I have gone with ECL (Ecolab) and Danaher (DHR), both of which are diversified companies that have some exposure to water. Bill Gates owns over 10% of the former and the latter is breaking up (likely next year.)
I have considered water rights plays, but unfortunately there's really not a pure play in that regard. Nestle does have water rights, infamously. Limonera (LMNR) and JG Boswell (BWEL) also sit on water rights.

Water plays seem to me the ultimate story stocks. It's an easy story to understand given our droughts, warming climate, and probable competition for a valuable resource; however, the 4 ETFs (PHO +51%; CGW +73%; PIO +52%; and FIW (65%) investing in the water theme have all underperformed SPY (+91%) over the last five years. Granted, several of the holdings of the funds are foreign stocks which have underperformed as a group during that time period. I lost money on Flexible Solutions (FSI), maybe the ultimate sucker's story stock: the company has a product that sits on the surface of reservoirs or swimming pools and retards evaporation. Good stories don't always translate into good returns. Maybe water stocks will have their day in the sun, if the metaphor doesn't pain you.

@Dex, Agree on that. Each person develops their own answer. There is not one set figure or style for everyone.

I have a pension that covers 45% of my budget. Then my interest income could cover 100% of my budget.

Hi Old Joe,,
Your reply still does not explain how you made your inputs. I'm still puzzled. I'm not as smart as you claim I think I am.
Please give us a sample input for a couple of years. For example, what would be your estimated equity input for 2016, for 2017, and for 2018? How were they specifically determined on a year-by-year basis?
My replies to your insidious and continuing charges are purely defensive. I merely react; I never initiate. That's a major distinction between our actions.
Best Wishes.

@Dex, The number that jumped out at me was the 4 years of cash for expenses. Isn't the general consensus calling for 18 months to 2 years? 4 years seems high to me and could be a drag on your portfolio.

That depends upon your comfort level - 4 would cover many downturns. Also, not 'cash' near cash - short term investments - you could ladder treasury bonds.

@Dex, The number that jumped out at me was the 4 years of cash for expenses. Isn't the general consensus calling for 18 months to 2 years? 4 years seems high to me and could be a drag on your portfolio.

That depends upon your comfort level - 4 would cover many downturns.

@Dex, The number that jumped out at me was the 4 years of cash for expenses. Isn't the general consensus calling for 18 months to 2 years? 4 years seems high to me and could be a drag on your portfolio.
In general, these types of questions are hard to answer due to all the variables and the unknown future expenses. While some here discredit the Monte Carlo calculators, I find them worthwhile as a confirmation tool. In these important decision making processes, it is better to use all the tools available.

http://www.getrichslowly.org/blog/2011/08/11/extreme-early-retirement-in-practice-how-two-people-did-it/
In 1991 we had close to $500,000 when we took this leap
http://retireearlylifestyle.com/

