Here is a link to Crescent's Annual Report.Mr Romick states his case for a continued high cash position and his current strategy.He continues to believe the current economic situation will not end well.Their is even a slight hint of closing the fund. FPACX continues to be a core holding of mine.I did sell some to buy into MFLDX within the past eighteen months and am glad I did before MFLDX went corporate with their share classes.These two funds plus BRUFX form my core Roth holdings four years into retirement.For younger readers I strongly advise setting up a retirement account through FPACX's shareholder services.$100.00 down,$100.00 a month and no sleepless nights! I just did that in a non-retirement account with SEEDX in the past month, same shareholder services,$100.00 down and $50.00 twice a month.Two younger managers with good creds from Acorn and Harris Associates . http://oakseedfunds.com/home.htm
CRESCENT ANNUAL REPORT
https://materials.proxyvote.com/Approved/MC2221/20130207/AR_154573.PDF

If you've become disenchanted with the fund and have something better to swap it with, you probably should. Actually, if you are strong on M* ratings, I see they gave it 4 stars and a gold rating.
That said, this is one of my core funds. Some times it seems like it lags, but when I measure it against the benchmark I like to use, TRRAX, a balanced 60:40 retirement fund, it has done quite well. Better returns overall, but I really like it because of it's downside protection. Your argument on bloat is not a new thing. It has had a large asset base for years now.
Good luck on your decision.

Just in case you folks were wondering, I'm the reason Kris Jenner decided to leave the T Rowe Price Health Sciences fund. Here's how it happened...
Late last year, I was analyzing my position in the Vanguard Healthcare fund (VGHCX) against PRHSX. I decided that while VGHCX was an excellent fund with a great long-term record, PRHSX was noticeably better. And since Ed Owens announced his retirement plans, it was a good time to switch. So I sold VGHCX last September, and started establishing a position in PRHSX in January 2013.
So there you have it! My timing is spot-on once again.

If I had money that I was only going to leave to my heirs, I'd put part of it in Berkshire Hathaway, even with Buffett's inevitable retirement or death. Presumably tax efficient and good companies even if Buffet isn't around. BBALX also seems to reasonably cheaply meet my requirements for money I would never need. It does, however, have a Lipper rating of 2 for tax efficiency, but it's 4's and a 5 (cost) otherwise. Don't know if the cost (.25%) balances out the tax cost for you.
Now, before I leave Fantasyland, I gotta find Tinkerbelle and get some fairy dust for my real portfolio.

