Retirement Income from a 401K Account – Part 1

I recently retired, so deciding what my income is, deciding how quickly to drain my retirement account, has gained a new urgency. Unless the goal is to live off Medicaid, or its expected that the government will put us down once we reach our life expectancy, its important to have a plan. And since the future is even harder to predict than the past, its a plan that must be flexible, and can adjust with the economy. Its important to remember that accommodations made early in retirement will be smaller than the forced reductions made later.

I’m hoping to do this in three parts. First, look at some trial & error estimates based on subtracting annual amounts. Second, look at mortality tables and life expectancy. And third, try to come up with some algebraic expressions, or simple formulas to make periodic reassessment easier. Yes, this has been done by more knowledgeable people than me, but for my sanity, I want to know what goes into these estimates and understand why I should make sacrifices now.

Continue reading

Happy New Year 2014

I like to say I’m optimistic for the next year, but I’m not. “Hope for the best, expect the worst.”

For whatever it is worth, here are some predictions:

  1. There will be wars. Marauding warlords will continue to pillage civilians in the Middle east and Africa. Civil war may come to South America as Venezuela continues to collapse.
  2. Climate will continue to change. Ice will melt and water will freeze.
  3. Lawyers, Judges and Government will not save us. Those in charge will continue to pervert justice.
  4. Social conservatives will continue to be ignored. Babies will be continued to be born without fathers.
  5. Cleveland Brown will fail to sign a front line. Quarterbacks beware!
  6. Economic growth will be slow at best. The economy received a huge stimulus in 2013 as stocks rose 30%. It remains to be seen whether this creates stending, profits and earning. Against this upward force is implementation of the Obamacare mandates on employers, sapping hiring and earning. Also artificially low interest rates will continue discourage investments.
  7. The Church will survive.

I expect that, whether we deserve it or not, we will muddle through.

Historic S&P 500 Price to Earnings Ratio

S&P 500 P/E ratio from

One of the metrics I use when looking at stocks it the price to earning ratio.  I think of it as an indication of the rate of return on an investment.  This is not entirely true. Other characteristic  also affect the future behavior as future expectations of earnings also play a role, and trust in the management etc. Dividends provide a more sure income. Continue reading

Unbalance (Fionn for Fed Chief)

Stock Prices are rising as another earnings reporting season begins. The first of my stocks to report has “better than expected” earnings. This is good. Bernanke is keeping the money pumps pumping. As stock to earnings ratios approach 20:1, that piece of the economy is being nailed into place and all is right with the world.

But then economies aren’t about balance and stability, or at least they haven’t been for at least 500 yrs. Maybe they never were, as drought, war, plague, religious reform, new ideas, trade always have affected economies. “They” say that a tree that stops growing is dieing. An economy that stops bubbling and frothing is, while not dead, well, its stagnant. A healthy growing economy is one that creates new opportunities, and kills off some of the obsolete ones, shedding the dead wood. Continue reading

Thoughts on the Laffer Curve

I am not an economist, so feel free to take these comments with a grain or two of salt. But I have a background in physics, and think I have a good enough grasp of calculus to make some observations about a graph.



Laffer curve is a qualitative description of government revenues as a function of tax rates. Wikipedia suggests that there are some sophisticated economists that doubt its existence. I, being less sophisticated, regard it as self evident. At zero tax rates, the revenues would be nearly zero – except for tariffs (which are taxes on trade) and legal fines and maybe some other fees (taxes) such as liquor stamps.  100% tax rates result in essentially a slave state or barter society.  Revenues would also be low as there in no incentive to generate an income.  Citizens are completely dependent on government for basic needs.  In between revenues will be higher, and there will be [at least] one maximum. Laffer skirts the issue of the maximum, noting that reducing taxes reduces income less than expected, and presumably, raising taxes produces less income.  Since there is no quantitative formulation of the Laffer Curve, any conclusions can only be qualitative. Continue reading