Author Topic: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?  (Read 28973 times)

maizeman

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #150 on: January 06, 2017, 12:04:05 PM »
Secondly having done retail sales in an outdoors shop it's fun and not particularly hard when it's not FT or your only source of income. Chatting about someone's upcoming trip while you sell them a tent is very chill.

I believe this was fun for you. Please understand that others may not feel the same way about it. Having also worked part time in retail, the misery of the experience was what drove me to buckle down and finish up college.

Because different people will place different relative value on an extra year of FIRE, an extra year working at their current job, and an extra year working at whatever sort of employment they can get with a ten year gap on their resume, possibly during a significant recession, different people will have different optimal solutions in the exact same set of circumstances. This isn't one of those situations where there is one universal correct answer that applies to everyone.

the difference between 4% SWR and 3% SWR is not one year for 99.99% of people.  you're talking about accumulating 33% more money than you currently have.  a person spending 40k per year and saving say 50% so saving 40k

takes 3 extra years to get to a 3% SWR.  thats not an extra year its 3x that.

I wasn't specifically arguing for 3%. I completely agree that is overkill. Take the example of 3.5%. That's the difference between 25 years of spending and ~28.5 years of spending. For a person living on 30-45% of their take home plus earning a year or more worth on living expenses on the compounded growth of 25 years living expenses, the difference is approximately one year.

But the ratio of years worked to years might have to work in the future isn't really the point. The 4% rule maxes out at an ~8% failure rate for an assumed retirement of ~48 years, while 3.5% withdrawal rate basically never fails. If a person thinks a job they could find after being out of the labor force for a decade, in the middle of a major recession, would be 15x more unpleasant than their current job, it makes logical sense for them to work the extra year (and this assumes they'd only have to work that job for one year). If they'd have to work longer in a failure scenario, then it makes sense for them to work longer at their current job even if they only have a 8x differential in how unpleasant they find the two jobs. On the other hand, if they're saving money more slowly, even at higher differentials of unpleasantness between current work and future work, it makes sense to FIRE earlier. 

Plus humans are weird non-logical creatures, and small risks of bad things happening to us disturb our happiness more than they should in a purely utilitarian model. We can argue we shouldn't be weird and illogical, or we can accept that our brains won't always process statistics and risks unemotionally and plan around it to still ensure ourselves the happiest lives we can manage.

For what it's worth, I'm perfectly happy retiring at a 4% withdrawal rate, with my safety margin coming from ways I could cut spending in bad years/decades rather than going back to work in bad years/decades.
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maizeman

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #151 on: January 06, 2017, 12:08:58 PM »
Snip.

I agree there is not one answer for everyone, but the reason I bother to make these comments is because as I read the explanations why people feel working extra years at the prime of their lives they don't sound rationale based on the facts. Since this is a forum to discuss FI and ER it's worth digging into that to understand what the opportunity costs are for the risks being addressed as well as to look at the many non-dollar based risks that we gloss over.

In the end everyone has to decide for themselves what they want to do. In some cases say the frequent early pay off of a mortgage discussion people conclude that despite the math and the risk analysis it makes them feel better to pay down their mortgage early understanding that that will likely mean a smaller portfolio and higher risks of foreclosure until that last payment clears. If all the relevant factors are discussed and you say hey working an extra 3yrs to mitigate this tiny risk of portfolio failure makes sense to me despite the risks [health effects of extra years of FT work] and the other ways to mitigate the risk [like easy PT work or being flexible on WRs say 3.5% - to 4.5%] than awesome go for it.

My take on it is that most professionals have been trained from a young age to work, want to work, enjoy the benefits of work and so even in the FIRE community we look for any excuse to keep doing that. We are programmed to work and fearful of change. That makes OMY so attractive as it feeds both beasts.

Point well taken, and I think it's definitely important to have voices on this forum making the points you've been making in this discussion. Some people really wouldn't be bothered by a smallish risk of going back to work for a few years, but if they never hear anyone make the point, they really may fall victim to OMY syndrome for no good reason. Similarly, being flexible about your spending in down years really REALLY helps cushion against a series of bad years early in FIRE, and it's important people consider whether a risk of having to cut some discretionary spending is really worth putting in more time at work. So yeah, I personally don't get the same answer to at least one of those questions as you, but I'm glad that the questions are at least being asked.
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Cassie

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #152 on: January 06, 2017, 01:17:39 PM »
I have been surprised at how much unsolicited work has come my way since retiring almost 5 years ago. In the beginning I took it all but now I only teach an online college class that I love.  I just turned down more work last week.  Before I retired I kept reading that people had trouble finding p.t. work in retirement (even professionals) but that has not been the case.

boarder42

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #153 on: January 06, 2017, 01:19:16 PM »
I have been surprised at how much unsolicited work has come my way since retiring almost 5 years ago. In the beginning I took it all but now I only teach an online college class that I love.  I just turned down more work last week.  Before I retired I kept reading that people had trouble finding p.t. work in retirement (even professionals) but that has not been the case.

what did you do?
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Cassie

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #154 on: January 06, 2017, 01:22:58 PM »
vocational testing/evaluation/career counseling to help people with disabilities get back to work. It is a tiny occupation with very few people qualified to do it.

Papa bear

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #155 on: January 06, 2017, 04:43:47 PM »
Ok - so if you are planning on working again in worst case scenario, when does that happen?  We all know sequence of returns risk at the beginning is terrible.  So do you wait until year 10?  Year 2? How do you know if you are in the worst retirement environment in history?  When your portfolio hits a certain percentage of original? Is that 50%? 20%? 80% ??

I'm curious to know what people are thinking. 


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boarder42

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #156 on: January 06, 2017, 04:47:56 PM »
I'm always going to be making money even in fire   I love buying and selling shit
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Retire-Canada

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #157 on: January 06, 2017, 06:32:32 PM »
I'm curious to know what people are thinking. 