Hi Guys,
First and foremost, I want to thank each and every MFO member who visited my posting. The response was overwhelming and very satisfying to me since the goal of every single of my submittals is to educate, to inform our band of brothers.
Secondly, and no less importantly, I particularly want to extend a thank you to those members who contributed excellent commentary. You prepared outstanding viewpoints that balanced the discussion. We all benefit from these divergent standpoints. No single person understands all the fascinating machinations and mechanisms of the marketplace. Your special perspectives are always welcomed and truly appreciated.
It appears that my chosen title is somewhat controversial. Good. It was selected to capture the prospective audience’s attention, and by the readership count it performed exactly as designed. In addition, it closely and purposely mirrors the title of Peter Lynch’s famous book whose objective was to inspire individual investor participation, education, and potential profits.
I partially concur with some contributors that specifically “Beating the Street” for that singular purpose is a shallow objective for most investors. It might satisfy some egos, but it will not necessarily enhance one’s retirement comfort. Please take note of my qualifier “necessarily”. I attach a deeper, embedded purpose to that common phrase. Let’s dive into the weeds now.
I naturally anticipate that under normal circumstances a retiree with a several million dollar portfolio need not Beat the Street; he might not even need to beat inflation; his goal might just be wealth preservation. However, for most retirees a fair return in excess of inflation must be the target.
Before constructing a portfolio, a target return is estimated based largely on projected annual withdrawal rate demands and expected timeframe. There are other factors too. During the construction of that portfolio, an asset allocation determination is made to satisfy that target goal with minimum risk. In many instances, risk is defined in terms of portfolio volatility.
The commonsense logic is that only risk sufficient to meet the required portfolio drawdown rate is acceptable. I’m a total investment amateur, but a highly seasoned one; I have never earned a dime giving financial advice. But that’s how I developed my portfolio over two decades ago; I propose that some professional advisors that participate on this fine site do the same.
A guiding principle that controls much thought in cobbling together a portfolio is broad product diversification, including international components. None of this is novel stuff. I do not invent these concepts: I do deploy them. Essential elements that go into that portfolio assembly are mutual fund statistical data sets like average annual return, return standard deviations, and correlation coefficients.
The forecasted portfolio returns must be high enough to satisfy the clients projected drawdown schedule. If a client needs a 4 % drawdown rate above inflation, short term government bonds will simply not do the job. Historically these short term government bonds only generate about a 0.7 % annual reward above inflation rates. Therefore, to satisfy this hypothetical customers needs, more additional product risk (likely equities) must be introduced into his portfolio.
How much of each asset class is required to resolve the allocation issue? That depends on the expected reward profiles of each investment class candidate. What are those levels? An excellent zeroth order point of departure is the historical returns (pick your own timeframe) registered in the past. These data are precisely the Index returns that represent the marketplace overall and for various subcomponents of it.
So equaling or beating the Indices (Beating the Street) is a crucial part of both constructing and assessing (measuring) the current status of a portfolio. That portfolio was assembled with certain forward looking expectations; expectations that were basically grounded in Index returns. That portfolio is in trouble if those expectations are not realized. So Beating the Street is a measure, a benchmark of the health of a retirement portfolio.
If a portfolio continuously fails to achieve street-like rewards, most advisors will eliminate the faltering elements and select replacements. If the advisor uses Morningstar as a data source, it is highly likely that the advisor will never select a one-star fund. Denials aside, most advisors base their initial selections on recent performance in general, and specifically contrasted against an Index reference standard.
How do financial advisors gauge their success? One reasonable answer is to compare performance against a carefully constructed benchmark. Typically, the benchmarks are composed of Indices which are themselves a proxy for the marketplace. So “Beating the Street” is really just an alternate way of saying that the portfolio is doing its intended job.
Since portfolios are built using Index returns as a likely returns pattern, a failure to achieve those forecasted returns implies dire consequences for the portfolio’s survival likelihood unless changes are implemented.
Language has developed to facilitate communications. It is mostly successful, but since it has been around for so long, alternate meanings and interpretations sometimes interrupt or interfere with its goal. Such might be the case here. Language can be a tricky business.
For me, “Beating the Street” is about equivalent to “Beating the Indices”. As a retiree, “Beating the Indices” means that my portfolio is keeping its head above water insofar as my planned withdrawal schedule is being preserved. It is an embedded performance measurement tool, not an ego adventure; it functions like a calibration device.
It’s interesting to note that even Wall Street bankers did not use this simple measurement concept as late as the early 1960s. In Peter Bernstein’s superb book “Capital Ideas”, he relates a story from Bill Sharpe. When Sharpe lunched with these bankers, he questioned them about their performance relative to some relevant benchmarks. No banker could answer his question. In that period, these professional financers did not measure their performance against any reasonable standard. We have come a long way since those times.
One final clarifying point is needed.
For the record, when I use the term “guy”, I mean it as a gender neutral term. That’s the way it is used in our household; that’s the way it is in many households. Sorry if it offends some of you guys, but it makes writing much easier for me. In all ways, I respect women for their financial acumen. They run their households efficiently, and they invest wisely. I often reference studies that conclude that female investors outperform their male counterparts. That’s accomplished by trading less frequently. Good for them.
Once again, thanks for your readership, and thanks for your informed contributions. I enjoy discussing these matters with you all.
Best Wishes.

Good morning folks. did not buy much over the past month or so. still 80%/20% w/ 401K. Still buying couple of bonds here and there. IMHO, to me the market appears 'very tired/sluggish' the past couple of wks after the new yr. Looks like it's climbing a large hill and it's getting to the top of the hill and giving out pretty soon. I would expect a major corrections [-] 20 - 30s% soon (but we've been saying this since 2010 LOL). BTW, We never saw that double dip.
It's good to be near retirement and bail - probably in 65% bonds and very little stocks if any.

