4% SWR for 30 years, what % for 15 years
4% SWR for 30 years, what % for 15 years
Assuming a 4% SWR for a 30 year time period, would it be a correct calculation to reduce the years to 15 and double the SWR to 8% ?
Re: 4% SWR for 30 years, what % for 15 years
No, not correct.
probably closer to 6% based on historical data. I don't have a good reference now, but there are papers that show worst case results for various withdrawal rates.
probably closer to 6% based on historical data. I don't have a good reference now, but there are papers that show worst case results for various withdrawal rates.
I wish I had learned about index funds 25 years ago
Re: 4% SWR for 30 years, what % for 15 years
Curious....why would you want that?
Besides...4% is a guide from a study and is not 100% guaranteed for any time period
Besides...4% is a guide from a study and is not 100% guaranteed for any time period
Unless you try to do something beyond what you have already mastered you will never grow. (Ralph Waldo Emerson)
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Re: 4% SWR for 30 years, what % for 15 years
Below 25 years, I suggest just assuming 1/n for the rule. So for 15 years you get 6.67%.
Re: 4% SWR for 30 years, what % for 15 years
Its a bit more than a guide, it's the consumption rate, in real dollars, for a given AA (80/20) that *never* ran out money over 30 years using real returns over the past century. (closer 3.5% is the real value, IIRC, and more conservative AA move this closer to and below 3%. 100% bonds, for example, put this at closer to 2%)Sheepdog wrote:Curious....why would you want that?
Besides...4% is a guide from a study and is not 100% guaranteed for any time period
So, while it is a guide, it is as close to 100% guaranteed that data can provide. Of course, the future always looks different than the past.
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Re: 4% SWR for 30 years, what % for 15 years
It only was. We don't know, as you mentioned, if it is. And the was people didn't know it in advance.ryman554 wrote:...
So, while it is a guide, it is as close to 100% guaranteed that data can provide. Of course, the future always looks different than the past.
The study authors themselves were at pains to emphasize an inflation-adjusted 4% of initial value per year is not an operational plan.
Back then the press was bandying 8% to 12% about as safe for the long term, as in never exhausting the portfolio. The Trinity authors changed the conversation, and eschewed the word safe for sustainable. Then the noisemakers changed it back again.
PJW
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Re: 4% SWR for 30 years, what % for 15 years
Not sure about OP (who maybe has a deferred annuity or something?)Sheepdog wrote:Curious....why would you want that?
Besides...4% is a guide from a study and is not 100% guaranteed for any time period
But some people don't retire until quite late, by choice.
DH is ~mid-70's, and just starting *another* multi-year project.
At least he now takes "real" vacations... and more and more of them each year
(This only started about 2-3 years ago, and we are making up for lost time.)
But MIL is 95 and sharp as a tack.
If DH inherits those genes, yes, he'll live a long time, but he'll work a long time if he is still able to.
He is fortunate to enjoy his work, and would no doubt do much the same even if not paid (an unappealing financial planning strategy, we've decided!).
And this means we cannot even touch the nice pot in the 403b accounts... yet.
RM
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Re: 4% SWR for 30 years, what % for 15 years
You can get 100/n % thru a TIPS ladder for any term of n years, so that's at least a 6.67% safe withdrawal rate adjusted for inflation.
You could buy a 15-year single-premium immediate annuity and probably do better. http://www.immediateannuities.com has a 15-year annuity paying 7.788%
The input requires age, sex and state, so YMMV. The big problem with most annuities is the lack of inflation protection.
You could buy a 15-year single-premium immediate annuity and probably do better. http://www.immediateannuities.com has a 15-year annuity paying 7.788%
The input requires age, sex and state, so YMMV. The big problem with most annuities is the lack of inflation protection.
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Re: 4% SWR for 30 years, what % for 15 years
I'd think that somewhere in the 6-7% range, depending on your asset allocation?
The 15-year annuity is mentioned above. Take a look at the wiki as well, if you think you can adjust your withdrawal rate somewhat:
https://www.bogleheads.org/wiki/Variabl ... withdrawal
The 15-year annuity is mentioned above. Take a look at the wiki as well, if you think you can adjust your withdrawal rate somewhat:
https://www.bogleheads.org/wiki/Variabl ... withdrawal
Re: 4% SWR for 30 years, what % for 15 years
Exactly.Oicuryy wrote:Trinity Study Table 3
Looks like, for the reasonably equity-heavy portfolios the 4% rule was based on for a 30-year retirement, the study shows very similar success rates for a 15-year retirement using a 6% initial withdrawal rate. And the 15-year duration is a little more forgiving of low equity allocations.
Table 3 shows the success rate of various portfolios for different time periods measured against the full time span of the studied data, 1926-1995. However, unlike Table 1 which covers the same time period, this data is adjusted for inflation & deflation.
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Re: 4% SWR for 30 years, what % for 15 years
The chart shows there's a 29% chance of failure in 15 years withdrawing 6% annually from a portfolio of 100% bonds. No AA provides 100% safety at a 6% withdrawal rate. But a TIPS ladder or a 15-year SPIA succeed 100% of the time.iceport wrote:Exactly.Oicuryy wrote:Trinity Study Table 3
Looks like, for the reasonably equity-heavy portfolios the 4% rule was based on for a 30-year retirement, the study shows very similar success rates for a 15-year retirement using a 6% initial withdrawal rate. And the 15-year duration is a little more forgiving of low equity allocations.
Table 3 shows the success rate of various portfolios for different time periods measured against the full time span of the studied data, 1926-1995. However, unlike Table 1 which covers the same time period, this data is adjusted for inflation & deflation.
What does that tell us?
Re: 4% SWR for 30 years, what % for 15 years
Very interesting results on the 15 year WR at 6%.
Since I have a pension, I could plan a WR at 5.5% starting 13 years before I can get the full value of my pension given that the pension is equal to about 60% of the planned WR instead of building up a nest egg designed around a WR of 3.5%.
I'm glad the OP posted this as it gives me another option to review and consider that (potentially) brings me to retirement a few years earlier.
Since I have a pension, I could plan a WR at 5.5% starting 13 years before I can get the full value of my pension given that the pension is equal to about 60% of the planned WR instead of building up a nest egg designed around a WR of 3.5%.
I'm glad the OP posted this as it gives me another option to review and consider that (potentially) brings me to retirement a few years earlier.