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What are the units of spend_mean, spend_min and spend_max in the table, and what exactly are these referring to? The post says: >The mean amount you would hav

by dnadler 10y ago

What are the units of spend_mean, spend_min and spend_max in the table, and what exactly are these referring to? The post says: >The mean amount you would have been able to spend by year if you had followed this plan, you retired in years 1928-1985 and you enjoyed a 30-year retirement. But I don't really follow... in year 1, spend_mean is 4.567. Does that mean on average I spend $4.57 in year 1? Is this in addition to the constant spending? Is variable spending in addition to constant spending? Or is this the % of the portfolio that I am drawing from by spending my const_spend target?

T-A 10y ago
From the y axis in the chart: "Annual spending as % of starting portfolio".
deleted 10y ago
[deleted]
sombremesa 10y ago
I'm assuming it's all dollars. There is no $4.57, it's actually $4,567 (but I guess the actual number doesn't matter if you treat them all the same). spend_mean, spend_min, and spend_max are probably the amounts you'd spend if you were in the mean, min and max respectively. For example, according to this data, the mean amount you have saved up is ~$667,459 (I calculated this backwards) - so for the first year you'd spend 2321 + 0.002102*667459 = $3,724. Likewise if you saved the max in the dataset you'd spend $5,358 instead (total, not in addition to anything). And yes, the var spending is in addition to const spending, it's explained a bit lower in the article.
RockyMcNuts 10y ago
author of TFA here, I updated the descriptions a little, basically in year 25 you spend $2.321 in constant dollars (starting portfolio in the example is 100, so 2.321% of starting portfolio adjusted for inflation) plus 8.218% of the value of the portfolio in that year. Using that strategy, over all 59 cohorts 1928-1986, - median cash flow in year 25 was 12.16 - worst case 3.756 - best case 27.38 - all as a % of starting portfolio, in constant dollars.

by dnadler 10y ago

T-A 10y ago

From the y axis in the chart: "Annual spending as % of starting portfolio".

deleted 10y ago

[deleted]

sombremesa 10y ago

I'm assuming it's all dollars. There is no $4.57, it's actually $4,567 (but I guess the actual number doesn't matter if you treat them all the same). spend_mean, spend_min, and spend_max are probably the amounts you'd spend if you were in the mean, min and max respectively. For example, according to this data, the mean amount you have saved up is ~$667,459 (I calculated this backwards) - so for the first year you'd spend 2321 + 0.002102*667459 = $3,724. Likewise if you saved the max in the dataset you'd spend $5,358 instead (total, not in addition to anything). And yes, the var spending is in addition to const spending, it's explained a bit lower in the article.

RockyMcNuts 10y ago

author of TFA here, I updated the descriptions a little, basically in year 25 you spend $2.321 in constant dollars (starting portfolio in the example is 100, so 2.321% of starting portfolio adjusted for inflation) plus 8.218% of the value of the portfolio in that year. Using that strategy, over all 59 cohorts 1928-1986, - median cash flow in year 25 was 12.16 - worst case 3.756 - best case 27.38 - all as a % of starting portfolio, in constant dollars.