A side note on this assertion, which I think is part of Tom's argument: "Suppose, for example, a retiree is taking withdrawals at a 4% annual rate. Even if the market were to drop 50%, that 50% loss would only be applied to the 4% withdrawal, resulting in a loss of just 2%." That argument about 2% seems wrong. Even if the portfolio bounces back the next day, the loss is at least 4%, the amount withdrawn. E.g., $1M drops by half to $500k, take $40k withdrawal leaving $460k, which doubles next day to $920k. This is 95.8% of $960k, what you would have had if the market had not dropped for a day, or a 4.2% loss. Not 2%.
Our providers are able to give us lots of features, sometimes very shortly after they recognize the need for such features, and in a changing business and technical environment, in large part by quickly linking together a number of independently designed, maintained, and operated systems. As a result, systems have a number of independent points of failure. If they hadn't gotten pretty good at making each of those system pretty reliable, we'd see thing broken more often that working. But as we enjoy all this cool stuff, we need to expect it to be broken at times, likely when we need it most, and to manage our dependency on it accordingly. Unfortunately, this may be be a bit less efficient for us; for example, it may be prudent to do some preliminary income estimates for tax planning purposes a bit early, to have something in case there is an outage when we hope to do right before year-end, etc.
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A side note on this assertion, which I think is part of Tom's argument: "Suppose, for example, a retiree is taking withdrawals at a 4% annual rate. Even if the market were to drop 50%, that 50% loss would only be applied to the 4% withdrawal, resulting in a loss of just 2%." That argument about 2% seems wrong. Even if the portfolio bounces back the next day, the loss is at least 4%, the amount withdrawn. E.g., $1M drops by half to $500k, take $40k withdrawal leaving $460k, which doubles next day to $920k. This is 95.8% of $960k, what you would have had if the market had not dropped for a day, or a 4.2% loss. Not 2%.
Post: Why Bonds Matter
Link to comment from October 3, 2026
Our providers are able to give us lots of features, sometimes very shortly after they recognize the need for such features, and in a changing business and technical environment, in large part by quickly linking together a number of independently designed, maintained, and operated systems. As a result, systems have a number of independent points of failure. If they hadn't gotten pretty good at making each of those system pretty reliable, we'd see thing broken more often that working. But as we enjoy all this cool stuff, we need to expect it to be broken at times, likely when we need it most, and to manage our dependency on it accordingly. Unfortunately, this may be be a bit less efficient for us; for example, it may be prudent to do some preliminary income estimates for tax planning purposes a bit early, to have something in case there is an outage when we hope to do right before year-end, etc.
Post: Unexpected, cautionary or funny tales about managing your retirement accounts online
Link to comment from August 4, 2024