Author Topic: Anyone pulled the plug right at a 4% wdr?  (Read 10491 times)

rdy4er

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Anyone pulled the plug right at a 4% wdr?
« on: December 21, 2017, 07:14:30 AM »
Just wondering if anyone has FIREíd right when they achieved the 4% withdrawal.
I really want to go but Iím right at a 4% with this run up and if the ACA stays. Iím 53 with a stay at home spouse and a 13 yo child. Iím I crazy?

lefty

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #1 on: December 21, 2017, 07:43:33 AM »
I'm about to do the same thing.

radram

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #2 on: December 21, 2017, 07:57:03 AM »
You could both be FIRED AND crazy. They are not mutually exclusive :)

At 53, I think the key will be flexibility. There is so much you can do when there is an inherent downturn, including going back to your old job full/part time for a little bit or longer(even at a lower wage if need be), getting a part time job to make up the difference, spending less, hobbies that pay, Uber drive, suspending inflation increases in bad years, medical travel if ACA blows up, etc.

Congratulations. Keep us posted here when you pull the plug.

rdy4er

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #3 on: December 21, 2017, 10:52:06 AM »
You could both be FIRED AND crazy. They are not mutually exclusive :)

At 53, I think the key will be flexibility. There is so much you can do when there is an inherent downturn, including going back to your old job full/part time for a little bit or longer(even at a lower wage if need be), getting a part time job to make up the difference, spending less, hobbies that pay, Uber drive, suspending inflation increases in bad years, medical travel if ACA blows up, etc.

Congratulations. Keep us posted here when you pull the plug.



Thanks for the insight, Iím dreading heading out on a 5 day trip tonight, ready to say fuck it and spend the holiday with my family. I will stick it out,at least this week though.

HawkeyeNFO

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #4 on: December 21, 2017, 01:02:38 PM »
Risk tolerance.  What is yours?  Also, have you really looked at how the 4% rule came about, and how it fits your situation? 

Some people are fine with a higher rate, some want it lower.  Once you understand the assumptions used to create the 4% rule (which included 1% going to a financial advisor EVERY YEAR), you can better make your own decision.

rdy4er

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #5 on: December 21, 2017, 01:37:44 PM »
Risk tolerance.  What is yours?  Also, have you really looked at how the 4% rule came about, and how it fits your situation? 

Some people are fine with a higher rate, some want it lower.  Once you understand the assumptions used to create the 4% rule (which included 1% going to a financial advisor EVERY YEAR), you can better make your own decision.

I do understand the trinity study and the 4% rule, I donít know about the advisor 1% though. I would think that 4% is 4% no matter where it goes.
I ran my bare bones expenses and can drop down to 3% if I really had to.

Eucalyptus

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #6 on: December 21, 2017, 04:33:50 PM »
Sounds like you have FU money now and can pull the pin at any time.

Also sounds like you aren't always enjoying work and what they are making you do, ie, this 5 day work trip right now.

You now have leverage. (bear in mind I'm about 13 years from being able to FIRE). If it was me, I'd totally start negotiating what you want in the workplace. Don't want to do trips? Say no. 5 days at this moment is pretty unreasonable unless its critical to people's health (eg you are a doctor or ambo or something). SAY NO.

After you have some time with your family, perhaps you could negotiate a pay rise, and going part time? Do this for 6 months perhaps, see how you enjoy it. If you aren't, just FIRE fully, or look for something else.

The power is yours! 4%, no worries at all :-)

AdrianC

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #7 on: December 21, 2017, 06:08:18 PM »
Once you understand the assumptions used to create the 4% rule (which included 1% going to a financial advisor EVERY YEAR), you can better make your own decision.

The 4% rule studies didn't include 1% for investment expenses. If they did we'd all be investing with vanguard and doing the 5% rule. Easy to demonstrate for yourself in cFiresim.

HawkeyeNFO

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #8 on: December 21, 2017, 08:07:25 PM »
Once you understand the assumptions used to create the 4% rule (which included 1% going to a financial advisor EVERY YEAR), you can better make your own decision.

The 4% rule studies didn't include 1% for investment expenses. If they did we'd all be investing with vanguard and doing the 5% rule. Easy to demonstrate for yourself in cFiresim.
I should clarify, that the assumption was not 1% to an FA, but I'll borrow your words: investment expenses.  That is much more accurate.

