm making tentative assumptions and estimates that I can adapt over time.

For my particular case, for instance, it helps that while I'm saving like someone who wants to retire in my 30s, I don't plan to quit when I get enough to retire. I plan to keep working indefinitely, because I'm enjoying myself doing so. But it's sure nice to have backup plans, and to build a substantial excess for charitable purposes.

Re: Fifty

#102

Post by b_emery »

rufugee wrote: post #60

I'm early 40s at the moment. I love technology, and love programming and system tinkering/admin in particular. I'm currently a CTO/CIO in a niche industry, although I write code almost daily and participate in various technical trenches many CIOs wouldn't venture into on a daily basis due to lack of resources. I am sadly terrified of getting older. Not because I fear death (well, maybe a little), but I fear the silve…

> I personally employee two 60+ folks on my team, and they're great resources. I wish other companies would view them in this way. It seems there is something which could be done...even if it's a company which distinguishes itself by making a point of hiring senior, aging folks for solving problems which require that level of experience.

We have a late 50's engineer who we're constantly trying to keep from retiring. The guy is just so experienced and so good that we're able to do things that we'd otherwise not be able to do. I see the silver ceiling as a niche thing. There might be areas were fast young and cheap will win, but there are certainly others where having a bunch of highly skilled 60+'s is a competitive advantage. After all, this is intellectual work we're talking about, not basketball or something.

Re: Fifty

#103

Post by fweespeech »

JoshTriplett wrote: post #101
fweespeech wrote: post #97

Earlier quoted context omitted.

> Not for over a century, including the Great Depression and the .com crash, according to various studies as well as publically available data from which anyone can make the same calculations. Evidence, please? 1) Even the author of the study doesn't say what MMM does in regards to the 4% rule. http://www.bogleheads.org/wiki/Safe_withdrawal_rates#Limitat... http://www.bogleheads.org/forum/viewtopic.php?p=717195#p7171…

The study was for the US, and never claimed to be otherwise, nor am I claiming otherwise. If you start talking about other countries, you're changing the parameters of the analysis. Get the numbers for your target market and run the analysis. And yes, of course you have to be prepared to adjust based on conditions. You shouldn't just blindly withdraw 4% every year. Withdraw what you actually spend, and one of your ma…

> You: The study was for the US, and never claimed to be otherwise, nor am I claiming otherwise.

> Me: What you fail to grasp, and what I am pretty sure you are going to refuse to believe at this point, is the 4% rule applied as you and MMM are suggesting is the same trap of overfitting that many people who engage in backtesting do.

http://www.financial-math.org/blog/2014/04/faqs-on-backtest-...

> 5. I do not understand the meaning of backtest overfitting. If a strategy worked in the past, why shouldn’t it work in the future? Could you please provide a simple example?

> Any random sample extracted from a population incorporates patterns. For example, after tossing a fair coin ten times we could obtain by chance a sequence such as {+,+,+,+,+,-,-,-,-,-}, where “+” means head and “-” means tail. A researcher could determine that the best strategy for betting on the outcomes of this coin is to expect “+” on the first five tosses, and for “-” on the last five tosses (a typical “seasonal” argument in the investment community). When we toss that coin ten more times, we may obtain a sequence such as {-,-,+,-,+,+,-,-,+,-}, where we win 5 times and lose 5 times. That researcher’s betting rule was overfit, because it was designed to profit from a random pattern observed in the past. The rule has absolutely no predictive power over the future, regardless of how well it appears to have worked in the past.

http://blogs.barrons.com/focusonfunds/2014/06/13/backtests-d...

> The point: Investors don’t know how many hypotheses the managers examined, didn’t like, and chucked out, before they found the perfect backtest. The more the data is tortured, the likelier the result is just a fluke. So: How often is a fluke passed off as “alpha,” or some kind of amazing financial innovation?

-----

I'm just putting this here because you clearly missed the boat on my post and its possible others will to.

Re: Fifty

#104

Post by JoshTriplett »

fweespeech wrote: post #103
JoshTriplett wrote: post #101

Earlier quoted context omitted.

The study was for the US, and never claimed to be otherwise, nor am I claiming otherwise. If you start talking about other countries, you're changing the parameters of the analysis. Get the numbers for your target market and run the analysis. And yes, of course you have to be prepared to adjust based on conditions. You shouldn't just blindly withdraw 4% every year. Withdraw what you actually spend, and one of your ma…

> You: The study was for the US, and never claimed to be otherwise, nor am I claiming otherwise. > Me: What you fail to grasp, and what I am pretty sure you are going to refuse to believe at this point, is the 4% rule applied as you and MMM are suggesting is the same trap of overfitting that many people who engage in backtesting do. http://www.financial-math.org/blog/2014/04/faqs-on-backtest-... > 5. I do not underst…

I understood your point. Past performance is no guarantee of future results. And I've seen multiple people (including MMM) make that same point in several different places; nor am I relying only on one source for advice. (Though if you're suggesting it has no predictive power for long-term averages, that's ridiculous; it's simply that predictions are not in any way guarantees, nor do they in any way let you time the market.)

But even if you don't buy into the 4% rate, or even if you want to make a more conservative assumption, the math for an estimate still works; just use a different multiplier. And you still shouldn't treat that estimate as a guarantee. Retirement doesn't need to be a binary one-way process, where once you retire if you didn't plan well enough you're doomed. One of the lovely advantages of retiring early is that you're still more than capable of working if you want to, or doing some other kind of work.