I haven't worked out my FIRE WR strategy yet, but I intend to vary my WR between 3% and 5% aiming to average ~4% depending on market performance. That will likely mean no requirement to ever work PT. That said I can't envision 40yrs+ where I don't earn any money at all. I don't have a $ number or % in mind that indicates I have to find PT work, but I will be evaluating my portfolio annually when I decide on the $ to WR. I'll use that opportunity to consider if any additional income is required.

I expect there will be many people here or in whatever FIRE forums are popular at the time discussing that very question. Those conversations will contribute to my decision making process.

One thing I suspect is that when I can no longer crush the trails mountain biking and kite surfing becomes untenable I'll be interested in doing something out of the house with my spare time and I won't be shocked at all if I grab a PT job in a bike shop or outdoor store. That'll let me stay connected to the outdoor community and if I earn a few bucks [needed or not] that's cool.

maizeman

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #158 on: January 06, 2017, 07:15:26 PM »
Ok - so if you are planning on working again in worst case scenario, when does that happen?  We all know sequence of returns risk at the beginning is terrible.  So do you wait until year 10?  Year 2? How do you know if you are in the worst retirement environment in history?  When your portfolio hits a certain percentage of original? Is that 50%? 20%? 80% ??

I'm curious to know what people are thinking. 


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If you spend 4% as long as your portfolio is >= to your original stash in inflation adjusted terms, and 3.3% or less in years when your portfolio is work less than your original stash in inflation adjusted terms, you will never run out of money (based on a 100% stock portfolio, and retirement lengths between 20 and 100 years, using data from 1871-present).

So if you have a little less than 20% of your planned spending you can either skip in bad years, or if you are willing work enough to bring in a little less than 20% of your FIRE income in bad years, you're golden. The farther you let your portfolio drop before you take action, the more you have to work or the more spending you have to cut to get back to a 100% historical success rate.



Partially recycled image from another thread about how planning for extremely long retirements can actually make you less conservative by taking really bad years to retire (like 1965) out of the simulations.
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Itchyfeet

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #159 on: January 06, 2017, 10:02:06 PM »
That statement in contradictory. I'm not a fan of looking at the past but based on everything I've read and experienced I'm good with 25x. That is entirely based on the past.  All data supporting it is

I agree that it sounds contradictory, but it wasn't meant to be.

Yes, 25x is normally linked to the trinity study and with reference to past performance. It's hard to divorce the future from the past.

But what I was trying to say is that you can't rely too much on the past so you have to just pick a point at which you are willing to take the risk and move forward.

If I take 25x and am flexible in the down years, and if the market performs at around 3% above inflation over the long term I should be ok to spend my stache over 35-40years or so, particularly as I feel sure I will pick up some extra cash along the way eg pension, inheritance, casual employment etc.

It's a gamble, but I'll take the risk.

If the market only returns 2% above inflation, or things go to crap in the coming 10 years I'll have to invoke a plan B.

In a capatilist world people go into business to make money, so I feel pretty comfortable with an assumption that returns will be greater than inflation over the long term - how much? No idea.

Dividend yields in Australia are currently around 5%. I get a net rental yield of 3 % on my rental property. I can always buy a cheaper home.

I think 25x will be enough without reference to the trinity study.

Absolute worst case, I go back to work or I'll just receive a government pension when I am old and live off that.

BuffaloStache

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #160 on: January 06, 2017, 10:41:04 PM »
If you spend 4% as long as your portfolio is >= to your original stash in inflation adjusted terms, and 3.3% or less in years when your portfolio is work less than your original stash in inflation adjusted terms, you will never run out of money (based on a 100% stock portfolio, and retirement lengths between 20 and 100 years, using data from 1871-present).

thanks for showing/linking this image- really awesome takeaway here and a great point.
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tj

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #161 on: January 07, 2017, 09:06:01 PM »
I just don't buy that anyone who has the discipline to hit 25x annual spending in their mid-20's is just going to stop generating income for the rest of their life.

It's not realistic.

Jason Fieber has a great article on this:

http://www.mrfreeat33.com/why-much-of-the-math-on-early-retirement-is-moot/

maizeman

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #162 on: January 08, 2017, 06:15:42 AM »
I just don't buy that anyone who has the discipline to hit 25x annual spending in their mid-20's is just going to stop generating income for the rest of their life.

It's not realistic.

Jason Fieber has a great article on this:

http://www.mrfreeat33.com/why-much-of-the-math-on-early-retirement-is-moot/

From the article you linked to:

Quote
And that means that if you want to work, youíll be doing it because you want to rather than because you have to. Thereís a big difference there.

The easiest way to ruin the joy of anything done for fun is to make it mandatory.
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Retire-Canada

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #163 on: January 08, 2017, 09:08:16 AM »
The easiest way to ruin the joy of anything done for fun is to make it mandatory.

That's definitely true. I'd add if you wanted to make a significant difference in your FIRE income and are somewhat frugal a PT job will do the trick. I think it's far easier to enjoy work at 10hrs or 20hrs a week for a finite number of months vs. 40hrs or 50hrs a week for year after year.

I'll also note that if you decide to do some PT work during FIRE [either to cushion your portfolio a bit or perhaps afford something luxurious that's not in your normal budget] it's not like the ATM stops spitting out $20's and it's either beg for a job flipping burgers at McD's or starve. It's a process that doesn't have to be rushed. You can take a breathe figure out what your options are and take some action when you are ready.
« Last Edit: January 08, 2017, 09:59:18 AM by Retire-Canada »

ChpBstrd

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #164 on: January 08, 2017, 09:35:56 AM »
The easiest way to ruin the joy of anything done for fun is to make it mandatory.

That's definitely true. I'd add if you wanted to make a significant difference in your FIRE income and are somewhat frugal a PT job will do the trick. I think it's far easier to enjoy work at 10hrs or 20hrs a week for a finite number of months vs. 40hrs or 50hrs a week for year after year.

