Ben Felix - How to Retire Early (The 4% Rule)

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geerhardusvos
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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by geerhardusvos » Wed May 13, 2020 10:36 am

smitcat wrote:
Wed May 13, 2020 9:28 am
geerhardusvos wrote:
Wed May 13, 2020 8:13 am
cherijoh wrote:
Wed May 13, 2020 7:52 am
geerhardusvos wrote:
Mon May 11, 2020 9:48 pm
Interesting how he even admits that 40 years still has close to 90% success rate. For most retirees, that’s pretty good. I personally am comfortable with anything above 70 to 80% on firecalc. In the video he references early retirement now analysis. With a 75/25 Portfolio, there really is excellent historical success with a 4% rule even beyond 30 years. Even without my ability to earn a little income, it is historically overwhelmingly safe. Even with current high stock valuations, a 3.5% withdrawal rate as an example, should be plenty safe for a 40 to 50 year retirement horizon when having at least 50% stocks. Things are crazy in the world right now, but I fail to see how we won’t continue to have at least reasonable market returns over long periods of time. He even admitted that the World portfolio supports a 3.5% withdrawal rate...

2.5% WR is way too conservative. You are way more likely to double your portfolio than you are to run out of your money at that rate...
I think it depends on what you have thrown into your retirement budget. If you were already using a bare-bones budget (as we sometimes see posted when someone in their early 50's is laid off unexpectedly and wants to completely retire), I personally wouldn't be satisfied with a 70% success rate. The consequences of being wrong (i.e., running out of money vs. doubling your portfolio) are not equivalent.

On the other hand, we also see some of the one more year (OMY) crowd posting about padding their budget with 40% discretionary spending and then worrying that they can't retire on a 2.5% withdrawal rate (for the padded budget). If your retirement budget is super generous, then a projected 70% success rate is fine. If your portfolio is tanking, you have plenty of discretionary spending to trim. This is also true for those close to retirement who ignore the impact of SS and extrapolate their early retirement withdrawal rate for their entire retirement.

The most important thing IMO is that if you are going to use a more aggressive withdrawal rate is to make sure that you have adequately accounted for early retiree healthcare, taxes, and irregular expenses (e.g., home repairs and replacing your car).
If someone is in their 50s and they have 25X their living expenses (even bare bones), they are financially independent, free and clear, no questions asked. Because then when retirement income like pensions or SS kicks in, they are even more golden. But even without that considered they are very likely OK with a equity portfolio greater than 50%.
Agree with Cherijoh , a clear post

"If someone is in their 50s and they have 25X their living expenses (even bare bones), they are financially independent, free and clear, no questions asked."
50's and 25X are very typically too light with a couple.

"Because then when retirement income like pensions or SS kicks in, they are even more golden"
There are folks without these plans ,or very small benefits.

"But even without that considered they are very likely OK with a equity portfolio greater than 50%."
On a strict 25X they are not - perhaps if you conclude that it is an acceptable risk to run out of money based on past returns then that is fine but its not likely OK.
If someone in their 50s wants to save 28x or 30x, that’s fine. It’s just very likely not necessary for someone with >50% equity portfolio given SS and other income.
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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by Tyler9000 » Wed May 13, 2020 11:22 am

Love Ben Felix. I may not agree with every conclusion, but his grasp of complex ideas and clarity of explanations are top-notch.

willthrill81 wrote:
Mon May 11, 2020 10:31 pm
There's a lot more to safe and perpetual withdrawal rates than expected returns alone.
This is a very important point I think way too many people miss. The problem with fixating on expected returns of individual assets is that it does not fully explain real-world portfolio behavior.

For example, gold doesn't grow, pays no dividend, and has a long-term expected return of zero. According to standard thinking, one would expect a portfolio with a sizable allocation to a zero-yielding asset to have a lower safe withdrawal rate than one with only stocks. Luckily, we can test that assumption. Looking at every retirement year since 1970, a portfolio of 100% US stocks had a 30-year SWR of 4.3%. A portfolio of 60% stocks and 40% gold had a SWR of 5.0%. So much for weighting the expected returns of each asset!

Just because an asset has a low expected return does not mean that it also has low volatility. The math behind the compound growth of a regularly rebalanced portfolio of multiple uncorrelated volatile assets with periodic withdrawals is a lot more complicated than a simple weighted average of expected returns is able to capture. So while expected returns is a useful concept in some situations, it's important to have a well-stocked toolbox and not always reach for the same hammer.
Last edited by Tyler9000 on Wed May 13, 2020 1:02 pm, edited 7 times in total.

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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by smitcat » Wed May 13, 2020 11:30 am

geerhardusvos wrote:
Wed May 13, 2020 10:36 am
smitcat wrote:
Wed May 13, 2020 9:28 am
geerhardusvos wrote:
Wed May 13, 2020 8:13 am
cherijoh wrote:
Wed May 13, 2020 7:52 am
geerhardusvos wrote:
Mon May 11, 2020 9:48 pm
Interesting how he even admits that 40 years still has close to 90% success rate. For most retirees, that’s pretty good. I personally am comfortable with anything above 70 to 80% on firecalc. In the video he references early retirement now analysis. With a 75/25 Portfolio, there really is excellent historical success with a 4% rule even beyond 30 years. Even without my ability to earn a little income, it is historically overwhelmingly safe. Even with current high stock valuations, a 3.5% withdrawal rate as an example, should be plenty safe for a 40 to 50 year retirement horizon when having at least 50% stocks. Things are crazy in the world right now, but I fail to see how we won’t continue to have at least reasonable market returns over long periods of time. He even admitted that the World portfolio supports a 3.5% withdrawal rate...

2.5% WR is way too conservative. You are way more likely to double your portfolio than you are to run out of your money at that rate...
I think it depends on what you have thrown into your retirement budget. If you were already using a bare-bones budget (as we sometimes see posted when someone in their early 50's is laid off unexpectedly and wants to completely retire), I personally wouldn't be satisfied with a 70% success rate. The consequences of being wrong (i.e., running out of money vs. doubling your portfolio) are not equivalent.

On the other hand, we also see some of the one more year (OMY) crowd posting about padding their budget with 40% discretionary spending and then worrying that they can't retire on a 2.5% withdrawal rate (for the padded budget). If your retirement budget is super generous, then a projected 70% success rate is fine. If your portfolio is tanking, you have plenty of discretionary spending to trim. This is also true for those close to retirement who ignore the impact of SS and extrapolate their early retirement withdrawal rate for their entire retirement.

The most important thing IMO is that if you are going to use a more aggressive withdrawal rate is to make sure that you have adequately accounted for early retiree healthcare, taxes, and irregular expenses (e.g., home repairs and replacing your car).
If someone is in their 50s and they have 25X their living expenses (even bare bones), they are financially independent, free and clear, no questions asked. Because then when retirement income like pensions or SS kicks in, they are even more golden. But even without that considered they are very likely OK with a equity portfolio greater than 50%.
Agree with Cherijoh , a clear post

"If someone is in their 50s and they have 25X their living expenses (even bare bones), they are financially independent, free and clear, no questions asked."
50's and 25X are very typically too light with a couple.

"Because then when retirement income like pensions or SS kicks in, they are even more golden"
There are folks without these plans ,or very small benefits.

"But even without that considered they are very likely OK with a equity portfolio greater than 50%."
On a strict 25X they are not - perhaps if you conclude that it is an acceptable risk to run out of money based on past returns then that is fine but its not likely OK.
If someone in their 50s wants to save 28x or 30x, that’s fine. It’s just very likely not necessary for someone with >50% equity portfolio given SS and other income.
I am not sue which one of these quotes you are comfortable with...
"If someone in their 50s wants to save 28x or 30x, that’s fine. It’s just very likely not necessary for someone with >50% equity portfolio given SS and other income."
"Because then when retirement income like pensions or SS kicks in, they are even more golden. But even without that considered they are very likely OK with a equity portfolio greater than 50%".

To add more clear data to any of these perhaps some definitions:
40-50 year need for retirement funds = retire in your 50's
4% withdrawal rate adjusted for inflation = strict 25X expenses at retirement
Without pension or SS = no other forms of income for retirement
So we are left with what does "very likely be OK mean".
IMHO very likely to be OK will be in the very high 90% range but there could be other meanings perhaps much lower than 80% - but not the way I vision that statement.

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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by hoops777 » Wed May 13, 2020 11:51 am

I do not share the overconfidence of many about the 4 pct rule in general.
3 months ago we were all living our normal lives. Look at us now. The effects of this pandemic are going to be long term. Just think how many major companies will change permanently on issues like working from home. Jobs that never come back. Many complex issues like the government printing money,etc.
All of this from some wild animal in a market in China.
What is next?
I would certainly be conservative and err on the side of caution. The world from 2000 to 2020 is not the world from 2020 to 2040.
K.I.S.S........so easy to say so difficult to do.

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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by H-Town » Wed May 13, 2020 11:58 am

Freefun wrote:
Mon May 11, 2020 5:23 pm
Another good vid from Mr. Felix

https://youtu.be/3BScK-QyWIo
He didn't touch on 50x annual expense concept that been discussed on here.

