Withdrawal Rate: your personal comfort zone.

[Al in Ohio]

For me it will be 4%. That works out in my planning, but will be higher for the first 5 or 6 years until I apply for ss.

 

[Totoro]

I was simply answering why many early retirees here are considering periods like 40 years or more, as opposed to the standard 30 years used in the models with a retirement age of 65. It depends on how early one retires and we have some very early retirees on this forum.

To complement that thought: For those going very early: Going from a 30 to 40 year scenario means roughly losing 0.5%-1% leeway.

Beyond that there is hardly any difference between 40 years and perpetual retirement (or endowments) in terms of 'safe' withdrawal rate.

And that is because for the past many years (100-200?) the actual real return on capital was about 3%.

 

[Carpediem]

....I understand the 4% withdraw strategy. But I see us pulling up to 5or 6 percent for 2 to 3 years right after retirement .

Same here. Keep us posted on how it goes. And congrats!

 

[audreyh1]

To complement that thought: For those going very early: Going from a 30 to 40 year scenario means roughly losing 0.5%-1% leeway.

Beyond that there is hardly any difference between 40 years and perpetual retirement (or endowments) in terms of 'safe' withdrawal rate.

And that is because for the past many years (100-200?) the actual real return on capital was about 3%.

Well sure - you need to pad a little more for longer retirements hence the lower withdrawal rates.

I retired at 39, but I didn't see a point in using a longer planning period than 50 years, and the data (historical scenarios) for 50 years were so limited anyway.

I did do some scenarios for 50. But I also felt that 40 years was probably good
enough. Especially since I planned to reevaluate my situation every 5 to 10 years anyway. Now I'll within that 40 year window, and in spite of going through 1999, and 2008/9 we are in better shape than when I retired. So far so good (knock on wood!!!).

And it's an ongoing process. As we cross 65 and move into that 30 year window, I expect we will also be raising our withdrawal rate.

 

[mickeyd]

Don't know about "comfort zone", only know about absolute dollars. I voted 1.0%, but it's really lower than that. My WR is whatever my RMD is, however I always reinvest my RMD, so it's not truly a WR. Absolutely $0.

 

[Out of Steam]

Not sure where you're getting a whiff of propaganda.

I was simply answering why many early retirees here are considering periods like 40 years or more, as opposed to the standard 30 years used in the models with a retirement age of 65.

There are two concerns I have with the media emphasis on planning for extremely long lifespans in retirement.

First, this theme provides cover to politicians and governments not to keep promises made to citizens regarding retirement plans. Basically, telling people that since everybody is living to these unexpectedly long ages today, we can't possibly pay off on Social Security, pensions, etc.

Second is that such long and increasing lifespans apply only to the upper and upper middle classes in the US. The second of these is well represented among both ER readers and members of the news media. It is looking like under half the men I grew up with in a declining 1970s NYC neighborhood will get to be 65. While I haven't shared the self-destructive habits common to many of them, that period has left its marks on me as well.

Overall lifespans in the US have probably peaked.

 

[Hermit]

There are two concerns I have with the media emphasis on planning for extremely long lifespans in retirement.

First, this theme provides cover to politicians and governments not to keep promises made to citizens regarding retirement plans. Basically, telling people that since everybody is living to these unexpectedly long ages today, we can't possibly pay off on Social Security, pensions, etc.

Second is that such long and increasing lifespans apply only to the upper and upper middle classes in the US. The second of these is well represented among both ER readers and members of the news media. It is looking like under half the men I grew up with in a declining 1970s NYC neighborhood will get to be 65. While I haven't shared the self-destructive habits common to many of them, that period has left its marks on me as well.

Overall lifespans in the US have probably peaked.

So are you planning around kicking the bucket at 66?

The question is what happens if that is your plan and you spend all your money and then make it to 67? Those years might be somewhat exaggerated, maybe not. I think I will plan on 95 and if I don't make it, someone else will have to spend my money. Then, again, if I do make it, I'll live much better than someone who has outlived their savings.

 

[audreyh1]

There are two concerns I have with the media emphasis on planning for extremely long lifespans in retirement.

First, this theme provides cover to politicians and governments not to keep promises made to citizens regarding retirement plans. Basically, telling people that since everybody is living to these unexpectedly long ages today, we can't possibly pay off on Social Security, pensions, etc.

Second is that such long and increasing lifespans apply only to the upper and upper middle classes in the US. The second of these is well represented among both ER readers and members of the news media. It is looking like under half the men I grew up with in a declining 1970s NYC neighborhood will get to be 65. While I haven't shared the self-destructive habits common to many of them, that period has left its marks on me as well.

Overall lifespans in the US have probably peaked.

Well - it just seems that you are making a link between the longer periods planned for by the early retirees on this forum, to the longevity stories pushed by the media, etc. They are not related.

 

[Out of Steam]

As I've noted in other posts, I'm planning for a 30 year retirement starting at 60-61. I think I'll do enough part time work to postpone taking Social Security to at least 65. Given trends in health in the U.S and my own observations, I'm not going to keep my nose to the grindstone because I or my wife might live past 90.