HighLow Withdrawal

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Safe Withdrawal Rates In Today’s Low Yield Environment – Walking On The Edge Of A Cliff?

February 6, 2020 12:05 pm 17 Comments CATEGORY: Retirement Planning

Executive Summary

Safe withdrawal rates have been under a great deal of criticism in recent years, as both investors and planners ratchet downwards their expectations of market returns in the face of a low return environment. Of course, the reality is that safe withdrawal rates are actually based upon low-return environments in the first place, and do not rely upon long-term historical average returns. Nonetheless, a growing body of research suggests that expectations of the safe withdrawal rate should be adjusted based on the current market conditions that apply at the time of retirement.

Accordingly, today’s low-yield environment, where the real return on TIPS is actually negative in the coming years, arguably represents one of those times where safe withdrawal rates should be applied with caution. And in fact, a recent draft study by Finke, Pfau, and Blanchett affirms this concern, finding that the probability of failure for today’s retirees could be much higher than commonly recognized, given today’s real returns on TIPS.

Ultimately, though, just because starting conditions are suboptimal does not guarantee that safe withdrawal rates will fail for today’s retirees. By analogy, just because you’re walking along the edge of a cliff does not mean you’re certain to fall off of it; nonetheless, being closer to the edge of the cliff is certainly more dangerous than being safely inland, and similarly starting a retirement in today’s market conditions clearly merits more caution and monitoring!

Author: Michael Kitces

Michael Kitces is Head of Planning Strategy at Buckingham Strategic Partners, a turnkey wealth management services provider supporting thousands of independent financial advisors.

In addition, he is a co-founder of the XY Planning Network, AdvicePay, fpPathfinder, and New Planner Recruiting, the former Practitioner Editor of the Journal of Financial Planning, the host of the Financial Advisor Success podcast, and the publisher of the popular financial planning industry blog Nerd’s Eye View through his website Kitces.com, dedicated to advancing knowledge in financial planning. In 2020, Michael was recognized with one of the FPA’s “Heart of Financial Planning” awards for his dedication and work in advancing the profession.

The inspiration for today’s blog post was the recent release of a “draft” study on the Social Science Research Network (SSRN) by retirement researchers Michael Finke, Wade Pfau, and David Blanchett, entitled “The 4 Percent Rule is Not Safe in a Low-Yield World” which concludes that in today’s low-yield environment the risk of failure for a 4% safe withdrawal rate may be upwards of 50% if rates stay this low indefinitely. Granted, most planners seem to be more concerned about rates rising in the coming years, rather than staying low, but the study notes that even if rates normalize in 5 years, the 4% safe withdrawal rate still presents a non-trivia 18% probability of failure.

Adjusting Safe Withdrawal Rates For Current Market Conditions

The basic concept of the new Finke et. al. study is to acknowledge that the risk to the safe withdrawal rate – or more generally, to a retirement scenario that would require more conservative spending to be safely sustained – is impacted by the starting conditions. As I’ve written in the past, the reality is that safe withdrawal rates do not necessarily require markets to perform at their long-term historical averages; in fact, safe withdrawal rates are built upon the worst case returns we’ve seen in the past, not the average returns. In point of fact, if one actually knew that markets would produce “average” returns, the safe withdrawal rate is closer to 6.5% than the more commonly used 4%!

In addition, the reality is that periods of poor returns do not occur entirely at random; below-average (as well as above-average) equity returns can be predicted by looking at the long-term P/E ratio of the markets at the start of the time horizon, and the secular market cycles that result can impact both the optimal investment strategy, but market valuation itself has been shown to impact the initial safe withdrawal rate.

Of course, the caveat to the above research is that it generally adjusts safe withdrawal rates based only on market valuation, even though most retirement portfolios are some diversified balance of stocks and bonds (and possibly other asset classes as well). Yet bonds, too, go through cycles of their own. In fact, for most investors, it’s readily apparent that in a world where a 10-year government bond doesn’t even yield 2%, it’s highly unlikely that bonds will generate a return anywhere near their long-term historical average of 5% in the coming decade!

Accordingly, the goal of the Finke et. al. study was to extend some of the current research on safe withdrawal rates adjusted to current market conditions to look specifically at the challenges posed by today’s low yield return environment.

Expected Bond Returns In Today’s World

The chart below shows the current real return Treasury yield curve based on TIPS rates (as of the beginning of February, 2020), compared to the long-term historical average real return for bonds (which is approximately 2.6%). As the chart makes clear, it appears exceptionally unlikely that bonds will produce real returns comparable to history anytime soon.