It's not that complicated for early retirement planning. In my mind, there are 2 basic steps:

1) Pick your SWR. 4% if you can't save that much. 3% if you can save.

2) The variable that retirees can control is their spending. One of the important parts of early retirement planning is to get rid of high fixed cost (mortgage, high property taxes, car loan, etc.). The remaining annual expenses should be relatively variable and it can be adjusted up or down depends on the bull or bear market.

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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by hoops777 » Wed May 13, 2020 12:03 pm

H-Town wrote:
Wed May 13, 2020 11:58 am
Freefun wrote:
Mon May 11, 2020 5:23 pm
Another good vid from Mr. Felix

https://youtu.be/3BScK-QyWIo
He didn't touch on 50x annual expense concept that been discussed on here.

It's not that complicated for early retirement planning. In my mind, there are 2 basic steps:

1) Pick your SWR. 4% if you can't save that much. 3% if you can save.

2) The variable that retirees can control is their spending. One of the important parts of early retirement planning is to get rid of high fixed cost (mortgage, high property taxes, car loan, etc.). The remaining annual expenses should be relatively variable and it can be adjusted up or down depends on the bull or bear market.
As someone who retired almost 3 years ago, I will tell you retiring without any debt is a wonderful feeling and alleviates a lot of stress.
K.I.S.S........so easy to say so difficult to do.

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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by randomguy » Wed May 13, 2020 12:34 pm

ScubaHogg wrote:
Wed May 13, 2020 9:28 am


Yes, obviously if someone has a 900,000 portfolio and spends 3000/mo it's going to last longer than the same portfolio will at 5000/mo. But that's not what we are talking about. We are talking about withdrawing 4% of a portfolio. 4% doesn't care how big the portfolio is, it's always 4%.

In your first example the person withdrawing 4% of a 1.5M portfolio is withdrawing 5000/mo. With regards to failure rate, that's mathematically the same thing as 4% of a $900,000 portfolio (ie, 3000/mo).

To put it another way, three people withdrawing 3000/mo of a 900,000 portfolio, 5000/mo of a 1.5M portfolio, and 10,000/mo of a 3M portfolio all have the exact same probability of running out of money, all else being equal.
It should be pointed out that things are rarely equal. For the early retiree, SS in 20-30 years for example helps a person with low expenses more than one with high expenses. On the other hand unexpected expenses (i.e. 5k doctors bill) matter more the tighter your budget.

Nothing is safer than spending as little as possible with the most money possible. That isn't how most people want to live though...

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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by geerhardusvos » Wed May 13, 2020 12:44 pm

smitcat wrote:
Wed May 13, 2020 11:30 am
geerhardusvos wrote:
Wed May 13, 2020 10:36 am
smitcat wrote:
Wed May 13, 2020 9:28 am
geerhardusvos wrote:
Wed May 13, 2020 8:13 am
cherijoh wrote:
Wed May 13, 2020 7:52 am


I think it depends on what you have thrown into your retirement budget. If you were already using a bare-bones budget (as we sometimes see posted when someone in their early 50's is laid off unexpectedly and wants to completely retire), I personally wouldn't be satisfied with a 70% success rate. The consequences of being wrong (i.e., running out of money vs. doubling your portfolio) are not equivalent.

On the other hand, we also see some of the one more year (OMY) crowd posting about padding their budget with 40% discretionary spending and then worrying that they can't retire on a 2.5% withdrawal rate (for the padded budget). If your retirement budget is super generous, then a projected 70% success rate is fine. If your portfolio is tanking, you have plenty of discretionary spending to trim. This is also true for those close to retirement who ignore the impact of SS and extrapolate their early retirement withdrawal rate for their entire retirement.

The most important thing IMO is that if you are going to use a more aggressive withdrawal rate is to make sure that you have adequately accounted for early retiree healthcare, taxes, and irregular expenses (e.g., home repairs and replacing your car).
If someone is in their 50s and they have 25X their living expenses (even bare bones), they are financially independent, free and clear, no questions asked. Because then when retirement income like pensions or SS kicks in, they are even more golden. But even without that considered they are very likely OK with a equity portfolio greater than 50%.
Agree with Cherijoh , a clear post

"If someone is in their 50s and they have 25X their living expenses (even bare bones), they are financially independent, free and clear, no questions asked."
50's and 25X are very typically too light with a couple.

"Because then when retirement income like pensions or SS kicks in, they are even more golden"
There are folks without these plans ,or very small benefits.

"But even without that considered they are very likely OK with a equity portfolio greater than 50%."
On a strict 25X they are not - perhaps if you conclude that it is an acceptable risk to run out of money based on past returns then that is fine but its not likely OK.
If someone in their 50s wants to save 28x or 30x, that’s fine. It’s just very likely not necessary for someone with >50% equity portfolio given SS and other income.
I am not sue which one of these quotes you are comfortable with...
"If someone in their 50s wants to save 28x or 30x, that’s fine. It’s just very likely not necessary for someone with >50% equity portfolio given SS and other income."
"Because then when retirement income like pensions or SS kicks in, they are even more golden. But even without that considered they are very likely OK with a equity portfolio greater than 50%".

To add more clear data to any of these perhaps some definitions:
40-50 year need for retirement funds = retire in your 50's
4% withdrawal rate adjusted for inflation = strict 25X expenses at retirement
Without pension or SS = no other forms of income for retirement
So we are left with what does "very likely be OK mean".
IMHO very likely to be OK will be in the very high 90% range but there could be other meanings perhaps much lower than 80% - but not the way I vision that statement.
All is consistent so far. For the 1000th+ time, the 4% wr is not a rule, it is a good guideline that has historically held up for long periods of time with an equity heavy portfolio. It’s a good place to start.

Here are 65 million scenarios considered of US stock data to put that into perspective:
Image

Stop worrying about the 4% wr. If you want / need to start with a 3.5% to avoid SORR, go for it. Probably not necessary though for a 30-40 year retirement. Someone who is retiring at 55 is more likely to die at 85 than their portfolio running out of money using a ~4% wr with 50%+ equity portfolio. I’m comfortable with anything above ~80% in the above chart for planning the future. I will be using a ~3.5% wr by retiring at 40 with an 80/20 portfolio. Notice: the 4% wr had ~90% success rate for a 60 year period using a 100% equity portfolio! - not that I recommend all stock portfolios for retirees, but let’s all be honest about the data
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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by willthrill81 » Wed May 13, 2020 12:59 pm

hoops777 wrote:
Wed May 13, 2020 11:51 am
I would certainly be conservative and err on the side of caution. The world from 2000 to 2020 is not the world from 2020 to 2040.
No one in their right mind would dispute that the markets are going to perform differently in the future than the past. Even when it 'rhymes', no two periods ever look identical.

Many believe that 4% already is a conservative enough starting point. No one I've seen on this forum believes that it's an ironclad guarantee without risk. No such withdrawal rate is, even 0%, because there is always a non-zero risk of markets going completely belly up.

Now if you mean that 4% is not conservative enough for an early retiree with a 40+ year expected retirement horizon, I agree that that may be so. Something like 3% to 3.5% might be more appropriate. But for ~65 year olds, who are not likely to survive 30 years, 4% seems conservative enough, at least to begin with.

Those who crave guarantees should consider delaying SS benefits as long as possible, using a portion of their portfolio to buy a SPIA, a TIPS/I-bonds ladder, etc.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by geerhardusvos » Wed May 13, 2020 1:06 pm

willthrill81 wrote:
Wed May 13, 2020 12:59 pm
hoops777 wrote:
Wed May 13, 2020 11:51 am
I would certainly be conservative and err on the side of caution. The world from 2000 to 2020 is not the world from 2020 to 2040.
No one in their right mind would dispute that the markets are going to perform differently in the future than the past. Even when it 'rhymes', no two periods ever look identical.

Many believe that 4% already is a conservative enough starting point. No one I've seen on this forum believes that it's an ironclad guarantee without risk. No such withdrawal rate is, even 0%, because there is always a non-zero risk of markets going completely belly up.

Now if you mean that 4% is not conservative enough for an early retiree with a 40+ year expected retirement horizon, I agree that that may be so. Something like 3% to 3.5% might be more appropriate. But for ~65 year olds, who are not likely to survive 30 years, 4% seems conservative enough, at least to begin with.

Those who crave guarantees should consider delaying SS benefits as long as possible, using a portion of their portfolio to buy a SPIA, a TIPS/I-bonds ladder, etc.
Well put, Will
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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by whodidntante » Wed May 13, 2020 1:14 pm

BW1985 wrote:
Tue May 12, 2020 11:36 am
Never heard of Ben Felix. Is he pretty well known/respected in the investment community?
Gosh, I hope not. Generally that community does not have your interests in in mind.

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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by whodidntante » Wed May 13, 2020 1:19 pm

To me it's fine to assume higher SWR rates so long as the difference consists of discretionary spending that you can dial back while still maintaining a retirement that you want to retire to. And if you oversave, you have other problems, like which business school you want named after you when you croak. Or today, if you want to watch them squirm.

