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Many Opinions on W/D Rate
Old 08-17-2017, 08:34 AM   #1
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Many Opinions on W/D Rate

Hi All - What would be wrong with a 40%/60% (stocks/individual bonds) allocation if my withdrawal rate is 2% over a 50 year retirement? I'm cognizant of the need to keep up with inflation. However, I've read many opinion pieces that suggest all kinds of AA for all kinds of reasons.

If my portfolio returns 4.5% and I'm taking 2% (with a 3% bump each year thereafter), it seems to me like that works over the long run if I'm comfortable with the lifestyle that 2% provides me.

I'd love some opinions on this. Thanks in advance.
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Old 08-17-2017, 08:51 AM   #2
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First stop: FireCalc or similar calculators.
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Old 08-17-2017, 08:51 AM   #3
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So you want even more opinions?

Nothing would be wrong. The best sustained withdrawal series is this one:
https://earlyretirementnow.com/2016/...-part-1-intro/

Did you read all 17 parts? There will probably be more added in the future.

What exactly are you worried about and what are you looking for? Validation? A desire to spend less? A desire to spend more? The bottom line is that only your own opinion really matters and no opinion from the peanut gallery will help you.

I like the linked series because it contains mostly facts and few opinions.
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Old 08-17-2017, 08:58 AM   #4
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Nothing wrong with 40/60 if it's in line with your risk tolerance comfort level. Can run Firecalc with various asset allocations if you'd like to see how much or how little a different allocation may perform for you. A quick run in Firecalc supports that a 2% withdrawal rate has a 100% chance of success over a 50 yr timeframe....ie will not cause your assets to deplete in your lifetime. So your plan should work and although be very conservative. A less conservative plan (using Firecalc "investigate" tabl) would be to keep your 40/60 allocation but withdrawal 3.16%. That would still give you an excellent success rate of 95%. Firecalc is a great tool, play with it and make sure you have a plan you are comfortable with without over restricting yourself. Good luck!
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Old 08-17-2017, 09:20 AM   #5
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I use the 40/60 allocation based on the premise of taking no more risk than is required to achieve my goals. Run the calculators for your lifestyle specifics and your ability/willingness to be flexible and if you like the results - go for it!
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Old 08-17-2017, 11:06 AM   #6
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Quote:
Originally Posted by LOL! View Post
...The best sustained withdrawal series is this one:
https://earlyretirementnow.com/2016/...-part-1-intro/
I came here to post the EXACT SAME THING! If OP is serious, read all parts linked above, and use their linked spreadsheet tool alongside FireCalc to get an idea of how "ready to go" your portfolio really is. Good luck.
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Old 08-21-2017, 08:49 AM   #7
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Quote:
Originally Posted by LOL! View Post
So you want even more opinions?

Nothing would be wrong. The best sustained withdrawal series is this one:
https://earlyretirementnow.com/2016/...-part-1-intro/

Did you read all 17 parts? There will probably be more added in the future.

What exactly are you worried about and what are you looking for? Validation? A desire to spend less? A desire to spend more? The bottom line is that only your own opinion really matters and no opinion from the peanut gallery will help you.

I like the linked series because it contains mostly facts and few opinions.
Thanks for this info and thanks to everyone for your responses. I looked at the link above and ran Firecalc. Firecalc say 100% with the 40/60 allocation and 2% w/d rate. I'd rather throttle back early on in retirement and ramp spending later on if it makes sense.
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Old 08-21-2017, 08:55 AM   #8
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Originally Posted by jjim6954 View Post
I'd rather throttle back early on in retirement and ramp spending later on if it makes sense.
That could be problematic.

Many of us prefer to spend more in the early years of retirement knowing the reality of declining physical ability over time. You need to find a balance or you may end up wishing you'd done more when you were able.
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