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at 1.5% withdraw rate, will my money last ?
03-29-2020, 09:20 PM
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#1
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Recycles dryer sheets
Join Date: Mar 2016
Location: SoCal
Posts: 353
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at 1.5% withdraw rate, will my money last ?
I retired at 50 July 2019 and was able to build a PF 50x my annual expenses in 100% equities and 2x in CD so my AA was around 96/4 but due to the correction my PF is now 40x in equities and 2x in CD. If I withdraw <1.5% per year then will I ever run out of money ?
Thanks
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03-29-2020, 09:21 PM
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#2
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,000
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How long will you live?
__________________
Numbers is hard
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03-29-2020, 09:28 PM
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#3
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Recycles dryer sheets
Join Date: Mar 2016
Location: SoCal
Posts: 353
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Quote:
Originally Posted by REWahoo
How long will you live?
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I probably live to 85 but like to leave some to my only 24 daughter and that's the reason why I am in 100% equities.
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03-29-2020, 09:40 PM
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#4
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,201
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You could put 75% (1.5%*50 years) in safe, fixed income and the other 25% in stocks and that should be pretty bulletproof.
Or if you really believe 85, then 53/47. Or something in between.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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03-29-2020, 09:43 PM
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#5
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Thinks s/he gets paid by the post
Join Date: Apr 2008
Posts: 1,991
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Any chance you might want to gift to your DD along the way?
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03-29-2020, 10:08 PM
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#6
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Thinks s/he gets paid by the post
Join Date: Mar 2013
Location: Southern California
Posts: 3,995
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There has never been a period in history where a 1.5% withdrawal rate failed. Even 3% has survived the worst periods in history.
We can’t predict the future so there are no guarantees but that is so low that even the most conservative members on this forum would tell you not to worry about it.
Now if you had asked me back in July if I think a 96% equity allocation for a 50 year old fully retired person is a good idea...that would have been another conversation.
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03-29-2020, 10:27 PM
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#7
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2006
Location: Boise
Posts: 7,862
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Quote:
Originally Posted by Ready
There has never been a period in history where a 1.5% withdrawal rate failed. Even 3% has survived the worst periods in history.
We can’t predict the future so there are no guarantees but that is so low that even the most conservative members on this forum would tell you not to worry about it.
Now if you had asked me back in July if I think a 96% equity allocation for a 50 year old fully retired person is a good idea...that would have been another conversation.
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+1, although as a 50 year old fully retired person with an ~1% WR (so stats very similar to OP), I think it can be a reasonable choice under certain very limited circumstances (which, of course, I think I fall into).
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"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
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03-30-2020, 01:30 PM
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#8
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Thinks s/he gets paid by the post
Join Date: Jul 2007
Location: St. Louis
Posts: 1,563
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Quote:
Originally Posted by vipertom1970
I retired at 50 July 2019 and was able to build a PF 50x my annual expenses in 100% equities and 2x in CD so my AA was around 96/4 but due to the correction my PF is now 40x in equities and 2x in CD. If I withdraw <1.5% per year then will I ever run out of money ?
Thanks
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I think your idea is ok but I would get that cash up to 6 years. In the 2000-2002 bear it took stocks 5 years to break even. If you go to 60/40 the break even is only about 2.5 years.
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03-30-2020, 02:31 PM
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#9
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Recycles dryer sheets
Join Date: Mar 2016
Location: SoCal
Posts: 353
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Quote:
Originally Posted by FANOFJESUS
I think your idea is ok but I would get that cash up to 6 years. In the 2000-2002 bear it took stocks 5 years to break even. If you go to 60/40 the break even is only about 2.5 years.
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Thanks, I plan to get it up to 5 years in CD when the market comes back.
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03-30-2020, 05:23 PM
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#10
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Thinks s/he gets paid by the post
Join Date: Feb 2014
Location: Syracuse
Posts: 3,501
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Quote:
Originally Posted by vipertom1970
I retired at 50 July 2019 and was able to build a PF 50x my annual expenses in 100% equities and 2x in CD so my AA was around 96/4 but due to the correction my PF is now 40x in equities and 2x in CD. If I withdraw <1.5% per year then will I ever run out of money ?
