A Rich Life

The Old Ideas on Saving & Investing Don't Work -- Here's What Does

“I Cite You and John Walter Russell as the Earliest Advocates of [New School SWR Research]”

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Wade Pfau, an Associate Professor at the National Graduate Institute for Policy Studies in Tokyo, wrote a comment to an earlier blog entry this morning that describes a research paper he has written (the paper is still in its first draft) about the New School Safe Withdrawal Rate concept that I developed with John Walter Russell (and with the help of hundreds of our fellow community members in the Retire Early and Indexing discussion-board communities). Set forth below is the text of his words. I sent an e-mail to Wade thanking him for letting us know of this exciting development. Who could have predicted on the morning of May 13, 2002, where this New School SWR business was going to lead?

Dear Rob,

I just became aware of your past research in September.  Since then, I’ve read archives from many Discussion Boards and websites, and I always find your writing to be very interesting and intriguing.

I just finished writing up a paper about using earnings valuations to predict withdrawal rates.  But I think it is also important to consider dividend yields and bond yields as well, since these are the income sources of returns.  With these measures, I find that withdrawal rates continue falling even after 2000.  With PE10, you found the lowest withdrawal rates in that year.

I do cite you and John Walter Russell in my paper as the earliest and strongest advocates of this approach.  I understand that John Walter Russell has passed away, sadly.

If you wish to see my paper, it is at:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1726225

I’m hoping it will be publishable in a finance journal. This is just the first draft, so if you have some comments or anything, I can still make revisions.  Thank you very much for your consideration.

Best wishes,

Wade

“Take a Bow, Bill Bengen! Take a Bow, Trinity Authors! Take a Bow, John Greaney! Take a Bow, Bill Sholar!”

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There was a discussion about safe withdrawal rates in the comments section of one of my blog entries a few months ago that provoked a comment by me in which I presented an overview of where things stand today re this issue. I wanted to highlight those words in a post of their own.

The thread from which my words set forth below were taken is here.

Here are the words that I put forward in that thread:

Thanks much for posting both the excerpt and the link, Gonna Get Moderated. Those are extremely helpful.

The key words in the Bengen passage are these: “Can we be confident that these withdrawal rates will work in practice, as well as they have in the laboratory? My answer to both questions is a resounding “No!” ”

This has of course been known throughout the Retire Early and Indexing discussion-board communities and throughout much of the Personal Finance Blogosphere for many years now. There have been thousands of community members who have expressed a desire that honest posting on SWRs and on many other critically important investment-related topics be permitted at all of our boards and blogs. I applaud the community members who have spoken out and urge all who have not until today worked up the courage to do so to make the jump today. The water is fine! There obviously is zero benefit to anyone in keeping the Ban on Honest Posting in effect any longer.

I think it is fair to say that every last one of the thousands who have expressed a desire that honest posting be permitted are grateful for the work done by the experts who developed the Old School SWR studies. We obviously wouldn’t know what we know today had it not been for the fine efforts of those who came before us. Take a bow, Bill Bengen! Take a bow, Trinity authors! Take a bow, John Greaney! Take a bow, Bill Sholar!

I also of course think it is fair to say that not one of the thousands who have spoken out feels even a tiny but comfortable with the tactics that have been employed by the internet predators who have posted in “defense” of Mel Lindauer and John Greaney and their Campaign of Terror against the various communities.

I stand ready to work with Bengen, Bogle, Bernstein, Clements, Burns, Kitces, Schultheis and any others who evidence a sincere desire to put the interests of the investors following their advice ahead of marketing considerations or personal ego considerations long enough to work through these questions in productive and warm and friendly and positive and life-affirming discussions. I will continue to post honestly on what the historical data says re safe withdrawal rates in any event. I will not permit the terrorist tactics or the blacklisting being supported today by a number of big-name personal finance bloggers pressure me into selling out the many fine community members who have participated constructively and bravely in our discussions.

I encourage Bengen and all others who have come to realize with time the mistake they made in being so arrogant and stubborn and narrow-minded in their unwillingness to correct the errors they made in their earlier SWR claims when they were first brought to their attention to join me in calling for a national debate on the realities of stock investing and on the implications of the academic research published 30 years ago showing that Buy-and-Hold has precisely zero chance of ever working out for the long-term investor.

