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Even worse... the 4% rule is only tested over 30 years. If you're retiring at 55 you should probably be looking at a withdrawal rate of 2.5 - 3%, so 35-40 time
by nly 4y ago
Even worse... the 4% rule is only tested over 30 years. If you're retiring at 55 you should probably be looking at a withdrawal rate of 2.5 - 3%, so 35-40 times your desired retirement income
- reducesuffering 4y agoYes https://youtu.be/1FwgCRIS0Wg https://youtu.be/1FwgCRIS0Wg
- berkle4455 4y agoFirst bear market in over a decade and suddenly the entire FIRE community capitulates to a decision that keeps them working for another decade. What a joke.
- nly 4y agoI don't think that's the case. It must means you need to lower your retirement expectations.
- benjaminwootton 4y agoThe FIRE community were definitely extrapolating from a 15 year bull run and assuming they had the foresight to find the next FAANG for the next 40 years. I like a lot of the FIRE stuff but I didn’t the numbers held up over a long retirement when you factored in inflation.
- berkle4455 4y agoI was mostly frustrated with the "100% VTSAX" mantra, especially across 2020-2021, as every possible valuation measurement was screaming how overvalued things were. And any attempt at pointing these things out received a harsh reply of "4% rule!" and "Stick to your allocations!" and pictures of 10-yr charts.
- nightski 4y ago100% VTSAX has actually performed pretty well relatively. International & Bond markets are not doing great either.
- neogodless 4y agoIf I retire at 55, I'm more likely to be dead at 85 than broke. That should cheer you up! https://engaging-data.com/will-money-last-retire-early/ https://engaging-data.com/will-money-last-retire-early/
- zeroonetwothree 4y agoSpends tends to go down with age though. If you live to 90 you aren’t going to be jetsetting around, you’ll just be resting at home all day.
- hindsightbias 4y agoIn an elder care facility that costs?
- loandbehold 4y agoThat's only if you plan to leave your stock portfolio to your children when you die. You can take out more than 4% if your plan is to use up your savings while you are alive.
- nly 4y agoSadly this isn't the case. Volatility in the stock market will see your withdrawals deplete your equity at a faster rate during downturns and put you at risk of going broke early. A $1M stock portfolio may not service $50K/yr for 20 years, let alone the rest of your life. A 40% downturn in the early years will see you go kaput. If you want to leave nothing you probably need to provision for 40 years and build a bond ladder yourself (rather than buy in to bond funds). The problem with that though is you're exposed heavily to inflation, which equity will give you some protection from over the long term
- prepend 4y ago4% of 1M is $40k, not 50. The idea is you withdraw $40k/year and invest in low risk income funds that yield 2-3%/year. So withdrawing $40k gives you about 40-50 years and that’s safe for most 65 year olds.
- nly 4y agoA 3% nominal yield doesn't even cover inflation, so you're not getting more than 25 years out of that $1M if you draw it down at an adjusted $40K/yr
- readthenotes1 4y agoUse cfiresim or any other retirement calculator and you can choose your length and mix. We don't have to rely on the calculations of someone from 1993...
- nly 4y agocfiresim basically confirms the 4% rule over 30 years. That said, if you mix in state benefits things are a lot more favorable for higher withdrawal rates.
- readthenotes1 4y agoYou can set your withdrawal rate in the mix of your assets. It does much more than confirm or not the 4% rule. There's also firecalc which is similar but has a weird user interface.