FWIW, why should the goal be to "beat the market"? I don't get it. Every investor's goal is going to be somewhat different. My goal is to be able to have the cash flow I desire in retirement. What with Social Security, 401k, and (fortunately for me, part of a business ownership), I know what kind of return I need from my investments to achieve that income goal. And it has nothing to do with "the market". The same goes for our clients. Each has a different pot to work with, each has different cash flow targets, and specific risk tolerance.
Frankly, I don't give a rat's patooie if my portfolio "beats the market" from one year to the next. I DO want my mix of managers to help me reach my retirement income goal. I can look back over the last 10, 15, 20 years and see that client accounts have done better than "the market" with less risk. What happens year-to-year is important, but not all that big of a deal. We are talking a marathon here, not a 100-meter dash. HOW each investor puts their truly diversified mix together is not nearly as important as is focusing on the big picture "at the end". The best thing investors can do for themselves is to create a TRULY diversified portfolio. In many cases, 401k plans have lousy investment options. But more and more we are seeing 401k plans offer self-directed brokerage accounts, which is something EVERY participant should consider. That should really open the door to a large number of investment options that are not found in hardly any traditional 401k, such as long-short, currency, EM bonds, bullion, and dynamic allocation strategies.
The fact is that there are plenty of talented managers (men AND women) who have strong track records and who have beaten their benchmarks over 3, 5, 10 year periods. If an investor does not have the time or the inclination to do the work needed to find these people, there are plenty of other options. Just don't go to Raymond James, Edward Jones, Merrill Lynch, or the local bank and expect someone there to do anything holistic. Places like Mutual Fund Observer have great content and plenty of smart people to offer help and insight.
My suggestion is to not spend time on "beating the market". Instead think about what your REAL goal should be, then create a portfolio that should get you there, no matter what happens to "the market". And remember that nothing helps like putting as much money away every pay period as you possibly can.

MJG,
Don't assume all of the committed active private investors are all men. Or that some of us don't index a portion of our portfolios. And that many of us to don't have advisors, and a game plan. Our goal is not always to beat the market, it's to make sure we have a well thought out approach and enough diversification so we get to keep and grow much of the money we want to spend in our retirement and leave to our heirs in many cases.