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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by KEotSK66 » Wed May 13, 2020 1:33 pm

if you're drawing 3% in 3% inflation and you get 3% return doesn't your money last for a little more than 33 years ?

the chart indicates only 89% chance of success
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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by willthrill81 » Wed May 13, 2020 1:35 pm

KEotSK66 wrote:
Wed May 13, 2020 1:33 pm
if you're drawing 3% in 3% inflation and you get 3% return doesn't your money last for a little more than 33 years ?

the chart indicates only 89% chance of success
The 89% probability of success is for 0% stock allocation, not 0% portfolio returns.
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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by ValuationsMatter » Wed May 13, 2020 1:49 pm

KEotSK66 wrote:
Wed May 13, 2020 1:33 pm
if you're drawing 3% in 3% inflation and you get 3% return doesn't your money last for a little more than 33 years ?

the chart indicates only 89% chance of success
The chart assumes the WR only as a starting point and then an adjustment each year for CPI. That means that you start at 3% in Year1, but if bonds drop 50% through year 2, and CPI goes upwards 10%, You'll end up drawing 6.6% of your portfolio in year 2.

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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by BW1985 » Wed May 13, 2020 2:00 pm

whodidntante wrote:
Wed May 13, 2020 1:14 pm
BW1985 wrote:
Tue May 12, 2020 11:36 am
Never heard of Ben Felix. Is he pretty well known/respected in the investment community?
Gosh, I hope not. Generally that community does not have your interests in in mind.
I meant this community and those like it.
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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by HomerJ » Wed May 13, 2020 3:04 pm

hoops777 wrote:
Wed May 13, 2020 11:51 am
I do not share the overconfidence of many about the 4 pct rule in general.
3 months ago we were all living our normal lives. Look at us now. The effects of this pandemic are going to be long term. Just think how many major companies will change permanently on issues like working from home. Jobs that never come back. Many complex issues like the government printing money,etc.
All of this from some wild animal in a market in China.
What is next?
I would certainly be conservative and err on the side of caution. The world from 2000 to 2020 is not the world from 2020 to 2040.
We had a pandemic AND a World War in 1918 too, and 4% worked.

4% doesn't rely on the world being as wonderful as 2000-2020 (Was 2000-2020 that wonderful? We had 3 stock market crashes, a giant terrorist attack at the heart of our financial district, and a War on Terror that is still on-going).

4% has worked through some tough times.

Don't think this pandemic is the worst thing that's ever happened in the history of the U.S.
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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by HomerJ » Wed May 13, 2020 3:08 pm

By the way, since Ben Felix is talking about retiring early, like in the 40s or early 50s, I agree that 4% may be too aggressive.

My defense of 4% is for 30-year retirements.

For a 40-50 year retirement, I'd go with 3% or 3.5% at the most at the start...
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”

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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by geerhardusvos » Wed May 13, 2020 3:46 pm

HomerJ wrote:
Wed May 13, 2020 3:08 pm
By the way, since Ben Felix is talking about retiring early, like in the 40s or early 50s, I agree that 4% may be too aggressive.

My defense of 4% is for 30-year retirements.

For a 40-50 year retirement, I'd go with 3% or 3.5% at the most at the start...
It’s definitely possible that 4% could be too aggressive for timeframes longer than 30 years. I have no qualms about retiring with 25X expenses in my 40s knowing that we will surely still make some income somehow (we will have a lot of life and skills left), and we will have inheritance and Social Security to some extent down the road. Most of the failure rates have to do with the initial years of the retirement, so if someone can avoid sequence of return risk initially, they should be well fine. Plus we are equity heavy. If you are at or slightly below a 50-50 stock bond portfolio, then 30 years is probably a safe maximum for 4% WR. I’m so tired of the <3% WR talk though...

Have appreciated your thoughts on WR, HomerJ!
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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by KEotSK66 » Wed May 13, 2020 4:44 pm

ValuationsMatter wrote:
Wed May 13, 2020 1:49 pm
KEotSK66 wrote:
Wed May 13, 2020 1:33 pm
if you're drawing 3% in 3% inflation and you get 3% return doesn't your money last for a little more than 33 years ?

the chart indicates only 89% chance of success
The chart assumes the WR only as a starting point and then an adjustment each year for CPI. That means that you start at 3% in Year1, but if bonds drop 50% through year 2, and CPI goes upwards 10%, You'll end up drawing 6.6% of your portfolio in year 2.
I was figuring on something without any volatility, but a number of years of inflation > 3% would shorten the life of the portfolio

thanks
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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by willthrill81 » Wed May 13, 2020 4:49 pm

KEotSK66 wrote:
Wed May 13, 2020 4:44 pm
ValuationsMatter wrote:
Wed May 13, 2020 1:49 pm
KEotSK66 wrote:
Wed May 13, 2020 1:33 pm
if you're drawing 3% in 3% inflation and you get 3% return doesn't your money last for a little more than 33 years ?

the chart indicates only 89% chance of success
The chart assumes the WR only as a starting point and then an adjustment each year for CPI. That means that you start at 3% in Year1, but if bonds drop 50% through year 2, and CPI goes upwards 10%, You'll end up drawing 6.6% of your portfolio in year 2.
I was figuring on something without any volatility, but a number of years of inflation > 3% would shorten the life of the portfolio

thanks
Inflation, by itself, is not the problem. Nominal returns minus inflation (i.e. real returns) are what actually matter.

Again, you were confusing the stock allocation that Karsten provided in that table with the growth rate. They are entirely different.
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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by smitcat » Wed May 13, 2020 5:12 pm

geerhardusvos wrote:
Wed May 13, 2020 12:44 pm
smitcat wrote:
Wed May 13, 2020 11:30 am
geerhardusvos wrote:
Wed May 13, 2020 10:36 am
smitcat wrote:
Wed May 13, 2020 9:28 am
geerhardusvos wrote:
Wed May 13, 2020 8:13 am


If someone is in their 50s and they have 25X their living expenses (even bare bones), they are financially independent, free and clear, no questions asked. Because then when retirement income like pensions or SS kicks in, they are even more golden. But even without that considered they are very likely OK with a equity portfolio greater than 50%.
Agree with Cherijoh , a clear post

"If someone is in their 50s and they have 25X their living expenses (even bare bones), they are financially independent, free and clear, no questions asked."
50's and 25X are very typically too light with a couple.

"Because then when retirement income like pensions or SS kicks in, they are even more golden"
There are folks without these plans ,or very small benefits.

"But even without that considered they are very likely OK with a equity portfolio greater than 50%."
On a strict 25X they are not - perhaps if you conclude that it is an acceptable risk to run out of money based on past returns then that is fine but its not likely OK.
If someone in their 50s wants to save 28x or 30x, that’s fine. It’s just very likely not necessary for someone with >50% equity portfolio given SS and other income.
I am not sue which one of these quotes you are comfortable with...
"If someone in their 50s wants to save 28x or 30x, that’s fine. It’s just very likely not necessary for someone with >50% equity portfolio given SS and other income."
"Because then when retirement income like pensions or SS kicks in, they are even more golden. But even without that considered they are very likely OK with a equity portfolio greater than 50%".

To add more clear data to any of these perhaps some definitions:
40-50 year need for retirement funds = retire in your 50's
4% withdrawal rate adjusted for inflation = strict 25X expenses at retirement
Without pension or SS = no other forms of income for retirement
So we are left with what does "very likely be OK mean".
IMHO very likely to be OK will be in the very high 90% range but there could be other meanings perhaps much lower than 80% - but not the way I vision that statement.
All is consistent so far. For the 1000th+ time, the 4% wr is not a rule, it is a good guideline that has historically held up for long periods of time with an equity heavy portfolio. It’s a good place to start.

Here are 65 million scenarios considered of US stock data to put that into perspective:
Image

Stop worrying about the 4% wr. If you want / need to start with a 3.5% to avoid SORR, go for it. Probably not necessary though for a 30-40 year retirement. Someone who is retiring at 55 is more likely to die at 85 than their portfolio running out of money using a ~4% wr with 50%+ equity portfolio. I’m comfortable with anything above ~80% in the above chart for planning the future. I will be using a ~3.5% wr by retiring at 40 with an 80/20 portfolio. Notice: the 4% wr had ~90% success rate for a 60 year period using a 100% equity portfolio! - not that I recommend all stock portfolios for retirees, but let’s all be honest about the data
"I’m comfortable with anything above ~80% in the above chart for planning the future."
And there you have it - your version of vbery likely is anything that has a success rate around 80%.

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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by smitcat » Wed May 13, 2020 5:17 pm

geerhardusvos wrote:
Wed May 13, 2020 3:46 pm
HomerJ wrote:
Wed May 13, 2020 3:08 pm
By the way, since Ben Felix is talking about retiring early, like in the 40s or early 50s, I agree that 4% may be too aggressive.

My defense of 4% is for 30-year retirements.

For a 40-50 year retirement, I'd go with 3% or 3.5% at the most at the start...
It’s definitely possible that 4% could be too aggressive for timeframes longer than 30 years. I have no qualms about retiring with 25X expenses in my 40s knowing that we will surely still make some income somehow (we will have a lot of life and skills left), and we will have inheritance and Social Security to some extent down the road. Most of the failure rates have to do with the initial years of the retirement, so if someone can avoid sequence of return risk initially, they should be well fine. Plus we are equity heavy. If you are at or slightly below a 50-50 stock bond portfolio, then 30 years is probably a safe maximum for 4% WR. I’m so tired of the <3% WR talk though...