However, while maybe not overtly included in the list of assumptions, I would argue that 1% is a number that is included in the 4% studies, given that the average mutual fund expense was over 1% and the average bond fund was .84% in the mid-90s when the studies were executed and published.  In addition, "no load" funds were not as common then as they are today.
https://www.ici.org/pdf/per23-03.pdf

These expenses significantly decrease your funds over time, which is why I personally like to minimize them.  If I wanted to strictly follow the 4% rule, but the cost was 1%, then I am really only getting 3%. 
« Last Edit: December 21, 2017, 08:10:11 PM by HawkeyeNFO »

Roothy

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #9 on: December 21, 2017, 10:05:27 PM »
The Trinity study did not include investment expenses.  It was a 4% withdrawal, period--and you get to spend it on whatever, including investment expenses to the extent you have them.

Classical_Liberal

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #10 on: December 21, 2017, 10:56:54 PM »
The Trinity study did not include investment expenses.  It was a 4% withdrawal, period--and you get to spend it on whatever, including investment expenses to the extent you have them.

This is correct*.  It also didn't count social security and assumed blind, inflation adjusted withdrawals without regard to capital performance.  It also only had two asset classes with a set allocation, no matter macro-economic conditions. ie it assumed you are stupid... are you stupid OP?

If not and you want to go, pull the trigger.  This is what you worked for, there will always be something looming!  I'd be waaaay more concerned that I was ready for retirement lifestyle than the money.

*Please note, ER's are not 1:1 with WR.  See Kites

MasterStache

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #11 on: December 22, 2017, 05:36:32 AM »
I say do it. It really isn't that difficult to supplement with a little side money from any hobby/part time work. I've made some decent money picking up some carpentry work here and there. It's fun as heck and beats cubicle life, shitty commutes and set hours any day.

soccerluvof4

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #12 on: December 22, 2017, 07:08:22 AM »
I say do it. It really isn't that difficult to supplement with a little side money from any hobby/part time work. I've made some decent money picking up some carpentry work here and there. It's fun as heck and beats cubicle life, shitty commutes and set hours any day.

+1 ^  there is pretty much something for everybody these days to do if there looking to make a little extra cash. Enjoy your freedom and if you want look around for some 15-20 hour side gig if it makes you feel better .  I to am 53 and have  4 kids and that was my plan when i Fire'd at 50 but still havent pulled the trigger on several things I stumbled on or looked at doing.
" In life you don't get what you deserve you get what you negotiate"

steveo

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #13 on: December 23, 2017, 01:07:43 AM »
5% is my figure. I'll probably have a bit over that but I can't see myself getting to 4% unless I do something like part time work.

AdrianC

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #14 on: December 23, 2017, 09:41:40 AM »
I should clarify, that the assumption was not 1% to an FA, but I'll borrow your words: investment expenses.  That is much more accurate.

However, while maybe not overtly included in the list of assumptions, I would argue that 1% is a number that is included in the 4% studies, given that the average mutual fund expense was over 1% and the average bond fund was .84% in the mid-90s when the studies were executed and published.  In addition, "no load" funds were not as common then as they are today.

The studies used asset classes (US stocks, US bonds), not specific funds.

Classical_Liberal

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #15 on: December 23, 2017, 04:44:40 PM »
I should clarify, that the assumption was not 1% to an FA, but I'll borrow your words: investment expenses.  That is much more accurate.

However, while maybe not overtly included in the list of assumptions, I would argue that 1% is a number that is included in the 4% studies, given that the average mutual fund expense was over 1% and the average bond fund was .84% in the mid-90s when the studies were executed and published.  In addition, "no load" funds were not as common then as they are today.

The studies used asset classes (US stocks, US bonds), not specific funds.

The second is correct.  Frankly, I'm surprised at some of the misinformation on a thread about 4%-rule regarding the very basics (trinity study).  This forum has many VERY knowledgeable people regarding this subject.  I suggest anyone interested in WR read this forums stop worrying about the 4& rule thread.  Yes it's long, but after reading you'll likely be better informed than your financial adviser.  A strong second for more detailed AA and WR analysis is Tyler's site and blog

Personally a 5% WR is fine by me, but I have no kids and can vary my spending. 

honeyfill

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #16 on: December 23, 2017, 09:30:03 PM »
Personally a 5% WR is fine by me, but I have no kids and can vary my spending.