"Generally, a bottoms up approach is better i.e. budget, net worth, pension, SS etc."
@Dex: You've done it now. I prescribed something similar many years ago, based upon my personal experience. Since it didn't involve elaborate financial engineering and theories, but rather common sense based upon life experience, our would-be master of the financial universe regarded that as inherently inferior to his vaunted Monte Carlo approach. He is under the misapprehension that I denigrate Monte Carlo, which is in fact inaccurate. Because he is evidently incapable of contemplating that anything he believes may not be factual, it has led to the present acrimonious exchange of opinion. You may be in danger of joining me in that category.
First, the planning and accumulation of data: I designed a worksheet which divided our expenses into various categories, including those which were optional and those which were absolutely required. I didn't buy into the "oh, once you're retired you're expenses will be lower" theme which was so popular at the time.
Once a month we tabulated all of our expenses, and filled out that worksheet. After three or four years we had a pretty good idea of our spending patterns. Assuming (yes, MJG, an assumption!, indicating of course a lesser intellect than you obviously possess) that that pattern was a reasonable model for the future, I then spent many, many hours designing a spreadsheet that could consider our net worth, lack of debt, anticipated incomes from pensions, investments and SS, ongoing expenses, and special expenses.
It allowed the entry and consideration of variables for inflation, investment income according to various asset allocation percentages (cash/bonds/equity), special expenses, and major financial disasters, a la 2008, which could be inserted at any desired year. It allowed for two expense modes: one allowed variable optional expenses each year (travel and so forth), and an alternative mode which held the expenses to the mandatory for one year, but allowed for additional optional expenses the second year, and so forth alternating every other year. Being a pessimist by nature, every facet of the calculations was designed to utilize the least favorable case. For instance, it assumed that cash would generate less interest than actual inflation, that bond income would merely break even, and that equity income would be in a variable input range from 3 to 5% above inflation.
For income source and expenses it generated a series of compounding tables which ran out for forty years, starting at age 60, which would have taken us to 100 years of age. From all of the subsidiary tables (each of which, using compounding calculations, took about one page of the spreadsheet) it generated a master table showing the remaining investment assets year-by-year.
It was prescient, in that 2008 struck at the least favorable possible time in our case: a few years after we retired. Because of the deliberate pessimistic bias of the calculations, we've weathered that disaster, and are still in excellent financial condition.
If you want a solid substantial approach based upon known variables, rather than Monte Carlo assumptions, I can recommend the spreadsheet approach, based upon personal experience.
Regards- OJ

Hi Dex,
It appears that you have made a decision that is comfortable for your circumstances. Good!
I wish you well and hope that your plan is successful. You were very wise to include safety factors in your wealth component breakout with the inclusion of “near cash” and “contingency” funding.
I surely do not want to rain on your parade, but I did a few exploratory Monte Carlo simulations for a 30-year retirement period to test the robustness of your analysis that included Social Security benefits. Warning red flags went flying.
I did the analyses using your postulated 7% annual return. I examined return standard deviations that ranged between 10% to 18%. Results were disastrous for the 185K investment portfolio by itself. Projected survival rates were at lower mud levels. There is an extremely high probability that you will need to heavily dip into your near cash and contingency components.
Even assuming a $350,000 dollar portfolio earning a 7% annual average return rate, the survival odds never reach an 80% level. That’s a risky route by my compass.
Given the meager market returns in recent years, an assumed 7% annual return rate seems a bit bushytailed. I briefly examined a 6% annual average return; not surprisingly, the estimated survival likelihoods went even further South.
Obviously, you will follow your analytical results and your gut feelings. I proffer only a caution, Take a little time to more fully evaluate your circumstances. You might want to reassess your analysis including portfolio return’s variability as a major element in that rework.
Whatever action you finally implement, I do wish you a relaxed, happy, and trouble-free retirement that permits you to complete any bucket list that inspires you.
Best Wishes.

Nice work Dex.
Some thoughts. I'd be a little worried about a swoon that lasts longer than 4 years and how it would put pressure on your near cash invested assets. A lost decade? Sound possible?
In the example, I didn't give an asset allocation. Look at the examples again, I was conservative e.g. I didn't give any income towards the 4 year near cash or the contingency money. But, a bond, dividend focused portfolio should not be that stressed. So, even in your 10 year example, you may have to cut back on expenses or dip into your principle. The key to the example, are the key things to look at in the evaluation process.
Would it be worth breaking out your invested reserves into smaller pots of money and explore different ways of securing yearly income according to risk (from risk-less to highly risky). How would you expose your reserves to risk-less investments on up and how much would each pot require?
I'm not sure what you mean.
Also, what could you do with your non-liquid assets (house, condo, trailer, etc.) to help your income. How could you make these resources work for you? For example, I own a home that has the potential to add on an in-law apartment. I could rent the main house or the in-law space. This would reduce housing costs without dedicating any additional resources.
Definately, I could rent out my house, but I don't have the need.
Finally, isn't wine a fruit and therefore a food cost?
Nectar of the Gods, yes.