I'll also note that if you decide to do some PT work during FIRE [either to cushion your portfolio a bit or perhaps afford something luxurious that's not in your normal budget] it's not like the ATM stops spitting out $20's and it's either beg for a job flipping burgers and McD's or starve. It's a process that doesn't have to be rushed. You can take a breathe figure out what your options are and take some action when you are ready.

An occasional temp job from an employment agency would do the trick. The nature of the work might be 3 months full time but IMO that would just make FIRE sweeter, like retiring multiple times. No, the hourly/consulting pay would not be very high, like a 50h/week job, but you're also working when it's convenient.

Personally, I'd rather work FT for just a little bit longer and not have to do this ever, but this is always a fallback option to comfort me if I thought my stache was too low.

BuffaloStache

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #165 on: January 08, 2017, 10:35:43 PM »
Personally, I'd rather work FT for just a little bit longer and not have to do this ever, but this is always a fallback option to comfort me if I thought my stache was too low.

And that's kind of the point- even in a recession you are still earning dividends and have a 'stache in the bank, so you can do things on your time.
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nereo

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #166 on: January 09, 2017, 06:37:17 AM »
Ok - so if you are planning on working again in worst case scenario, when does that happen?  We all know sequence of returns risk at the beginning is terrible.  So do you wait until year 10?  Year 2? How do you know if you are in the worst retirement environment in history?  When your portfolio hits a certain percentage of original? Is that 50%? 20%? 80% ??

I'm curious to know what people are thinking. 
Personal short answer:  Within the first 7 years and when the portfolio goes down 10% from its value at t=0.
Reason why: Looking through all the sims, portfolios that failed all showed stress (defined as droping below the starting balance) within the first 7 years.  Its important to note that not all sims that showed stress eventually failed - about 50% recovered... but that's would be my first warning sign.

From that point forward it would be a matter of dropping my WR down below 3.5% by spending less, earning some or both. For us that would be $5k/year, and we've decided this possibility is nothing to stress over. It's actually not very different from our current plan where we'll go part time for many years before finally hitting the ER button. We could also more than hit this by slow traveling for a few months in LCOL areas.

How long: Still trying to work this out but I'd feel comfortable again once we went 5% above our original portfolio amount. From personal experience it seems very hard to earn LESS than $5k/year working part time, as most companies want to give you a big enough job to offset the cost and paperwork of hiring you.

That's just us - others may do things differently.
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Classical_Liberal

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #167 on: January 09, 2017, 10:24:55 AM »
There is a lot of conversation about part time work picking up slack in bad sequence scenarios, so, Iím just going to point something out that may not be obvious.  Someone retiring very young will likely still want to make a difference with their life.  Sure a couple of years traveling, reclaiming mental health and physical fitness, working on the house or homestead, child rearing until kids become more independent  will be fulfilling.  However, over a period of decades this is not going to be enough for the type of person who was motivated enough to become FI.
 
Eventually, mentality will shift back to participating in meaningful activities.  Unfortunately, most volunteer work is not that fulfilling in itself.  Sure, you can stock at the food shelf two days a week, but this type of work will likely be no more fulfilling than working a 9-5 at the supermarket doing the same for 15 bucks an hour.  Not saying someone doesnít have to do it, just that I doubt someone with a Mustachian personality type is going to limit him/herself to this type of activity.  If you think a stocking volunteer who offers to create an inventory software and distribution system to increase efficiency will be allowed to do so, think again.  If you want to make that contribution, youíll likely have to take a part time job at the food shelf, probably at a ridiculously low wage, but it's unexpected income.  Want to volunteer in the medical corps for six monthsÖ sorry, but part of the package is that they pay for your food, housing and travel while on assignment, more unexpected compensation.  I could go on ad nauseam, but the point is the world perceives value through how much they have to pay for it.  Any truly meaningful activity is likely going to provide unexpected compensation.

This framework has been shown anecdotally, time and again, with the experiences of those on this forum.  A 29 year old Mustachian who earns no other form of compensation through a 60+ year retirement is less likely than a 4% rule failure, and thatís pretty low.

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #168 on: January 09, 2017, 10:34:51 AM »
There is a lot of conversation about part time work picking up slack in bad sequence scenarios, so, Iím just going to point something out that may not be obvious.  Someone retiring very young will likely still want to make a difference with their life. 
[snip]

I've never met an early retiree who didn't wind up earning money or compensation for something at some point. We live in a world that's set up to reward time spent with compensation. Most individuals actually feel uncomfortable not paying you for doing something, and many businesses simply cannot allow you to work for very long without paying you (often required by law).

Call the IRP if you must... but being a functional member of society typically means you get something for it.
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OurTown

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #169 on: January 09, 2017, 10:35:11 AM »
Here's a simple tool for testing SWR.

Sorry, need more clickbait.  THE ONE SIMPLE TOOL THAT WILL CHANGE YOUR LIFE COMPLETELY!!!!!  OMG!!!!!!

https://retirementplans.vanguard.com/VGApp/pe/pubeducation/calculators/RetirementNestEggCalc.jsf

AdrianC

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #170 on: January 09, 2017, 10:47:01 AM »
I have a family to support. A part time minimum wage job isn't going to make enough difference for me. I have to build in a safety margin elsewhere.

So how much to do you figure you have to earn per year to make a difference between success and failure? Are you starting from a 4%WR if not what are you starting from? And what is your safety margin then?

Minimum wage "part-time" job:
$8.15/h x20h x50w x(1-0.0765) = $7,526 take home

Our health insurance and OOP medical/dental costs in 2016 were $15K. That's just a normal, nobody got sick year. So the minimum wage part time job pays only half of our medical. And that's before the ACA gets repealed. It's anybody's guess what it will cost in 2018, assuming we can even get insurance.

You see my point? The part time minimum wage option is a non-starter for a person with a family to support. Yes, it would help. No, it isn't even remotely on my radar.

I've built a large safety margin into my future expense estimates. Or into my withdrawal rate. Depends on how you look at it.