I am with Classical Liberal.  5% is perfectly fine if you can adjust your spending and have a fall back plan.  I am 60 so my fall back plan is to keep enough in liquid assets to get to 62.  IF the market stays high I can delay SS, if not, I can start collecting.  Plus , I could cut spending by 40% and still get by.  for you younger people, 5% might be too aggressive unless you are willing to go back to work or have some other fall back plan.   



pecunia

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #17 on: December 25, 2017, 06:48:44 PM »
OK - How about the converse?  Let's say you are rather frugal most of the time and have gone beyond the basic 4%.  Is it better to live on a decreasing percentage for a few years until you sort things out?  See - With the way the stock market rose in 2017 and me pulling the plug in 2018, I just wonder if the extra margin can save me from being a cat food eater.

People are always saying on this blog that, "Oh you can go back to work."  Well - I'm not so sure.  There is a lot of reluctance on the part of employers to hire the older guys.

WildJager

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #18 on: December 25, 2017, 09:06:18 PM »
OK - How about the converse?  Let's say you are rather frugal most of the time and have gone beyond the basic 4%.  Is it better to live on a decreasing percentage for a few years until you sort things out?

That's basically the sequence of returns risk you may have heard about.  If you pull the plug at 4%, and then the market corrects for the next few years, suddenly you could be well over 4% WR.  The Trinity study says historically you'd be fine, but that could be not true in the future.  No one knows.  So some people aim for a lower WR, others pad a few years worth of cash to waterfall if necessary, but also there are reverse glideslope techniques.  Then end result is all the same, you're saving a bit more than bare bones 4%.  Personally, I think that is prudent if you've reached your number during a rapid rise of gains that is above the historical average.

Fishingmn

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #19 on: December 31, 2017, 07:57:57 AM »
That's basically the sequence of returns risk you may have heard about.  If you pull the plug at 4%, and then the market corrects for the next few years, suddenly you could be well over 4% WR.  The Trinity study says historically you'd be fine, but that could be not true in the future.  No one knows.  So some people aim for a lower WR, others pad a few years worth of cash to waterfall if necessary, but also there are reverse glideslope techniques.  Then end result is all the same, you're saving a bit more than bare bones 4%.  Personally, I think that is prudent if you've reached your number during a rapid rise of gains that is above the historical average.

No - the Trinity Study says the 4% rule has a 95% success rate. It's those years that see an immediate market correction after retirement that are most at risk for failing 1 out of 20 times.

WildJager

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #20 on: January 02, 2018, 05:21:58 PM »
That's basically the sequence of returns risk you may have heard about.  If you pull the plug at 4%, and then the market corrects for the next few years, suddenly you could be well over 4% WR.  The Trinity study says historically you'd be fine, but that could be not true in the future.  No one knows.  So some people aim for a lower WR, others pad a few years worth of cash to waterfall if necessary, but also there are reverse glideslope techniques.  Then end result is all the same, you're saving a bit more than bare bones 4%.  Personally, I think that is prudent if you've reached your number during a rapid rise of gains that is above the historical average.

No - the Trinity Study says the 4% rule has a 95% success rate. It's those years that see an immediate market correction after retirement that are most at risk for failing 1 out of 20 times.

Your nuance is subtle, but I think fair to express.  The failure cases are obviously preceded by a market crash shortly after pulling the trigger.  However, failure assumes that there is not an aggressive market recovery and that you are forced to draw down even in poor conditions.  I used "fine" to indicated that chances are on your side that the market will recover enough for you to not self destruct.  The rest of the risk can theoretically be mitigated via careful money management.  I doubt anyone here advocates robotically following the method the Trinity study laid out.

MoneyStacher

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #21 on: January 03, 2018, 04:10:46 PM »
I know you are asking who did, but, I didn't. Just plain scared and maybe you are too. My current situation at work is way better than a couple of years ago. Way better. So it is easier to keep at it. Yes, according to the 4% rule I could comfortably retire single at age 50 with no kids and 1.2M. But, I'm just not confident. I don't like it, but this is how I am. Yes, I've got tendonitis from programming and should walk, but I don't. Yes, I've got plenty to stay busy at if I quit, but I still OMY. Now I need to go read some OMY threads. I need to break out of this. How much is enough? That is a question for me.

