Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
SWR another 6.5+ million calculations
Old 01-03-2017, 01:34 PM   #1
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 9,844
SWR another 6.5+ million calculations

https://earlyretirementnow.com/2016/...-part-1-intro/

I didn't see the above early December 2016 study (Part 1) on the EarlyRetirementNow web blog discussed yet on this forum. How could it not already be posted? Maybe my Google Fu could not find the thread?

Anyways, it is being discussed at bogleheads now, so some of you have already seen it. It is for the early-retired folks with 60 years to go, so the SWR is 3.5% and one needs more stocks than ever before.
__________________

LOL! 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 01-03-2017, 01:58 PM   #2
Full time employment: Posting here.
 
Join Date: May 2015
Location: Atlanta suburbs
Posts: 633
A very interesting article. I look forward to the next article in the series, to see how the currently high CAPE of @28 affects the probability of success for different withdrawal rates.
__________________

DEC-1982 is offline   Reply With Quote
Old 01-03-2017, 02:02 PM   #3
Thinks s/he gets paid by the post
Huston55's Avatar
 
Join Date: Jul 2011
Location: The Bay Area
Posts: 2,505
Quote:
Originally Posted by LOL! View Post
https://earlyretirementnow.com/2016/...-part-1-intro/

I didn't see the above early December 2016 study (Part 1) on the EarlyRetirementNow web blog discussed yet on this forum. How could it not already be posted? Maybe my Google Fu could not find the thread?

Anyways, it is being discussed at bogleheads now, so some of you have already seen it. It is for the early-retired folks with 60 years to go, so the SWR is 3.5% and one needs more stocks than ever before.
I read Part 1. Seeing 50 & 60 yr WD projections is interesting but, I don't really see anything new here.

Besides, they pretty much lost me when they said this,

"Intriguingly, very few early retirement planners or bloggers question the validity of the 4% safe withdrawal rate rule."

Which is, of course, not accurate.
__________________
You may be whatever you resolve to be.

100% x 10% > 10% x 100%
Huston55 is offline   Reply With Quote
Old 01-03-2017, 03:57 PM   #4
gone traveling
 
Join Date: Jan 2017
Posts: 15
Quote:
Originally Posted by Huston55 View Post
I read Part 1. Seeing 50 & 60 yr WD projections is interesting but, I don't really see anything new here.

Besides, they pretty much lost me when they said this,

"Intriguingly, very few early retirement planners or bloggers question the validity of the 4% safe withdrawal rate rule."

Which is, of course, not accurate.
Hi! I'm the author of the study over at EarlyRetirementNow.com. Sorry, I lost you over such a trivial issue. You missed well researched and very well-received follow-up posts (Part 2 and 3 so far, more parts to come).
I insist that the overwhelming majority of FIRE bloggers still hold on to the 4% rule. There are obviously some smaller blogs with a more cautious approach(including mine and a bunch of my blogging friends), but Mr. Money Mustache, MadFIentist and a bunch of very well known blogs all subscribe to that false 4% rule.
Financial planners: I don't know very many but the ones I know and have spoken to, they all look at the Trinity Study like it's scripture. In their defense, I should say that their target audience is the regular age 65 retirement crowd.
JohnDoe123 is offline   Reply With Quote
Old 01-03-2017, 05:18 PM   #5
Full time employment: Posting here.
 
