Michael Kitces on the 4% rule

[seraphim]

We have access to most of our funds - only about 30% can't be accessed until I'm 59.5, and I intentionally moved them from a 457 which we could have accessed. We draw from an inherited IRA with RMDs and a taxable account which contain about 25% of our assets. We haven't started drawing them 'down' yet, as they return more than we draw. So far lol

We draw a fixed dollar amount, not percentage, but when I consider the percentage I think of it as a percentage of the entire portfolio.

 

[pb4uski]

I take what we need to live and when the market are doing well I might splurge a bit and if they do poorly I'll tighten my belt as needed. There is enough flexibility in our needs that I can make it work. As long as my withdrawals are in the 3.5-4.5% range, I don't get too wound up in worrying about it.

 

[Turboslacker]

I take what we need to live and when the market are doing well I might splurge a bit and if they do poorly I'll tighten my belt as needed. There is enough flexibility in our needs that I can make it work. As long as my withdrawals are in the 3.5-4.5% range, I don't get too wound up in worrying about it.

That's the ticket...be flexible and minimize worry

 

[Ronstar]

Good video - I'm glad it stressed that SWR is not a set it and forget it thing. I've been working part time, putting most of the $ in my 401k, and withdrawing a little. Also put together a post-retirement budget that begins April 1. Starting next month, I plan on monitoring my actual WR monthly to make sure it doesn't get out of control.

 

[tuixiu]

Using firecalc I get a 95.1% success rate over 40 years at about 4.2% draw when I include social security at 70% of what the ss calculator says it'll be.

 

[e86s54]

Video was OK...my take...blah, blah, blah...4% rule is still good but needs to be fine tuned to the individual based on wants and needs.

What I didn't like of the video was the background music...it often sounded like my default iPhone ringtone

 

[mathjak107]

once we know the real return we need which thanks to michael kitces and the data we love to hate that firecalc and the trinity uses we need nothing more than a simple calculator to know how we are doing in real time through our own retirement.

further more we know that mathamatically the floor you get from firecalc or any of the trinity studies will hold true as your minimum as long as real returns do not slide below x for a time frame of y..

it becomes a simple process now ,with a simple calcultor to see if you are holding on track for at least the minimum floor .


but none of this could have been possible without the data actually being quantified into numbers that are meaningfull which thankfully now they have.

folks love to argue and hate these studies and are always bringing up how its the past and means nothing as we can't predict but they never get the point it really does not matter if you are using the info in a meaningful way as it is ALWAYS TRUE regardless.

if your real return equals less than x the first 15 years of your retirement then mathamatically the minimum floor the 4% rule gives you will likely not hold true no matter what the circumstances are .

that is data anyone of us can easily use now and put in a simple calculator and monitor through retirement.

if every time the temperature goes below 32 water freezes ,who cares if every day , week and year weather patterns are different and no one can predict next years weather.

it never matters what repeats , the only thing that matters is if you have tempertures below 32 water will freeze.

there is no predicting water will freeze it is a fact.

the same is true with this other data once you understand how to quantify and use that data.

thanks to researchers we now know everything pertaining to an swr is formed duriung the first 15 years... we also know every time the real return averages are 1.5% or below per year over the first 15 years we have had a failure mathamatically at 4% .

so it is easier now for us to monitor.

i know if i am under a 2% real return average for my first 10 ten years a danger sign should pop up... it may be wise to cut below 4% if you have not already since we are getting closer to that 15 year critical time frame.

it is simple math not based on history repeating itself and that is the real value of these studies and calculators.