Awhile back, I proposed an SWR of as low as 2% for these reasons:
If the market fell 50% just after retirement (never hoped/thought/dreamt it would really happen), you would still be at a 4% withdrawal of the reduced principal
You could live off dividends and never sell, assuming dividend payouts were not slashed since the dividend rate is around 2% (problem could be that companies reduce dividends as the yield is now higher and earnings are lower)
For really long retirements of 40 - 50 years, 4% may not be safe enough
At the market peak (just 1 short year ago), I was awfully close to the 2%, though I was too chicken to retire. Now, it is somewhere in the 4% range.
If I did retire now, am I at a 2% or 4% SWR? I guess it is now 4%, but if a bull market ultimately follows this bear, it could get back to the 2%.
I can still live off the dividends, so does the change in principal actually matter?
PS: I have not been on this site awhile or thought about ER, since with everything going on, it seems like a tease. But I have stayed the course, and am hoping that the market anticipates, often overreacts, and that this may be a bit of a reverse bubble (term I heard in the media).
One thing I have decided, when this is all over and there is a recovery, I have to get closer to something like 60/40 equity ratio (from 90/10 now).
If the market fell 50% just after retirement (never hoped/thought/dreamt it would really happen), you would still be at a 4% withdrawal of the reduced principal
You could live off dividends and never sell, assuming dividend payouts were not slashed since the dividend rate is around 2% (problem could be that companies reduce dividends as the yield is now higher and earnings are lower)
For really long retirements of 40 - 50 years, 4% may not be safe enough
At the market peak (just 1 short year ago), I was awfully close to the 2%, though I was too chicken to retire. Now, it is somewhere in the 4% range.
If I did retire now, am I at a 2% or 4% SWR? I guess it is now 4%, but if a bull market ultimately follows this bear, it could get back to the 2%.
I can still live off the dividends, so does the change in principal actually matter?
PS: I have not been on this site awhile or thought about ER, since with everything going on, it seems like a tease. But I have stayed the course, and am hoping that the market anticipates, often overreacts, and that this may be a bit of a reverse bubble (term I heard in the media).
One thing I have decided, when this is all over and there is a recovery, I have to get closer to something like 60/40 equity ratio (from 90/10 now).