Fidelity says I am in good shape with a 5% withdrawal. Living to 85 starting at 55. What do you think?

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Dennisl
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Re: Fidelity says I am in good shape with a 5% withdrawal. Living to 85 starting at 55. What do you think?

Post by Dennisl »

Rudy Tooty wrote: Wed May 05, 2021 9:10 pm
RudyS wrote: Wed May 05, 2021 8:46 pm Biggest concern in my mind is the part about living to 85. Why such an early age? I know many people who get to their 90's and a few over 100.
I believe the average male lifespan in the U.S. is around 77 or so. 85 would be a gift. Judging from those I know over 90, I would not want to reach that age. But to each his own.

Based on my genetics I'll be happy to make it to 80. That's a long life.

So for my retirement calculation I'll push it and say 85 tops.
https://www.ssa.gov/OACT/STATS/table4c6.html

The social security actuary tables will give you a pretty good idea. If you are in the top quartile of health, add 50%, bottom quartile, subtract 50%.
ncbill
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Re: Fidelity says I am in good shape with a 5% withdrawal. Living to 85 starting at 55. What do you think?

Post by ncbill »

OP can set up a guest account at Fidelity & use their full-blown retirement planner.

I like it since it seems to be the most conservative of all the ones I've used when the market is set to "significantly below average."
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JoeRetire
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Re: Fidelity says I am in good shape with a 5% withdrawal. Living to 85 starting at 55. What do you think?

Post by JoeRetire »

teen persuasion wrote: Fri May 07, 2021 12:08 pmI know my dad crunched the numbers on when to take SS, and opted for earlier rather than later, based on the assumption/calculation he'd never reach breakeven in his 80s (based on his parents' lifespans). Wrong! They've both outlived their parents by roughly 2 decades each. To some degree, it's because of medical advances that might have prevented early deaths common generations ago. We and our children/grandchildren might outlive them, with more advances to come, or just generally healthier living.
My father's father lived until 72.
My father lived until 87.
At that rate, I should plan for 102 I guess.

My actual planning has been for 95. But if I'm still around at 102, I'll be fine financially. I'm not the type that plans to die with less than $0.10 to my name.
Just remember: it's not a lie if you believe it.
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Taylor Larimore
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Re: Fidelity says I am in good shape with a 5% withdrawal. Living to 85 starting at 55. What do you think?

Post by Taylor Larimore »

iamblessed:

I retired at age 57. I am now 97.

I'm glad I did not use that calculator.

Best Wishes
Taylor
Jack Bogle's Words of Wisdom: “When we rely on the past to help us foretell the future, we are all-too-likely to reach invalid conclusions.”
"Simplicity is the master key to financial success." -- Jack Bogle
quantAndHold
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Re: Fidelity says I am in good shape with a 5% withdrawal. Living to 85 starting at 55. What do you think?

Post by quantAndHold »

My good friend’s dad got medically retired at 55. He was in poor health, and assumed he wouldn’t live long, so he set up his pension to pay out up front, and stop paying on his 80th birthday. He lived to 94. His daughter then supported him for 14 years.

Do you have a daughter?
Yes, I’m really that pedantic.
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iamblessed
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Re: Fidelity says I am in good shape with a 5% withdrawal. Living to 85 starting at 55. What do you think?

Post by iamblessed »

If you take it out to age 93 they are saying about a 4.5% withdrawal.

I think somewhere in 4.75%, 5% [range] is probably going to be OK. We won't know for 30 years, so I can safely say that in an interview." Speaking to someone else, Bengen noted that he himself is using a 5% rate.
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abuss368
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Re: Fidelity says I am in good shape with a 5% withdrawal. Living to 85 starting at 55. What do you think?

Post by abuss368 »

Taylor Larimore wrote: Fri May 07, 2021 7:11 pm
iamblessed:

I retired at age 57. I am now 97.

I'm glad I did not use that calculator.

Best Wishes
Taylor
Jack Bogle's Words of Wisdom: “When we rely on the past to help us foretell the future, we are all-too-likely to reach invalid conclusions.”
Hi Taylor -

A lifetime of wisdom and simplicity proves Mr. Bogle’s teachings and advice work! Thank you for sharing your experiences and life lessons.