Such a national debate is long overdue given the huge amount of human misery that has been caused by the level of overvaluation that we as a society permitted to take place in the late 1990s (with both the experts and the ordinary investors listening to their advice sharing in the blame). There’s nothing like taking serious action to bring an economic crisis to an end to get a whole big bunch of people feeling better about just about every subject on their minds. Let’s turn the corner on this thing. Let’s stop walking deeper into the darkness and take our first tentative steps together in the direction of the light. That’s when the real fireworks (the good kind!) begin!

I am confident that Bengen’s understanding of SWRs would improve dramatically if he gave up his belief in Buy-and-Hold. He is not alone in that belief, to be sure. There are millions of good and smart people who believe. If they believe wrongly (and the behavior of Bogle and many other lead Buy-and-Hold advocates certainly evidences at a minimum a lack of confidence in this model at this time even among its strongest advocates), they need to find this out.

The best way for as many as possible to discover the realities quickly is for us all to participate actively in a national debate aimed at working through what we have learned or should have learned from the important research done by Shiller, Russell and many others over the past 30 years. A deepening of the economic crisis is to precisely no one’s benefit. (As a side note, it is always amazing to me that such words as those in that last sentence even need to be put forward — Yak!)

I’ve said it before and I’ll say it again — We’ve got a tiger by the tale with this one! We’re deep into Year Eight and The Great Safe Withdrawal Rate Debate is not showing signs of slowing down a tiny bit! Holy moly! Heaven help us all!

Let’s get back to Learning Together!

Let’s get back to Having Fun!

Starting —

Now!

Rob

“Someone Had Already Created the Tools I Had Daydreamed About Having!”

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Set forth below is the text of an e-mail that I recently received from Bjorn Amundson, a Certified Financial Planner, followed by my response:

Rob:

Thanks so much for all the work you do and your great calculators on your site!

I stumbled onto Shiller’s study probably 2 years ago.  I was instantly struck with the huge implications it had for my work as a financial planner.  Even better, I found out that someone had already gone and done all the legwork I imagined doing and creating the tools I had daydreamed about having!

I’ve been at too many places that love the 4-5% rule.  The inherent contradiction in this rule (or trap) is that if you can spend 5% no matter what year you retire, then if the stock market goes up a lot, then you can “reset” your spending rate at this new 20% higher rate!  So, spending goes up with the stock market returns, but…then …isn’t supposed to go down with it….

The next level of your calulators/ideas will be applying this across different markets as well.  Imagine if Australia is at a PE10 of 9 while the US is at 25 or something.  I’ve searched the web far and wide and have had a VERY difficult time coming up with international data…Do you know of any?

Also, I have spent a long time creating a formula that adjusts allocation according to the PE10 raio as well.  It historically outperforms the market (no shocker)with less volitility.  However, it doesn’t work in all decades and is primarily useful at the extreme margins.

Anyways, thanks again and I’ll keep reading your stuff.

Bjorn

Bjorn:

Thanks for your kind words and for your interest in my work.

There’s not a lot of international material. I believe that the problem is that a market needs to be stable for some time for predictions to work. This won’t work for emerging markets or for markets in dying economies. Chapter Six of Shiller’s “Irrational Exuberance” book is titled “New Eras and Bubbles Around the World.” That gives a bit of information about foreign markets but not a great deal.

Here are four links to discussion threads at the SWR Research Group board that make reference to international questions. It might be that you would come across some useful references by checking these out:

http://s162532268.onlinehome.us/Sewer/viewtopic.php?t=1016&highlight=international

http://s162532268.onlinehome.us/Sewer/viewtopic.php?t=1144&highlight=international

http://s162532268.onlinehome.us/Sewer/viewtopic.php?t=1153&highlight=international

http://s162532268.onlinehome.us/Sewer/viewtopic.php?t=1202&highlight=international

You are absolutely right about the logic flaw in having SWR resets go only in one direction. The insanity of this drives me crazy. There are lots of otherwise smart people who think it makes sense to proceed in this way, however.

John Walter Russell tested some switching formulas at his www.Early-Retirement-Planning-Insights.com site. It certainly can be a stimulating intellectual exercise to do this. However, I personally don’t think that all answers can ever be obtained from formulas. One problem is that the return available from super-safe asset classes is ever-changing. In some circumstances, it might be worth investing heavily in stocks selling at a certain P/E10 level and in other circumstances this would not be so. There are several different moving pieces in this puzzle. I certainly wish you the best of luck with your efforts in this regard, however, and would always be interested in knowing how things turn out.