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Accordingly, the Finke et. al. study simply re-ran Monte Carlo projections to determine the safe withdrawal rate assuming that returns were not randomized around a historical 2.6% real return, but around a -1.4% 5-year TIPS real return that actually exists in today’s marketplace. The study still assumed that equities still provide an equity risk premium of about 6%, but notably with a -1.4% real return on bonds, the expected real return for equities would be “only” 4.6%.

Of course, assuming a -1.4% real return on bonds for all 30 years is arguably unduly harsh; after all, as the chart above shows, even the markets are projecting a real return of nearly 0.6% on a 30-year basis (which could be secured by purchasing 30-year TIPS now). Thus, while it’s still notable that the TIPS curve implies that real returns will be about 2% below the long-term historical average (the difference between the 30-year TIPS real yield and the red line), that’s still 2% better than a 30-year real return of -1.4%. Or viewed another way, projecting a -1.4% real return for 30 years still assumes that markets are drastically wrong about long-term real returns, and that long-term TIPS are still poised for a strong rally (which would ultimately be necessary to drive today’s 30-year 0.6% TIPS rate down to a -1.4% real return over 30 years).

To adjust for this, the Finke et. al. study also projects the results of bond markets producing a -1.4% real return on bonds for “merely” 5 or 10 years, and then normalizing to the long-term average of 2.6%. Arguably, this is still a bit harsh for the 10-year scenario, as the 10-year TIPS yield is -0.55%, not -1.4%, but also gives the benefit of the doubt to the investor thereafter, assuming that real rates normalize to 2.6% for the remainder of the time period (even though the TIPS curve implies that the real return would only be about 1% for the last 25 years after -1.4%, or about 1.1% for the last 10 years after -0.55%). Notably, the study does not assume any capital losses on the bonds as interest rates rise (ostensibly implicitly assuming the whole portfolio is invested in 5-year TIPS that are held until maturity and then reinvested at the higher rates thereafter).

Interpreting The Low Yield SWR Results

While the biggest headline associated with the Finke et. al. study has been the potential 57% failure rate for their baseline scenario – a Monte Carlo analysis where bonds generate a real return of -1.4% for the next 30 years – this result is arguably questionable, as it essentially relies on a forecast that the current bond market is still horribly overestimating bond returns and that TIPS are still poised for a huge rally, given that 30-year TIPS are still priced for a real return near 0.6% over 30 years, not -1.4% as the study assumes! In other words, the analysis assumes that real returns on bonds are a whopping 4% below the historical norm, sustained for 30 years, even though the bond market itself provides 30-year TIPS that are “merely” 2% below the long-term historical average for that time horizon.

Similarly, assuming such a low real return environment ultimately impacts the portfolio heavily not just because it drags down the bond return for 30 years, but because it also drags down the equity returns for 30 years, as the authors assume the real return on equities is “only” 4.6% when the real return on bonds is -1.4%. In point of fact, it’s not entirely clear from the results of the 57% failure scenario whether the primary driven is the bond real returns of -1.4%, or the equity real returns of only 4.6%, or the overall implied real return of only 2.2% on a 60/40 portfolio.

By contrast, the chart below (based on available data from Shiller) shows the real returns over 30 years for the four worst case scenarios historically, which did result in a safe withdrawal rate near 4%. Notably, while some of them did witness flat or even negative real returns in bonds (the 1929 or 1937 retirees), or very substandard real returns in stocks (the 1966 retiree really did get a real return of 4.6% in equities for 30 years!), none of the scenarios produced a real return of only 2.2% on a balanced portfolio. In fact, there is a notable inverse relationship; the worst environments for stocks that had poor equity risk premia tended to still have near-average real returns in bonds, while the environments that had low real returns for bonds (similar to today) actually tended to produce above-average equity risk premiums for stocks. This is not entirely surprising, given the low bond rates tend to stimulate stocks and risky assets, while higher bond rates do the opposite (which is exactly why the Fed cuts rates to stimulate the economy and raises rates to slow it).