Nor should you assume that because you planned for 4% (or 3%, or whatever you like), you should withdraw that much like clockwork every year. You might plan for 4%, but then spend 2.5% because that's what you happened to need. And if the market happens to grow 10% in a year, great, but you shouldn't spend 2.5x as much that year. Whatever you don't spend stays in place, growing your buffer even more for future downsides. If you steal away every unexpected upside, averages stop working, and you'll be more screwed by unexpected downsides rather than just living a little more frugally for a while.

Estimates are just that: estimates. They're useful tools for planning, not guarantees.

Again, see the article I linked about safety margins. You're talking all about all the horrible things that could happen. So, have backup plans, and backup backup plans, and you still can retire before your 60s.

Re: Fifty

#105

Post by rokhayakebe »

crusso wrote: post #99
IkmoIkmo wrote: post #42

Earlier quoted context omitted.

Out of curiosity if I may, what'd you be doing if you woke up 30 tomorrow morning?

Well, if I didn't also have a family to consider - I think I'd move to another country. Just pick up and go somewhere interesting where I could challenge myself to learn a new language, culture, get a job in a new environment, and just generally make some really interesting memories. I think that the big mistake I made when I really was 30 was to retreat too quickly toward comfort.

I moved to the US when I was 19. Now I am 34. I have been thinking hard for the past few years about living briefly in Eastern Europe, then somewhere "desertic" in the Middle East, and a full year or more in Southern America (Hello Costa Rica). Living somewhere for a few years in another country is something every man* should do.

*I say man because I think it will be hard for safety reasons for women to just pick up and live anywhere. They tend to get harassed a little more frequently.

Re: Fifty

#106

Post by shostack »

tomjen3 wrote: post #85
fweespeech wrote: post #47

Earlier quoted context omitted.

> Or even if you're not changing track, if you're developer ~20%++ of the track changes on you every year, can you maintain this pace when you're older, maybe with a family, and don't have the time or motivation to learn yet another way of doing for the umpteenth time. For younger people I would recommend keeping a close eye on that situation over the long term and if possible have a plan B if you want to get off the…

Patio11 is my plan B. A startup at 40 is too risky but I am more and more convinced that if I took some problem domain that could be solved with code and then made that a SASS I could make quite a nice living for myself. Unlike Patio11 my first attempt would be to go for business clients first, and not sell any plan less than 99 usd.

Be wary of falling into the trap of magical thinking with SaaS businesses. It isn't as simple as "oh, I'll just solve a problem and build a small SaaS business around, then live off the recurring income indefinitely."

Competitors come and go, the value of your solution comes and goes with market changes, cost of doing business and customer acquisition fluctuates, churn happens, etc. Businesses are never at equilibrium. They are not magical passive revenue streams.

Re: Fifty

#107

Post by shostack »

cstross wrote: post #8

I hit 51 next month, and that's ... well. These decadal anniversaries seem to get more onerous each time. 20? No problem, it just means you're not a teenager any more! 30? Okay, you're officially a grownup, but you can still party! 40 was pause for concern, but it isn't what it used to be, the threshold of middle age: that's 50. Oops ... Well, as Terry Pratchett observed, inside every old man there's an eight year ol…

Charlie, would you describe a lot of the revelations here as coming to terms with the consequences of your collective life choices (for better or worse)?

Re: Fifty

#108

Post by shostack »

tonyedgecombe wrote: post #72
rufugee wrote: post #60

I'm early 40s at the moment. I love technology, and love programming and system tinkering/admin in particular. I'm currently a CTO/CIO in a niche industry, although I write code almost daily and participate in various technical trenches many CIOs wouldn't venture into on a daily basis due to lack of resources. I am sadly terrified of getting older. Not because I fear death (well, maybe a little), but I fear the silve…

"namely, a senior employee likely has a lot of his/her own personal overhead to cover, so salary requirements will be understandably greater" I wouldn't assume that, once the mortgage is paid off and kids have left home the cost of living plummets. In fact there could be a real cost advantage if nobody else is offering them a job.

That's a big and dangerous assumption.

Take the Bay Area...many people living here now that will likely never be able to buy a home if prices stay even close to where they are (let alone ever pay it off if they did). So then they have large mortgages or high rents.

There's also increased risk of major medical expenses, the baggage of paying for things like divorces, college, etc.

Re: Fifty

#109

Post by mistermann »

Frondo wrote: post #61
mistermann wrote: post #48

Earlier quoted context omitted.

I agree - the older you are, the more chances you've had to peek behind the curtains and see how truly corrupt the machine and people within it really are. Sure, try to make a difference here and there, but I'd advise not going too far out of your way, and never put your personal livelihood on the line. Better to focus that energy on family, friends and community, where you can make a difference.

Never put your personal livelihood on the line to make the world a better place? That's terrible, cowardly advice.

If you're surrounded by cowards / people who will sell out and join the corruption given the chance, it's neither cowardly nor terrible advice. Everyone has to learn this lesson on their own I think.

Re: Fifty

#110

Post by cstross »

shostack wrote: post #107
cstross wrote: post #8

I hit 51 next month, and that's ... well. These decadal anniversaries seem to get more onerous each time. 20? No problem, it just means you're not a teenager any more! 30? Okay, you're officially a grownup, but you can still party! 40 was pause for concern, but it isn't what it used to be, the threshold of middle age: that's 50. Oops ... Well, as Terry Pratchett observed, inside every old man there's an eight year ol…

Charlie, would you describe a lot of the revelations here as coming to terms with the consequences of your collective life choices (for better or worse)?

It sure looks that way.
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