Thanks for your feedback and questions. I hope that we will be back in touch from time to time.

Rob

“A 4% Safe Withdrawal Rate Goes Out the Window”

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Yesterday’s blog entry linked to a recent article on safe withdrawal rates by Scott Burns. William Bernstein, author of the book The Four Pillars of Investing, commented on the article in a thread at the www.Bogleheads.org forum. Bernstein’s words are set forth below:

Hi All:

As usual, Scott is spot on.

The Trinity and Bengen studies–the “4% Rule” came from the latter–were done with historical post-1926 stock returns in the US, a cherry-picked sample if there ever was one, with nominal equity returns in the 10% region.

We’re now looking at forward nominal returns of around 7%: a 2% dividend yield plus 5% of nominal per-share growth: if you’re a wild-eyed optimist, maybe 8%. So, in my mind, a 4% SWR goes out the window; even 3% may be a stretch.

Bill

“There Is No Iron-Clad Rule for Withdrawal Rates”

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Scott Burns recently wrote an article at his Asset Builder web site titled The Safe Withdrawal Rate May Be Changing.

Juicy Excerpt #1: There is no iron-clad rule for withdrawal rates. All the rules-of-thumb that you see discussed are based on probability studies of how long different portfolios will last at different rates of withdrawal. If you retire at age 65 the odds are with you for a withdrawal rate of 4 to 5 percent. If you are younger than that, or come from a long-lived family, you should make withdrawals at the low end of that range. If you are older than that or have a shorter than average life expectancy, you can withdraw toward the higher end of the range.

Juicy Excerpt #2: Another thing to remember is that all these probability studies were done in periods where interest rates and stock dividend yields were considerably higher. For instance, the yield on a 50/50 portfolio of S&P 500 index stocks and 5 year Treasury obligations is under 2 percent today. In 2000 the same portfolio provided a yield of 3.65 percent and in 1990 it provided a yield of 5.99 percent. You can read more about this on my website under “portfolio survival.”

The difference in current yield is important because every dime of withdrawal that doesn’t come from current interest and dividend income must come from principal. So in 1990 you could withdraw 6 percent and not touch your principal. If you did that today you’d be taking 4 percent of your principal each year. That’s a formula to go broke well before you die.

“The Ideas Were All Developed Through INTERACTION With My Fellow Community Members”

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Larry:

Recent blog entries have reported on correspondence between a community member named “Larry” and me. Set forth below is the text of an e-mail that I sent to Larry on November 12, 2009.

Thanks for the kind “beyond awesome” assessment. I fully get it that you are trying to bring the positive aspects to the next level. I am of course grateful.

I feel that I need to respond to the point about spending time and energy battling old foes. I hope that you will not take my feeling a need to respond as defensiveness.

The first thing that I need to say is that you are not the only person whom I respect who has said things along these lines. My wife has said things along these lines. John never said it in words but my strong sense is that he would have agreed with you. My brother has said things along these lines. There are others. So there is evidence that I may just have a blind spot here and cannot see something that is obvious to many others.

Still, I believe what I believe re this aspect of things and I think I should make an effort to put what I believe into words so that you are at least clear about where it is that I am coming from according to my perspective.

I feel that any old “foes” (I don’t personally think of the Goons as “foes” although it certainly is fair to say that they view me as constituting some sort of “foe”) have a right to invest however they please. This has never been even a tiny concern to me.

My “battle” is to open the internet to honest posting on investment questions. Not one of the ideas explored at my site was developed by me sitting in a room thinking grand thoughts. They were all developed through INTERACTION with my fellow community members. The process that works is much like the one that you and I are going through in these e-mails. Different thoughts come from different angles and over time people develop better-informed takes as a result.

Hundreds of the people on the boards are friends of mine. I think they have a right to have the discussions that they want to have. And many of these people have things to teach me. I think I have a right to bounce ideas off them and learn from them. The purpose of the “battle” is to make that possible.