Have appreciated your thoughts on WR, HomerJ!

"It’s definitely possible that 4% could be too aggressive for timeframes longer than 30 years."
Yes - it is.
"I have no qualms about retiring with 25X expenses in my 40s"
But that is not accurate without all the backups that you also have in order to feel comfortable with plan.
"knowing that we will surely still make some income somehow (we will have a lot of life and skills left),"
This is in addition to the 25X
"and we will have inheritance"
And this is in addition to the 25X
"and Social Security to some extent down the road."
And this is also in addition to the 25X.

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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by whodidntante » Wed May 13, 2020 5:40 pm

BW1985 wrote:
Wed May 13, 2020 2:00 pm
whodidntante wrote:
Wed May 13, 2020 1:14 pm
BW1985 wrote:
Tue May 12, 2020 11:36 am
Never heard of Ben Felix. Is he pretty well known/respected in the investment community?
Gosh, I hope not. Generally that community does not have your interests in in mind.
I meant this community and those like it.
I would not call us "the investment community." I would call us a bunch of rogue misfits railing against "the investment community." Kind of like a punk rock group, but with less interesting hair. 8-)

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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by hoops777 » Wed May 13, 2020 9:30 pm

willthrill81 wrote:
Wed May 13, 2020 12:59 pm
hoops777 wrote:
Wed May 13, 2020 11:51 am
I would certainly be conservative and err on the side of caution. The world from 2000 to 2020 is not the world from 2020 to 2040.
No one in their right mind would dispute that the markets are going to perform differently in the future than the past. Even when it 'rhymes', no two periods ever look identical.

Many believe that 4% already is a conservative enough starting point. No one I've seen on this forum believes that it's an ironclad guarantee without risk. No such withdrawal rate is, even 0%, because there is always a non-zero risk of markets going completely belly up.

Now if you mean that 4% is not conservative enough for an early retiree with a 40+ year expected retirement horizon, I agree that that may be so. Something like 3% to 3.5% might be more appropriate. But for ~65 year olds, who are not likely to survive 30 years, 4% seems conservative enough, at least to begin with.

Those who crave guarantees should consider delaying SS benefits as long as possible, using a portion of their portfolio to buy a SPIA, a TIPS/I-bonds ladder, etc.
I think most people would be well advised to try to get as close to a guarantee as they can.
K.I.S.S........so easy to say so difficult to do.

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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by geerhardusvos » Wed May 13, 2020 9:51 pm

smitcat wrote:
Wed May 13, 2020 5:17 pm
geerhardusvos wrote:
Wed May 13, 2020 3:46 pm
HomerJ wrote:
Wed May 13, 2020 3:08 pm
By the way, since Ben Felix is talking about retiring early, like in the 40s or early 50s, I agree that 4% may be too aggressive.

My defense of 4% is for 30-year retirements.

For a 40-50 year retirement, I'd go with 3% or 3.5% at the most at the start...
It’s definitely possible that 4% could be too aggressive for timeframes longer than 30 years. I have no qualms about retiring with 25X expenses in my 40s knowing that we will surely still make some income somehow (we will have a lot of life and skills left), and we will have inheritance and Social Security to some extent down the road. Most of the failure rates have to do with the initial years of the retirement, so if someone can avoid sequence of return risk initially, they should be well fine. Plus we are equity heavy. If you are at or slightly below a 50-50 stock bond portfolio, then 30 years is probably a safe maximum for 4% WR. I’m so tired of the <3% WR talk though...

Have appreciated your thoughts on WR, HomerJ!

"It’s definitely possible that 4% could be too aggressive for timeframes longer than 30 years."
Yes - it is.
"I have no qualms about retiring with 25X expenses in my 40s"
But that is not accurate without all the backups that you also have in order to feel comfortable with plan.
"knowing that we will surely still make some income somehow (we will have a lot of life and skills left),"
This is in addition to the 25X
"and we will have inheritance"
And this is in addition to the 25X
"and Social Security to some extent down the road."
And this is also in addition to the 25X.
25X is in case we don’t get any of the “backups” as you say (SS isn’t a back up though, it’s a reality). We could probably retire with 22-24X and delay Social Security and be fine. Given the historical data and the information we have, I’m comfortable with 25X expenses for anyone to never work again, even an early retirement horizon... the math and historical probabilities are with us. We can’t afford not to retire early! Still bewildered why this is so controversial... Sure, we may start with a 3.5% wr but should be able to ramp that up in the good years to 4.5%. I think a variable withdraw strategy is the right approach when having a high equity portfolio
Last edited by geerhardusvos on Wed May 13, 2020 9:59 pm, edited 3 times in total.
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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by geerhardusvos » Wed May 13, 2020 9:52 pm

smitcat wrote:
Wed May 13, 2020 5:12 pm
geerhardusvos wrote:
Wed May 13, 2020 12:44 pm
smitcat wrote:
Wed May 13, 2020 11:30 am
geerhardusvos wrote:
Wed May 13, 2020 10:36 am
smitcat wrote:
Wed May 13, 2020 9:28 am

Agree with Cherijoh , a clear post

"If someone is in their 50s and they have 25X their living expenses (even bare bones), they are financially independent, free and clear, no questions asked."
50's and 25X are very typically too light with a couple.

"Because then when retirement income like pensions or SS kicks in, they are even more golden"
There are folks without these plans ,or very small benefits.

"But even without that considered they are very likely OK with a equity portfolio greater than 50%."
On a strict 25X they are not - perhaps if you conclude that it is an acceptable risk to run out of money based on past returns then that is fine but its not likely OK.
If someone in their 50s wants to save 28x or 30x, that’s fine. It’s just very likely not necessary for someone with >50% equity portfolio given SS and other income.
I am not sue which one of these quotes you are comfortable with...
"If someone in their 50s wants to save 28x or 30x, that’s fine. It’s just very likely not necessary for someone with >50% equity portfolio given SS and other income."
"Because then when retirement income like pensions or SS kicks in, they are even more golden. But even without that considered they are very likely OK with a equity portfolio greater than 50%".

To add more clear data to any of these perhaps some definitions:
40-50 year need for retirement funds = retire in your 50's
4% withdrawal rate adjusted for inflation = strict 25X expenses at retirement
Without pension or SS = no other forms of income for retirement
So we are left with what does "very likely be OK mean".
IMHO very likely to be OK will be in the very high 90% range but there could be other meanings perhaps much lower than 80% - but not the way I vision that statement.
All is consistent so far. For the 1000th+ time, the 4% wr is not a rule, it is a good guideline that has historically held up for long periods of time with an equity heavy portfolio. It’s a good place to start.

Here are 65 million scenarios considered of US stock data to put that into perspective:
Image

Stop worrying about the 4% wr. If you want / need to start with a 3.5% to avoid SORR, go for it. Probably not necessary though for a 30-40 year retirement. Someone who is retiring at 55 is more likely to die at 85 than their portfolio running out of money using a ~4% wr with 50%+ equity portfolio. I’m comfortable with anything above ~80% in the above chart for planning the future. I will be using a ~3.5% wr by retiring at 40 with an 80/20 portfolio. Notice: the 4% wr had ~90% success rate for a 60 year period using a 100% equity portfolio! - not that I recommend all stock portfolios for retirees, but let’s all be honest about the data
"I’m comfortable with anything above ~80% in the above chart for planning the future."
And there you have it - your version of vbery likely is anything that has a success rate around 80%.
Have you listened to the most recent bogleheads podcast? What makes you think the future won’t be even better than the last 100 years?
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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by hoops777 » Wed May 13, 2020 9:54 pm

HomerJ wrote:
Wed May 13, 2020 3:04 pm
hoops777 wrote:
Wed May 13, 2020 11:51 am
I do not share the overconfidence of many about the 4 pct rule in general.
3 months ago we were all living our normal lives. Look at us now. The effects of this pandemic are going to be long term. Just think how many major companies will change permanently on issues like working from home. Jobs that never come back. Many complex issues like the government printing money,etc.
All of this from some wild animal in a market in China.
What is next?
I would certainly be conservative and err on the side of caution. The world from 2000 to 2020 is not the world from 2020 to 2040.
We had a pandemic AND a World War in 1918 too, and 4% worked.

4% doesn't rely on the world being as wonderful as 2000-2020 (Was 2000-2020 that wonderful? We had 3 stock market crashes, a giant terrorist attack at the heart of our financial district, and a War on Terror that is still on-going).

4% has worked through some tough times.

Don't think this pandemic is the worst thing that's ever happened in the history of the U.S.
What you say is true of course.However,this pandemic could very well turn out to be the worst thing financially if it is not handled correctly, [political comment removed by moderator oldcomputerguy].
The problems coming up like jobs permenately disappearing due to AI,robotics,etc along with climate change and who knows what else, may be far worse for us financially as a country....and they may not. All I am saying is give yourself a good cushion. I could never feel confident having my retirement being based on the stock market.
I am very pessimistic and find it hard not to be in the current climate. Fixed income has gone to hell for who knows how long which will force people to take more risk.
K.I.S.S........so easy to say so difficult to do.