I'm keeping my hand in picking up consulting work from selected old clients. It's easy and pays a lot more than the min wage option :-)
 

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #171 on: January 09, 2017, 10:58:22 AM »
I have a family to support. A part time minimum wage job isn't going to make enough difference for me. I have to build in a safety margin elsewhere.

So how much to do you figure you have to earn per year to make a difference between success and failure? Are you starting from a 4%WR if not what are you starting from? And what is your safety margin then?

Minimum wage "part-time" job:
$8.15/h x20h x50w x(1-0.0765) = $7,526 take home

Our health insurance and OOP medical/dental costs in 2016 were $15K. That's just a normal, nobody got sick year. So the minimum wage part time job pays only half of our medical. And that's before the ACA gets repealed. It's anybody's guess what it will cost in 2018, assuming we can even get insurance.

You see my point? The part time minimum wage option is a non-starter for a person with a family to support. Yes, it would help. No, it isn't even remotely on my radar.

I've built a large safety margin into my future expense estimates. Or into my withdrawal rate. Depends on how you look at it.

I'm keeping my hand in picking up consulting work from selected old clients. It's easy and pays a lot more than the min wage option :-)

Sorry, but I'm not really understanding your point here and why it would be a non-starter.  Your theoretical part-time job at minimum wage would be $8k. Why would that be a non-starter, medical costs aside? Total spending is what matters, not any sub-category; if you normally spend $40k/year then the extra $8k would reduce your reliance on investments an equatable amount. More to the point, it allows you not to draw down as much principle.

What am I missing?
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Retire-Canada

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #172 on: January 09, 2017, 11:03:36 AM »
I'm keeping my hand in picking up consulting work from selected old clients. It's easy and pays a lot more than the min wage option :-)

If I needed to work during FIRE I'd far rather do consulting work than retail. As has been noted the need to make money is not a panic situation so I would take a moment to find the best option of those that seem reasonable at the time. Here a PT retail job in a bike shop or outdoors store would be over $15/hr. 20hrs a week for 6 months would knock my WR down to 3.5%WR. Add in some easy spending modifications and I'd be below 3%WR.

How much is your annual FIRE budget?

AdrianC

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #173 on: January 10, 2017, 10:07:28 AM »
Quote
Sorry, but I'm not really understanding your point here and why it would be a non-starter.  Your theoretical part-time job at minimum wage would be $8k. Why would that be a non-starter, medical costs aside? Total spending is what matters, not any sub-category; if you normally spend $40k/year then the extra $8k would reduce your reliance on investments an equatable amount. More to the point, it allows you not to draw down as much principle.

What am I missing?

You're not missing anything. I'm just trying to show how insignificant working 1000 hours at min wage might be for someone with a family to support. I think a parent needs to have a better plan if he/she take their responsibilities seriously.

A single person or childless couple? No problem.

EDIT - wanted to add more but plane was taking off - I'm on one of those part time consulting gigs :-)

$40k stash, say it drops 40%. Your costs don't drop 40%. Your part time job makes up only half of it.

I got to admit also that I'd find it hard to be happy selling my time at min wage. I FIRE'd because I value my time higher than $100/hour. I'm not going to be happy at $10/hour unless it's doing something I'd do for free anyway.



 
« Last Edit: January 10, 2017, 01:39:09 PM by AdrianC »

AdrianC

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #174 on: January 10, 2017, 01:43:28 PM »
I'm keeping my hand in picking up consulting work from selected old clients. It's easy and pays a lot more than the min wage option :-)

If I needed to work during FIRE I'd far rather do consulting work than retail. As has been noted the need to make money is not a panic situation so I would take a moment to find the best option of those that seem reasonable at the time. Here a PT retail job in a bike shop or outdoors store would be over $15/hr. 20hrs a week for 6 months would knock my WR down to 3.5%WR. Add in some easy spending modifications and I'd be below 3%WR.

How much is your annual FIRE budget?

Quite a bit more than yours. It covers 5 people, though. 3 growing kids.

How many people does your cover?

Retire-Canada

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #175 on: January 10, 2017, 02:25:19 PM »
$40k stash, say it drops 40%. Your costs don't drop 40%. Your part time job makes up only half of it.

I got to admit also that I'd find it hard to be happy selling my time at min wage. I FIRE'd because I value my time higher than $100/hour. I'm not going to be happy at $10/hour unless it's doing something I'd do for free anyway.

The fact your portfolio drops 40% doesn't mean you withdrawals need to drop by 40%. In most cases you wouldn't need to change anything due to a significant market crash. You also would not shoot for the lowest paying PT job as a goal. There would be no pressure to jump on something crappy ASAP.




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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #176 on: January 10, 2017, 08:49:11 PM »
$40k stash, say it drops 40%. Your costs don't drop 40%. Your part time job makes up only half of it.

I got to admit also that I'd find it hard to be happy selling my time at min wage. I FIRE'd because I value my time higher than $100/hour. I'm not going to be happy at $10/hour unless it's doing something I'd do for free anyway.

The fact your portfolio drops 40% doesn't mean you withdrawals need to drop by 40%. In most cases you wouldn't need to change anything due to a significant market crash. You also would not shoot for the lowest paying PT job as a goal. There would be no pressure to jump on something crappy ASAP.

Just curious - did you have a significant portion of your net worth invested in 2008 and 2009?

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #177 on: January 11, 2017, 02:07:41 AM »
The fact your portfolio drops 40% doesn't mean you withdrawals need to drop by 40%. In most cases you wouldn't need to change anything due to a significant market crash. You also would not shoot for the lowest paying PT job as a goal. There would be no pressure to jump on something crappy ASAP.

Great points.

As has been pointed out, if your stash drops 40% (or X% from its inflation adjusted starting value) and one is living off of 4% withdrawls, they only need to drop their withdrawls 12.5% to ensure they will never run out of money. At $40K, this puts it in the neighborhood of $5K, or even less than a minimum wage job. If spending is double that, two adults with jobs would fill that gap easily until the portfolio amount returns to the inflation-adjusted value.
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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #178 on: January 11, 2017, 02:08:58 PM »
The fact your portfolio drops 40% doesn't mean you withdrawals need to drop by 40%. In most cases you wouldn't need to change anything due to a significant market crash. You also would not shoot for the lowest paying PT job as a goal. There would be no pressure to jump on something crappy ASAP.

