SWR of 6.21% for 26 years


Recycles dryer sheets
Jul 20, 2003
If you retire now (at S&P around 1100), your SWR should be about 6.21%, given the assumption that the 30 yr period 2000-2029 would not be worse than the worst 30 year period from the past.

Reason: If you had $1000000 at the beginning of 2000, FIRECalc will tell you that your SWR for 30yrs is 4.19%, using the defaults. If you stick to 4.19% withdrawal, at the end of 2003, your nest egg will be about $674000. Yet, you should be OK to continue withdrawing $41900, plus inflation adjustment til 2029. Hence, if you had $1mil at the end of 2003, then you should be able to withdraw $41900*1000000/674000=$62166, or about 6.22% annually, inflation adjusted. Of course, if you believe that 2000-2029 period will be worse than the worst we've ever experienced, then your personal SWR will be less than that.
Although I can see why it's important, I pay little
attention to my own SWR. I focus more on my net
worth continuing to increase, which it has since I
retired. Thus, I obviously am not dipping into my
base. Hopefully I'll never have to. That will make my
heirs happy also.

John Galt
A portfolio can increase in nominal terms, but still lose ground to inflation. If the portfolio doesn't grow enough to keep pace with inflation, the interest that it throws off will gradually lose purchasing power in the market place. Over a few years, this effect will be small, but over long periods of time it can make a major difference.
At age 60 (a 'semi-old phart' ER wise), I can remember times (1980's) when 6% would have been so low as make me lose my discussion spot around the watercooler. My 401k fixed portion racked up a lot of 11% GIC years back then. Things change - even reading the Terhorst homepage 1988, 1993 and 2003 interviews their portfolio changed over the years.

So I'm an avid reader of SWR analysis, and research on retirement calculator evaluations posted/referenced here - A. because things change. B. Nothing like being in ER, to keep you focused on using any good ideas that surface.
At age 60 (a 'semi-old phart' ER wise), I can remember times (1980's) when 6% would have been so low as make me lose my discussion spot around the watercooler.
Unclemick, let's hope they aren't saying the same thing about 3% 20 years from now.
Sorry to be posting on this thread(thanks -amt) but the page breaks and my antique webtv aren't getting along(on the 6 page thread).

Anywise - revision to the mean (and of course SWR implications). Bernstein's Winter 2004, Efficient Frontier, Almost Normal article left me scratching my head. ? revision to the mean for the right countries?
WOW! eight pages and counting. A little cross thread once again(webtv still doesn't like the page breaks).

If my portfolio gave me 4% in 2000 and 6% in 2004 - I'D CHANGE THE PORTFOLIO - then play with FIREcalc. Also in line with my previous bias(non mathematical), I would look at the SEC yield (portfolio) and SWR - pick a number somewhere in - between (with great courage?) and soldier on. Rereading Bernstein's 'Almost Normal' Winter 2004 while I 'selected' the number with hopefully some 'faith' in RTM.
Hey, unclemick! I have faith in me! Everyone else
bears careful watching. It's one of the advantages
of galloping egomania. Even if you are wrong, you never
know it, or at least you never acknowledge it.

John Galt
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