Daisy

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #22 on: January 03, 2018, 04:54:44 PM »
I know you are asking who did, but, I didn't. Just plain scared and maybe you are too. My current situation at work is way better than a couple of years ago. Way better. So it is easier to keep at it. Yes, according to the 4% rule I could comfortably retire single at age 50 with no kids and 1.2M. But, I'm just not confident. I don't like it, but this is how I am. Yes, I've got tendonitis from programming and should walk, but I don't. Yes, I've got plenty to stay busy at if I quit, but I still OMY. Now I need to go read some OMY threads. I need to break out of this. How much is enough? That is a question for me.

I was stuck in OMY until I got a new asshole manager. That surely cured my OMY and I FIREd!

I wish for you an FU money-worthy situation at work to get you out of your OMY daze.

MrThatsDifferent

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #23 on: January 03, 2018, 09:28:51 PM »
I know you are asking who did, but, I didn't. Just plain scared and maybe you are too. My current situation at work is way better than a couple of years ago. Way better. So it is easier to keep at it. Yes, according to the 4% rule I could comfortably retire single at age 50 with no kids and 1.2M. But, I'm just not confident. I don't like it, but this is how I am. Yes, I've got tendonitis from programming and should walk, but I don't. Yes, I've got plenty to stay busy at if I quit, but I still OMY. Now I need to go read some OMY threads. I need to break out of this. How much is enough? That is a question for me.

You have plenty. Youíre single, no kids with 1.2m already and SS is only 15 yrs away? How much do you need? How extravagant is your lifestyle? Iím sure itís not insane. Retire, relax and enjoy lifeódonít need to be a martyr. Your worst case is some p/t job, just to keep you a little busy. Do it!

Rollin

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #24 on: January 04, 2018, 07:36:57 AM »
I did, however the 4% is only a portion of my total income portfolio. Either way, the 4% allowed me to FIRE in late 2016. It was a great positive decision. Best of my life for sure! But that's me.
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pecunia

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #25 on: January 07, 2018, 08:01:32 PM »
Wildjager wrote:

Quote
So some people aim for a lower WR, others pad a few years worth of cash to waterfall if necessary,
,

Well the old adage is "Cash is King"  I think that makes some sense.  I can take Social Security in 6 mos, but want to forgo as 100 percent  for the remainder of my life would be better than 70 percent.  On paper the 4 percent should give me adequate income w/o SS.

Here's another concern I have.  The boys in charge are going to be spending a trillion dollars they don't have.  Is all of that going to be borrowed?  Is some just going to be spent as deficit spending?  Seems to me there is the specter of inflation haunting us again.  Looks like an artificial increase in the money supply.  Will the return be 4 percent + inflation or 4 percent - inflation?

It the money is left in Index funds or similar, will this be expected to keep pace with the inflation?  My cash certainly won't.  I've been seeing inflation as I visit the grocery store.  It is out there. 

This retirement thing is both wondrous and scary at the same time.

Bateaux

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #26 on: January 08, 2018, 01:27:10 AM »
Wildjager wrote:

Quote
So some people aim for a lower WR, others pad a few years worth of cash to waterfall if necessary,
,

Well the old adage is "Cash is King"  I think that makes some sense.  I can take Social Security in 6 mos, but want to forgo as 100 percent  for the remainder of my life would be better than 70 percent.  On paper the 4 percent should give me adequate income w/o SS.

Here's another concern I have.  The boys in charge are going to be spending a trillion dollars they don't have.  Is all of that going to be borrowed?  Is some just going to be spent as deficit spending?  Seems to me there is the specter of inflation haunting us again.  Looks like an artificial increase in the money supply.  Will the return be 4 percent + inflation or 4 percent - inflation?

It the money is left in Index funds or similar, will this be expected to keep pace with the inflation?  My cash certainly won't.  I've been seeing inflation as I visit the grocery store.  It is out there. 

This retirement thing is both wondrous and scary at the same time.

In 2016 I had a high degree of confidence I'd FIRE in 2018.  I was confident that the ACA would be solid and universal health care was on the way.  Well, we know how that ended.  I have zero confidence I'll be guaranteed health care going forward and have all but resolved to postpone FIRE till 2020.  Even with 2M invested I know one bout with cancer could wipe us out without health insurance.   I've got a decent health insurance  plan at work, good pay and not so terrible job task.  I'm just going to save even harder and wait to vote for hope.
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soccerluvof4

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #27 on: January 08, 2018, 04:06:05 AM »
Wildjager wrote:

Quote
So some people aim for a lower WR, others pad a few years worth of cash to waterfall if necessary,
,

Well the old adage is "Cash is King"  I think that makes some sense.  I can take Social Security in 6 mos, but want to forgo as 100 percent  for the remainder of my life would be better than 70 percent.  On paper the 4 percent should give me adequate income w/o SS.

