SWR -I thought I had all my answers
from my last post but oops.
"I thought I knew how to handle the 4% SWR but after reading a few threads and many posts I am confused. I am math dumb so please bear with me.
Here's my hypothetical example. I start retirement with a 60/40 portfolio worth 800k. My first year's withdrawal is 32k.
In year 2, say the portfolio is worth 840k. Do I:
a) take out 4% of 840k, or
b) 32k plus adjusted for inflation.
Now I believe the answer is b) so now my question is:
In year 2, if the CPI is 2.5%, do I take 2.5% of the 32k, or 800K or 840K?"
Your answer was take the CPI on the 32K.
If my initial SWR was 32k. Second year, CPI is 2.5% so 2nd year I take 32800. In the third year do I take the CPI of 32800 or do I go back to base of 32k. I think it is the former but just want to get this straight.
Thanks again to all who help.
Retired early and loving it.