Join Early Retirement Today
Reply
 
Thread Tools Display Modes
Morningstar declares 4% safe once again
Old 11-13-2023, 09:23 AM   #1
Administrator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 40,398
Morningstar declares 4% safe once again

Morningstar has declared a 4% withdrawal rate is once again safe. In an annual “state of retirement income” (here, registration required)

An accompanying article can be read here

Quote:
But for people who are about to retire, the prospects for retirement income look a bit brighter. In our newly released research paper, “The State of Retirement Income 2023,” my co-authors Christine Benz, John Rekenthaler, and I estimate that retirees drawing down income from an investment portfolio can now afford to withdraw as much as 4.0% as an initial spending rate, assuming a 90% probability of still having funds remaining after a 30-year time horizon. That figure is the highest safe withdrawal percentage since Morningstar began creating this research in 2021. (The highest starting safe withdrawal rate based on similar assumptions was 3.3% in 2021 and 3.8% in 2022.)
MichaelB is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 11-13-2023, 09:36 AM   #2
Recycles dryer sheets
 
Join Date: Jan 2018
Location: Boise
Posts: 226
Well, that's good to hear, 'cause I'm spending at least that.
__________________
Regards,

Tom
tominboise is offline   Reply With Quote
Old 11-13-2023, 09:41 AM   #3
Thinks s/he gets paid by the post
Major Tom's Avatar
 
Join Date: Nov 2009
Location: SF East Bay
Posts: 4,321
A 90% probability of having money left after 30 years is still a little low for my taste. Plus, there are most likely some runs that leave you with surplus funds, which still dip rather frighteningly low. My WR represents ~2.6% of my current portfolio, and that's still a bit higher than I'd like.

For me, it's not merely about my portfolio surviving; it's about it surviving while simultaneously leaving me with clean underwear.
__________________
Contentedly ER, with 3 furry friends (now, sadly, 1).
Planning my escape to the wide open spaces in my campervan (with my remaining kitty, of course!)
On a mission to become the world's second most boring man.

Major Tom is offline   Reply With Quote
Old 11-13-2023, 09:41 AM   #4
Thinks s/he gets paid by the post
 
Join Date: Jan 2008
Posts: 1,633
Well, it should be safer. My portfolio is down something like 9% since December, 2021
jebmke is offline   Reply With Quote
Old 11-13-2023, 10:09 AM   #5
Recycles dryer sheets
 
Join Date: Apr 2023
Posts: 271
The 4% withdrawal rate "rule" is a myth. Nobody does that. It is conservative, but not risk free.


edit: it is a reasonable place to start your planning
__________________
Retired. So far so good.
dknighd is offline   Reply With Quote
Old 11-13-2023, 10:16 AM   #6
Administrator
Gumby's Avatar
 
Join Date: Apr 2006
Posts: 22,822
0% is my goal.

__________________
Living an analog life in the Digital Age.
Gumby is online now   Reply With Quote
Old 11-13-2023, 10:17 AM   #7
Full time employment: Posting here.
 
Join Date: May 2014
Posts: 971
Higher inflation makes higher SWR?
flyingaway is offline   Reply With Quote
Old 11-13-2023, 10:24 AM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
target2019's Avatar
 
Join Date: Dec 2008
Location: On a hill in the Pine Barrens
Posts: 9,633
We measure, we plan, then stuff happens.
target2019 is offline   Reply With Quote
Old 11-13-2023, 10:29 AM   #9
Recycles dryer sheets
 
Join Date: Apr 2023
Posts: 271
Quote:
Originally Posted by Gumby View Post

I hope that never happens.
__________________
Retired. So far so good.
dknighd is offline   Reply With Quote
Old 11-13-2023, 03:17 PM   #10
Full time employment: Posting here.
 