Hi Guys,
It was a different investment community forty years ago. In that hazy past, the odds were that individual investors were mostly trading with each other.
In that yesteryear, private investors executed 70 % of the daily trading volume; institutions accounted for the remaining 30 %. The science or art of investing was very primitive; it was basically dumb, weak money exchanging stocks with equally dumb, weak money. There were remarkable exceptions; these exceptions quickly became rich (and sometimes poor again cyclically).
Today, that structure has been completely reversed and turned on its head. Now the bulk of the trading (like 70 %) is done by smart, strong institutional money. As an individual investor, it is highly likely that if you are trading some equity position, an institution is taking the other side of that gamble.
That trading partner poses a significant threat. Over time, he has become relatively and absolutely a more powerful opponent. His advantages are manifested by his composite unbounded financial resources, his unfettered timeline, his formal educational background dominated by top-tier MBA graduates, his mathematical sophistication especially in the statistical and operations research arenas, his unlimited research time commitment, his supercomputer access, and his sheer numbers.
The institutional participant is a daunting challenge to private investors. It is not a fair or a level playing field. It is something like the championship Baltimore Ravens professional football team competing against a ragtag group of tag football high school part-time players. The outcome is basically predetermined.
In the early 1990s, Peter Lynch published his blockbuster best seller “Beating the Street”. He projected that the “average Joe” could tame the excesses of Wall Street. Lynch ended that exceptional tutorial with 25 Golden Rules for superior investment outcomes. However, even at that earlier date, the private investor was becoming overmatched by the resources and skills of the institutional giants.
Even the legendary Peter Lynch magic was eroding. His major outsized performance was registered in the late-1970s to the mid-1980s. In that glorious period, his firm permitted him to participate in the inefficient small company and foreign company marketplaces. He invested so broadly and prolifically that it was said that Lynch never saw an investment opportunity that he did not like. But the times turned against him in the late-1980s, and he struggled to generate market-like rewards for his now excessively large client base. He salvaged his reputation by retiring in 1990 at age 46 after a few very mediocre years.
Interestingly, Jeff Vinik, Fidelity managements replacement for the departing Lynch, was soon summarily fired in 1996 when he attempted an ill-fated timing rotation to bond positions. Even as early as the 1990s, the major investment houses were clamping down on the freedom of choice prerogatives that were afforded earlier superstars like Peter Lynch. Vinik eventually recovered while launching and managing a highly profitable Hedge Fund operation. He currently owns a host of professional sports franchises around the world.
That’s spectacular success, even for a Jersey-boy. It does prove a major point. Rare as they likely are, active investing can have huge paydays.
But, there has been a sea change that has made the task far tougher for today’s amateurs, semi-pros, and even full time professionals. Everyone is substantially smarter, better informed, and can react with computer-like lightening speed.
The global statistics collected at places like Morningstar, Dalbar, and Standard and Poor’s demonstrate just how demanding it now is for the part-time investor to produce excess returns above market Index averages. When reviewed in total, these data sets are dismal for the individual investor. On average, we investors recover only about one-third of the returns that the mutual funds that service us deliver. We are pitiful in our entry-exit timing maneuvers. The marketplace is essentially a winning institutional game now.
I recognize there will always be a few highly skilled, insightful, and lucky souls who will outperform the dominating monoliths. They will be rare birds indeed. There are so many smart, informed, and talented financial outlets nowadays competing for the golden ring that they tend to neutralize one another.
They cancel each other out, quickly negating any momentary advantage, and deliver sub-par performance to their customers because of the continuous frictional cost to compete so energetically. Costs are like a hole in a water bucket; it’s a constant drain to wealth accumulation under all circumstances.
So, currently, my takeaway is that it is nearly impossible to “Beat the Street”. That’s just not going to happen for most of us.
But some segment of us will persistently try. Many current MFO members are in this camp. What is the game plan, the strategy, and most importantly, the prospects for this brave band of fearless warriors? Let me invent a likely generic profile to explore the issue for comparative purposes.
The committed private active investor is middle aged with a college degree. He is smart, dedicated, motivated, and industrious. He exchanges ideas on websites like MFO, accesses Morningstar for needed mutual fund data, and probably visits sites like Pony Express Bob to identify momentum attractive candidate funds for consideration. He likely deploys technical analyses using charts to guide perhaps a sector rotational strategy. It is a time-consuming struggle to access and absorb the mountainous pile of data available. Constant attention is necessary. Decision making is a lonely process.
Given the dominance of institutional investors these days, his competition is probably an institutional giant. Perhaps it’s a Boston behemoth, perhaps one of Chicago’s monsters of the midway, or perhaps it’s a team from the illustrious New York Genius network. Surviving against that cohort is hazardous duty. Given their many advantages, the odds of outwitting and outplaying these fierce and tireless opponents must approach zero. And adding the heavy burden of costs into the equation only deepens the challenge.
Given today’s environment and the lineup of market participants, what Peter Lynch interpreted as an individual investor advantage has morphed into a decided disadvantage. Currently, an active private investor is definitely playing a Loser’s game.
Why fight the tape? Since smart institutional investors engage to neutralize one another, an increasing number pf this elite club are joining the passive investment universe. Their numbers will swell in the future. It is doubtful that these numbers will ever penetrate the 50 % level, since institutional warriors enjoy the hunt and the profit incentives too much. That’s all goodness because active market participants are necessary to supply the requisite market pricing mechanism. Pricing competition keeps the marketplace roughly efficient.
Indexing is a reasonable solution to this dilemma for individual investors. It guarantees just short of market rewards if the low cost and low trading disciplines as advocated and practiced by outfits like Vanguard are followed. Even Warren Buffett has acknowledged the wisdom of this approach for most investors.
I encourage you to seriously consider the passive Index option for a more comfortable retirement. Although I currently own a mixed bag of actively managed and passively managed mutual funds/ETFs in my portfolio, I am slowly switching to more and more low cost passive holdings. Portfolio management need never be a overly simple either/or decision; compromise is a useful tool to reduce risk.
So it might well be time to step away, not to smell the roses, but to readdress your portfolio mix. The accumulating evidence overwhelmingly demonstrate a participant sea change and a slowly developing tsunami of institutional investors flooding towards the Index option. Recognize those perturbations and respond to your own special interpretations of those factoids. The institutions are making smarter decisions these days; just look at their profit margins
Certainly there will always be winning active investors who produce outsized market returns. Jeff Vinik is one such wizard. But there will also be lottery winners too. The key is to forecast these winners and their persistence. That’s a Herculean chore. Fat chance on accomplishing it.
Talk to you guys further down the road.
Best Regards.

