I find this discussion interesting. A LOT of discussion on SWR on this site - most seem to think 4% is too high- but then many people on this thread think 95% is pretty safe!
To get to 95% i have to have 5.78% SWR on a 30 year retirement. This is due to SS and My house being paid off along the way.
So, it would seem to me that just picking a "SAFE" SWR - say 4% is probably way conservative for most people.
If i use the same retirement parameters and start retirement with 4% SWR, my lowest "ending balance" in my retirement is 100% of my starting amount- i would have effectively spent 0 dollars to retire........so...why am i still working?
You are not applying the numbers correctly (and IIRC, FIRECalc is partially to blame for this).
"To get to 95% i have to have 5.78% SWR on a 30 year retirement. This is due to SS and My house being paid off along the way."
The above does not compute. The 5.78% in your case is
not a withdraw rate, it is a
spending rate. Big difference.
To illustrate, using the "investigate" tab "adjust spending level for 100% success", and others at defaults, I get:
This spending level is 3.59% of your starting portfolio. (Your spending is assumed to come from any Social Security and pensions you entered, as well as from the portfolio.)
A portfolio has survived a 3.59% inflation adjusted withdraw 100 % of past cycles. Regardless of SS, pension, etc - that is the withdraw from the portfolio. If you get, say, 2% from SS/COLA-pension,
then you can spend 5.59%. But the SWR from the portfolio is still 3.59%.
To make an extreme case, say I estimated $50,000 annual spend, and I had $60,000 from SS/COLA-pension, and $25,000 portfolio (which I don't need to withdraw a penny from). Would it be helpful to say my Safe Withdraw Rate is 200%, when I'm not withdrawing anything at all? Would you say I'm not conservative, even though I spend less than my income, and have a $25,000 buffer that will increase by >$10,000 every year?
Bottom line, you can't compare your 5.78% with someone's 3.59%, or 4% or whatever. It's not apples-apples. You might be far more conservative at 5.78% than someone else at 4%.
What I do, and encourage others to do, is to enter your numbers into FIRECalc, and then report the WR that matches that time period and your % success rate with the defaults (no SS/pension/adjustments). That tells you what the withdraw from the portfolio is, and is closer to something that is comparable to others (not exact due to timing, etc, but closer).
-ERD50