Here's another concern I have.  The boys in charge are going to be spending a trillion dollars they don't have.  Is all of that going to be borrowed?  Is some just going to be spent as deficit spending?  Seems to me there is the specter of inflation haunting us again.  Looks like an artificial increase in the money supply.  Will the return be 4 percent + inflation or 4 percent - inflation?

It the money is left in Index funds or similar, will this be expected to keep pace with the inflation?  My cash certainly won't.  I've been seeing inflation as I visit the grocery store.  It is out there. 

This retirement thing is both wondrous and scary at the same time.

In 2016 I had a high degree of confidence I'd FIRE in 2018.  I was confident that the ACA would be solid and universal health care was on the way.  Well, we know how that ended.  I have zero confidence I'll be guaranteed health care going forward and have all but resolved to postpone FIRE till 2020.  Even with 2M invested I know one bout with cancer could wipe us out without health insurance.   I've got a decent health insurance  plan at work, good pay and not so terrible job task.  I'm just going to save even harder and wait to vote for hope.






^+1.  I would without a doubt if you have a contingency plan for Healthcare and or its cost is built into your 4%, If not get that figure out first and then fire. 
" In life you don't get what you deserve you get what you negotiate"

radram

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #28 on: January 08, 2018, 06:26:00 AM »


In 2016 I had a high degree of confidence I'd FIRE in 2018.  I was confident that the ACA would be solid and universal health care was on the way.  Well, we know how that ended.

How can we conclude that the issues with healthcare have ended? Right now, healthcare spending is an absolute dream for a FIRE couple with a modest income. I believe the chances of healthcare staying unchanged are close to zero. It is less than half of what I budgeted for when I FIRED 3 years ago. Moving forward, who the hell knows? I will still plan for healthcare costs to be a large percentage of my annual budget and have backup plans including being willing to travel (or permanently move) for the sole purpose of healthcare needs. Whatever changes I will still have incredible flexibility.

You are correct that 1 bout with cancer can wipe out an uninsured FIRE stache with 2 million. Truth is, waiting 5-7 years to double your stache will do very little to change that scenario.


pecunia

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #29 on: January 08, 2018, 06:24:49 PM »
Quote
You are correct that 1 bout with cancer can wipe out an uninsured FIRE stache with 2 million. Truth is, waiting 5-7 years to double your stache will do very little to change that scenario.

Nothing in life is certain except death and taxes.

I wonder how outrageous the cost of health insurance can get.  I've been putting a separate stash aside to cover the cost, but my stash is based on this year's cost plus a little margin.  At the time I plan to retire, there will be 3 years to Medicare.  I just figure if it keeps increasing, there will be some sort of people's revolt.  I saw the clips of some of the town meetings with politicians.  Now that people have been given the hope of having more than "access" to health care, actually getting health care, a change will be forced on the system.

We've all got Cancer and its in our health care system.

You guys never said anything about the chance of big inflation with the huge government debt.  Is this another big gamble?

StetsTerhune

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #30 on: January 09, 2018, 02:36:51 AM »
Late to the party, but I'll chime in anyway. Yes, I pulled the plug at almost exactly 4%.  In fact I just calculated my spending for 2017, my first full calendar year since I quit,and I was at almost exactly 4% spending.

Lots of caveats though and I wouldn't have quit without some or most of these in place.
 1. I'm very young and very employable, I could get a (specific) job tomorrow, and a (nonspecific) job fairly quickly. I am fully prepared to go that route if something changes investmentwise.
2. My wife (and I do some consulting work for her, mostly so I have something I can put on my resume for this time) is working on a big project. It may never pay off, but if it does it will reduce the % considerably
3. I have no fixed spending at all (I am a permanent traveler) and can reduce my spending considerably if needed.

I think all of those factors are much more important than the specific percentage of spending I have. I am hoping my retirement will last 60+ years, and over that span I think flexibility is the only thing that can guarantee success.

boarder42

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #31 on: January 09, 2018, 04:08:49 AM »
@Retire-Canada should chime in here.

