The current period we are in, is but a small slice of time.
Things have likely not changed expectationally.
4 percent SWR is still the rule of thumb for 30 year intervals.
The caveat, if things look dicey, lower it. this has not changed.
This may well apply now. So yeah, make it 3, 3.5 percent if things look bad, that's only commonsense, as you may be personally on one of the 5 percent of failure paths of a 4 percent SWR..........
Reality sucks sometimes, as anyone rolling over a TIPS ladder into negative yields (which they will then be taxed on the nominal "gains" when they decumulate, resulting in an even more negative yield of the "riskless" tips that "guarantee" your money back in real terms).
But for me, at 43, I see no reason to expectationally go away from the 4 percent SWR.
There is always SPIA, which can be great, giving you the money from dead people, the enhance your return if you live. The caveat is if you can trust a private company for 30 years to pay back your money as promised, backed by vague state governments guarantees with states having 1T assets, and 3T liabilities pensionwise alone...... Also, hope they do not cure cancer for SPIA for 30-40 years going forward, because that will blow the SPIA model of people dying and giving up thier money to the fund out of the water : )
There is no guarantee, only different risks which one can try and diversify. There also is no matching possible really, as a single persons life needs are just too variable/uncertain.
For the better safety, heck go 2 or even one percent SWR. But at some point, "retirement plan" then becomes 1) delay retirement indefinitely, 2) "retire" but work another career(ie dont retire), etc....
Pay low fees as possible, diversify your portfolio, maintain/dont capitulate, rebalance, keep your eyes open, if things look bad, lower consumption. This goes the same if you are cruising along on a TIPS ladder, and the rollover goes negative, or if you are 20 years into SPIA, and your SPIA looks "enron-ish" and your guarantee state, assuming the guarantee even exists per se, is having protests over failing to pay its pensions, or if you are 43, and the government tells you your SS you have paid into for 20 years is only projected to be 67 percent of whats was promised.
Guess what, time to cut back consumption a bit.
Variable uncertain world.
Last edited by LH
on Wed Feb 13, 2013 3:07 pm, edited 1 time in total.