30-year Real Return Starting 1907 Starting 1929 Starting 1937 Starting 1966 Avg of Bad Periods Overall 140-year Avg
Stocks 6.0% 6.4% 7.1% 4.6% 6.0% 8.4%
Bonds 2.6% 0.0% -0.7% 2.4% 1.1% 2.9%
Rebalanced Portfolio 5.3% 4.5% 4.3% 4.0% 4.5% 6.2%
Equity Risk Premium 3.4% 6.3% 7.8% 2.2% 4.9% 5.5%

Notwithstanding the concerns of projecting a 5-year -1.4% TIPS rate for 30 years, it does seem entirely valid to project the 5-year TIPS rate for the next 5 years and then allow rates to revert, and from this perspective the 18% failure rate indicated in the Finke et. al. study is still notable – especially given that while most anticipate that rates and real returns will rise in the coming years (even the forward returns of the TIPS yield curve implies it), it’s not necessarily clear that real rates will go all the way back to the historical average in just 5 years. To the extent that rates only partially normalize in 5 years, the 18% failure rate could actually still be too conservative. And the study also does not further trim expected real returns in equities in the coming years despite today’s high valuation (at least based on Shiller P/E10 and secular market cycles), and the fact that reverting to higher real returns with rising rates is often bearish for both bonds and equities.

Ultimately, the conclusions of the study – especially an 18% (or greater?) risk of failure for current 5-year TIPS real returns followed by a reversion to the long-term average – do not imply “certain doom” for today’s retirees, but nonetheless the study does illustrate the reality that today’s retirees will need to be actively monitored to ensure that their plans are not falling off a cliff. Strictly speaking, even with the assumed real returns of 2.2% on a balanced 60/40 portfolio for 30 years, it is possible for a 4% withdrawal rate to work (just amortizing a 2.2% real return for 30 years supports a 4.5% withdrawal rate). Nonetheless, as the graphic below reminds us, when the retiree is walking near the edge of the cliff (the version on the right), there’s more danger than when the retiree is walking safely inland. But just because you’re living the scenario on the right doesn’t mean you are going off the cliff; just that you need to be more cautious!

So what do you think? Does the Finke et. al. study merely reinforce that safe withdrawal rates should be at 4% specifically to defend against environments like this, or do you believe the safe withdrawal rate needs to be trimmed further? Do you really anticipate that the real return on a balanced portfolio will be 2.2% for the next 30 years? Or are your projections for balanced portfolios closer to the 4% – 5% real returns that have in fact been consistent with a 4% safe withdrawal rate in the past?

Best Kratom Strains For Opiate High&Withdrawal

Table of Contents

The opiate crisis globally is massive, and especially here in the USA. That’s why a lot of people are looking for the best kratom for opiate high feelings so that they can get off dangerous narcotic opiates.

Using kratom for opiate withdrawal, therefore, is big business, which is why so much misinformation and poor quality kratom is out there.

Which makes me really angry, because using kratom to get off opiates can really help people to get off kratom, so the negativity and the attempt by the government to ban kratom is insane.

So let’s look at the best kratom for an opiate high, let’s look at how you can deal with the pain and problems of opiate withdrawal with kratom, plus point you towards the types of kratom that can work best.

Kratom High Or Opiate Withdrawal?

I think here at the outset of this piece, I need to explain the difference between looking for a kratom high, and dealing with opiate withdrawal. Although the two are linked, meaning people who are using opiates will switch to kratom and may want to get high, that’s not everyone.

Some people may want to stay in control now and use the minimum possible dose of kratom to mimic the minor effects of opiates, but mainly to use it for analgesia, relaxation, and energy, to help them get past the brick wall of opiate addiction.

Which means that although people could be using kratom to get off opiates, they might have two different strategies, one which involves getting high to mimic the feeling they get from opiates, the other using lower doses to help them go “cold turkey” better.

So what I’m saying, is that the dose and type of kratom may not be the same for getting an opiate high, as it is for helping with opiate withdrawal symptoms, and I will cover both of those topics now.

Using Kratom For Opiate Withdrawal

The reason that using kratom for opiate withdrawal is such a good strategy, is because the alkaloids in it mimic the actions of opiates like heroin, morphine, and opium. In fact, kratom has a lot in common with morphine, which is why it so awesome for relieving pain.

However, what makes it good, is that it doesn’t directly attach to the opioid receptors in the body in the same way as things like heroin do. Kratom is only a partial agonist of the opioid receptors. But it still interacts with them, producing similar feelings, but without such intensity, or addictive potential.