My take. You're over 50. You're more likely to die now than have your stache fail. I also assume you're not accounting for ssa add that in and you likely have a huge safety net outside of the 4% swr safety. Why keep doing something you don't want to do.

Many companies will let you buy their insurance after a certain age. If that was in a year or two I'd cut my work to part time to buy into that and stick around. But that would be my only personal reason for sticking around.
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Retire-Canada

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #32 on: January 09, 2018, 07:11:16 AM »
Just wondering if anyone has FIREíd right when they achieved the 4% withdrawal.
I really want to go but Iím right at a 4% with this run up and if the ACA stays. Iím 53 with a stay at home spouse and a 13 yo child. Iím I crazy?



No I think it would be crazy to keep working past 4%WR. Set yourself up with enough bonds for a few years expenses in case a crash happens right after you FIRE. Get on with your life you won. Congrats.

Note: red area in chart above is the chance of going broke at 4% starting at 50. Yeah it's hard to see, but it's there.

I'm shooting for 5% myself [about to turn 49] and then I'll start my exit strategy to FIRE at ~4.5% and most definitely before 4%. Note I am already downshifted working 24hrs/week Mon-Wed as I feel free time is more important than working to 4%WR as fast as possible.

rdy4er

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #33 on: January 09, 2018, 01:36:05 PM »
Just wondering if anyone has FIREíd right when they achieved the 4% withdrawal.
I really want to go but Iím right at a 4% with this run up and if the ACA stays. Iím 53 with a stay at home spouse and a 13 yo child. Iím I crazy?



No I think it would be crazy to keep working past 4%WR. Set yourself up with enough bonds for a few years expenses in case a crash happens right after you FIRE. Get on with your life you won. Congrats.

Note: red area in chart above is the chance of going broke at 4% starting at 50. Yeah it's hard to see, but it's there.

I'm shooting for 5% myself [about to turn 49] and then I'll start my exit strategy to FIRE at ~4.5% and most definitely before 4%. Note I am already downshifted working 24hrs/week Mon-Wed as I feel free time is more important than working to 4%WR as fast as possible.



Thanks for the chart, I see it is for 100% stocks, just wondering what a 60/40 split does to it.

Retire-Canada

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #34 on: January 09, 2018, 01:44:58 PM »
Thanks for the chart, I see it is for 100% stocks, just wondering what a 60/40 split does to it.

I don't recall Maizeman making charts for that situation, but I could be wrong. a 60/40 split will likely have a significantly bigger go broke zone, but I suspect it will still be small compared to the risk of dying.

You could PM Maizeman and see if he'd be willing to crank out 60/40 chart.

boarder42

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #35 on: January 09, 2018, 01:58:31 PM »
why are you looking at a 60/40 split thats not a great scenario you dont gain much you should stay above 80/20 and historically you'd be safer - throw out all the data that you learned from people on the outside its poor data.
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2Birds1Stone

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #36 on: January 09, 2018, 03:52:50 PM »
Not yet.....but that sure as heck is the plan!

steveo

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #37 on: January 09, 2018, 06:57:36 PM »
Thanks for the chart, I see it is for 100% stocks, just wondering what a 60/40 split does to it.

I don't recall Maizeman making charts for that situation, but I could be wrong. a 60/40 split will likely have a significantly bigger go broke zone, but I suspect it will still be small compared to the risk of dying.

You could PM Maizeman and see if he'd be willing to crank out 60/40 chart.

McClung has analysed this and he suggests a 60/40 split may be too high on the stock side. I think a 50% stock/bond ratio while following his approach of never selling stocks unless you have no bonds has I think a 4.5% SWR. Basically utilising a traditional stock/bond allocation over your retirement and reallocating to retain that percentage has a lower chance of success.

So with the right withdrawal strategy you may be able to increase your rate of success. He does take into account mortality figures when working out your withdrawal rate per year and I think he defaults to something like 5%.
« Last Edit: January 09, 2018, 07:11:22 PM by steveo »

boarder42

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #38 on: January 10, 2018, 07:50:22 AM »
Thanks for the chart, I see it is for 100% stocks, just wondering what a 60/40 split does to it.

I don't recall Maizeman making charts for that situation, but I could be wrong. a 60/40 split will likely have a significantly bigger go broke zone, but I suspect it will still be small compared to the risk of dying.