Great points.

As has been pointed out, if your stash drops 40% (or X% from its inflation adjusted starting value) and one is living off of 4% withdrawls, they only need to drop their withdrawls 12.5% to ensure they will never run out of money. At $40K, this puts it in the neighborhood of $5K, or even less than a minimum wage job. If spending is double that, two adults with jobs would fill that gap easily until the portfolio amount returns to the inflation-adjusted value.

How do you get the 12.5% figure? 

If I had a stash of $1m, which allows me to withdraw $40k per year, and the stash drops 40%, it becomes $600k.  That $600k only allows me to withdraw $24k per year (using the 4%) rule. $24k is a 40% drop from $40k.  I might be missing something obvious here.

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #179 on: January 11, 2017, 02:18:47 PM »
If I had a stash of $1m, which allows me to withdraw $40k per year, and the stash drops 40%, it becomes $600k.  That $600k only allows me to withdraw $24k per year (using the 4%) rule. $24k is a 40% drop from $40k.  I might be missing something obvious here.

That's not how the 4% WR Rule works.

- if your starting portfolio is $1M you can withdraw $40K year 1
- if year 2 there is a market crash and your portfolio ends up at $600K the 4% WR plan is to still withdraw $40K + inflation
- you do not reset your WR % each year based on your current portfolio value you use 4% of the initial value + inflation
- using the cFIREsim defaults this have a ~96% chance of success using historical data

Now practically speaking you may cut back on spending by $5K and maybe take a PT side gig for $10K that year because you are concerned about such a big drop early on, but the 4% WR plan is not telling you to only take $24K that year from your investments.
« Last Edit: January 11, 2017, 02:22:44 PM by Retire-Canada »

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #180 on: January 11, 2017, 02:35:28 PM »
If I had a stash of $1m, which allows me to withdraw $40k per year, and the stash drops 40%, it becomes $600k.  That $600k only allows me to withdraw $24k per year (using the 4%) rule. $24k is a 40% drop from $40k.  I might be missing something obvious here.

That's not how the 4% WR Rule works.

- if your starting portfolio is $1M you can withdraw $40K year 1
- if year 2 there is a market crash and your portfolio ends up at $600K the 4% WR plan is to still withdraw $40K + inflation
- you do not reset your WR % each year based on your current portfolio value you use 4% of the initial value + inflation
- using the cFIREsim defaults this have a ~96% chance of success using historical data

Now practically speaking you may cut back on spending by $5K and maybe take a PT side gig for $10K that year because you are concerned about such a big drop early on, but the 4% WR plan is not telling you to only take $24K that year from your investments.

Ah, thanks for the clarification.  Okay, so I understand that if withdrawing $40k annually from a $1 million portfolio will result in a ~96% success rate, then reducing the amount withdrawn by even, say, 10%, would increase the success rate.  I still don't understand where 12.5% comes from.  What would a 12.5% reduction in expenses increase the success rate to? 

Personally I'm quite risk averse and have a lot of flexibility in my budget for at least the first few years - I plan to move to a LCOL area upon FIRE-ing for a year or two (possibly permanently if I like it there), but my FIRE target is based on my current expenses. So if my portfolio drops x% in the first year, I'm planning to drop my spending by x% - up to a point.  If my portfolio drops 40% I'm not sure I'll be able to reduce my spending by 40% but I think I'll be able to cut back by around 20% relatively easily. 
« Last Edit: January 11, 2017, 02:37:40 PM by Out of the Blue »

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #181 on: January 11, 2017, 02:39:51 PM »
Ah, thanks for the clarification.  Okay, so I understand that if withdrawing $40k annually from a $1 million portfolio will result in a ~96% success rate, then reducing the amount withdrawn by even, say, 10%, would increase the success rate.

If you use a variable WR going from 3.5% to 4.5% of the initial portfolio value depending on market returns [so for $1M WRing $35K to $45K] you get 100% success using historical data with cFIREsim.

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #182 on: January 11, 2017, 02:43:11 PM »
Ah, thanks for the clarification.  Okay, so I understand that if withdrawing $40k annually from a $1 million portfolio will result in a ~96% success rate, then reducing the amount withdrawn by even, say, 10%, would increase the success rate.

If you use a variable WR going from 3.5% to 4.5% of the initial portfolio value depending on market returns [so for $1M WRing $35K to $45K] you get 100% success using historical data with cFIREsim.

That is very reassuring, thanks! I may start rethinking my overly conservative plans....   

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #183 on: January 11, 2017, 02:46:11 PM »
That is very reassuring, thanks! I may start rethinking my overly conservative plans....

No problem. I plan to use a variable WR rate plan as it gets me to FIRE faster.

Interestingly if you look at the average and median yearly WR using that variable rate plan in the previous post they are both above $40K/yr. So you have a higher probability of success and are likely to have higher WR amounts. That's win-win for just a bit of flexibility in your spending.In a bad return year if you didn't want to take the "pay cut" at $35K you could do an easy side gig to get $5K to spend and be back at $40K/yr.

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #184 on: January 11, 2017, 02:59:05 PM »
That is very reassuring, thanks! I may start rethinking my overly conservative plans....

No problem. I plan to use a variable WR rate plan as it gets me to FIRE faster.


A variable WR rate plan does seem to be the way to go, I had just never used that feature on cfiresim before.  I also think that human nature will make it hard NOT to be somewhat variable in your WR unless your planned expenditure was already barebones. If my portfolio dropped 40% in the first year after I retired, I doubt I'd be able to resist cutting back my spending by at least 10-20%.  All it would mean for me is not taking vacations that I had planned for in my expenses. 