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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by willthrill81 » Wed May 13, 2020 10:45 pm

hoops777 wrote:
Wed May 13, 2020 9:30 pm
willthrill81 wrote:
Wed May 13, 2020 12:59 pm
hoops777 wrote:
Wed May 13, 2020 11:51 am
I would certainly be conservative and err on the side of caution. The world from 2000 to 2020 is not the world from 2020 to 2040.
No one in their right mind would dispute that the markets are going to perform differently in the future than the past. Even when it 'rhymes', no two periods ever look identical.

Many believe that 4% already is a conservative enough starting point. No one I've seen on this forum believes that it's an ironclad guarantee without risk. No such withdrawal rate is, even 0%, because there is always a non-zero risk of markets going completely belly up.

Now if you mean that 4% is not conservative enough for an early retiree with a 40+ year expected retirement horizon, I agree that that may be so. Something like 3% to 3.5% might be more appropriate. But for ~65 year olds, who are not likely to survive 30 years, 4% seems conservative enough, at least to begin with.

Those who crave guarantees should consider delaying SS benefits as long as possible, using a portion of their portfolio to buy a SPIA, a TIPS/I-bonds ladder, etc.
I think most people would be well advised to try to get as close to a guarantee as they can.
I don't know about 'most people'. I definitely don't think that most Bogleheads need all of their desired spending to be guaranteed. But I don't know about the general populace.*

The problem with guarantees is that they are usually very expensive. A TIPS ladder guarantees that you'll have X amount of inflation-adjusted dollars at Y date, but that currently comes at the cost of negative real returns across all maturities. A negative real return for something like stocks, for instance, over 20 years or longer is possible but historically very unlikely. It was far more likely that stocks would have grown significantly over 20 years or longer.

Our estimated SS benefits from age 70 onward should cover all of our essential spending, leaving whatever remains in our portfolio for discretionary spending, a bequest, and potential LTC needs. So we'll very likely already have more than adequate guaranteed income.

*Many who cannot afford to buy any meaningful sort of guarantee are those in lower income brackets who had difficulty saving much while working. Their silver lining, however, is that SS benefits will likely replace a substantial portion of their career income in retirement. So the general populace already has a guarantee that will cover a large portion, very possibly the majority, of their retirement spending.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by willthrill81 » Wed May 13, 2020 10:53 pm

hoops777 wrote:
Wed May 13, 2020 9:54 pm
The problems coming up like jobs permenately disappearing due to AI,robotics,etc
I was once concerned with such things, but no longer. Around 90% of the American populace worked in agriculture and closely related industries around 150 years ago. Now it's less than 5%. But all of those people aren't unemployed. We have totally new jobs that simply didn't exist before. Heck, many of today's jobs didn't exist just 20 years ago. AI, robotics, etc. hold a lot of promise because they should be able to improve our economic productivity, which is the real measure of an economy's strength.
hoops777 wrote:
Wed May 13, 2020 9:54 pm
I am very pessimistic and find it hard not to be in the current climate.
I can empathize with that. But you can't let today's issues worry you too much about the distant future. Retirees don't need all of their money on day 1 of retirement.
hoops777 wrote:
Wed May 13, 2020 9:54 pm
Fixed income has gone to hell for who knows how long which will force people to take more risk.
Fixed income has gone through a lot of rough times in the past as well, as has already been said multiples times in this thread. That's not new. If we were basing withdrawal rates on stocks and bond returns from 1982-1999, I agree that we would be looking at the future through extremely rose colored glasses. But nobody in this thread at least is remotely doing that.
Last edited by willthrill81 on Thu May 14, 2020 10:47 am, edited 1 time in total.
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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by ValuationsMatter » Wed May 13, 2020 11:37 pm

willthrill81 wrote:
Wed May 13, 2020 10:45 pm


Our estimated SS benefits from age 70 onward should cover all of our essential spending, leaving whatever remains in our portfolio for discretionary spending, a bequest, and potential LTC needs. So we'll very likely already have more than adequate guaranteed income.
I really appreciate this forum for these kinds of insights. I had always assumed I'd aim for a fixed 3% per year WR without CPI adjustments. But if I make retirement, then I can actually try to plan on depleting the portfolio because I will have the pension & SS to fall back on.

Military retirement, assuming I make it, will guarantee $50k/yr and adjust for inflation. With that kind of a backstop, it allows a significantly more aggressive withdrawal and allocation. I don't have to worry about really going broke.

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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by ValuationsMatter » Wed May 13, 2020 11:46 pm

willthrill81 wrote:
Wed May 13, 2020 10:53 pm
hoops777 wrote:
Wed May 13, 2020 9:54 pm
The problems coming up like jobs permenately disappearing due to AI,robotics,etc
I was once concerned with such things, but no longer. Around 90% of the American populace worked in agriculture and closely related industries around 150 years ago. Now it's less than 5%. But all of those people aren't employed. We have totally new jobs that simply didn't exist before. Heck, many of today's jobs didn't exist just 20 years ago. AI, robotics, etc. hold a lot of promise because they should be able to improve our economic productivity, which is the real measure of an economy's strength.
AI will replace all human jobs. The arts and sexual attraction will be the final domain relegated to humans. The only question is how long it will be before general AI and the singularity. It sounds like sci fi, but it's inevitable. As the Borg say, "Resistance is futile."

I'm only 1/2 teasing. I do believe that automation will replace many jobs. But General AI will replace humans.

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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by Stef » Thu May 14, 2020 1:12 am

Tyler9000 wrote:
Wed May 13, 2020 11:22 am
For example, gold doesn't grow, pays no dividend, and has a long-term expected return of zero. According to standard thinking, one would expect a portfolio with a sizable allocation to a zero-yielding asset to have a lower safe withdrawal rate than one with only stocks. Luckily, we can test that assumption. Looking at every retirement year since 1970, a portfolio of 100% US stocks had a 30-year SWR of 4.3%. A portfolio of 60% stocks and 40% gold had a SWR of 5.0%. So much for weighting the expected returns of each asset!
Bad example as gold wasn't traded in 1970. You have to start at 1974-1976 to get the effective historical returns of gold.

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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by smitcat » Thu May 14, 2020 7:32 am

geerhardusvos wrote:
Wed May 13, 2020 9:51 pm
smitcat wrote:
Wed May 13, 2020 5:17 pm
geerhardusvos wrote:
Wed May 13, 2020 3:46 pm
HomerJ wrote:
Wed May 13, 2020 3:08 pm
By the way, since Ben Felix is talking about retiring early, like in the 40s or early 50s, I agree that 4% may be too aggressive.

My defense of 4% is for 30-year retirements.

For a 40-50 year retirement, I'd go with 3% or 3.5% at the most at the start...
It’s definitely possible that 4% could be too aggressive for timeframes longer than 30 years. I have no qualms about retiring with 25X expenses in my 40s knowing that we will surely still make some income somehow (we will have a lot of life and skills left), and we will have inheritance and Social Security to some extent down the road. Most of the failure rates have to do with the initial years of the retirement, so if someone can avoid sequence of return risk initially, they should be well fine. Plus we are equity heavy. If you are at or slightly below a 50-50 stock bond portfolio, then 30 years is probably a safe maximum for 4% WR. I’m so tired of the <3% WR talk though...

Have appreciated your thoughts on WR, HomerJ!

"It’s definitely possible that 4% could be too aggressive for timeframes longer than 30 years."
Yes - it is.
"I have no qualms about retiring with 25X expenses in my 40s"
But that is not accurate without all the backups that you also have in order to feel comfortable with plan.
"knowing that we will surely still make some income somehow (we will have a lot of life and skills left),"
This is in addition to the 25X
"and we will have inheritance"
And this is in addition to the 25X
"and Social Security to some extent down the road."
And this is also in addition to the 25X.
25X is in case we don’t get any of the “backups” as you say (SS isn’t a back up though, it’s a reality). We could probably retire with 22-24X and delay Social Security and be fine. Given the historical data and the information we have, I’m comfortable with 25X expenses for anyone to never work again, even an early retirement horizon... the math and historical probabilities are with us. We can’t afford not to retire early! Still bewildered why this is so controversial... Sure, we may start with a 3.5% wr but should be able to ramp that up in the good years to 4.5%. I think a variable withdraw strategy is the right approach when having a high equity portfolio
"Still bewildered why this is so controversial"
Simple - because other folks reading these posts might actually believe them. It is important that someone reading these that do not have a method to know about the 'backups' realizes that it could make for huge problems down the road. Your application sounds like it will work in your situation but it also relies on items not originally posted like these:
- "knowing that we will surely still make some income somehow (we will have a lot of life and skills left),"
- "and we will have inheritance"
- "and Social Security to some extent down the road."

In the original post to readers the backups were specifically all stripped out and made to seem like the 25X would be all that is needed for success.
"If someone is in their 50s and they have 25X their living expenses (even bare bones), they are financially independent, free and clear, no questions asked. Because then when retirement income like pensions or SS kicks in, they are even more golden. But even without that considered they are very likely OK with a equity portfolio greater than 50%."