You could PM Maizeman and see if he'd be willing to crank out 60/40 chart.

McClung has analysed this and he suggests a 60/40 split may be too high on the stock side. I think a 50% stock/bond ratio while following his approach of never selling stocks unless you have no bonds has I think a 4.5% SWR. Basically utilising a traditional stock/bond allocation over your retirement and reallocating to retain that percentage has a lower chance of success.

So with the right withdrawal strategy you may be able to increase your rate of success. He does take into account mortality figures when working out your withdrawal rate per year and I think he defaults to something like 5%.

historically anything under 80/20 starts to get really bad really fast when back tested with cFIREsim.
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AdrianC

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #39 on: January 10, 2018, 07:54:51 AM »
Just wondering if anyone has FIREíd right when they achieved the 4% withdrawal.
I really want to go but Iím right at a 4% with this run up and if the ACA stays. Iím 53 with a stay at home spouse and a 13 yo child. Iím I crazy?

Iíve been thinking about the question.

We were right at 4% in the fall of 2007. It wasnít on my radar at the time anyway, but with hindsight Iím glad I didnít pull the plug then. We know how that would have turned out.

We got back to 4% at the end of 2012, five years later. FIRE then would have worked out just great. Still wasnít on my radar.

I discovered MMM in early 2014, went part time in fall 2015. I worked far longer than I needed to (2013-2014 full-time, 2015-2017 part-time). Business owner. Takes a while to wind down gracefully. Iím FIRE now (still do some part-time consulting).

I think Iíd FIRE at 4% now as long as we had enough in our projected expenses to cover healthcare costs rising at above inflation rates.

That chart of age versus probability of success/death is quite compelling, to say the least.

RedmondStash

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #40 on: January 10, 2018, 11:15:37 AM »
I FIREd recently, somewhat inadvertently -- sudden crappiness at work -- and spouse retired early last year. We're looking at probably 4.5% to 5% withdrawal rates. Not exactly ideal, but we both still have earning power if we need it, and I'd been looking at FIRE over the next year anyway.

I expect we'll pick up side hustles at some point, some kind of low-stress, low-paid part-time work, to round out the corners. That's the nice thing about FIRE: it doesn't have to be a permanent condition. You can adjust as necessary.

Retire-Canada

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #41 on: January 10, 2018, 11:16:24 AM »
I FIREd recently, somewhat inadvertently -- sudden crappiness at work -- and spouse retired early last year. We're looking at probably 4.5% to 5% withdrawal rates. Not exactly ideal, but we both still have earning power if we need it, and I'd been looking at FIRE over the next year anyway.

I expect we'll pick up side hustles at some point, some kind of low-stress, low-paid part-time work, to round out the corners. That's the nice thing about FIRE: it doesn't have to be a permanent condition. You can adjust as necessary.

That sounds perfect. Enjoy!

Livingthedream55

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #42 on: January 12, 2018, 09:57:55 AM »
I know you are asking who did, but, I didn't. Just plain scared and maybe you are too. My current situation at work is way better than a couple of years ago. Way better. So it is easier to keep at it. Yes, according to the 4% rule I could comfortably retire single at age 50 with no kids and 1.2M. But, I'm just not confident. I don't like it, but this is how I am. Yes, I've got tendonitis from programming and should walk, but I don't. Yes, I've got plenty to stay busy at if I quit, but I still OMY. Now I need to go read some OMY threads. I need to break out of this. How much is enough? That is a question for me.

Does it have to be all or nothing? Could you go part-time now?



steveo

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #43 on: January 12, 2018, 03:01:38 PM »
Thanks for the chart, I see it is for 100% stocks, just wondering what a 60/40 split does to it.

I don't recall Maizeman making charts for that situation, but I could be wrong. a 60/40 split will likely have a significantly bigger go broke zone, but I suspect it will still be small compared to the risk of dying.

You could PM Maizeman and see if he'd be willing to crank out 60/40 chart.

McClung has analysed this and he suggests a 60/40 split may be too high on the stock side. I think a 50% stock/bond ratio while following his approach of never selling stocks unless you have no bonds has I think a 4.5% SWR. Basically utilising a traditional stock/bond allocation over your retirement and reallocating to retain that percentage has a lower chance of success.

