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Never ending SWR & FIRECALC
Old 04-22-2011, 09:08 AM   #1
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Never ending SWR & FIRECALC

We all know the often referenced 4% SWR is based on retiring at age 65 with a 25-30 year retirement.

And I've heard it said here and elsewhere that 3% is a good rule of thumb for a never ending SWR (for early retirees), and I agree. But just for fun I plugged numbers in FIRECALC with a wide range of retirement durations (how many years in retirement). Only used the first tab, didn't play with Soc Sec, pensions or other income and left it on the default portfolio, etc. Used 100% or 0 cycles failed as the tipping point (yes, we know there's no such thing as 100% success in this area). FWIW...

Years Retired100% WR
204.39%
253.89%
303.57%
353.43%
403.32%
453.21%
503.21%
553.36%
603.32%

Don't know or care why the inflection at 55 years...all just for the gee whiz file.
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Target AA: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
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Old 04-22-2011, 11:59 AM   #2
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What was your portfolio mix?
Edit: Saw that you used default which is 75% total market & 25% "Long Interest Rate".
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Old 04-22-2011, 12:12 PM   #3
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If you didn't already know, the ubiquitous referenced 4% SWR refers to a 30 year retirement only.

Bernstein has some nice little graphic(s) that have very similar numbers to the OP's table ...
Attached Images
File Type: gif SWR2.gif (13.9 KB, 28 views)
File Type: gif SWR.gif (29.2 KB, 275 views)
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Old 04-22-2011, 12:44 PM   #4
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I was just thinking and posting about this, thanks!
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Old 04-22-2011, 12:50 PM   #5
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Quote:
Originally Posted by MasterBlaster View Post
If you didn't already know the ubiquitous referenced 4% SWR refers to a 30 year retirement only. Noted in my OP.

Bernstein has some nice little graphic(s) that have very similar numbers to the OP's table ...
Reassuring that Bernstein and FIRECALC pretty much agree. I am shooting for a 2.5% WR so I should be golden, if not we're probably all going to be in trouble...
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Retired Jun 2011 at age 57

Target AA: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
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Old 04-22-2011, 05:49 PM   #6
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Since we have a small pension, SS x2, and I am planning on a small SPIA (ladder)... our planned income level projected with a 3.5% inflation adjusted WR% goes from about 3.5% (of our invested assets on day 1) and decreases to a little less than 0% (saving money) at 70 and back up to about 2% when we are in our 90s (if we live that long).

We could increase our planned income (which is more than we spend right now because it includes money for increased travel)... but we would just be spending it (for the sake of spending it)... not our style.

The excess funds will reduce our risk if something goes wrong, since it serves as a large contingency fund... plus, if we decide to splurge on something along the way... we will be able to do it without worry or fear.
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