Samurai Says: 1/2% SWR...

SecondCor521 said:
Uh, not if you think FIREcalc is accurate (which I do).

The 4% rule succeeds in all but the worst 6 starting periods in history.

I believe a 6.5% WR is approximately the average safe withdrawal rate, so if you use a 6.5% WR you're about as likely to succeed as you are to fail.

If you go to FIREcalc and put in a 6.5% withdrawal rate on the first page (using $65,000 as the spending level and $1M as the portfolio level) and leave the rest default, FIREcalc will tell you that you have a 45% success rate:

"Here is how your portfolio would have fared in each of the 120 cycles. The lowest and highest portfolio balance at the end of your retirement was $-4,044,946 to $3,415,537, with an average at the end of $-169,561. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)

For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 66 cycles failed, for a success rate of 45.0%."

(emphasis added)
Click to expand...

Ah ha, okay the average safe withdrawal rate.
 
njhowie said:
No matter what happens, FIREcalc will be "accurate" because everything it does is about probabilities based on history. Even if it gives 100% success, again, that is based on historical events and returns - which does not guarantee what may happen in the future and that your retirement funds may not last through the remainder of your life.

I personally do not put much "faith" in FIREcalc. It's just a bunch of formulas and calculations based on a set of assumptions. Many investment firms do exactly the same - they have their own models and systems which are similar in nature to FIREcalc. When they crash and burn, they are quick to say "Well, we just experienced a once in a 100 (or 1000) year event and we weren't prepared for that" - and neither is FIREcalc.
Click to expand...

I understand your point that FIREcalc is historical and giving answers based on the past and not predictions about the future.

My commentary was alluding to a different point. I was in software and firmware development and testing for about 20 years, and have seen plenty of bugs in code and formulas. It would be possible, indeed probable that a historical SWR calculator would have bugs in their calculations that would produce inaccurate historical answers. In the early days, FIREcalc had some of those, although it has always been pretty good. I think that FIREcalc today is written mostly correctly and gives accurate historical answers.
 
If one has a portfolio that just keeps up with inflation, the 40 year safe withdrawal rate would be 2.5%. not .5% (100 / 40 years = 2.5%). Current interest rates are low, but then so is inflation, and most retirees who go this route are going to use ladders, so they would get a rolling average of returns in their portfolios and not just the super low returns we're seeing today on fixed income investments. At our ages now we could go to over 3.33%, as we don't have as long a retirement to plan for (100 / 30 years = 3.33%) and because of our past investments we should be able to plan on a blended real return better than a 0% real return.
 
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NW-Bound said:
Yep, 0.5% WR would be a real problem for youngsters who want to ER, but I have grown old enough to be past that phase. See my signature line below.
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Yes, old(er) age has some advantages. I stopped planning for 30 years (more) retirement at age 70! I now think in terms of 100 minus my age. Haven't refigured what my "new" SWR is. Honestly, I can't spend my RMDs now. Fortunately, there are enough charities in my heart to absorb the excess. YMMV
 
njhowie said:
Exactly.

Since he did an about-face a couple years ago (a few years into FIRE), he now relies on shock journalism, panning FIRE, getting the articles picked up by CNBC, Marketwatch, Yahoo, and any other outlet that will pay him...I call it "Whore Journalism".

Always, always remember - here's "an expert" who makes excuses and justifies why he is unable to get by on $265,000 a year in passive income. Does anyone not start laughing uncontrollably? Who really listens to such a person for advice?

In contrast, it's my belief that the SWR is actually higher than 4% - probably more like 6% for those who have FIREd appropriately.
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I was thinking of what I could clearly articulate about this clown without running afoul of the forum rules and was having a difficult time...until I read your post. I wholeheartedly agree 110% with all you have said about him.
 
that article is so stupid


and this whole fixation on the "perfect SWR" needs to go away already...
 
FREE866 said:
... and this whole fixation on the "perfect SWR" needs to go away already...
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Everyone does have a perfect SWR. Unfortunately, we can't know exactly what it is until we die. So we have to just pick a WR we are comfortable with and stand by to adjust as necessary.
 
Just another con man like all the other bloggers on the web.
 
CardsFan said:
Read the comments:LOL:

My favorite so far:
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The comments over there are in fact priceless. It is as if the entire MW audience has grabbed their pitch forks.

Fame and notoriety are opposite sides of the same coin.

Here is my fav exchange from over there so far:

“Maryland Royal
6h ago
I only need a modest corn field and a dozen chickens for some eggs every morning. Do I still need 8 mil?

“Douglas Schofield
6h ago
6 and a half million should work in that case, MR. ;)“
 
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NW-Bound said:
Yes, I remember that miniseries. As shown in one episode, a real samurai would not hesitate to lop off the head of a peasant who does not show respect. :cool:

And nowadays, a real samurai does not worry about any stinkin' SWR. He's always on top of the food chain.
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True. But they also commit ritual suicide if they fail those who depend on them.
 
I finally looked at this nonsense. Interestingly, Bill Bengen posted in the comments. He was very polite, suggesting that 0.5% would be "wonderful for heirs".
 
statsman said:
Wasn't that range about retiring in your 30s? A seriously different situation than retiring in your 50s.
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Sure - my point was more about the overall size of the pile that these two so-called financial experts say is required regardless of when you retire.
 
USGrant1962 said:
I finally looked at this nonsense. Interestingly, Bill Bengen posted in the comments. He was very polite, suggesting that 0.5% would be "wonderful for heirs".
Click to expand...

As some of the comments on his blog note, the 0.5% rate assumes that the entire principal is untouched at the FIRE'd person death. His answer to that is:

"Believe it or not, a lot of people want to leave money for their children and charitable organizations to help society. It makes people feel happy that their legacy will live on. And it also feels good in general to help other people."

While I'm far from knocking charitable giving and helping others, the whole concept of FIRE is about helping ourselves to live happier lives through managing investments and spending. It's a fairly self-centered goal but that is the main priority of the FIRE crowd. The 0.5% withdrawal rate seems to shift that priority to a somewhat less prominent spot. So the question is: is he still writing his blog for the FIRE crowd or financial legacy junkies?
 
tenant13 said:
As some of the comments on his blog note, the 0.5% rate assumes that the entire principal is untouched at the FIRE'd person death. His answer to that is:

"Believe it or not, a lot of people want to leave money for their children and charitable organizations to help society. It makes people feel happy that their legacy will live on. And it also feels good in general to help other people."

While I'm far from knocking charitable giving and helping others, the whole concept of FIRE is about helping ourselves to live happier lives through managing investments and spending. It's a fairly self-centered goal but that is the main priority of the FIRE crowd. The 0.5% withdrawal rate seems to shift that priority to a somewhat less prominent spot. So the question is: is he still writing his blog for the FIRE crowd or financial legacy junkies?
Click to expand...

I think he's writing for remuneration.
 
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