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #185 on: January 11, 2017, 03:32:13 PM »
A variable WR rate plan does seem to be the way to go, I had just never used that feature on cfiresim before.  I also think that human nature will make it hard NOT to be somewhat variable in your WR unless your planned expenditure was already barebones. If my portfolio dropped 40% in the first year after I retired, I doubt I'd be able to resist cutting back my spending by at least 10-20%.  All it would mean for me is not taking vacations that I had planned for in my expenses.

Agreed. I just looked at some rough numbers and the difference for me to go variable WR vs. a similar constant WR was 2.5yrs of extra full-time work. No thanks!

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #186 on: January 11, 2017, 05:26:30 PM »
So what number are you shooting for Canada. You said it helps your fire faster. Are you firing at 4.5% swr
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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #187 on: January 11, 2017, 06:27:32 PM »
So what number are you shooting for Canada. You said it helps your fire faster. Are you firing at 4.5% swr

I haven't decided yet. I'm going to stop FT work at the end of this year and let the 'stash do its thing. That way I get lots more free time now while earning enough to cover costs.

Here are a couple options...

Constant WR

- FIRE target $1.1M
- take out $40K + $6K taxes each year [less CPP + OAS]
- cFIREsim = 96% success
-  avg/median WR/yr = $46K

Variable WR

- FIRE target $850K
- take out $35K to $60K each year [less CPP + OAS]
- cFIREsim = 100%
- median WR/yr = ~$45K

I'm at $675K today. So I'll add what I can in 2017 and then coast until I'm happy with the value of the portfolio. At the moment I'd like $46K/yr income in Canada bucks. That's like $35K USD/yr. I'm going to continue to optimize spending so perhaps I'll get that lower. $850K seems like a reasonable compromise and that's 5.4%WR [-1.4%/+1.7%] @ $46K/yr. I can collect modest Gov't benefits in 2029 and more in 2034.

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #188 on: January 12, 2017, 08:55:43 PM »
Thank you for referencing my article tonysemail. This is a very interesting and thoughtful thread and I'm glad I stumbled upon it.

I think the 4% rule can work for someone in extremely early retirement, but there are certainly more things to consider. Health care is something that I spend a great deal of time thinking about (perhaps because I work in the industry and see the chaos it introduces to many peoples lives). The problem is that health care costs are growing at or faster than inflation while at the same time buying health insurance gets much more expensive as you age. Over long periods of time these little increases add up. Most people will do just fine, but if you are in one of those unlucky cohorts that retires in a year where 4% barely makes it, then these areas of lifestyle inflation become real problems. I think the 4% rule is a good foundation. I just question my ability to actually stick to a 4% withdrawal when times get tough and life becomes more expensive. I guess it just depends on how badass you are. I'm kinda wimpy and risk averse :)

For me personally, when I retire I don't want to have to go back to work 15 years later. I'm not sure I would be hireable. I make great money right now and can trade my time for it at a very high rate. It is a factor I think one needs to take into consideration. I can go from 4% to 3% in only a few years because of my high savings rate and relatively low spending in relation to my income. If your needs are low and there is not a big barrier to getting back into the workforce I think 4% is solid at any age.


Consider also that since your mortgage is inflation impervious (well most of it anyway) and the 4% WR is inflation adjusted. If your budget includes a mortgage of about $15k/yr ($13k after removing taxes which do inflate) and your spending is $40k/yr that means approximately 1/3 of your budget doesn't need an inflation adjustment. So if your spending lines up with inflation after your first ten years of ER (assuming 2% inflation):

Yeah, I agree.  4% WR is somewhat academic for me.  In reality, I divide my expenses between perpetual ones and expiring ones.
Eventually, my mortgage is paid and my kids are launched and then my WR drops in half.
This can all be modeled as Other Spending in cfiresim.
Similarly, you can model expenses that are likely to increase faster than CPI.
This post caused me to update my estimate for healthcare expenses.
At the end of the day, it didn't matter much because my expiring expenses more than make up for the expected healthcare inflation.
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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #189 on: January 13, 2017, 03:28:44 AM »
So what number are you shooting for Canada. You said it helps your fire faster. Are you firing at 4.5% swr

I haven't decided yet. I'm going to stop FT work at the end of this year and let the 'stash do its thing. That way I get lots more free time now while earning enough to cover costs.

Here are a couple options...

Constant WR

- FIRE target $1.1M
- take out $40K + $6K taxes each year [less CPP + OAS]
- cFIREsim = 96% success
-  avg/median WR/yr = $46K

Variable WR

- FIRE target $850K
- take out $35K to $60K each year [less CPP + OAS]
- cFIREsim = 100%
- median WR/yr = ~$45K

I'm at $675K today. So I'll add what I can in 2017 and then coast until I'm happy with the value of the portfolio. At the moment I'd like $46K/yr income in Canada bucks. That's like $35K USD/yr. I'm going to continue to optimize spending so perhaps I'll get that lower. $850K seems like a reasonable compromise and that's 5.4%WR [-1.4%/+1.7%] @ $46K/yr. I can collect modest Gov't benefits in 2029 and more in 2034.

Good call. Probably gonna do this allows for crazy top end spending if I just cut 5k or just make 5 k in down years which I'll likely do anyways
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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #190 on: January 13, 2017, 06:39:30 AM »
Thank you for referencing my article tonysemail. This is a very interesting and thoughtful thread and I'm glad I stumbled upon it.

