I have a question about Safe Withdrawal rates and adaptability (or conditional probability if you prefer). Please excuse me if it's well-covered or old hat to you guys.
It falls naturally into 2 parts (the second came to me as I thought of the first):
1. let's say you have ERed with a 40-year horizon and a SWR to go with that. After, say, 5 years, should you worry or even panic if your withdrawals now exceed the SWR for the portfolio you now have over 35 years? Many 40-year cases will dip into this state after 5 years but still survive in the long run: do you just hope you've got one of those and not a "FAIL" run, or do you modify your withdrawal regularly?
2. same starting situation, but this time, after 5 years you are still on a SWR for the portfolio you have, over 35 years. Is that good enough? I think not, because your situation has now changed: you now know that you're not one of those who died during that 5 years. Whatever reasoning led to to a 40-year horizon 5 years ago, would not lead you to a 35-year horizon now, but to something longer.
This being my first post I'd like to say hello and especially thanks to Dory36 and all the others who have put so much into this (and in such a good humour compared to Certain Other Places). I have certainly taken much out of it while lurking.
It falls naturally into 2 parts (the second came to me as I thought of the first):
1. let's say you have ERed with a 40-year horizon and a SWR to go with that. After, say, 5 years, should you worry or even panic if your withdrawals now exceed the SWR for the portfolio you now have over 35 years? Many 40-year cases will dip into this state after 5 years but still survive in the long run: do you just hope you've got one of those and not a "FAIL" run, or do you modify your withdrawal regularly?
2. same starting situation, but this time, after 5 years you are still on a SWR for the portfolio you have, over 35 years. Is that good enough? I think not, because your situation has now changed: you now know that you're not one of those who died during that 5 years. Whatever reasoning led to to a 40-year horizon 5 years ago, would not lead you to a 35-year horizon now, but to something longer.
This being my first post I'd like to say hello and especially thanks to Dory36 and all the others who have put so much into this (and in such a good humour compared to Certain Other Places). I have certainly taken much out of it while lurking.