Have a nice weekend.
Tony
John C. Bogle: “Simplicity is the master key to financial success."
Exchme
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Re: Fidelity says I am in good shape with a 5% withdrawal. Living to 85 starting at 55. What do you think?

Post by Exchme »

iamblessed wrote: Sat May 08, 2021 7:30 am If you take it out to age 93 they are saying about a 4.5% withdrawal.

I think somewhere in 4.75%, 5% [range] is probably going to be OK. We won't know for 30 years, so I can safely say that in an interview." Speaking to someone else, Bengen noted that he himself is using a 5% rate.
Everyone does their own risk/reward balancing, but you told us Firecalc gave you a 1 in 5 chance of failure in 30 years and it would be worse odds if you lived longer. Is that OK with you? Most people here would think that working a couple more years to push the chance of success up would be worth it to manage the risk. Do you have some ideas on how to cut expenses or supplement income if you need it?

[Edit: I originally thought OP's comment about Bengen using 4.75% withdrawal rate referred to Bengen's personal situation, which would be strange. I believe OP meant that Bengen's research found a certain asset allocation and set of investment factors that historically allowed 4.75% SWR. Apparently OP knows what those are and is following them.]
Last edited by Exchme on Sat May 08, 2021 8:59 am, edited 1 time in total.
dbr
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Re: Fidelity says I am in good shape with a 5% withdrawal. Living to 85 starting at 55. What do you think?

Post by dbr »

I think the best way to address choosing a withdrawal rate that is predicted by some model to have a small but not zero of failure is to understand what the plan is if that failure actually might materialize. This is not different from having a plan where the chance of failure is zero but having failure materialize anyway. Don't forget that in FireCalc, for one, there are only a hundred or so runs and no failures just means that failure is probably likely at less than one in a hundred odds. A more interesting experiment is to vary the spending and see at what point failures start to develop and how rapidly they increase. I also think it makes sense to adapt withdrawals if things do not go well at the beginning. But, as I might have speculated before, my guess is that anyone retiring in the last ten or twenty years probably has a retirement that can sustain 5%. That does not predict that 2021 is a year that can do that.

A lot of this also depends on the whole situation. A person with Social Security, possible pensions or annuities, long term care insurance, an owned home (the idea that a home is not an investment is nonsense) that becomes a resource for old age financing, and so on is not bankrupt even if a portfolio is depleted. Note that buying annuities at age 75-80 might be optimum. You wouldn't probably buy a fixed annuity at age 55.
MnD
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Re: Fidelity says I am in good shape with a 5% withdrawal. Living to 85 starting at 55. What do you think?

Post by MnD »

We retired at 56 in 2018 and are using 5% of annual portfolio balance per the IPS and retirement income strategy in my signature below.
Despite two bear markets and a global pandemic our portfolio balance is much larger than when we retired and our income from portfolio is well above the ultra-low % inflation-adjusted SWR approaches than seem increasingly popular here.

We are in the go-go years of retirement and have utility for all the income this provides. In fact we'd have utility for several multiples of our current 6-figure after-tax retirement income. We have a pension and our true needs are a small % of our income so the variability of a % of portfolio balance isn't a problem.

When we start drawing SS (her at 62 and me at 70) we will reevaluate our portfolio and our utility for additional income and decide whether or not to reduce the 5% by an amount corresponding to the SS income increase. If I had to guess now I'd say we will not reduce the 5% and instead spend more.

Our retirement income plan does not revolve around worst than worst case scenarios and likely ending up with a portfolio several multiples of what we retired with when too old/ill to enjoy it or dead.
70/30 AA for life, Global market cap equity. Rebalance if fixed income <25% or >35%. Weighted ER< .10%. 5% of annual portfolio balance SWR, Proportional (to AA) withdrawals.
Rudy Tooty
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Re: Fidelity says I am in good shape with a 5% withdrawal. Living to 85 starting at 55. What do you think?

Post by Rudy Tooty »

One of my favorite financial books of all-time is "Die Broke" by Stephen Pollan. I love his philosophy on all things financial.
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