Join Date: Jul 2013
Posts: 956
I haven't read the article but I find that 4% is already plenty safe considering there's still the entire principal intact and if I had to draw down even 60% of it and 'only' leave 40% to my heirs they're still well ahead of where I started my journey which was at $0 (many here started with less than $0). OK that was a long sentence but I'm done now
dvalley is online now   Reply With Quote
Old 01-03-2017, 05:23 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2006
Posts: 11,401
Quote:
Originally Posted by dvalley View Post
I haven't read the article but I find that 4% is already plenty safe.....
There are two flaws in your argument.
1. You're not dead yet.
2. It's impossible to generalize from your current situation to the retired population as a whole.
Meadbh is offline   Reply With Quote
Old 01-03-2017, 05:38 PM   #7
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Posts: 2,422
Quote:
Originally Posted by dvalley View Post
I haven't read the article but I find that 4% is already plenty safe considering there's still the entire principal intact and if I had to draw down even 60% of it and 'only' leave 40% to my heirs they're still well ahead of where I started my journey which was at $0 (many here started with less than $0). OK that was a long sentence but I'm done now
Quote:
Originally Posted by Meadbh View Post
There are two flaws in your argument.
1. You're not dead yet.
2. It's impossible to generalize from your current situation to the retired population as a whole.
I thought the bog standard 4% rule was studied for a 30 year retirement and having a high chance of not running out of money... not 100% guarantee of not running out of money. This is much different than leaving the entire principal intact.
bingybear is offline   Reply With Quote
Old 01-03-2017, 05:45 PM   #8
Full time employment: Posting here.
 
Join Date: Jul 2013
Posts: 956
Quote:
Originally Posted by Meadbh View Post
There are two flaws in your argument.
1. You're not dead yet.
Hence me typing?

Quote:
2. It's impossible to generalize from your current situation to the retired population as a whole.
I wasn't generalizing, just sharing my point of view. I'm certainly open to the counter logic/argument in case I'm missing something in my understanding.

Quote:
Originally Posted by bingybear View Post
I thought the bog standard 4% rule was studied for a 30 year retirement and having a high chance of not running out of money... not 100% guarantee of not running out of money. This is much different than leaving the entire principal intact.
Well I don't think anyone can guarantee anything 100% but my understanding was with 4% you could withdraw without touching the principal which makes sense if your principal can generate 4% for its life. Sequence of returns and such things can throw this off hence no 100% guarantee.
dvalley is online now   Reply With Quote
Old 01-03-2017, 05:52 PM   #9
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: 23,993
Quote:
Originally Posted by dvalley View Post
Well I don't think anyone can guarantee anything 100% but my understanding was with 4% you could withdraw without touching the principal which makes sense if your principal can generate 4% for its life. Sequence of returns and such things can throw this off hence no 100% guarantee.
No, 4% assumes you spend down the principal, although if you get lucky the portfolio will grow. A much lower rate would be required to leave principal intact.

Generate 4% for its life? Not when inflation is taken into account.
__________________
Retired since summer 1999.
audreyh1 is online now   Reply With Quote
Old 01-03-2017, 05:54 PM   #10
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Posts: 2,422
the 4% rule assumes that you start at 4% WR and index future withdraws to inflation. Thus you would need to earn more than 4% as future WR would grow with inflation. But as with most of these schemes, you design it so you don't run out of money. However, in a typical market you will have a large amount left over.
bingybear is offline   Reply With Quote
Old 01-03-2017, 06:13 PM   #11
Thinks s/he gets paid by the post
dtbach's Avatar
 
Join Date: Apr 2011
Location: Madison
Posts: 1,277
4% is probably a pretty good bet for a 30 year retirement. If you have 60 years to go probably not. But how many people have a big enough nest egg to get by on a 1 or 2% draw? I'm 64, delaying SS until 70 and am taking 3.5% and may even up it to 4%. No use in leaving too much to the kids.
__________________
Wild Bill shoulda taken more out of his IRA when he could have. . . .
dtbach is offline   Reply With Quote
Old 01-03-2017, 06:32 PM   #12
Moderator Emeritus
Bestwifeever's Avatar
 
Join Date: Sep 2007
Posts: 17,691
Someone should do a poll about this.
__________________
“Would you like an adventure now, or would you like to have your tea first?” J.M. Barrie, Peter Pan
Bestwifeever is offline   Reply With Quote
Old 01-03-2017, 06:34 PM   #13
Recycles dryer sheets
 
Join Date: Jul 2013
Location: Villa Grande
Posts: 264
So, is 3.5% officially the new 4.0% for a longer early retirement?
TimSF is offline   Reply With Quote
Old 01-03-2017, 06:40 PM   #14
Thinks s/he gets paid by the post
Huston55's Avatar
 
Join Date: Jul 2011
Location: The Bay Area
Posts: 2,505
Quote:
Originally Posted by Huston55 View Post
I read Part 1. Seeing 50 & 60 yr WD projections is interesting but, I don't really see anything new here.