I think the 4% rule can work for someone in extremely early retirement, but there are certainly more things to consider. Health care is something that I spend a great deal of time thinking about (perhaps because I work in the industry and see the chaos it introduces to many peoples lives). The problem is that health care costs are growing at or faster than inflation while at the same time buying health insurance gets much more expensive as you age. Over long periods of time these little increases add up. Most people will do just fine, but if you are in one of those unlucky cohorts that retires in a year where 4% barely makes it, then these areas of lifestyle inflation become real problems. I think the 4% rule is a good foundation. I just question my ability to actually stick to a 4% withdrawal when times get tough and life becomes more expensive. I guess it just depends on how badass you are. I'm kinda wimpy and risk averse :)

For me personally, when I retire I don't want to have to go back to work 15 years later. I'm not sure I would be hireable. I make great money right now and can trade my time for it at a very high rate. It is a factor I think one needs to take into consideration. I can go from 4% to 3% in only a few years because of my high savings rate and relatively low spending in relation to my income. If your needs are low and there is not a big barrier to getting back into the workforce I think 4% is solid at any age.


Consider also that since your mortgage is inflation impervious (well most of it anyway) and the 4% WR is inflation adjusted. If your budget includes a mortgage of about $15k/yr ($13k after removing taxes which do inflate) and your spending is $40k/yr that means approximately 1/3 of your budget doesn't need an inflation adjustment. So if your spending lines up with inflation after your first ten years of ER (assuming 2% inflation):

Yeah, I agree.  4% WR is somewhat academic for me.  In reality, I divide my expenses between perpetual ones and expiring ones.
Eventually, my mortgage is paid and my kids are launched and then my WR drops in half.
This can all be modeled as Other Spending in cfiresim.
Similarly, you can model expenses that are likely to increase faster than CPI.
This post caused me to update my estimate for healthcare expenses.
At the end of the day, it didn't matter much because my expiring expenses more than make up for the expected healthcare inflation.

I heartily agree healthcare costs are a great uncertainty. I'm 51 and have maintained good health, and therefore I hardly have any medical expenses. But health insurance for me has gone up over the years, and the only reason I'm not paying exorbitantly for it now is because of the subsidies under the ACA. We all know how long that's likely to last. The uncertainty of future health insurance costs that used to spiral up for me prior to ACA, and the uncertainty of some unknown medical event in the future are the reasons I want to build in an extra layer of financial security, maybe more like a 2% rule. Obviously, Canada's health care situation is a lot more sane and predictable, and if I lived there I think the 4% rule would be no problem. Because the US social safety net is so much weaker than Canada's I have to save more and spend less to cover me for these future unknowns.

Retire-Canada

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #191 on: January 13, 2017, 07:19:47 AM »
I heartily agree healthcare costs are a great uncertainty. I'm 51 and have maintained good health, and therefore I hardly have any medical expenses. But health insurance for me has gone up over the years, and the only reason I'm not paying exorbitantly for it now is because of the subsidies under the ACA. We all know how long that's likely to last. The uncertainty of future health insurance costs that used to spiral up for me prior to ACA, and the uncertainty of some unknown medical event in the future are the reasons I want to build in an extra layer of financial security, maybe more like a 2% rule. Obviously, Canada's health care situation is a lot more sane and predictable, and if I lived there I think the 4% rule would be no problem. Because the US social safety net is so much weaker than Canada's I have to save more and spend less to cover me for these future unknowns.

You have to assess the risk of health care costs and come up with a plan that you can live with. My only comment would be don't discount the negative health care impacts of working so much longer to build twice as big a stash at 2% WR.

FWIW health care is not free in Canada nor is it a full coverage situation. You can go bankrupt paying for treatment up here if you get unlucky.
« Last Edit: January 13, 2017, 07:21:18 AM by Retire-Canada »

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #192 on: January 13, 2017, 07:37:20 AM »

FWIW health care is not free in Canada nor is it a full coverage situation. You can go bankrupt paying for treatment up here if you get unlucky.

adding (because I feel I have to): There is no "Canadian Health Care" - each province is responsible for disbursing health care, and the levels of coverage (and rules governing that) are different throughout Canada. Depending on your province things like prescription drugs, non-essential surgeries (i.e. those that improve quality of life), post-op care, physical therapy, advanced or 'high-risk' treatments etc may have limited or no coverage. Also, as we learned shortly after arriving your coverage level can be changed when the next political parties comes in and decides we need a "more sound fiscal policy".

If we remainin Canada we'll definitely carry additional health insurance (yes, that's a thing here).  One bonus though is that its much cheaper to have than in the US because everyone does get a basic level of service.  I'd say Health Care is THE biggest concern with the long-term fiscal health in most provinces, and most financial experts agree that it's going to become a bigger slice of the budget as Canada's population gets older.
Just FYI.
« Last Edit: January 13, 2017, 08:09:44 AM by nereo »
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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #193 on: January 13, 2017, 08:03:48 AM »
I'd say Health Care is THE biggest concern with the long-term fiscal health in most provinces, and most financial experts agree that it's going to become a bigger slice of the budget as Canada's population gets older.
Just FYI.

No argument on the healthcare cost concern. BC spends more than 50% of its annual budget on health care.

I have some extra health care insurance due to my GF's job, but I don't plan on buying extra insurance when she quits. The 4% WR rule ends up with massive wealth so much of the time I'm more worried about what to do with all the money I am likely to have than running out or paying for health care. I also know that looking back at my adult life the single biggest negative health care impact has been working full time. So if I was worried about paying for health care costs working many years extra to double my stash and hit a 2% WR would not seem like a good call. Doing that would pretty much guarantee I'll need far more health care than stopping FT work at 4% WR or earlier.  That's a self-defeating plan in my opinion.

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #194 on: January 13, 2017, 08:32:58 AM »
I'd say Health Care is THE biggest concern with the long-term fiscal health in most provinces, and most financial experts agree that it's going to become a bigger slice of the budget as Canada's population gets older.
Just FYI.

No argument on the healthcare cost concern. BC spends more than 50% of its annual budget on health care.