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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by aristotelian » Thu May 14, 2020 7:44 am

Triple digit golfer wrote:
Mon May 11, 2020 10:05 pm

But what about bond yields being so low?
The flipside is low inflation. 0-2% inflation should be great for retirees. Plus there is some thinking that the Fed is reducing the risk of stocks. The negative side of that is lower expected return but the positive is lower risk. Certainly, I would not retire the day my portfolio hits 25X expenses, but I think I will be OK pulling the trigger in the 27-28X range. If a poor sequence of returns hits, I can always make up the difference through a combination of cutting expense or working part time.

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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by geerhardusvos » Thu May 14, 2020 9:28 am

smitcat wrote:
Thu May 14, 2020 7:32 am
geerhardusvos wrote:
Wed May 13, 2020 9:51 pm
smitcat wrote:
Wed May 13, 2020 5:17 pm
geerhardusvos wrote:
Wed May 13, 2020 3:46 pm
HomerJ wrote:
Wed May 13, 2020 3:08 pm
By the way, since Ben Felix is talking about retiring early, like in the 40s or early 50s, I agree that 4% may be too aggressive.

My defense of 4% is for 30-year retirements.

For a 40-50 year retirement, I'd go with 3% or 3.5% at the most at the start...
It’s definitely possible that 4% could be too aggressive for timeframes longer than 30 years. I have no qualms about retiring with 25X expenses in my 40s knowing that we will surely still make some income somehow (we will have a lot of life and skills left), and we will have inheritance and Social Security to some extent down the road. Most of the failure rates have to do with the initial years of the retirement, so if someone can avoid sequence of return risk initially, they should be well fine. Plus we are equity heavy. If you are at or slightly below a 50-50 stock bond portfolio, then 30 years is probably a safe maximum for 4% WR. I’m so tired of the <3% WR talk though...

Have appreciated your thoughts on WR, HomerJ!

"It’s definitely possible that 4% could be too aggressive for timeframes longer than 30 years."
Yes - it is.
"I have no qualms about retiring with 25X expenses in my 40s"
But that is not accurate without all the backups that you also have in order to feel comfortable with plan.
"knowing that we will surely still make some income somehow (we will have a lot of life and skills left),"
This is in addition to the 25X
"and we will have inheritance"
And this is in addition to the 25X
"and Social Security to some extent down the road."
And this is also in addition to the 25X.
25X is in case we don’t get any of the “backups” as you say (SS isn’t a back up though, it’s a reality). We could probably retire with 22-24X and delay Social Security and be fine. Given the historical data and the information we have, I’m comfortable with 25X expenses for anyone to never work again, even an early retirement horizon... the math and historical probabilities are with us. We can’t afford not to retire early! Still bewildered why this is so controversial... Sure, we may start with a 3.5% wr but should be able to ramp that up in the good years to 4.5%. I think a variable withdraw strategy is the right approach when having a high equity portfolio
"Still bewildered why this is so controversial"
Simple - because other folks reading these posts might actually believe them. It is important that someone reading these that do not have a method to know about the 'backups' realizes that it could make for huge problems down the road. Your application sounds like it will work in your situation but it also relies on items not originally posted like these:
- "knowing that we will surely still make some income somehow (we will have a lot of life and skills left),"
- "and we will have inheritance"
- "and Social Security to some extent down the road."

In the original post to readers the backups were specifically all stripped out and made to seem like the 25X would be all that is needed for success.
"If someone is in their 50s and they have 25X their living expenses (even bare bones), they are financially independent, free and clear, no questions asked. Because then when retirement income like pensions or SS kicks in, they are even more golden. But even without that considered they are very likely OK with a equity portfolio greater than 50%."
Please stop worrying about a 4% wr.

Someone retiring in their 50s, let’s say 55, has about a 30 year retirement. The 4% wr has a 99% success historically to hold up with a 75-25 portfolio over 30 years. So someone in their 50s who has 25X their expensive is by definition financially independent. Period. No “backups”. How much more safe from a planning perspective can you get? Any withdrawal rate lower than 4% for 30 year time horizon is just ridiculous, especially if the investor understands their investments. If the investor just gets $200 a month in Social Security starting at age 70, the 4% withdrawal rate would have 100% historical success. Please look at the data.

4% wr is a good guideline for bogleheads and helpful for people to have confidence in, especially for the 30 year time horizon. And it is very likely to last significantly longer especially with an investor who retires with a mid-high equity portfolio and avoids SORR. Variable withdrawal rate strategies are very helpful and logical for this reason.

Just look at the data again, seems you may have missed it:

65 million scenarios of all available US data
Image
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ValuationsMatter
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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by ValuationsMatter » Thu May 14, 2020 10:20 am

Just remember that models are only as good as their assumptions. I do data analysis and make models for a living. In modeling, many assumptions are optimistic. Will you have large unforeseen health/legal/disaster expenses? Will markets really behave as they have? Can you really gut your way through a depression level event at 75/25? These are all questions that the model in question doesn't address, but effectively treat the assumption as a given. No, you will not have a year in which expenses must exceed the formula. No, you will not change your asset allocation part way through your retirement after a market down turn scares you. No, markets will not act differently in the future than they have in the past.

It's hard not to choose to be even more conservative than a model's results when you're betting your well being on it. Perhaps I will feel differently in the future, but if I have nothing else to fall back on, I rather like the idea of portfolio growth, even in retirement. I know I can't take it with me, but consider it a payment for my peace of mind.

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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by smitcat » Thu May 14, 2020 10:40 am

geerhardusvos wrote:
Thu May 14, 2020 9:28 am
smitcat wrote:
Thu May 14, 2020 7:32 am
geerhardusvos wrote:
Wed May 13, 2020 9:51 pm
smitcat wrote:
Wed May 13, 2020 5:17 pm
geerhardusvos wrote:
Wed May 13, 2020 3:46 pm


It’s definitely possible that 4% could be too aggressive for timeframes longer than 30 years. I have no qualms about retiring with 25X expenses in my 40s knowing that we will surely still make some income somehow (we will have a lot of life and skills left), and we will have inheritance and Social Security to some extent down the road. Most of the failure rates have to do with the initial years of the retirement, so if someone can avoid sequence of return risk initially, they should be well fine. Plus we are equity heavy. If you are at or slightly below a 50-50 stock bond portfolio, then 30 years is probably a safe maximum for 4% WR. I’m so tired of the <3% WR talk though...

Have appreciated your thoughts on WR, HomerJ!

"It’s definitely possible that 4% could be too aggressive for timeframes longer than 30 years."
Yes - it is.
"I have no qualms about retiring with 25X expenses in my 40s"
But that is not accurate without all the backups that you also have in order to feel comfortable with plan.
"knowing that we will surely still make some income somehow (we will have a lot of life and skills left),"
This is in addition to the 25X
"and we will have inheritance"
And this is in addition to the 25X
"and Social Security to some extent down the road."
And this is also in addition to the 25X.
25X is in case we don’t get any of the “backups” as you say (SS isn’t a back up though, it’s a reality). We could probably retire with 22-24X and delay Social Security and be fine. Given the historical data and the information we have, I’m comfortable with 25X expenses for anyone to never work again, even an early retirement horizon... the math and historical probabilities are with us. We can’t afford not to retire early! Still bewildered why this is so controversial... Sure, we may start with a 3.5% wr but should be able to ramp that up in the good years to 4.5%. I think a variable withdraw strategy is the right approach when having a high equity portfolio
"Still bewildered why this is so controversial"
Simple - because other folks reading these posts might actually believe them. It is important that someone reading these that do not have a method to know about the 'backups' realizes that it could make for huge problems down the road. Your application sounds like it will work in your situation but it also relies on items not originally posted like these:
- "knowing that we will surely still make some income somehow (we will have a lot of life and skills left),"
- "and we will have inheritance"
- "and Social Security to some extent down the road."

In the original post to readers the backups were specifically all stripped out and made to seem like the 25X would be all that is needed for success.
"If someone is in their 50s and they have 25X their living expenses (even bare bones), they are financially independent, free and clear, no questions asked. Because then when retirement income like pensions or SS kicks in, they are even more golden. But even without that considered they are very likely OK with a equity portfolio greater than 50%."
Please stop worrying about a 4% wr.

Someone retiring in their 50s, let’s say 55, has about a 30 year retirement. The 4% wr has a 99% success historically to hold up with a 75-25 portfolio over 30 years. So someone in their 50s who has 25X their expensive is by definition financially independent. Period. No “backups”. How much more safe from a planning perspective can you get? Any withdrawal rate lower than 4% for 30 year time horizon is just ridiculous, especially if the investor understands their investments. If the investor just gets $200 a month in Social Security starting at age 70, the 4% withdrawal rate would have 100% historical success. Please look at the data.

4% wr is a good guideline for bogleheads and helpful for people to have confidence in, especially for the 30 year time horizon. And it is very likely to last significantly longer especially with an investor who retires with a mid-high equity portfolio and avoids SORR. Variable withdrawal rate strategies are very helpful and logical for this reason.

