FWIW, I really appreciate your number based approach and it’s helped balance the emotional component I see often in people’s posts. We have no interest in living on an ultra low withdrawal rate, so it helps me balance their true risk vs perceived risk. As a relative newbie to thinking about all of this, understanding the numbers behind the failures, and the market dynamics behind cycles that failed, has changed my perspective a lot. My traditional ‘conservative’ approach was always property or cash. I still tend to keep too much in cash, but at least I understand the implications!
Thanks. This might be a good time for me to add, that though I personally take a conservative approach to WR, I don't think it is irrational at all for someone to start with a 50% success rate, providing they have an aggressive Plan B.
I ran some numbers, FIRECalc say 3.34% for historical SWR for 40 years, and 5.29% for 50% success rate.
So my hypothetical 'twin' could choose to spend 1.58x more than me each and every year over a 40 year period, ending with the two of laying in hospital beds side by side and he could say "Hah! I had a LOT of fun with all those extra indulgences the past 40 years - you lost out!". Who could argue?
But he'd need to be in a position to
cut way back if thinks went bad. And I mean way, way back, for a very long time. And for some people, the early years of high living might be worth taking that risk. I think the scenario would need to be something like - hey, I can deal with frugal and still be happy - I just prefer not to. It's a choice, maybe the right one for some people.
Of course, knowing when and how much to cut back is tricky. Like the 2008 crash - I plowed right through it. A high WR would have made me more nervous, and I would have cut spending way down, and that would have affected my lifestyle, at an age where it matters (I might not be able to do those things when I'm older). But that's why I prefer the conservative approach. I can be happy (just a less extravagant version of happy), and it is unlikely I will ever need to cut back at all.
-ERD50