Vanguard looks at the 4% rule, 20 years later

[W2R]

We should all be so lucky. I'm officially envious!

Don't be! It's all temporary. I have spent most of my life right around the corner from broke. We all have good luck and bad luck at various times in our lives and nothing is ever constant. Karma is on my side for a change right now, but who knows what tomorrow will bring.

 

[audreyh1]

I am a little concerned that I'll find it difficult to adjust my draw upwards later. I do tend to suffer from an effect that has been much discussed here, and that is that the same frugality that propelled me to be able to ER, also threatens to make it a little difficult to loosen the purse strings in ER. Have you had any issues with this, audreyh1?

One can always gift more. That's easy.

I fine myself more inclined to "upgrade" as funds become available.

I have always lived below my means, but I am not necessarily frugal, just prudent.

I'm not buying first class airfare anywhere yet. But I'll buy first class train tickets in Europe.

 

[cooch96]

No one seems to mention getting part time work to make ends meet if your portfolio doesn't last. I figure 80% success is good gambling odds. If I ever start to slip into that 20%, why not tighten your belt AND pick up something seasonal to tide you over until your portfolio is healthy again? I reckon if I'm too old to do anything productive, then I'll also be too old to give a care what happens.

 

[Major Tom]

I reckon if I'm too old to do anything productive, then I'll also be too old to give a care what happens.

My fear about a situation like this would be that I would be too old to do anything productive, yet still sentient enough to be miserable if my means had dwindled. Although I hope it doesn't happen to me, I can envisage being physically incapacitated, yet still being perfectly aware that my life sucked. It's a position I don't wish to be in.

 

[cooch96]

My fear about a situation like this would be that I would be too old to do anything productive, yet still sentient enough to be miserable if my means had dwindled. Although I hope it doesn't happen to me, I can envisage being physically incapacitated, yet still being perfectly aware that my life sucked. It's a position I don't wish to be in.

I guess I just have a real hard time imagining a life where I'm unable to do anything, but still thrilled because I have a team of nurses and a pile of money in the bank. Spend it while you can enjoy it. That's what I say.

 

[Fermion]

I guess I just have a real hard time imagining a life where I'm unable to do anything, but still thrilled because I have a team of nurses and a pile of money in the bank. Spend it while you can enjoy it. That's what I say.

Exactly. How much joy is that 1.x% SWR going to bring you when you are hooked up to a feeding tube and a bedpan?

 

[daylatedollarshort]

No, that's not a 'worry' at all.

A worry would be running out of money after quitting work before full retirement age, and then what? My kids would probably help out, but I hope to never hit that stage. Keeping my WR conservative is how I do that.

I do what I want, drink good beer/wine, eat good food, go to concerts, buy what I want. I'm not limiting myself to any great degree. Otherwise, I would have managed to work longer. Everything is a balance, mine feels good to me.

-ERD50

+1. We use our money to buy leisure and financial security and live in a pretty place. Does spending more money beyond a certain point really make people happier?

I mean no matter how much we have there will always be people with more or less money and nicer houses and cars to buy than we can afford. Isn't that what the hedonistic treadmill is all about?

 

[clifp]

No one seems to mention getting part time work to make ends meet if your portfolio doesn't last. I figure 80% success is good gambling odds. If I ever start to slip into that 20%, why not tighten your belt AND pick up something seasonal to tide you over until your portfolio is healthy again? I reckon if I'm too old to do anything productive, then I'll also be too old to give a care what happens.

I have posted about this several times, but perhaps not since you've been on the board. I stop working in 1999, without the benefit of knowledge of the 4% rule, my plan was if if my liquid net worth drop below a certain level I'd go back to work.

In Feb 2009, my net worth dropped 10% below that figure. Unfortunately Feb 2009 was a pretty awful time to look for work for anybody. Much less a 50 year old from the tech field with skills that were at best rusty (I gradually moved from software engineer to marketing/management) who hadn't worked in a decade. To make matters worse I had zero experience in Hawaii's biggest industry tourism. After making a six figure salary, the prospect of fighting 50 other really desperate people for a $10-$15/hour job was frankly terrifying. Mercifully my portfolio rebound above the magic by the summer of 2009.