I do not care what Greaney thinks about investing any more than I care what anyone else thinks. I had some good times with  the guy. I think of him as a friend because of those good times. But I couldn’t possibly care less how he goes about investing his money. I see that as being his call. The one way in which he has become a concern to me is that he and his Goon Squad stand in the way of a number of boards and blogs permitting honest posting on these questions. I think he should be banned from the boards until he is willing to follow the rules he agreed to follow when he was permitted access. I have been saying so since November 2002. All of the boards that I have posted at prohibit the tactics that he employs to block honest posting.

There’s one more angle here that I believe that you need to consider to develop a full appreciation of why the Passive model is so dangerous. I noted above that all of the boards prohibit the tactics employed by Greaney and Lindauer. That’s evidence that there is a deep feeling among many people that those tactics are unacceptable. Yet only a small number have spoken out in strong terms in opposition to the tactics that have been employed. Does that not say something about how emotional an approach the Passive investing approach is?

I think it does. I think that all of us know on some level of consciousness that the idea that price doesn’t matter when buying stocks is nonsense. We try to ignore the voice inside telling us this but we can never fully pull it off. So it eats away at us. And it makes us emotional when someone comes along and points out what the historical data really says.

I don’t possess an I.Q. bigger than all these experts. So how did it come to be that I am the one writing and speaking about all these exciting findings? That’s a fair question that I think reasonable people should be asking.

I think that the explanation is just that I haven’t had money in stocks since 1996. So I am not caught up in the Passive Investing craziness. I am capable of a level of objectivity that few alive today are capable of. I think that’s part of the story here.

Several financial planners have told me that the reason why they do not talk straight about stock investing is that most investors are far too emotional to handle the truth. I think that the problem is that the conventional advice MAKES them emotional. So this is all circular. Passive Investing makes us incapable of reason and being incapable of reason makes us unable to appreciate strategies rooted in reason.

We need to break this chain. I don’t think we can break it any final sense by writing some super-duper article that lays out all the points (I of course do not mean to say that producing such articles is not a plus). The human mind possesses an incredible ability to rationalize away points that it does not want to take in. But I have seen people slowly come around when they are able to ask questions and step by step come to a better appreciation of the realities. So I am always looking for places where I can help people through that step-by-step process.

The Goons of course want to block that learning process as much as I want to advance it. So we are working at cross purposes. My view is that I am working for a positive purpose and they are working for a negative purpose. I get the sense that they would like me to feel that I should apologize for doing so. I offer no apologies. I am proud of the work that each of the hundreds of people who have made positive contributions has put forward.

I believe that even the Goons would feel a whole big bunch better about themselves if they would make positive and constructive contributions. I have often urged them to do so. I believe that I have done pretty much all that it is possible for me to do in this regard.

I view this as a positive story and I regret it that many characterize it as a negative story because of the ugliness that the Goons have injected into the proceedings. My view is that we should all work together to insure that things always remain positive. I do what I can in this regard. When I am not able to think of anything more of a positive nature that can be done, I let it go and turn my attention elsewhere. I personally do not see what is wrong with this approach. But, again, you are far from the first person I respect who has indicated to me that I am going about things in the wrong way.

If I have done something wrong, I hope that there will come a day when I can recognize that. Until I really do see it, I don’t think it would be right for me to say that I do. I have to just keep doing what seems right in my eyes while making an effort to remain open to the points made by people of good will seeking to steer me in another direction.

Rob

“Beyond Awesome”

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Recent blog entries have reported on e-mail correspondence between a community member named “Larry” and me. Set forth below is the text of an e-mail sent by Larry on November 12, 2009.

Rob,

I see and understand the difference that you talked about in your note. Buffet has said for years that he hopes the academics keep teaching the Efficient Market Theory in business schools. It helps him with his investing approach.

One of my main points in investing is to avoid catastrophic investment loss. The P/E 10 helps with this goal. I’m just trying to articulate additional benefits of your investment approach. You’ve focused heavily on safe withdrawal impacts in your writings. This is great but as you know there are many more benefits to your approach. I want to finish the position paper and chart so you and others can see the entire spectrum of benefits of the valuation informed investing process.

I think what you have done is beyond awesome. However, I think you spend way too much time and energy battling old foes. I’m just trying to help bring  the positive aspects of your work to the next level.