Thanks
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Boy I hope so.
If your 1.5% doesn't hold I won't be eating cat food, I'll have to be trapping and eating cats!
__________________
“No, not rich. I am a poor man with money, which is not the same thing"
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03-30-2020, 05:42 PM
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#11
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2018
Location: Tampa
Posts: 11,196
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You could always sell the Porsche.
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TGIM
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04-01-2020, 02:18 AM
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#12
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Recycles dryer sheets
Join Date: Aug 2018
Posts: 75
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We are very similar to OP, although we are in transition period vs FT ER. I really hope your plan works, otherwise I will be in very bad shape in 20+ yrs
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04-01-2020, 04:39 AM
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#13
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Thinks s/he gets paid by the post
Join Date: Dec 2015
Location: Michigan
Posts: 4,942
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Quote:
Originally Posted by GravitySucks
Boy I hope so.
If your 1.5% doesn't hold I won't be eating cat food, I'll have to be trapping and eating cats!
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I think that covers it.
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"The mountains are calling, and I must go." John Muir
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04-01-2020, 08:04 AM
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#14
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Thinks s/he gets paid by the post
Join Date: Jun 2017
Location: Western NC
Posts: 4,600
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Quote:
Originally Posted by GravitySucks
Boy I hope so.
If your 1.5% doesn't hold I won't be eating cat food, I'll have to be trapping and eating cats!
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Is this you?
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04-01-2020, 08:18 AM
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#15
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2016
Posts: 9,373
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In my opinion if 1.5% WR isn't safe then there will be a lot of people starving to death because a lack of cats and dogs to eat.
Like others have said, with history as we know it today, you are golden.
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04-01-2020, 08:24 AM
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#16
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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__________________
TGIM
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04-01-2020, 08:29 AM
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#17
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Thinks s/he gets paid by the post
Join Date: Feb 2014
Location: Syracuse
Posts: 3,501
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Old photo. I had the mole on my snout removed and my eye brows are bushier.
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04-01-2020, 08:40 PM
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#18
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Recycles dryer sheets
Join Date: Dec 2007
Posts: 375
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Quote:
Originally Posted by vipertom1970
I retired at 50 July 2019 and was able to build a PF 50x my annual expenses in 100% equities and 2x in CD so my AA was around 96/4 but due to the correction my PF is now 40x in equities and 2x in CD. If I withdraw <1.5% per year then will I ever run out of money ?
Thanks
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I think the only way your $ won't last is if you will make multiple mistakes going forward. Sell large % of your NW at low, buy large % of NW at high. If you do so a few times, your NW could be reduced significantly. This is why the common wisdom has been to not do much during rough time. Buying/Selling low % of NW as you have planned should be fine.
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04-01-2020, 09:08 PM
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#19
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2008
Location: No fixed abode
Posts: 8,764
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Quote:
Originally Posted by Ready
There has never been a period in history where a 1.5% withdrawal rate failed. Even 3% has survived the worst periods in history.
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But, but, but...it's different this time!
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"Good judgment comes from experience. Experience comes from bad judgement." - Anonymous (not Will Rogers or Sam Clemens)
DW and I - FIREd at 50 (7/06), living off assets
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04-01-2020, 09:27 PM
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#20
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Recycles dryer sheets
Join Date: Mar 2016
Location: SoCal
Posts: 353
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Quote:
Originally Posted by ut2sua
I think the only way your $ won't last is if you will make multiple mistakes going forward. Sell large % of your NW at low, buy large % of NW at high. If you do so a few times, your NW could be reduced significantly. This is why the common wisdom has been to not do much during rough time. Buying/Selling low % of NW as you have planned should be fine.
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I have been a buy and hold guy for over 25 years and get more aggressive on buying in a down market. I am most likely use up emergency funds first before starting with draw.
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