willthrill81 wrote: ↑
Wed Jan 10, 2018 12:43 pm
snarlyjack wrote: ↑
Wed Jan 10, 2018 12:29 pm
I just wanted to know that if you had to you could live off of the 100% stock portfolio knowing that it's very volatile? In other words just live off the income from the portfolio but let the portfolio float in the market.
If your portfolio is big enough relative to your withdrawals and you can stay the course, 100% stocks is fine and has been, historically speaking, likely to result in a higher balance over time than a balanced portfolio.
Yes, if you get to 50x expenses, you'll have zero worries about running out of money.
But to get to 50x expenses instead of 25x expenses, most people would have to work an extra 10-15 years.
Quite a few people on this board have had the good fortune of not having to make that choice. They have hit 50x expenses by 45 or 55 because they have very high paying jobs, and made good choices keeping expenses low compared to their income.
The rest of us have to make a choice between time and money. My wife and I will hit 25x expenses around 55-60, which I thought was pretty good. We can choose to retire then, or work another 10 years to let our money double again.
4% withdrawal is very conservative already. It's not the average safe withdrawal rate from decades past... It's represents the safe withdrawal rate from the WORST decades in the past. Most of the time, one could pull 5% or 6% and do fine. Those withdrawal rates left you broke though if you had the bad luck to retire right before the Great Depression or in the mid 1960s (stock market was flat from 1966-1982, interest rates were rising, AND we had high inflation in the late 1970s).
But 4% worked during those times (technically 3.7% I think in 1966 - the worst year to retire so far).
So it's fairly conservative to go with 4%. An argument can be made that the next 30 years could indeed be worse than the worst 30 years on record so far, so maybe one could go 3.5% or even 3%. I personally say go with 4% if you have discretionary spending in that 4% that could be cut for a few years in case things go bad for a while.
But 2% is bullet-proof. Great if you can do it without sacrifice. But for most of us here, it would probably mean working through our 60s. And for security we 99.99% don't need.
When you only have 0-20 healthy years left, working 10 of them to double your money again (when you very likely won't need the extra money) is a tough choice.