Reply to @scott: "I've become a lot longer-term in nature with my investments..." Precisely!!! Consider the market investment road you traveled to reach that point and how long it took you to reach that end. I'm assuming that it's a radical departure from the vista you perceived when you began your investing travels. It certainly is for me.
When I first started investing/saving it was simply a matter of me thinking that the stock market provided the best bang for my buck. Raised by depression era parents with a "make do with what you've got lifestyle" I knew we struggled but we were fed, housed and healthy. What there was allocated to saving was in the form of US Savings Bonds, shoe boxes full of them. As I and my 6 siblings left the house I could see my dad begin to tinker with buying stocks while my mother kept filling the shoe boxes. I began with short-term CD's simply because I didn't want my savings tied up for the longer terms dictated for holding savings bonds. Eventually I moved into mutual funds and witnessed half of my retirement savings wiped out by Black Monday. The move to individual equities coincided with the tech craze and we all know how that turned out. Point being - I had a momentum 'buy' plan but no 'sell' plan whatsoever. As far as I was concerned I was just a stock market genius right up to the point where I had my head handed to me. Thus began the evolution to an investment plan with goals other than making a killing and a more disciplined diversified approach which probably mirrors yours in many respects although our holdings are likely radically different. The key is the "plan."

Well that's a nice tale but I'm not buying it as the sole answer. Why? Frankly I think a lot of people are afraid of the stock market. Loss aversion to be sure but many simply don't trust the stock market anymore and/or they don't understand it. I think it has a lot to do with possibly the losses they may have incurred relative to the tech bomb of 2000 and the slump of 2008. It also has a lot to do with their fear of not having a good paying job with a pension or retirement that they can rely on like those investors who came before them. It seems as though many of those safety nets of yore now come with big, big holes in them.
Boomers who do have investment money or market exposure are worried that another crash may wipe them out or at the very least send them back out into the work force ergo - they want the 'safety' of bonds. Today's workers worry about what little they may be able to invest, if any, and want the perceived safety of bonds as well because they don't know if their jobs will be there tomorrow. Many, many others think the market is just a scam manipulated by the well to do and insiders. Flash crashes and computer glitches don't leave them feeling warm and fuzzy. Bottom line people want to see what little they have sitting there when they need it or look for it. It's their rock and they are sick and tired of the Goldman Sachs', rating agencies and numerous others out there taking it from them correctly or incorrectly.
Finally think also about your own investments. How many of you skim off profits from your winning positions as a rule or on a regular basis. I'm guessing the percentage is low because many believe that these investments will just keep going up. Likewise, when many experience a losing position they will hang on to it for dear life on the belief that it will revert eventually. I don't think that's a good plan. I believe that one needs to have a sell discipline in addition to a buying regimen or plan and that both should be firmly in place before you begin investing. Far too many just take whats handed to them.

Thanks man.
I first went into FAAFX pretty big on 25 July 2011 and added the following month. Totaling about 50% of portfolio. Like you, I just felt Mr. Berkowitz made perfect sense to me. And, thanks to being FAIRX heavy through the credit crisis, I trusted his shop. Back then anyway, I liked holding just 3-4 funds.
I modulated a bit through 2012, added a separate BAC holding, but cut FAAFX to under 10% last September with decision to retire at year end. Wanting to reel-in portfolio volatility.
With recent announcement to close Fairholme to new investors and me getting better handle on retirement finances, I upped our stake. I also got back into FAIRX and bought FOCIX. Mr. Berkowitz now manages a quarter of our portfolio.
He is a money manager I have come to appreciate through good times and bad. And when I ask myself the question: Will he make us money over the next three years? I believe he will. So, we're in.
Hopefully I am right. And hopefully we investors continue to have opportunity to stay with Fairholme.

