Results tab incorrect or misleading as to portfolio pull down. #66

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david-wendelken opened this Issue Sep 23, 2016 · 2 comments

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@david-wendelken

Example test portfolio:

$1,000,000 portfolio.
$50,000 SS income.
$60,000 yearly spend, inflation adjusted.

This is the Withdrawal Analysis
<
1st 5y : 1-10 : 11-20 : 21-30
Average: $60,000 $55,000 $60,000 $60,000
Median: $60,000 $60,000 $60,000 $60,000
St. Dev.: $0 $16,583 $0 $0
Highest: $60,000 $60,000 $60,000 $60,000
Lowest: $60,000 $0 $60,000 $60,000
Failures: 0 0 0 0

These numbers make no sense to me. Perhaps I don't understand what the number represents.

Ignoring inflation, I only need to spend $10,000 from the portfolio to make the $60,000 target.
So, numbers in the $55,000 to $60,000 range make no sense if it's total spending amount. I can't imagine I would ever have to drop down below the target $60,000 spending target given this scenario.

If the amount instead refers to how much I would be pulling from the portfolio to reach my spending target, again, numbers in the $55,000 to $60,000 range make no sense.

I can't figure out any other likely meanings for this number.

Is this a defect or am I just clueless?

Thanks!

@bogosj
bogosj commented Sep 23, 2016

This is what I see with your inputs: http://imgur.com/a/VpKQ1 - leaving all of the other fields set to the defaults.

My interpretation: the way it is being modeled is that your entire $60k inflation adjusted spending is being drawn off of your portfolio at the beginning of each year, which is why it's in the "Withdrawl Analysis" section. The model is also "refilling" your portfolio with the additional SS income, thus leading to a net of roughly 10k outflow from the portfolio, which is why it's succeeding 100% of the time ($10k net outflow is 1% of a $1m portfolio).

I'm confused how you got the $55k number though.

@david-wendelken

Can't read the link at work. :( Will check it out Sunday when I get home.

I get $60,000 across the board with a retirement in 2016.
If I use 2017 as the retirement year (because that's my plan), I get a lower number in the 1st Third column. Don't understand why.

From my perspective, I'm NOT withdrawing $60,000 from stocks. I would have to pay capital gains on those stocks, plus income tax on the income, then buy new stocks with what's left. That would be a silly way to do things. Makes much more sense to only withdraw what my other income sources can't supply!

I think your withdrawal number is a confused combination of two different numbers:
(1) How much am I withdrawing from my portfolio?
(2) How much will I have to live on?

To me, it would make much more sense to show both those numbers separately rather than combine them into one number. #1 shows the burn rate thru my portfolio. #2 shows the amount of money I will have to live on each year. If #1 is too high, #2 will drop also, but with a lag while I blow thru my savings. Better to show when the drop is STARTING, not when it's arrived and our budget's in the toilet. :)

---- James Bogosian notifications@github.com wrote:

This is what I see with your inputs: http://imgur.com/a/VpKQ1 - leaving all of the other fields set to the defaults.

My interpretation: the way it is being modeled is that your entire $60k inflation adjusted spending is being drawn off of your portfolio at the beginning of each year, which is why it's in the "Withdrawl Analysis" section. The model is also "refilling" your portfolio with the additional SS income, thus leading to a net of roughly 10k outflow from the portfolio, which is why it's succeeding 100% of the time ($10k net outflow is 1% of a $1m portfolio).

I'm confused how you got the $55k number though.

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