Larry

“I Would Feel Better to Have Many, Many More Participating in the Discussions”

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Last Sunday’s blog entry set forth the text of an e-mail that I received from Adam Butler, Director and Wealth Management & Portfolio Manager at Butler, Philbrick & Associates. Set forth below is the text of my response:

Adam:

Thanks so much for writing. Your note brought a good bit of cheer to my Saturday afternoon.

I would love to have a telephone conversation with you and Mike. My telephone number is 540-751-0685 (that’s in Virginia). I work from home, so I am available at most times. If you let me know in advance when you will be calling, I can be sure to be by the phone at that time.

I have not yet looked over the work reported on at your site. I am certainly going to do so. I wanted to get a response to you quickly. Then, after I get some other work I need to complete out of the way, I will spend some time looking over the materials at your site.

Please understand that all of the findings reported on at my site are tentative ones. My view is that we need a national debate on the realities of stock investing. I would like to see thousands of smart people contributing to these discussions. I felt an obligation to take a stab at addressing some of these questions. But it’s only by talking things over with lots of others that we can come to have strong confidence in our findings. I’ve enjoyed feedback from a good number of people (both experts in the field and ordinary investors) over the past eight years. But I would feel better to have many, many more participating in the discussions that we have been having in the Retire Early and Indexing discussion-board communities.

I am not a numbers-skilled person (I am a journalist). The four calculators at my site are the work product of a partnership that I enjoyed with John Walter Russell, the former owner of the www.Early-Retirement-Planning-Insights.com site. John died in October 2009. I wish that he could respond to your questions because he would give you sharper responses. I will take a stab at answering your questions. But I encourage you to take a look at John’s site (ownership of it was passed to me after his death) as well:

http://www.early-retirement-planning-insights.com/index.html

The two places to get started at his site are the Foundations section and the Guidelines section:

http://www.early-retirement-planning-insights.com/foundations.html

http://www.early-retirement-planning-insights.com/guidelines.html

John found a reasonably strong statistical correlation between the P/ E10 level that applies on a given date and the return earned 10 years later. He found an even stronger correlation at 15 years and at 20 years:

http://www.early-retirement-planning-insights.com/Year-10-PE10-Real-Return.html

http://www.early-retirement-planning-insights.com/Year-20-PE10-Real-Return.html

I believe that the difference between what you have found and what John found is that John generally used data from 1921 forward. He did indeed find a weaker correlation when using the data going all the way back to 1870:

http://www.early-retirement-planning-insights.com/Year10-PE10-Full-Data.html

http://www.early-retirement-planning-insights.com/Year20-PE10-Full-Data.html

It was John’s belief that the earlier data was not as relevant to the working of today’s market because economic conditions were so different. My understanding is that different researchers follow different practices re how far back to go. John used the data going back to 1870 when making very long-term predictions (those going 40 years out or more) because he felt that there was not enough data to make such predictions using only the data from 1921 forward.

I am not sure what you mean when you say “intermediate valuations provide little guidance to long-term returns.” Perhaps this point will be clearer to me after I read the material at your site.  This appears to me to be an important point that I want to explore more carefully.

Here are two graphics that relate to the work John did in the SWR area (the “Historical Surviving Withdrawal Rate” is our term for referring to the concept that is now generally referred to as the “Safe Withdrawal Rate” — we rejected the idea that just because a particular withdrawal rate happened to survive in a small number of tests that it could properly be deemed “safe”):

http://www.early-retirement-planning-insights.com/HSWR80T2-Graph.html

http://www.early-retirement-planning-insights.com/HSWR50T2-Graph.html

You might want to take a look at the article “The 4 Percent Shocker”:

http://www.early-retirement-planning-insights.com/4shocker.html

You also might want to look at “Our Strong Theoretical Foundations”:

http://www.early-retirement-planning-insights.com/strongfoundations.html

“The Logical Sequence” also might be helpful:

http://www.early-retirement-planning-insights.com/logicalsequence.html

Finally, I think that “Using All of the Data” is an important one:

http://www.early-retirement-planning-insights.com/usingalldata.html

I hope that I have not buried you in material. John and I had been working this on a full-time basis for nearly eight years when he died in October. So I get excited when I have a chance to share our findings with interested parties.

I hope to hear back from you about a time at which to have a telephone conversation to thrash some of this out. I can participate to only a limited extent in discussions of technical statistical questions as I do not possess expertise in this area. But I have written extensively about the big-picture implications of these findings, which I believe are huge. And I certainly need to hear both the good and the bad of what others with expertise see in the work that John and I did together.