Join Date: Sep 2016
Location: Way up North
Posts: 560
Wait, you guys are withdrawing money ?

bada bing is offline   Reply With Quote
Old 11-13-2023, 03:23 PM   #11
Thinks s/he gets paid by the post
 
Join Date: Nov 2011
Posts: 3,842
sounds like Treasury rates figure into their formula
GrayHare is offline   Reply With Quote
Old 11-14-2023, 06:49 AM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
donheff's Avatar
 
Join Date: Feb 2006
Location: Washington, DC
Posts: 11,301
Sorry for the hijack but as I was laughing at these embedded Youtube clips I was amused to see that they even track you back here. My version of Bada Bing's video has two ads for astrophotography software on the left. That's some fine-tuned, on the fly ads.
Attached Images
File Type: jpg Ad.jpg (110.8 KB, 3 views)
__________________
Idleness is fatal only to the mediocre -- Albert Camus
donheff is offline   Reply With Quote
Old 11-14-2023, 07:17 AM   #13
Thinks s/he gets paid by the post
 
Join Date: Jun 2023
Posts: 1,004
Quote:
Originally Posted by Gumby View Post
It's the only way to be sure...
LateToFIRE is offline   Reply With Quote
Old 11-14-2023, 07:19 AM   #14
Thinks s/he gets paid by the post
 
Join Date: Jun 2023
Posts: 1,004
Quote:
Originally Posted by tominboise View Post
Well, that's good to hear, 'cause I'm spending at least that.
Oh yeh, I plan to blow right thru that,

90% certainty is too much.
LateToFIRE is offline   Reply With Quote
Old 11-14-2023, 10:09 AM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 37,756
Quote:
Originally Posted by Gumby View Post
I so loved Sigourney Weaver in that role. Became a big fan.
__________________
Retired since summer 1999.
audreyh1 is offline   Reply With Quote
Old 11-14-2023, 02:42 PM   #16
Full time employment: Posting here.
SnowballCamper's Avatar
 
Join Date: Aug 2019
Posts: 691
Quote:
(The highest starting safe withdrawal rate based on similar assumptions was 3.3% in 2021 and 3.8% in 2022.)
So just wait until 2030 and the withdrawal rate will be up to 6.5%
__________________
--At what age does spending less now in order to have more later stop making sense?
SnowballCamper is offline   Reply With Quote
Old 02-10-2024, 09:10 AM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2005
Posts: 6,056
4% inflation adjusted with at least 35-40% equities never changed being anything but a safe withdrawal rate at any point since 1966.

there was no actual basis for thinking we saw its demise in the first place.

it takes less then a 2% real return over a 15 year period mathematically to cause a failure.

we have not had that in decades
mathjak107 is online now   Reply With Quote
Old 02-10-2024, 09:22 AM   #18
Thinks s/he gets paid by the post
 
Join Date: Aug 2013
Posts: 1,952
I suppose so. I'm 8 months retired and nest egg is up 100K
__________________
No to consumerism, Living a simple life, enjoying the experience - not the material stuff
cyber888 is offline   Reply With Quote
Old 02-10-2024, 09:32 AM   #19
Thinks s/he gets paid by the post
 
Join Date: May 2019
Posts: 2,485
Quote:
Originally Posted by cyber888 View Post
I suppose so. I'm 8 months retired and nest egg is up 100K
Same here, up even more in nearly 8 months, but my are expenses are way up due to real world inflation well exceeding the government CPI figures while it took over two years for the S&P 500 to finally hit a new record. When will be see the big market drop?
GenXguy is offline   Reply With Quote
Old 02-10-2024, 09:34 AM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2005
Posts: 6,056
we actually spend 80% of our investing lives somewhere between the last high and the last low .

for some crazy reason though we always use the last high though as our benchmark and consider anything less DOWN .

yet unless you just bought you are likely substantially up .

we just have a crazy way of benchmarking. i doubt there is anyone here who really expects or expected to sell at that exact momentary high
mathjak107 is online now   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
When a company declares bankruptcy yomama604 Active Investing, Market Strategies & Alternative Assets 7 11-17-2017 09:11 PM
Cisco declares a dividend! Did Hell freeze over? audreyh1 Active Investing, Market Strategies & Alternative Assets 6 09-15-2010 12:09 AM
Morningstar- Safe Withdrawl wkst bizlady FIRE and Money 16 06-01-2010 01:06 PM
Army declares new spelling of "Family" Nords Other topics 13 05-02-2007 07:10 PM

» Quick Links

 
All times are GMT -6. The time now is 04:55 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.