I have some extra health care insurance due to my GF's job, but I don't plan on buying extra insurance when she quits. The 4% WR rule ends up with massive wealth so much of the time I'm more worried about what to do with all the money I am likely to have than running out or paying for health care. I also know that looking back at my adult life the single biggest negative health care impact has been working full time. So if I was worried about paying for health care costs working many years extra to double my stash and hit a 2% WR would not seem like a good call. Doing that would pretty much guarantee I'll need far more health care than stopping FT work at 4% WR or earlier.  That's a self-defeating plan in my opinion.

and just using variable spending and personally only dropping 5k on 80k spend it allows upward mobility later in life since we also plan to keep the mortgage that will expire 22 years after FIRE.  mean top end spending is about double our current spending.  there is piles of money and you can acually spend down your retirment and not be left with a big bubble
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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #195 on: January 13, 2017, 10:49:52 AM »
Healthcare will always be the big unknown... until it isn't.  Consider that the median household income in the US is around 56K* with an average household size of about 2.5**.  Obviously there is great variability in health care costs, but the average cost of health care per household is over 20K***.  This means that a full 35% of gross income is spent on health care costs without government or employer subsidy.   This is unsustainable, period. Either the subsidies from gov't and employers will begin to dry up and the market will correct or gov't will step in and create a lower cost system and price controls (I also work in health care and see tremendous waste; private patient suites, unnecessary tests to avoid liability, abusers of system, etc). The ACA was a half-assed effort at combining both a  market and social subsidy solution.  I see this issue being tackled in the next decade, for humans necessity breeds innovation.  Just one person's opinion.

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #196 on: January 13, 2017, 11:07:52 AM »
Healthcare will always be the big unknown... until it isn't.  Consider that the median household income in the US is around 56K* with an average household size of about 2.5**.  Obviously there is great variability in health care costs, but the average cost of health care per household is over 20K***.  This means that a full 35% of gross income is spent on health care costs without government or employer subsidy.   This is unsustainable, period. Either the subsidies from gov't and employers will begin to dry up and the market will correct or gov't will step in and create a lower cost system and price controls (I also work in health care and see tremendous waste; private patient suites, unnecessary tests to avoid liability, abusers of system, etc). The ACA was a half-assed effort at combining both a  market and social subsidy solution.  I see this issue being tackled in the next decade, for humans necessity breeds innovation.  Just one person's opinion.

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holy cow.  20k per year per household.  that is a shocking number.  how cutting the costs isnt one of the main goals of the govt is beyond me.
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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #197 on: January 13, 2017, 01:56:04 PM »
The fact your portfolio drops 40% doesn't mean you withdrawals need to drop by 40%. In most cases you wouldn't need to change anything due to a significant market crash. You also would not shoot for the lowest paying PT job as a goal. There would be no pressure to jump on something crappy ASAP.

Great points.

As has been pointed out, if your stash drops 40% (or X% from its inflation adjusted starting value) and one is living off of 4% withdrawls, they only need to drop their withdrawls 12.5% to ensure they will never run out of money. At $40K, this puts it in the neighborhood of $5K, or even less than a minimum wage job. If spending is double that, two adults with jobs would fill that gap easily until the portfolio amount returns to the inflation-adjusted value.

Like Out of the Blue above, I'd also like to know what the basis of this claim is.  It doesn't make sense to me as is.  Why would reducing your withdrawals by 1/8 ensure that you'd never run out of money?  Certainly you're already started down a path that's staring at failure if your portfolio shrinks by 40% shortly after retirement.  Just because that last large drop recovered extremely quickly doesn't mean the next one will.
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boarder42

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #198 on: January 13, 2017, 02:02:04 PM »
The fact your portfolio drops 40% doesn't mean you withdrawals need to drop by 40%. In most cases you wouldn't need to change anything due to a significant market crash. You also would not shoot for the lowest paying PT job as a goal. There would be no pressure to jump on something crappy ASAP.

Great points.

As has been pointed out, if your stash drops 40% (or X% from its inflation adjusted starting value) and one is living off of 4% withdrawls, they only need to drop their withdrawls 12.5% to ensure they will never run out of money. At $40K, this puts it in the neighborhood of $5K, or even less than a minimum wage job. If spending is double that, two adults with jobs would fill that gap easily until the portfolio amount returns to the inflation-adjusted value.

Like Out of the Blue above, I'd also like to know what the basis of this claim is.  It doesn't make sense to me as is.  Why would reducing your withdrawals by 1/8 ensure that you'd never run out of money?  Certainly you're already started down a path that's staring at failure if your portfolio shrinks by 40% shortly after retirement.  Just because that last large drop recovered extremely quickly doesn't mean the next one will.

if you're using a variable withdrawal method you can play with the z value to see what works for you but historically with a .5 z value and a floor at ~.5% less than your spending level you will never run out of money.  the basis lies somewhere in that math.
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Classical_Liberal

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Re: The 4% Rule For Those In Their Mid-20's... Completely Unrealistic?
« Reply #199 on: January 13, 2017, 02:11:27 PM »
Healthcare will always be the big unknown... until it isn't.  Consider that the median household income in the US is around 56K* with an average household size of about 2.5**.  Obviously there is great variability in health care costs, but the average cost of health care per household is over 20K***.  This means that a full 35% of gross income is spent on health care costs without government or employer subsidy.   This is unsustainable, period. Either the subsidies from gov't and employers will begin to dry up and the market will correct or gov't will step in and create a lower cost system and price controls (I also work in health care and see tremendous waste; private patient suites, unnecessary tests to avoid liability, abusers of system, etc). The ACA was a half-assed effort at combining both a  market and social subsidy solution.  I see this issue being tackled in the next decade, for humans necessity breeds innovation.  Just one person's opinion.

*Google search, 2016
**Google search, 2016
*** Google search, 2013 (wanna bet it's even higher today?)

holy cow.  20k per year per household.  that is a shocking number.  how cutting the costs isnt one of the main goals of the govt is beyond me.

In case I wasn't clear, that isnt what a household pays.  The out of pocket was about 4.5K.  The remainder of the total is paid for by employer, gov't subsidy, etc. The numbers may be a bit skewed as I dont think household income counts benefits (ie how much employers subsidize this cost, likely seen as reduction in regular compensation), although I could be wrong.  Point being the resources are coming from somewhere and are of circulation for other needs.