Besides, they pretty much lost me when they said this,

"Intriguingly, very few early retirement planners or bloggers question the validity of the 4% safe withdrawal rate rule."

Which is, of course, not accurate.
Quote:
Originally Posted by JohnDoe123 View Post
Hi! I'm the author of the study over at EarlyRetirementNow.com. Sorry, I lost you over such a trivial issue. You missed well researched and very well-received follow-up posts (Part 2 and 3 so far, more parts to come).
I insist that the overwhelming majority of FIRE bloggers still hold on to the 4% rule. There are obviously some smaller blogs with a more cautious approach(including mine and a bunch of my blogging friends), but Mr. Money Mustache, MadFIentist and a bunch of very well known blogs all subscribe to that false 4% rule.
Financial planners: I don't know very many but the ones I know and have spoken to, they all look at the Trinity Study like it's scripture. In their defense, I should say that their target audience is the regular age 65 retirement crowd.
Well, now you've changed your assertion, from 'very few don't' to 'the overwhelming majority do'.

While I'm not going to get into a counting contest to refute the latter assertion, I do refute the former assertion. Here's a short list off the top of my head (all of which are frequently discussed here):

Wade Pfau
Dirk Cotton
Todd Tresidder
Mike Piper

BTW, you'll also find a large contingent here @ E-R.org which believes 4% is too high. Stick around for more than one post, and you'll likely find some kindred souls...and develop an understanding of 'dryer sheets.'
__________________
You may be whatever you resolve to be.

100% x 10% > 10% x 100%
Huston55 is offline   Reply With Quote
Old 01-03-2017, 06:49 PM   #15
Full time employment: Posting here.
 
Join Date: Nov 2014
Location: Austin
Posts: 797
Discussion on this also going on over at bogleheads.
https://www.bogleheads.org/forum/vie...ewpost=3176759
big-papa is offline   Reply With Quote
Old 01-03-2017, 08:55 PM   #16
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: 23,993
Quote:
Originally Posted by TimSF View Post
So, is 3.5% officially the new 4.0% for a longer early retirement?
Close enough.
__________________
Retired since summer 1999.
audreyh1 is online now   Reply With Quote
Old 01-03-2017, 09:22 PM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 9,844
Quote:
Originally Posted by TimSF View Post
So, is 3.5% officially the new 4.0% for a longer early retirement?
Is that the same as an early longer retirement?
LOL! is offline   Reply With Quote
Old 01-03-2017, 09:45 PM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 26,798
In the worst case, 4% WR will deplete your portfolio in 30 years, at which time you are supposed to die.

Hence, 100% success for a 30-year or shorter retirement. That's the conclusion of the Trinity study.
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is offline   Reply With Quote
Old 01-03-2017, 10:34 PM   #19
Thinks s/he gets paid by the post
RobbieB's Avatar
 
Join Date: Mar 2016
Location: Central CA
Posts: 4,900
Better not retire too early.
__________________
Retired at 59 in 2014. Should have done it sooner but I worried too much.
RobbieB is online now   Reply With Quote
Old 01-03-2017, 10:58 PM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 26,798
... or draw much less than 4%.

Late retirees have fewer years to live. They are closer to SS and Medicare eligibility if not on these benefits already. They also worked more years, and their SS benefit is higher.
__________________

__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
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
advisor calculations vs my calculations Travelwanted FIRE and Money 49 06-03-2014 05:58 PM
From 100 million to 4 million FANOFJESUS FIRE and Money 19 08-22-2009 12:15 PM
SWR for a $2.5 million nest egg... REWahoo FIRE and Money 118 07-14-2009 09:51 PM
what all do you consider in your portfolio for SWR calculations fisherman FIRE and Money 12 11-10-2007 08:25 AM
Spreadsheet to ease SWR calculations using Guytons Decision Rules walkinwood FIRE and Money 7 08-25-2007 10:28 AM

» Quick Links

 
All times are GMT -6. The time now is 02:21 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2020, vBulletin Solutions, Inc.
×