Just look at the data again, seems you may have missed it:

65 million scenarios of all available US data
Image
You have moved the goalposts from your original post:
- 50's leaves 40 or 50 year retirement for many couples
- you said no other income
- at 50% equity portfolio
- not a variable rate strategy, needed all funds
On your chart that leaves us with 86% success rate for 40 yrs and a 74% success rate for 50 years.

So if you now want to say 30 year retirement, and 75% portfolio in equities, and you will be counting on some SS, and a variable rate strategy then you have a winner.

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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by smitcat » Thu May 14, 2020 10:45 am

willthrill81 wrote:
Wed May 13, 2020 10:53 pm
hoops777 wrote:
Wed May 13, 2020 9:54 pm
The problems coming up like jobs permenately disappearing due to AI,robotics,etc
I was once concerned with such things, but no longer. Around 90% of the American populace worked in agriculture and closely related industries around 150 years ago. Now it's less than 5%. But all of those people aren't employed. We have totally new jobs that simply didn't exist before. Heck, many of today's jobs didn't exist just 20 years ago. AI, robotics, etc. hold a lot of promise because they should be able to improve our economic productivity, which is the real measure of an economy's strength.
hoops777 wrote:
Wed May 13, 2020 9:54 pm
I am very pessimistic and find it hard not to be in the current climate.
I can empathize with that. But you can't let today's issues worry you too much about the distant future. Retirees don't need all of their money on day 1 of retirement.
hoops777 wrote:
Wed May 13, 2020 9:54 pm
Fixed income has gone to hell for who knows how long which will force people to take more risk.
Fixed income has gone through a lot of rough times in the past as well, as has already been said multiples times in this thread. That's not new. If we were basing withdrawal rates on stocks and bond returns from 1982-1999, I agree that we would be looking at the future through extremely rose colored glasses. But nobody in this thread at least is remotely doing that.
"But all of those people aren't employed. We have totally new jobs that simply didn't exist before. Heck, many of today's jobs didn't exist just 20 years ago."
I agree - the problem is that many people will not adapt to new jobs/skills/careers and that will leave them out of luck.
Not a day goes by that I do not see great resistance to new jobs/skills/careers that could pay more, yield higher satisfaction, and lend more future security right on this Bogle website.

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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by willthrill81 » Thu May 14, 2020 10:47 am

ValuationsMatter wrote:
Thu May 14, 2020 10:20 am
Perhaps I will feel differently in the future, but if I have nothing else to fall back on, I rather like the idea of portfolio growth, even in retirement.
How many here literally have nothing to fall back on? Virtually everyone here will get something from SS or a pension.

45% of Baby Boomers have nothing saved for retirement. Nothing. Granted, a number of them have pensions, and many of them had low incomes while working and so have a substantial portion of that income replaced with SS benefits (or at least they could have if they at least waited until full retirement age to start collecting). Yet we don't hear stories about millions of Baby Boomers living in cardboard boxes.

I'm always amazed at the number of posters who appear to believe that their literal survival is dependent on them playing limbo with their withdrawal rate from day 1 of their retirement.

While I'm not a fan of Taylor Larimore's 'strategy' to just fly by the seat of your pants when it comes to making withdrawals (I'm a huge fan of withdrawal policy statements and don't believe that nearly enough here have them in place), I think it underscores the reality that no sane person will blindly spend their portfolio down to zero.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by ValuationsMatter » Thu May 14, 2020 10:49 am

willthrill81 wrote:
Thu May 14, 2020 10:47 am
ValuationsMatter wrote:
Thu May 14, 2020 10:20 am
Perhaps I will feel differently in the future, but if I have nothing else to fall back on, I rather like the idea of portfolio growth, even in retirement.
How many here literally have nothing to fall back on?
Early retirees. Pertinent to me, because I might be one. A decision for a later time.
Last edited by ValuationsMatter on Thu May 14, 2020 10:50 am, edited 1 time in total.

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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by willthrill81 » Thu May 14, 2020 10:50 am

smitcat wrote:
Thu May 14, 2020 10:45 am
"But all of those people aren't employed. We have totally new jobs that simply didn't exist before. Heck, many of today's jobs didn't exist just 20 years ago."
I agree - the problem is that many people will not adapt to new jobs/skills/careers and that will leave them out of luck.
Not a day goes by that I do not see great resistance to new jobs/skills/careers that could pay more, yield higher satisfaction, and lend more future security right on this Bogle website.
Yes, workers must be willing to adapt. Like it or not, the job market is constantly shifting and has been for the last ~140 years. Those who do not adapt to it will be left behind. That's just the way it is.

The media doesn't help matters when they focus on industries that are failing and people losing those jobs when other industries are thriving and begging for people to work in them.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by willthrill81 » Thu May 14, 2020 10:54 am

ValuationsMatter wrote:
Thu May 14, 2020 10:49 am
willthrill81 wrote:
Thu May 14, 2020 10:47 am
ValuationsMatter wrote:
Thu May 14, 2020 10:20 am
Perhaps I will feel differently in the future, but if I have nothing else to fall back on, I rather like the idea of portfolio growth, even in retirement.
How many here literally have nothing to fall back on?
Early retirees.
Early retirees have a huge resource to fall back on: their own human capital. Now someone who has been out of their prior career for years might not be able to reenter it easily or even at all, but they can still do something. Before the current chaos began, an able bodied person with no qualifications or meaningful skills in our area could easily get a job paying $30k annually. That income could take a big load off of their withdrawals while their portfolio recovers. If such an income isn't enough to even do that, then the early retiree has a bona fide first world problem on their hands and needs to find ways to live comfortably on five figures like most Americans do.

I get it. You're pessimistic about the future and want a cushion on top of a cushion. But most people aren't willing to do what's necessary to achieve that (i.e. spend a lot of additional time of their finite lifespan). I certainly am not.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by geerhardusvos » Thu May 14, 2020 11:04 am

smitcat wrote:
Thu May 14, 2020 10:40 am
geerhardusvos wrote:
Thu May 14, 2020 9:28 am
smitcat wrote:
Thu May 14, 2020 7:32 am
geerhardusvos wrote:
Wed May 13, 2020 9:51 pm
smitcat wrote:
Wed May 13, 2020 5:17 pm



"It’s definitely possible that 4% could be too aggressive for timeframes longer than 30 years."
Yes - it is.
"I have no qualms about retiring with 25X expenses in my 40s"
But that is not accurate without all the backups that you also have in order to feel comfortable with plan.
"knowing that we will surely still make some income somehow (we will have a lot of life and skills left),"
This is in addition to the 25X
"and we will have inheritance"
And this is in addition to the 25X
"and Social Security to some extent down the road."
And this is also in addition to the 25X.
25X is in case we don’t get any of the “backups” as you say (SS isn’t a back up though, it’s a reality). We could probably retire with 22-24X and delay Social Security and be fine. Given the historical data and the information we have, I’m comfortable with 25X expenses for anyone to never work again, even an early retirement horizon... the math and historical probabilities are with us. We can’t afford not to retire early! Still bewildered why this is so controversial... Sure, we may start with a 3.5% wr but should be able to ramp that up in the good years to 4.5%. I think a variable withdraw strategy is the right approach when having a high equity portfolio
"Still bewildered why this is so controversial"
Simple - because other folks reading these posts might actually believe them. It is important that someone reading these that do not have a method to know about the 'backups' realizes that it could make for huge problems down the road. Your application sounds like it will work in your situation but it also relies on items not originally posted like these:
- "knowing that we will surely still make some income somehow (we will have a lot of life and skills left),"
- "and we will have inheritance"
- "and Social Security to some extent down the road."

In the original post to readers the backups were specifically all stripped out and made to seem like the 25X would be all that is needed for success.
"If someone is in their 50s and they have 25X their living expenses (even bare bones), they are financially independent, free and clear, no questions asked. Because then when retirement income like pensions or SS kicks in, they are even more golden. But even without that considered they are very likely OK with a equity portfolio greater than 50%."
Please stop worrying about a 4% wr.

Someone retiring in their 50s, let’s say 55, has about a 30 year retirement. The 4% wr has a 99% success historically to hold up with a 75-25 portfolio over 30 years. So someone in their 50s who has 25X their expensive is by definition financially independent. Period. No “backups”. How much more safe from a planning perspective can you get? Any withdrawal rate lower than 4% for 30 year time horizon is just ridiculous, especially if the investor understands their investments. If the investor just gets $200 a month in Social Security starting at age 70, the 4% withdrawal rate would have 100% historical success. Please look at the data.

4% wr is a good guideline for bogleheads and helpful for people to have confidence in, especially for the 30 year time horizon. And it is very likely to last significantly longer especially with an investor who retires with a mid-high equity portfolio and avoids SORR. Variable withdrawal rate strategies are very helpful and logical for this reason.

Just look at the data again, seems you may have missed it:

65 million scenarios of all available US data
Image
You have moved the goalposts from your original post:
- 50's leaves 40 or 50 year retirement for many couples
- you said no other income
- at 50% equity portfolio
- not a variable rate strategy, needed all funds
On your chart that leaves us with 86% success rate for 40 yrs and a 74% success rate for 50 years.