,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,

Might be a good time to relink Ray Dalio's presentation on the economic machine:
How The Economic Machine Works

FYI: The preoccupation with all of the things that could possibly go wrong has been a persistent characteristic of this economic recovery. It was termed recession porn in 2009. It has been a focus of websites, pundits and, of course, goldbugs. When an economist picks up the nickname “Dr. Doom,” it suggests an obsession with the negative.
Recession porn was perhaps best parodied in the following tweet:
Regards,
Ted
http://www.bloombergview.com/articles/2015-05-19/investors-underestimate-odds-of-virtuous-circle

Hi Dex,
You ask a very open-ended question that is poorly timed if it specifically applies to your situation. From your earlier postings, I recall that you jumped into the retirement stream a few years ago. If so, you are probably an unhappy camper these days that prompted the question. Fortunately, reassessments, recoveries, and reversals are often possible.
Good luck on your reassessment project.
Best Wishes.

Too many assumptions to go into there. Monte Carlo and others are like many rule of thumb (e.g. 4% rule) estimators - good for generalities but not good for the specific situations.
Generally, a bottoms up approach is better i.e. budget, net worth, pension, SS etc.
This is my 2015 budget own home, no debt, single person
Basic Living
House
2,117 RE Tax
2,556 HOA
489 Electric
928 Insurance
300 Misc Purchases
133 Mail Box
6,522 Subtotal House
Car
138 AAA
744 Routine Mtc.
1,164 Insurance
82 Registration
1,800 Gas
3,929 Subtotal Car
Personal Expenses
327 Income Taxes
1,200 Cash
360 Medical
340 Cell Phone
3,300 Food
600 Wine
59 Misc
396 Internet Access
300 Dining Out/Entertainment
4,029 Health Ins.
300 Clothes
- Driving Lic
11,211 Subtotal Personal Expenses
21,661 Total Basic Living
Incremental Living - 1
91 Travel Trailer Reg
492 Storage
Good Sam
583
Incremental Living - 2
6,256 Travel/Education/Etc
Misc Hobbies
6,256
6,839 Total Discretionary
28,500 Total Basic + Incremental
Let's assume I don't have any pension or SS, and no inflation for now. What do I need?
$114,000 in near cash for 4 years of expenses - this is ride out market (bond & stock downturns.
$407,143 earning 7% to get to 28,500/year expenses
$100,000 to 150,000 contingency money, if wanted, earning ???
$621,143 to 671,143 total excluding house
Does a person need all that money? Maybe not if the person will collect SS. The closer they are to collecting SS would affect that - e.g. if they are within 2 years they could have less money in near cash.
This is not meant to be a perfect example.
Now let's use Junkster's info on SS $1294 monthly - 15,528/yr
$28,500 Total Basic + Incremental
-$15,528 SS
$12,972 to be funded
$51,888 in near cash for 4 years of expenses - this is ride out market (bond & stock downturns.
$185,143 earning 7% to get to 12,972/year expenses to be funded
$100,000 to 150,000 contingency money, if wanted, earning ???
$337,031 to 357,031 total excluding house
Both of these examples are better than monte carlo and top down rule of thumb.
There are two reasons I can think of that the top down method is the most discussed:
1. Advisors use them to scare people into buying their services
2. Budgeting is boring and most don't people don't have one nor do most know where they spend their money.

