Really basic ? about the 4% rule

[Markola]

Doesn't have to be stressful...time and statistics can just catch up to you.

Wife's uncle just died...made it a barely a year after his cancer diagnosis at age 70, was still working full-time AFAIK.

Everyone should also remember Bernstein's 80% rule from his "Retirement Calculator from Hell" series...basically, any retirement calculator result above 80% means little because of other potential causes of failure that simply can't be financially modeled.

For sure. My dad still works as a mechanical engineer at 81! I’d worry more about him if he wasn’t working. I, however, had to get away from decades of “managing” other humans and being accountable for the team’s revenue generation. It wasn’t fun anymore, I’d get too angry at constantly being asked to do more with less and the “What have you done for me lately?” questions. Docs told me I have a heart murmur and a terrible case of sleep apnea, which I’m treating well. Anyway, I reached “enough” at 54 and bailed.

Thanks for Bernstein 80% Rule, which I hadn’t seen but which makes sense to me. FWIW as one reference point, Vanguard Personal Advisor Services aims to keep us above 85%, which is in the Bernstein ballpark.

 

[flintnational]

Thanks for Bernstein 80% Rule, which I hadn’t seen but which makes sense to me. FWIW as one reference point, Vanguard Personal Advisor Services aims to keep us above 85%, which is in the Bernstein ballpark.

IIRC, in that article, Bernstein is trying to capture events we can't adequately plan for such as the collapse of our civilization. I have interpreted his comments to mean if you have a financial calculator that shows a 100% probability of success discount it by 20% to include the risks that weren't modeled, societal collapse.

But, personally I tend to ignore the risks he is illustrating since I have little or no control over them. If society collapses, it does not matter if I am working, retired or how well my retirement is funded. It may all disappear. But, I think that is his point.

 

[razztazz]

But, personally I tend to ignore the risks he is illustrating since I have little or no control over them. If society collapses, it does not matter if I am working, retired or how well my retirement is funded. It may all disappear. But, I think that is his point.

Hear hear!

Personally I disregard Bernstein's 20% because the last thing I need is adding an additional risk to the pile. Like what if society doesn't collapse, we don't get hit by a meteor, I don't die young....? Given 80% outranks 20% anyway the bigger risk is living a long time and running out of money because somebody was betting on the 20%.

 

[RobLJ]

Yes, but there aren’t really any rules. The withdrawal amount can easily be adjusted downward if the market is doing poorly, as long as spending can be adjusted.

 

[albundyz]

I've only read the first page of this thread, but what hits me is that I interpreted this rule, apparently, differently than most of you. Why? My kids are more successful than I ever was and they DON'T need any inheritance. so? so, I plan to have nothing left in my IRA at age 90. Note: my wife and I get the max SS and a nice pension. At age 90, we can live on that income, while eating oatmeal and watching TV. Meanwhile, I can spend a little more than the 4%.

 

[Markola]

I've only read the first page of this thread, but what hits me is that I interpreted this rule, apparently, differently than most of you. Why? My kids are more successful than I ever was and they DON'T need any inheritance. so? so, I plan to have nothing left in my IRA at age 90. Note: my wife and I get the max SS and a nice pension. At age 90, we can live on that income, while eating oatmeal and watching TV. Meanwhile, I can spend a little more than the 4%.

Heck, yes. Why not?

 

[Out-to-Lunch]

I've only read the first page of this thread, but what hits me is that I interpreted this rule, apparently, differently than most of you.

Well, how are you interpreting it? I just re-read the first page, and I don't see anyone (except for the OP, who was seeking understanding) who interpreted it in a way inconsistent with your post.