In terms of using kratom for opiate withdrawal symptoms, it has the following characteristics which are beneficial:

  • Because it is similar to morphine, it has strong pain relieving abilities
  • It has the ability to sedate you, chilling you out
  • It can make you feel very calm and in control
  • Kratom can clear your mind and give you optimism
  • It can make your worries melt away
  • kratom has anti-inflammatory abilities
  • It can mimic the feelings of opiates, helping you to keep away from them
  • It can boost your energy levels, helping you to deal with life and depression
  • Kratom at lower doses can actually improve your mental clarity

So as you can see, there is a hell of a lot of positive reasons to use kratom to get off opiates. The key thing is the dosage for opiate withdrawal that you use.

You have to use the minimum possible, and for the minimum amount of time, until you are clear of the danger going back onto heroin, or whatever opiate you are struggling with.

Best Kratom Strains For Opiate Withdrawal Symptoms

So let’s talk specifically about the strains that are best for opiate withdrawal symptoms. We are talking about red kratom.

White strains are too energizing, and won’t calm you down, nor take away the pain symptoms. It can also make people more anxious if they are already struggling with anxiety.

That’s the same with most types of green kratom. However, Green Malay is strongly associated with an opiate-like high feeling, a real euphoric high, and it can be used successfully to deal with opiate withdrawal symptoms.

However, the problem with most green kratom is that it still packs too much of energy and focus punch, which people looking for an opiate-like experience, and relieve symptoms, don’t like.

So we are talking mostly about red kratom, and I would suggest starting with Red Bali, one of the mildest reds, but also a classic red.

That means it has the ability, even at a moderate dose, to produce strong pain relief, chill you right out, make you feel very happy, plus retain energy and focus. At higher doses, it will definitely really allow you to drop out and wash the worries away.

Other classic red kratom strains that are good for opiate withdrawal include Red Borneo and Red Thai.

Kratom Dosage For Opiate Withdrawal

When it comes to the correct kratom dosage for opiate withdrawal, it’s going to be a very personal thing, based on your own tolerance levels of kratom, the effect you want to achieve, any physical, or mental problems you have, plus the quality and type of kratom.

That’s a lot of things to factor in, which is why the correct dose for opiate withdrawal will mean experimenting with different types of kratom, and different doses, until you get to the level you need.

If you get your hands on pure kratom, then generally, a low dose will be a couple of grams, and that should be your starting point. If it’s pure, you should start to feel calm, less in pain, less inclined to reach for opiates, but still fully in control. You may even feel slight energy and focus boost.

A moderate dose will be up to five grams. At this level, you should still feel the energy and focus boost, but pain, relaxation, and a feeling of a slight opiate high should happen. This 2-5 gram bracket is where most people find the best relief when using kratom for opiate withdrawal.

Best Kratom Strains For Opiate High

So linked to using kratom for opiate withdrawal, is using kratom for an opiate high. The two are linked, because a lot of people trying to get off opiates will substitute the blissful high of heroin for the less intense high of kratom, especially initially while they work their way off it.

The types of kratom you will use to achieve an opiate high will tend to be red kratom strains. Pretty much any will deliver an opiate-like high, as long as the dose is strong.

Another strain linked very strongly with an opiate high is Green Malay. Other green kratom strains can achieve this, but they tend to have a different balance of alkaloids, and are not as powerful in that respect, tending instead to deliver more energy and focus, too much for someone wanting to get off opiates.

So I would focus on Green Malay if you want an opiate high that also has quite a boost of energy. It’s very important to buy high-quality pure Green Malay kratom, I recommend this seller for powder and this vendor for Super Green Malay capsules.

But if you don’t want much energy and focus, you really want to feel no pain, to bliss-out, to drift, and experience that opiate euphoria, then a strong dose of red kratom is going to be best.

Red Malay, Red Thai, Red Bali, pretty much any red kratom strain can deliver a kratom high. But I would steer clear of Red Maeng Da, as this is often mixed with white kratom, making it very energizing.

However, if you are looking for the most opiate-like kratom, in terms of the high it can produce, then I would recommend Red Borneo.

In my experience, and with users on Facebook, and specialist groups on Reddit, the consensus is pure Red Borneo at higher dose can really deliver a truly opiate-like high, that strongly mimics that of something like heroin, but without the inherent dangers. If you are looking for the best red Borneo, I highly recommend this vendor.

Kratom Dose For An Opiate High

So when it comes to the correct kratom dose for an opiate high, not only will you have to use the best kratom for opiate high feelings, but it’s going to have to be a high dose.

A high dose of kratom can be problematic because it can build tolerance, and be overwhelming to some people. So I would strongly advise that you work up to that level, rather than just taking several grams of pure kratom, and finding it too much for you.