 

[audreyh1]

I have posted about this several times, but perhaps not since you've been on the board. I stop working in 1999, without the benefit of knowledge of the 4% rule, my plan was if if my liquid net worth drop below a certain level I'd go back to work.

In Feb 2009, my net worth dropped 10% below that figure. Unfortunately Feb 2009 was a pretty awful time to look for work for anybody. Much less a 50 year old from the tech field with skills that were at best rusty (I gradually moved from software engineer to marketing/management) who hadn't worked in a decade. To make matters worse I had zero experience in Hawaii's biggest industry tourism. After making a six figure salary, the prospect of fighting 50 other really desperate people for a $10-$15/hour job was frankly terrifying. Mercifully my portfolio rebound above the magic by the summer of 2009.

They were scary times?

 

[Huston55]

I guess I just have a real hard time imagining a life where I'm unable to do anything, but still thrilled because I have a team of nurses and a pile of money in the bank. Spend it while you can enjoy it. That's what I say.

Depends on the nurses.



Sent from my iPhone using Early Retirement Forum

 

[David1961]

I do tend to suffer from an effect that has been much discussed here, and that is that the same frugality that propelled me to be able to ER, also threatens to make it a little difficult to loosen the purse strings in ER.

+1 Well said.

 

[David1961]

Doesn't anyone withdrawing less than 3% worry that you'll leave a huge chunk to your heirs while limiting your enjoyment in your golden years? Is that your intention?

Not really a worry but is a valid concern. I'm fairly new to ER, and making the transition from portfolio buildup to drawdown is an ongoing process. A temporarily lower WR now makes me more comfortable. Also, I know I will have some expensive infrequent expenses (like a new car, new roof, etc) and want to have a cushion in my WR so these expenses will not be a problem.
At some point, though, I know I need to up my spending.

 

[Jack_Pine]

Doesn't anyone withdrawing less than 3% worry that you'll leave a huge chunk to your heirs while limiting your enjoyment in your golden years? Is that your intention?

That's one of our biggest concerns/worries. Did nto work this hard building a nest egg for nieces and nephews....................

 

[ERD50]

I guess I just have a real hard time imagining a life where I'm unable to do anything, but still thrilled because I have a team of nurses and a pile of money in the bank. Spend it while you can enjoy it. That's what I say.

There is a long list of health issues which could require years of treatments to help make us more comfortable and lead a more normal life. That could cost lots of money. The difference between merely being treated, and being treated for an enhanced quality of life might not be covered by any insurance program.

At that point, you might really appreciate having the resources to improve your quality of life. Odds are this won't happen to any major degree to us (individually, I bet some on this forum are in this category, maybe unable to post anymore), but I would not be so dismissive of it.

-ERD50

 

[jkern]

Doesn't anyone withdrawing less than 3% worry that you'll leave a huge chunk to your heirs while limiting your enjoyment in your golden years? Is that your intention?

I have no problem having additional financial security and leaving a legacy. If the picture continues to look brighter and brighter, I will incrementally increase my spending. However, spending a few extra bucks has little effect on my happiness.

 

[Hermit]

This thread prompted me to withdraw 1.6% of retirement funds before the end of the year. This is my first time in trying to withdraw from 401k. Dealing with Voya as the keeper of the 401k. What a nightmare. I was on the phone with them for over 45 minutes (mostly on hold) for them to tell me they need a spousal consent form before they can distribute any money. It has to be mailed to them. BTW, I'm not married. They need a copy of the spousal consent form on file that is not more than 90 days old.

Is this normal for others trying to withdraw from a 401k?

 

[HFWR]

This thread prompted me to withdraw 1.6% of retirement funds before the end of the year. This is my first time in trying to withdraw from 401k. Dealing with Voya as the keeper of the 401k. What a nightmare. I was on the phone with them for over 45 minutes (mostly on hold) for them to tell me they need a spousal consent form before they can distribute any money. It has to be mailed to them. BTW, I'm not married. They need a copy of the spousal consent form on file that is not more than 90 days old.

Is this normal for others trying to withdraw from a 401k?

I w*rked part-time much of this year, so made my first withdrawal, around 2%, this past summer, to supplement the skinny paycheck..

Filled out a web-based form, and the money appeared in my bank account a couple of days later. Relatively painless...