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Old 11-18-2011, 10:48 PM   #21
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Originally Posted by 67walkon View Post
I understand the 4% concept. My wife, a long retired banker, understands it to. But how does it work for you guys?
So how does it work?
I'll tell you a secret.

The only ER who religiously follows the 4% SWR system is the hapless Y2K ER on Raddr's board. That's because he's not a real human being so he doesn't vary from the program for any reason whatsoever.
Raddr's Early Retirement and Financial Strategy Board • View topic - Hypothetical Y2K retiree update

Us real humans have lumpy expenses (new roof, fantasy vacation, kid's college) or we shrink our spending during bear markets.

What we really do is use the 4% SWR as an indicator of when our portfolio is likely to provide us with 30 good years. Then we ER and spend our time contributing to threads like this one.

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Originally Posted by 67walkon View Post
It's impossible to tie down all the variables and often I fear I'm erring on the conservative side way too much.
But I don't know if I'll ever get over the need to save something every check or every year or whatever. I'll have to work at it.
Exactly. You just keep working until you figure out all the variables to your personal satisfaction. Or at least until you can no longer work.

Some people don't enjoy their jobs very much and quickly figure out the ER solution. Others apparently enjoy working more than they enjoy working on ER problems.
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Old 11-18-2011, 11:08 PM   #22
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Originally Posted by Nords View Post
..... Others apparently enjoy working more than they enjoy working on ER problems.
I love it!
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Old 11-19-2011, 04:35 AM   #23
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According to the SWR method, you need to take up to 4% of your nest egg in year 1 (in your case $80,000). You do not spend $90,000 on top, which would represent 8.5% withdrawal in total for the the first year.
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Originally Posted by 67walkon View Post
In year 1, under the 4% SWD method, would they spend $80,000, or 4% of the nest egg? Or would they be able, should they choose to do so, take the $80,000 plus the $90,000 cash flow?
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Old 11-19-2011, 09:17 AM   #24
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Quote:
Originally Posted by Nords
The only ER who religiously follows the 4% SWR system is the hapless Y2K ER on Raddr's board. That's because he's not a real human being so he doesn't vary from the program for any reason whatsoever.
Raddr's Early Retirement and Financial Strategy Board • View topic - Hypothetical Y2K retiree update
Wow that thread is terrific.

What does FIRECalc say inputting the parameters of Y2K ER's scenario?
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Old 11-19-2011, 10:50 AM   #25
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Originally Posted by arebelspy View Post
Wow that thread is terrific.

What does FIRECalc say inputting the parameters of Y2K ER's scenario?
I didn't read the whole thread, but it does look interesting. Anyone know if the spreadsheet for the table in this post is available? If not, it would be pretty easy to reverse-eng the formulas.

Raddr's Early Retirement and Financial Strategy Board • View topic - Hypothetical Y2K retiree update


As I understand it, FIRECALC already has those numbers in it. However, for you to 'experience' a 1999-2010 data-set, you need to set your portfolio life to 11 years. A default 30 year life will not include the most recent 29 years.

Bottom line, it demonstrates that a 4% starting from a bubble is aggressive.

-ERD50
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