So if you now want to say 30 year retirement, and 75% portfolio in equities, and you will be counting on some SS, and a variable rate strategy then you have a winner.
You’re saying many couples live to be in their 90s and 100s? Who’s the one moving the goalposts and not understanding the data? Avg age of death in the US is 78. https://www.macrotrends.net/countries/U ... expectancy

When will the nitpicking stop? All has been consistent with the statements and data coming from my end. Stop worrying about 4% wr. Most of us will have SS or other income in retirement so that’s not novel or backup, it’s a reality for many investors, and therefore makes 25x annual expenses is a great planning guideline to start with.

We plan to live until 92 (although I have health issues so that is improbable and only God knows, but my wife could live longer so it evens out), and that makes my retirement at age 40 a ~50 year retirement to support. 25x-28x is comfortable for us for saying goodbye to the megacorp and living as financially independent starting on my 40th bday (happens to be after bonus season), whatever we choose to do from there is up to us and we‘ll be fine since we have a strategy to avoid SORR and ability to variably withdraw. If I don’t travel and go out to eat for a couple years when I initially retire, it literally adds 2+ years to my retirement income...
Last edited by geerhardusvos on Thu May 14, 2020 11:32 am, edited 1 time in total.
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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by ValuationsMatter » Thu May 14, 2020 11:27 am

willthrill81 wrote:
Thu May 14, 2020 10:54 am
ValuationsMatter wrote:
Thu May 14, 2020 10:49 am
willthrill81 wrote:
Thu May 14, 2020 10:47 am
ValuationsMatter wrote:
Thu May 14, 2020 10:20 am
Perhaps I will feel differently in the future, but if I have nothing else to fall back on, I rather like the idea of portfolio growth, even in retirement.
How many here literally have nothing to fall back on?
Early retirees.
Early retirees have a huge resource to fall back on: their own human capital. Now someone who has been out of their prior career for years might not be able to reenter it easily or even at all, but they can still do something. Before the current chaos began, an able bodied person with no qualifications or meaningful skills in our area could easily get a job paying $30k annually. That income could take a big load off of their withdrawals while their portfolio recovers. If such an income isn't enough to even do that, then the early retiree has a bona fide first world problem on their hands and needs to find ways to live comfortably on five figures like most Americans do.

I get it. You're pessimistic about the future and want a cushion on top of a cushion. But most people aren't willing to do what's necessary to achieve that (i.e. spend a lot of additional time of their finite lifespan). I certainly am not.
Sure, I grant the general point you're making. I suppose from your perspective, if you're alive and not in imminent threat to your life, then you will have something to fall back on, but that's a matter of semantics. At the end of the financial system, after the zombpocalypse, the survivors will always have their human capital to fall back on. It is not meaningful to an approach that is focused on the level of security I would desire from a planning perspective if I want to retire without going back to work, implicit in the word 'retire' to me, if I don't have another passive source of income. If, passively, I am wholly dependent on my portfolio starting in my early 40's, then some portfolio growth would provide cushion to deal with the unexpected/circumstances necessarily absent from a simplified model. I wouldn't say I'm pessimistic, but I am conservative, and I believe in redundancy to the extent that I would not feel comfortable without it.

I also think your perspective only applies to able-bodied retirees who run out of money. In these sorts of plans, you're most likely to run out of money near the end of your life when you are least able-bodied.
Last edited by ValuationsMatter on Thu May 14, 2020 11:43 am, edited 1 time in total.

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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by Stef » Thu May 14, 2020 11:28 am

Even if you spend down all the money before you die, at least you lived a good life.

The state won't let you starve to death. We are not in Venezuela.

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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by willthrill81 » Thu May 14, 2020 11:31 am

ValuationsMatter wrote:
Thu May 14, 2020 11:27 am
willthrill81 wrote:
Thu May 14, 2020 10:54 am
ValuationsMatter wrote:
Thu May 14, 2020 10:49 am
willthrill81 wrote:
Thu May 14, 2020 10:47 am
ValuationsMatter wrote:
Thu May 14, 2020 10:20 am
Perhaps I will feel differently in the future, but if I have nothing else to fall back on, I rather like the idea of portfolio growth, even in retirement.
How many here literally have nothing to fall back on?
Early retirees.
Early retirees have a huge resource to fall back on: their own human capital. Now someone who has been out of their prior career for years might not be able to reenter it easily or even at all, but they can still do something. Before the current chaos began, an able bodied person with no qualifications or meaningful skills in our area could easily get a job paying $30k annually. That income could take a big load off of their withdrawals while their portfolio recovers. If such an income isn't enough to even do that, then the early retiree has a bona fide first world problem on their hands and needs to find ways to live comfortably on five figures like most Americans do.

I get it. You're pessimistic about the future and want a cushion on top of a cushion. But most people aren't willing to do what's necessary to achieve that (i.e. spend a lot of additional time of their finite lifespan). I certainly am not.
Sure, I grant all of those things. I wouldn't say I'm pessimistic, but I am conservative, and I believe in redundancy. I suppose from your perspective, if you're alive and not in imminent threat to your life, then you will have something to fall back on, but that's a matter of semantics. It is not meaningful to an approach that is focused on the level of security I would desire under retirement circumstances if I don't have another passive source of income.

I also think your perspective only applies to able-bodied retirees who run out of money. In these sorts of plans, you're most likely to run out of money near the end of your life when you are least able-bodied.
If you're elderly and not able-bodied, you have SS benefits (or a pension) to fall back on.

I've said for years that those who crave guarantees and security and are considering a starting withdrawal rate under 3% would probably be well served by using a portion of their portfolio to buy a single premium immediate annuity. A TIPS / I-bonds ladder could be another good choice.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by hoops777 » Thu May 14, 2020 11:35 am

willthrill81 wrote:
Thu May 14, 2020 10:50 am
smitcat wrote:
Thu May 14, 2020 10:45 am
"But all of those people aren't employed. We have totally new jobs that simply didn't exist before. Heck, many of today's jobs didn't exist just 20 years ago."
I agree - the problem is that many people will not adapt to new jobs/skills/careers and that will leave them out of luck.
Not a day goes by that I do not see great resistance to new jobs/skills/careers that could pay more, yield higher satisfaction, and lend more future security right on this Bogle website.
Yes, workers must be willing to adapt. Like it or not, the job market is constantly shifting and has been for the last ~140 years. Those who do not adapt to it will be left behind. That's just the way it is.

The media doesn't help matters when they focus on industries that are failing and people losing those jobs when other industries are thriving and begging for people to work in them.
Sounds great....adapt or be left behind.
A lot of older blue collar workers, simply have no option to start a new career. Yea you can get a job at Walmart and try to survive on 1/4 of what you were earning.
I listened to a podcast on Joe Rogan about 6 months ago with Andrew Yang,who was pushing universal income because of the gradual elimination of jobs.
This is a real and very serious problem and no,there are not a ton of thriving industries looking to hire 50 year old truck drivers and the like with good paying jobs.
K.I.S.S........so easy to say so difficult to do.

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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by geerhardusvos » Thu May 14, 2020 11:35 am

Stef wrote:
Thu May 14, 2020 11:28 am
Even if you spend down all the money before you die, at least you lived a good life.

The state won't let you starve to death. We are not in Venezuela.
Right, and my church won’t let our members starve and we’ve given them tens of thousands over the years. We (the church) consistently do the house maintenance and pay the utility bills for our elderly saints, most of whom are widows as it happens
Last edited by geerhardusvos on Thu May 14, 2020 11:40 am, edited 1 time in total.
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Re: Ben Felix - How to Retire Early (The 4% Rule)

Post by willthrill81 » Thu May 14, 2020 11:39 am

hoops777 wrote:
Thu May 14, 2020 11:35 am
willthrill81 wrote:
Thu May 14, 2020 10:50 am
smitcat wrote:
Thu May 14, 2020 10:45 am
"But all of those people aren't employed. We have totally new jobs that simply didn't exist before. Heck, many of today's jobs didn't exist just 20 years ago."
I agree - the problem is that many people will not adapt to new jobs/skills/careers and that will leave them out of luck.
Not a day goes by that I do not see great resistance to new jobs/skills/careers that could pay more, yield higher satisfaction, and lend more future security right on this Bogle website.
Yes, workers must be willing to adapt. Like it or not, the job market is constantly shifting and has been for the last ~140 years. Those who do not adapt to it will be left behind. That's just the way it is.

The media doesn't help matters when they focus on industries that are failing and people losing those jobs when other industries are thriving and begging for people to work in them.
Sounds great....adapt or be left behind.
A lot of older blue collar workers, simply have no option to start a new career. Yea you can get a job at Walmart and try to survive on 1/4 of what you were earning.
I listened to a podcast on Joe Rogan about 6 months ago with Andrew Yang,who was pushing universal income because of the gradual elimination of jobs.
This is a real and very serious problem and no,there are not a ton of thriving industries looking to hire 50 year old truck drivers and the like with good paying jobs.
Your statement about working at Walmart for one-fourth of a blue collar worker's prior pay is obviously at least somewhat hyperbolic. Most blue collar workers aren't making $80k/annually. Around here, almost no one but teenagers and the very bottom tier of more mature workers earn only minimum wage, and that's $12/hr. or $24k/year for a full-time job.

Issues related to universal basic income are completely off topic, so I won't even touch that.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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