Reply to @ron:
Hi Ron,
Indeed it is different strokes for different folks. But even admitting that each retiree must seek his own unique comfort zone, a few general policy rules are suitable for almost all retirees.
I have done a zillion Monte Carlo simulations using a host of Monte Carlo codes including one that I developed for my own early application needs. Results do vary a little, but some general rules of engagement can be extracted from the myriad solutions.
The most obvious generic finding is that time dominates all other considerations, both in the accumulation phase and in the projected distribution phase. Almost everyone recognizes this non-controversial factor.
A very critical factor, especially during a portfolio’s drawdown phase, is returns volatility, its standard deviation. A few misguided MFO members insist that portfolio volatility is meaningless. That position is simply plain wrong.
What is critical for portfolio survivability is compound return. A rigorous equation links compound return to both annual average return and its standard deviation. Given an annual return, a volatility increase works to reduce compound return. During its drawdown phase, high volatility operates to enhance portfolio failure (bankruptcy) rates.
That’s why many financial advisors recommend a larger commitment to bond-like products within retirement; it operates to reduce overall portfolio standard deviation.
The MRD issue is really a non-issue; it is mandated by law. Penalties if violated are just too damaging to accept. Besides it doesn’t usually impact a drawdown plan if that plan follows a 4 to 5 % withdrawal rate. The MRD schedule doesn’t demand that level of drawdown until about age 78 or 79. So MRD requirements usually don’t impact investment decisions until that advanced age.
BobC is perfectly on-target when he generalizes that Monte Carlo retirement applications typically yield an allowable 4 to 5 % drawdown schedule during retirement. It was interesting that most of his clients adjusted cash flow needs downward during lean portfolio return years. His clients show considerable wisdom.
Monte Carlo simulations can be used to demonstrate that wisdom. Portfolio survival rates are dramatically improved if some flexibility in portfolio drawdown rate is practiced as a matter of policy.
For example, most Monte Carlo codes automatically increase withdrawals as a function of COLA changes. However, if a retiree is sufficiently disciplined and motivated, he can elect to sacrifice any inflation increase when his portfolio suffers a negative year. That simple tactic works wonders to enhance portfolio survival statistics. A host of other strategies can be implemented if the portfolio is exposed to a series of bad years.
Certainly, portfolio survival becomes a critical issue when current and projected future market rewards approach the planned withdrawal rates. Major surgery is required given that dire forecast. You can identify the critical tipping points for your specific portfolio by doing “what-if” scenarios using the Monte Carlo tool.
I wish you well in your retirement.

One size never always fits all. How about current age of an investor already in retirement and taking RMD?

I would not put a large chunk in Stable Value fund. They contain illiquid investments and in an environment like 2008 where they suffered losses and had to suspend redemptions. Read the disclosures of your Stable Value fund in your retirement plan. You can also google for more info.
In this case, there is no free lunch (extra yield) without extra risk.

Reply to @fundalarm: I think you plan and fundalarms advice is very good. I had a stable value fund in my 401k in the past and it was an excellence way to reduce portfolio volatility. Essentially cash with a decent return. My retirement plan eliminated that option and I miss it. Good luck to you.

Reply to @igno2:
I believe there's no symbol because this is a fund designed to be sold only to retirement plans.
For example, you can see a version of this fund offered by the Guardian Advantage annuity, designed for small to midsize company 401K plans. (Small companies often use annuities in their 401Ks, because the fees for the plans then come from the annuity wrapper, which the participants are paying for, rather than from separate fees that the company pays. This also tends to explain the somewhat high index fund ER.)
Here's a Lipper writeup of the fund. https://www.guardianretirement.com/download/FactCard.aspx?ID=594
As I wrote before, I'm guessing you're actually getting a lower ER than a lot of other companies who are paying more for the other classes. But it's really hard to tell and not worth researching.
With respect to lending securities, as Investor wrote, lots of funds do this. The questions are: how the income from the lending is split between the fund and the management company (the more the fund gets, the better); what protections are in place to ensure the securities are returned. Here's a writeup from Vanguard on Securities Lending; page 4 describes Vanguard's approach to lending securities. The fact that Vanguard uses this tool suggests that with the right management, it's not a high risk practice.

