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Discuss Latest POF Blog Post: The 4% Rule May Not Work Work for Early Retirement

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  • Discuss Latest POF Blog Post: The 4% Rule May Not Work Work for Early Retirement

    This Friday Feature gets deep into the weeds discussing the 4% Rule (of thumb) as a safe withdrawal rate that ... Read more

    Click here to view the article!
    Helping those who wear the white coat get a fair shake on Wall Street since 2011

  • #2
    While I agree with this post, I observe variable withdrawal table implies an artificial precision based on assumptions. Much simpler to understand that early retirees should plan on something like 3.5%; traditional retirees ok at more like 4%. Either way, we should all plan to adjust as we go along and the market behaves unpredictably.

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    • #3
      These are just different ways of saying the same thing. I'm pretty sure it was Mr money mustache who had a nice post about flexibility and retirement spending. But the gist of it was we all inherently are going to plan to spend more than we actually do and it will be places that we can cut back if times are tough and there are streams of income that can be tapped if necessary. If something's going to go horribly wrong with an early retirement it'll most likely happen in the early years when you are most able to go back to work if necessary. By the time you work 10 or 20 years into an early retirement and if the market behaves as you expected you will likely have more money than you started with.

      Basically early retirement people are planners. We overestimate the bad and underestimate the potential good. We are all going to die with lots and lots of money.

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      • #4
        Low fixed expenses and high variable expenses that can be cut out at a moments notice fix many of the 4% rule problems.

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        • #5
          No pass on the math. Good luck with the assumptions!
          "To paraphrase, Bengen’s study was relevant to 30 years in retirement. Not 35 years. Not 40 years and certainly not 50 years like some FIRE-seekers may need if they plan to retire at age 40 and live to age 90 (or beyond).
          This is simply a huge reminder that your time horizon is a critical factor when it comes to retirement planning."

          Early retirement ? What's with that? Click bait?
          Serious question, how many years do you plan on being retired? Life expectancy tables are nice and you get different answers on the average depending on how old you are now. Moving target that likely will be wrong for and individual.

          https://coolconversion.com/heath/lif...age_60_in-US_w

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          • #6
            FIPhysician has a recent post related to this. may need to withdraw more initially before dropping off when social security kicks in.
            “. . . And the LORD spake, saying “First shalt thou take out the Holy 401k. Then shalt thou save to 20%, no more, no less. 20% shall be the number thou shalt save, and the number of the saving shall be 20%. 25% shalt thou not save, neither save thou 15%, excepting that thou then proceed to 20%. 30% is right out . . .””

            Comment


            • #7
              Originally posted by Lordosis View Post
              These are just different ways of saying the same thing. I'm pretty sure it was Mr money mustache who had a nice post about flexibility and retirement spending. But the gist of it was we all inherently are going to plan to spend more than we actually do and it will be places that we can cut back if times are tough and there are streams of income that can be tapped if necessary. If something's going to go horribly wrong with an early retirement it'll most likely happen in the early years when you are most able to go back to work if necessary. By the time you work 10 or 20 years into an early retirement and if the market behaves as you expected you will likely have more money than you started with.

              Basically early retirement people are planners. We overestimate the bad and underestimate the potential good. We are all going to die with lots and lots of money.
              Awesomeness! Yes. This.

              Comment


              • #8
                Originally posted by Tim View Post
                No pass on the math. Good luck with the assumptions!
                "To paraphrase, Bengen’s study was relevant to 30 years in retirement. Not 35 years. Not 40 years and certainly not 50 years like some FIRE-seekers may need if they plan to retire at age 40 and live to age 90 (or beyond).
                This is simply a huge reminder that your time horizon is a critical factor when it comes to retirement planning."

                Early retirement ? What's with that? Click bait?
                Serious question, how many years do you plan on being retired? Life expectancy tables are nice and you get different answers on the average depending on how old you are now. Moving target that likely will be wrong for and individual.

                https://coolconversion.com/heath/lif...age_60_in-US_w
                The RE in FIRE stands for Retire Early.


                Regarding timelines and actuarial outcomes, I like Flowing Data's visual simulation featured in this post.

                Comment


                • #9
                  Originally posted by PhysicianOnFIRE View Post

                  The RE in FIRE stands for Retire Early.


                  Regarding timelines and actuarial outcomes, I like Flowing Data's visual simulation featured in this post.
                  I showed this to my spouse. Her response was "No way. The bouncing balls get my vertigo going."

                  Comment


                  • #10
                    Originally posted by Tangler View Post

                    Awesomeness! Yes. This.
                    I tried to like this but was informed you were banned again

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