Hi Junkster,
Thank you for reading my post. It’s nice to know that I engage, and perhaps sometimes enrage, your interests. Disagreements and disparate opinions among investors is commonplace.
We agree that a Two Million Dollar Man need not access a Monte Carlo tool if he spends at the rates you specified.
But your Two Million Dollar Man is likely an artificial, unrealistic strawman who mostly exists in your fertile imagination. There are not many such individuals in the US.
According to a 2012 CNN Money report, using data from an IRS 2007 survey, about 1.8 million Americans had wealth in excess of the 2 million dollar threshold. I know you stated that you don’t read my references, but, nevertheless, here is the Link:
http://money.cnn.com/2012/03/02/news/economy/wealth_in_America/
The number of citizens that fit your strawman description is miniscule. It is certainly not mandatory that such a unique character consult any Monte Carlo simulators.
But it still might be a worthwhile project for him. Given his wealthy status, he might want to explore how much he could expand his subsistence lifestyle without compromising his portfolio survival likelihoods. A few Monte Carlo runs would yield some useful guidelines.
Your postulated Two Million Dollar Man is surely atypical for the bulk of MFO visitors. The median accumulated wealth for US citizens is well under one million dollars. Given that reality, a retirement decision is not easy for most Americans.
Uncertainties cause fear, and fear causes decision paralysis. Monte Carlo analyses can relieve, not totally cure, the uncertainty and the subsequent paralysis. It’s only a tool, but it’s a nice addition to an investor’s toolbox.
Best Wishes.
EDIT in Reply to Junkster's edit: Your internet troll charges directed at me are speculative and groundless. On both FundAlarm and on MFO, I have been a persistent advocate for a deeper understanding of statistics, for Monte Carlo analyses, and for relevant references. That may not make you happy, but that is my honest purpose.
If by your standards that qualifies me as a troll, so be it. I stand by my positions on these matters, and I am satisfied that MFO participants will fairly judge the merits and shortcomings of them.

This is a new fund with tiny assets although it is managed by experienced emerging market managers Emery Brewer of Driehaus fame, Stephen Lew, and Dr. Ivo Kovachev.
The fund is up 21.57% YTD. It's on my watch list. Does anyone have any insight into Emery Brewer's tenure at Driehaus and his results?
http://www.morningstar.com/funds/XNAS/JOMIX/quote.html
Thanks,
Mike_E

I have chosen to become less active on the board through the summer as I feel the market will be making a pullback sometime soon … perhaps, ten percent, or more. Note: I have recently felt this way before ... and, well, it just did not happen as I thought except for this past September and October.
Since, my current asset allocation of about 20% cash, 20% income, 50% equity and 10% other leaves me heavy in cash and light in income from my normal allocation ranges I am neutral in equity at 50% with a low range of 40% and a high range of 60%. With this, I am not doing much except watching the markets.
I think it is interesting that Bank of America has come forward and expects a decline in the markets and recommends investors increase their cash allocation and even perhaps buy some gold. You can read more about this in the link below.
http://www.marketwatch.com/story/bank-of-america-is-forecasting-a-scary-summer-for-the-stock-market-2015-05-18?siteid=yhoof2
I own two income funds, within my income sleeve, that are currently holding a good percentage in stocks for fixed income funds. They are NEFZX and LBNDX. The other three funds in this sleeve currently have low durations (LALDX, THIFX & TSIAX which also holds some stocks). Also, I hold a good number of conserative allocation funds, within my hybrid income sleeve, which kick off a good yield and also holds a fair amount of stock holdings. They are AZNAX, CAPAX, FKINX, ISFAX, PASAX and PGBAX.
So, I guess … I’ll let these fund mangers deal with this anticipated coming market storm and perhaps add to my gold fund SGGDX.
I’ll be back on the board, more often, when I feel it is time to ramp up my allocation to stocks and open a new equity spiff.
Enjoy your summer ...
Old_Skeet

Headline is a bit misleading.
Not "rout" now. ... "Rout" if and when Fed raises rates (according to the article).
I don't know if it's a rout now. But 10-year is approaching 2.3%.
Nobody saw this coming.

Interesting that Peabody at Eaton Vance (EVBAX) and Eagan at Loomis (NEZYX) work blocks apart and are on the same page as it relates to using equities in their multi-sector bond funds.
The possibility of "unwinding large stock positions (18-22% of portfolios) to take advantage of any turbulence in the bond market" is a tactic that I had not previously contemplated.
Peabody's remark that stocks could drop to 5% is particularly revealing.
As was mentioned previously, I view them more as having strategic income or income & growth fund profiles.

Junkster has solved the aging boomer problem for America. Only the top 10% of boomers without generous pensions can retire. Oops, now who will step up to the plate and solve the aging boomer jobs problem?
Perhaps a compromise model like FIRECalc?