I’d be grateful if you would let me know how you found about my site. I wrote several articles about my calculators at the www.ValueWalk.com site in the past few weeks. If it happened that that is where you found out about me, I want to let Jacob Wolinsky (the owner of the site) know that he has been a big help in spreading the word about all this.

“I Am Intrigued By Your Ideas”

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Set forth below is the text of an e-mail that I received recently from Adam Butler. Adam is Director and Wealth Management & Portfolio Manager at Butler, Philbrick & Associates.

Hey Rob,

I am intrigued by your ideas, many of which overlap with the approach that we espouse at Butler|Philbrick & Associates. I would be delighted to hear your thoughts on our techniques and assertions, many of which are described in detail on our blog: http://gestaltu.blogspot.com.

Some thoughts on your approach, as i understand it. I eagerly await clarification where I have misunderstood:

Regarding the regression of long-term stock returns that you use in your models, I wonder about the statistical significance of the regression using all of the the available months. When I regress Shiller PE data back to 1870 against forward 10 year returns my findings suggest that the linear relationship is not strong enough to form the basis of a prescriptive model. This is due to the fact that intermediate valuations provide little guidance to long-term returns  However, when i isolate the top and bottom quartiles of valuations and regress against the forward returns from these valuation levels,  my regression strengthens considerably. Please see our blog post entitle Why Now Is Not The Time For Buy and Hold (http://gestaltu.blogspot.com/2010/03/why-now-is-not-time-for-buy-and-hold.html ), and Expensive Markets Revisited  for some of our (and others) thoughts on this.

I am extremely interested in how you have applied the findings from the Shiller PE regression analysis to find the safe withdrawal rate. Have you taken the expected return at a specific Shiller PE (based on your regression of all data) and combined it with the TIPS return, with specified allocations to each asset class, to arrive at an expected portfolio return, and then run a mean/variance analysis for various withdrawal rates to a 30-year horizon? What historical volatility numbers do you use? Do you include fees?

Have you read some of Moshe Milevsky’s work on safe withdrawal rates? If not, I encourage you to check out the following papers: (http://www.qwema.ca/pdf_research/2007APR_RUIN.pdf) and (http://www.qwema.ca/pdf_research/2007SEPT_SustSpending.pdf).

Our approach incorporates our findings on Shiller PE regression vs. long-term total real equity returns (1st and 4th quartile only) with Dr. Milevsky’s gamma distribution approach to sustainable withdrawal rates (See http://gestaltu.blogspot.com/2010/07/three-horsemen-of-retirement-apocalypse.html).

We have extended this approach by applying timing systems, such as Mebane Faber’s Multi-Asset Tactical Asset Allocation strategy (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1476225), and applied simple momentum overlays with extensive and robust back-testing, to offer strategies that substantially improve the safe withdrawal rates offered by buy and hold strategies from these lofty valuations. Note that we have adjusted the back-tested returns to our models by reducing them by the difference between long-termaverage stock returns (6.6% real total returns) and current regression prescribed long-term returns. This aligns our back-tests with the implications of lofty market valuations (See http://gestaltu.blogspot.com/2010/04/and-now-good-news.html).

My partner, Mike and I would be very interested in touching base over the telephone to discuss our mutual findings in an effort to swap best practices. You will find our contact info, and a little bit about us on our web site: http://www.butlerphilbrick.com.

I look forward to hearing from you soon.

Adam

ValueWalk.com Article #4 — What If You Don’t Want to Die Broke?

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The www.ValueWalk.com site has posted my article entitled The Retirement Risk Evaluator: Part Three — What If You Don’t Want to Die Broke?

Juicy Excerpt: A demand that 100 percent of the portfolio balance remain at Year 30 reduces the safe withdrawal rate by less than one full percentage point! Insisting that your portfolio retain its value delays your retirement date, as would be expected. But the cost of insisting that a significant percentage of your starting-point portfolio value be retained or even the entire starting-point portfolio value be retained is much less than the cost that is incurred by failing to take valuations into consideration. The conventional retirement planning guidance is failing to provide retirees with valuable information about the tradeoffs that come into play when putting together a retirement plan.