Apparently GEGAX (ER 1.39%) is available NL/NTF at Schwab, and last time I checked, AEMSX (1.28% ER) is available at Fidelity for a low minimum in retirement accounts with an initial $75TF. I have heard of one individual over at M* who was able to have Fidelity convert shares of AEMSX into the lower cost ABEMX (1.03% ER). As for buying GEGAX at TDA, it appears that a load will be imposed as I see no evidence that the load is being waved by TDA.
Kevin

Hi Guys,
I submitted the following post to the MFO discussion group in late January recommending Monte Carlo simulations as a means to scoping the huge uncertainties with the retirement decision and an acceptable drawdown rate that generates a high likelihood of portfolio survival for the entire projected retirement period.
I believe it is applicable to the current discussion so I repost it here:
Retirement decisions are surely among the most difficult and stressful that anyone but everyone must eventually address. And the most successful retirements will be achieved the sooner that that issue is confronted; the earlier the better.
Up until just 20 years ago, that vexing problem could only be insufficiently analyzed using deterministic methods that completely failed to capture the uncertainty of future portfolio returns and its volatility.
Recently, these forecasting deficiencies could be mostly relaxed using Monte Carlo simulation calculators. I say relaxed because the uncertainties of the future marketplace can never be removed. However, Monte Carlo techniques can parametrically explore the impact of these uncertainties on portfolio survival likelihoods given various withdrawal rates. With super speed, these Monte Carlo simulations will estimate retirement wealth survival for whatever scenario the simulation user elects to study. Portfolio survival probabilities are the final output.
These calculations are completed with lightening speed on numerous websites these days. Here are Links to two such sites:
http://www.moneychimp.com/articles/volatility/montecarlo.htm
http://www.flexibleretirementplanner.com/wp/
The first Link is to the MoneyChimp site. It is simplicity itself and allows for both a pre-retirement portfolio estimated return and volatility and a post-retirement projected return and volatility. It is extremely fast as it performs 1000 random simulations. Since the controlling returns are randomly selected within the machine, identically repeating the same calculation will generate a slightly different probability outcome.
The second Link is to the Flexible Retirement Planner site. It is slightly more complex than the MoneyChimp site, but it is also more detailed in its analyses. For example, it divides your portfolio into taxable, deferred tax, and tax free components. Also it permits several spending options during the drawdown phase of the retirement.
Both sites provide excellent Monte Carlo simulators. I recommend you try both of them. Do numerous “what if” scenarios to test the survivability robustness of your approaching retirement.
I am certain that these Monte Carlo analyses will better inform your savings, your retirement date, and your portfolio withdrawal rate decisions.
I resorted to Monte Carlo computations when making my retirement decisions, and believe they emboldened me and gave me some needed comfort. By way of full disclosure, I did not use the two simulators that I referenced; they were not available at my critical moment.
When dealing with uncertainty and not deterministic events, Monte Carlo methods are the proper tools to apply.
Good luck and Best Wishes.
Many other Monte Carlo simulation sites are also available on the Internet
I like and occasionally still use the Financial Engines product developed by Noble Laureate Bill Sharpe. It is mathematically a rigorous and superior Monte Carlo tool. Bill Sharpe has dedicated his work to improve the lot of us small independent investors.
One issue that I currently have with Financial Engines is that I access it through my Vanguard affiliation so when it recommends some portfolio modifications, that sponsored site tends to follow the Vanguard tradition of fewer holdings and Index-like elements. The financial linkage with Vanguard provides a potential incentive for biased recommendations and makes their proposed changes somewhat suspect. That’s just me speculating aloud without any substantial evidence of any bias.
You can gain access to the Financial Engines website by visiting Terry Savage at the following address:
http://terrysavage.com/
By clicking on the Financial Engines box you can get a free one year subscription to that planning tool.
These Monte Carlo tools surely do not remove the uncertainty of future market returns, but at least you enter the arena better armed to deal with those uncertainties. What realistic returns you guesstimate from the marketplace will forever be a potent driver to any decision.
I hope this helps.

The first thing that comes to mind is, if 2.8% is the right number now and 4% was the right number 5 years ago, who's to say another study 5 years from now won't say that the safe withdrawal rate is 6%. It's certainly guess work trying to figure out what interest rates will be throughout retirement.
I guess the only safe way to withdraw is to wait until you have enough to start on the low end, 2-3% maybe, and be willing and able to adjust with economic times. I'm still working so we don't have to dig into savings yet, but that is my goal.
Anyone else have thoughts on withdrawal rates?