Most people, using pure kratom, something like Red Borneo, or Green Malay, find they hit a euphoric, opiate-like high, around 6-8 grams.

So in terms of achieving an opiate high using kratom, I would say start with 5 grams, and see if that’s enough. If you using Green Malay, you may find it’s too energizing, and you can’t get that chilled out feeling enough, but you will definitely feel euphoric.

With a classic red, like Red Borneo, at 5-6 grams, you should definitely start to feel the major effects of a kratom opiate-like high.

How To Experiment With Kratom For Opiate Withdrawal

If you are wanting to deal with opiate withdrawal, or you’d like to get off opiates by replacing the high you achieve using kratom, then you now know the sort of strains of kratom that are best for opiate high feelings.

You also know that the same types are good for relieving the symptoms of opiate withdrawal, it’s red kratom that can numb the pain, chill you out, but still give you energy and focus, at lower doses.

I would recommend you get a variety pack. These contain enough kratom for a dose or two, and each variety pack usually contains 3-6 different red strains. That way, you can experiment for a couple of weeks, to find the strain, and dose, that will work best for you, before investing more money.

A great alternative, it will give you a far more controlled approach to this, is to use red kratom capsules. You can buy all the main types of kratom in capsule form, from reputable sellers who market pure kratom.

The best kratom for opiate high feelings will be red, and if you want to control that feeling exactly, then you can dose precisely using kratom capsules.

Withdrawals

How do I withdraw funds from my account?

To withdraw funds, log into the trading platform and click “Add Funds” and then select the “withdraw funds” option. Funds must be withdrawn to the originating source of deposit.

Excess funds may be withdrawn by wire transfer, bank transfer or paper check. In the event you added a new bank account to withdraw excess funds, FOREX.com will require evidence of the account by uploading a bank statement.

How will my withdrawal be processed?

Deposited funds must be returned to the originating source. If you have deposited funds using multiple methods, you must exhaust the total deposit amounts based in the following order:

  1. Bank Transfer
  2. Debit Card
  3. Wire
  4. Paper Check

Excess funds may be withdrawn via bank transfer, wire or paper check. In the event you add a new bank account to withdraw excess funds, FOREX.com will require evidence of the account by uploading a bank statement.

How much can I withdraw in one time?

The minimum withdrawal amount is $100, or all your available account balance (whichever is lower).

You can withdraw a maximum of $25,000 per transaction if you are funding by bank transfer, and $50,000 with debit card. Wire transfers have no restriction on transaction size.

How do I withdraw excess funds to a new bank?

In order to facilitate a withdraw of excess funds to a new bank, we’ll need to confirm your bank account information. To do this, you will need to provide us with a bank statement that clearly shows the full name on the account. You can upload a copy of the statement by logging into the platform and accessing MyAccount.

How will bank transfer withdrawals be processed?

Bank transfer withdrawals may be up to the amount of total deposits plus any excess funds. There is a $25,000 per transaction limit on bank transfers. Bank transfer may take up to 24 hours to process. No fee.

How will debit card withdrawals be processed?

Debit card withdrawals is limited to the amount of total deposits. There is a $50,000 per transaction limit on debit card transfers. Bank transfer may take up to 24 hours to process. No fee.

How will wire withdrawals be processed?

Wire withdrawals may be up to the amount of total deposits plus any excess funds.

Wire transfer may take up to two business with the US and five business days. A $25 fee is charged within the US, $40 for international wires (including Canada). There are no fees for withdrawals greater than $10,000. Processing time only reflects the time it takes FOREX.com to complete the withdrawal during normal business hours. Your bank may take additional time to credit the funds to your account.

Please be aware that fees may be applied by the receiving bank that involve a bank outside of the US and require an intermediary US bank. Intermediary banks may charge an additional transaction fee.

How will paper check withdrawal be processed?

Paper check withdrawals may be up to the total deposits plus any excess funds. Paper checks may take up to 48 hours to process. No fee.

I funded my account by bank transfer. Why don’t I see this amount available for withdrawal or transfer?

Funds deposited by bank transfer are not available for withdrawal for 5 business days after the deposit date.

What if I have open positions when I submit a withdrawal or transfer request?

A withdrawal of funds will result in a reduction of funds available to be used for margin to maintain open positions. This may result in the liquidation of any or all of my open positions. It is your responsibility to ensure that the account holds enough margin to maintain open positions.

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