So with the right withdrawal strategy you may be able to increase your rate of success. He does take into account mortality figures when working out your withdrawal rate per year and I think he defaults to something like 5%.

historically anything under 80/20 starts to get really bad really fast when back tested with cFIREsim.

The same comment was made in the other 4% thread and it's not factually true. The problem is that you aren't implementing a withdrawal strategy at all or maybe better put you are implementing a really poor withdrawal strategy.

It's exactly like implementing a 100% cash strategy in that it is sub-optimal. There are alternatives that work a lot better once you reach the drawdown phase.

This is newer information (and therefore I don't think it can be tested in the tools that you mention) but I think the whole analysis that is done on portfolios and assuming that portfolio remains as it throughout the accumulation and drawdown phase is to put it simple far from ideal.

« Last Edit: January 12, 2018, 03:04:56 PM by steveo »

boarder42

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #44 on: January 12, 2018, 06:06:18 PM »
I plan to use a variable withdrawal method. And use it to only lower our withdrawals around 10k per year the first few years. I'll look a bit more at reverse equity glide
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steveo

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #45 on: January 12, 2018, 07:23:18 PM »
I plan to use a variable withdrawal method. And use it to only lower our withdrawals around 10k per year the first few years. I'll look a bit more at reverse equity glide

I think this is the area where there is a dearth of information. McClung uses a variable withdrawal percentage with an increased bond percentage in your portfolio at the start of your retirement. I think the best bet was something like 50/50 stocks/bonds at the start of the drawdown phase. He does suggest increasing your stock percentage if you want the increased chance of your portfolio lasting longer or having more money at the end however this comes at the cost of decreasing your chances of success over the course of your retirement. So you may end up with more money on average but fail more often as well.

Personally I'm going to follow McClung's approach with a higher equity percentage. I may also work part time for a little while depending on how I feel about work. I'm also happy though with a 5% WR.

RedmondStash

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #46 on: January 13, 2018, 11:30:15 AM »
I FIREd recently, somewhat inadvertently -- sudden crappiness at work -- and spouse retired early last year. We're looking at probably 4.5% to 5% withdrawal rates. Not exactly ideal, but we both still have earning power if we need it, and I'd been looking at FIRE over the next year anyway.

I expect we'll pick up side hustles at some point, some kind of low-stress, low-paid part-time work, to round out the corners. That's the nice thing about FIRE: it doesn't have to be a permanent condition. You can adjust as necessary.

That sounds perfect. Enjoy!

Thanks. It's not so bad. :)

Flexibility is key. We're also planning to take on expensive home projects that can have flexible timing (replacing roof & gutters, repainting house exterior, remodeling rooms) during bull-market years, and avoid them during down years. So our withdrawal rates rise and fall with our annual profits. You could call it market timing, but I think of it as profit-taking. That way, when the market falls, we'll still have that new roof. ("We'll always have Paris.")

Retire-Canada

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #47 on: January 13, 2018, 02:08:31 PM »
Flexibility is key.

I'm 100% with you on this. A big chunk of my spending can be moved around [within reason] so that I can adjust for year to year with market returns like you are suggestion. I think that's a solid way improve your portfolio's performance with no really significant quality of life impact.

smoghat

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #48 on: February 12, 2018, 07:36:46 AM »
I think one thing we don't consider here is that it's not just a matter of percent, it's also a matter of how much cash there is in the first place. Are you trying to retire on $1 million with a $40,000 withdrawal rate or on 5 million with a $200,000 withdrawal rate? It's obvious that in one case you could lose half your stache and still live ok and in the other you'd be the guy holding the cardboard sign by the side of the road. 

boarder42

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #49 on: February 12, 2018, 07:52:28 AM »
I think one thing we don't consider here is that it's not just a matter of percent, it's also a matter of how much cash there is in the first place. Are you trying to retire on $1 million with a $40,000 withdrawal rate or on 5 million with a $200,000 withdrawal rate? It's obvious that in one case you could lose half your stache and still live ok and in the other you'd be the guy holding the cardboard sign by the side of the road.

not correct- what really matters is how much flexibilty there is in the number - if you retire with 5MM and have to spend 200k a year to maintain your basic needs you're more likely to go broke than the person spending 40k a year but only have to spend 20k for basic needs you're much less likely to go broke - add to that the fact that its much easier to make 20k than it is to make 100k doing odd jobs and other things after FIRE and you're likely in a lot larger world of hurt. 
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