Author Topic: Anyone pulled the plug right at a 4% wdr?  (Read 7377 times)

PizzaSteve

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #50 on: February 12, 2018, 08:48:00 AM »
To answer your first question, for us the answer is no.  We RE'd at your age exactly, but with a bigger cushion. 

However, my advice is to go for it.  In my opinion stash size should not be the primary criteria for deciding.

Why?

1) You are FI.  4% is very safe range.
2) Early 50s are a perfect age to retire.  Likely you have achieved your career and family goals and it is a great age for new adventures.
3) The window to do some physically demanding fun things is closing.  Last week we found a specific glacier hike we wanted to do was age restricted 18 to 50, no exceptions due to insurance.  Never mind 50+ people are climbing Everest....that was the policy...sucks, but bucket list items must be done  :-), get on it.
« Last Edit: February 12, 2018, 08:49:48 AM by PizzaSteve »
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pecunia

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #51 on: February 12, 2018, 07:58:35 PM »
Quote
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

That makes a lot of sense.  The more stuff you have, the more it enslaves you.  It is also easier to move up to higher lifestyle than the $200k people to go down.  I guess life always has the KISS principle.

PizzaSteve

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #52 on: February 14, 2018, 10:30:57 AM »
Quote
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

That makes a lot of sense.  The more stuff you have, the more it enslaves you.  It is also easier to move up to higher lifestyle than the $200k people to go down.  I guess life always has the KISS principle.
I dont fully agree. 

True, if you `need` to spend $200k, there is a risk.

However, someone with $200k income who has accumulated $5M is by definition a saver.  This person has forgone enough possible consumption to save and invest.  They have not spent 300k or more, even though they could have.  Such a person can easily spend less. 

Dont confuse income levels with saving and investing habits.  The habits are what make successful FIRE, at any level.

If you have $5M, you are ABLE to spend 200k.  That doesnt mean you MUST spend 200k.  Bashing someone who has been successful, for their success, may be a popular position to take in this forum (queue the long thread bashing Bogleheads type folks), but we have a lot of frugal people in this forum who are also doing very well with their investments.  Most people I know who accumulate several millions are actually very capable of being frugal. 

MMM is a good example, for instance.  I would not be suprised if he now has an 8 figure net worth.  I doubt his lifestyle changes much though.  The spenders never get to that 5M.  It raises an interesting question....if through good fortune you have more than enough  (maybe you worked for Apple and got stock), shouldnt you enjoy it a bit?  Excess wealth isnt doing any good after death.  I know some advocate more charity, which is a good idea.  Perhaps a thread on setting up revocable trusts would be an interesting topic for those without generational heirs...(money there should markets crash and you need it, but going to a good cause on death if you dont).
« Last Edit: February 14, 2018, 10:43:40 AM by PizzaSteve »
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boarder42

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #53 on: February 14, 2018, 11:28:06 AM »
Correct if you change the entire premise of my statement it's incorrect. Crazy how that works.

Also to have accumulated 5MM does also not make the person a saver there are numersous ways to get 5MM without being a saver.

The post is taken mildly out of context too as it was in response to some one claiming that 5MM provides more security than 1MM. Which is incorrect. What really matters was the point I was making in that post above.

Really it's the percentage of discretionary spending over required spending that adds to flexibility and increases safety. Not the total dollars retired with. And as stated the ability to supplement higher required spending in general decreases as spending rises.
« Last Edit: February 14, 2018, 11:50:56 AM by boarder42 »
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PizzaSteve

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #54 on: February 20, 2018, 07:31:40 AM »
Correct if you change the entire premise of my statement it's incorrect. Crazy how that works.

Also to have accumulated 5MM does also not make the person a saver there are numersous ways to get 5MM without being a saver.

The post is taken mildly out of context too as it was in response to some one claiming that 5MM provides more security than 1MM. Which is incorrect. What really matters was the point I was making in that post above.

Really it's the percentage of discretionary spending over required spending that adds to flexibility and increases safety. Not the total dollars retired with. And as stated the ability to supplement higher required spending in general decreases as spending rises.
I think we are mostly in agreement, so I wont argue.  There are people who blow through money and those who dont.  Income or asset levels dont have much to do with it, so we can agree it is spending habits relative to wealth that matter.  We can also agree that savers tend to save, spenders to spend, regardless of wealth or income levels. 

I personally think lower asset level folks face a higher risk of catastrophic loss, since medical costs are the number 1 cause of going broke and the 200k/yr spender tends to have medical coverage while in the US the 20k spender often cant afford it.  But that is a different story.

My comment was because I know a lot of millionaires and nearly all of them are not the spenders.  The 200k/yr spenders I know do not have much of a stash.  Despite your comment that there are a lot if ways to accumulate 5M, I actually dont agree.  Even those who get stock options tend to either save them (and get rich) or cash them in ASAP to buy stuff (and never get a stash).  Sure there are NBA and movie stars or folk who inherit, but they are in the minority of millionaires under 60 I know. 

Maybe the millionaires or wealth accumulation modes where you live are different from mine.  Do you actually know any 200k/yr spenders who also are also worth 5M?  I dont know any TBH.  I know plenty of 200-300k/yr spender couples in debt and without much savings though, so I get where you are coming from.
« Last Edit: February 20, 2018, 07:35:57 AM by PizzaSteve »
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boarder42

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #55 on: February 20, 2018, 08:28:53 AM »
Correct if you change the entire premise of my statement it's incorrect. Crazy how that works.

Also to have accumulated 5MM does also not make the person a saver there are numersous ways to get 5MM without being a saver.

The post is taken mildly out of context too as it was in response to some one claiming that 5MM provides more security than 1MM. Which is incorrect. What really matters was the point I was making in that post above.

Really it's the percentage of discretionary spending over required spending that adds to flexibility and increases safety. Not the total dollars retired with. And as stated the ability to supplement higher required spending in general decreases as spending rises.
I think we are mostly in agreement, so I wont argue.  There are people who blow through money and those who dont.  Income or asset levels dont have much to do with it, so we can agree it is spending habits relative to wealth that matter.  We can also agree that savers tend to save, spenders to spend, regardless of wealth or income levels. 

I personally think lower asset level folks face a higher risk of catastrophic loss, since medical costs are the number 1 cause of going broke and the 200k/yr spender tends to have medical coverage while in the US the 20k spender often cant afford it.  But that is a different story.

My comment was because I know a lot of millionaires and nearly all of them are not the spenders.  The 200k/yr spenders I know do not have much of a stash.  Despite your comment that there are a lot if ways to accumulate 5M, I actually dont agree.  Even those who get stock options tend to either save them (and get rich) or cash them in ASAP to buy stuff (and never get a stash).  Sure there are NBA and movie stars or folk who inherit, but they are in the minority of millionaires under 60 I know. 

Maybe the millionaires or wealth accumulation modes where you live are different from mine.  Do you actually know any 200k/yr spenders who also are also worth 5M?  I dont know any TBH.  I know plenty of 200-300k/yr spender couples in debt and without much savings though, so I get where you are coming from.

my comment was mostly hyperbolic to show the person i was replying to that the size of the stache is not relevant.  its the size of the required spending needing to live relative to the stache we can nit pick the numbers all day long but a person with more discressionary spending in their stache that can be eliminated is safer- b/c they can cut spending if the markets are bad the first few years of FIRE. and the lower the overall required spending makes a person safer - b/c its easier to go earn that money.

talking about unknown costs like healthcare are just straw man arguements b/c you can what if yourself with unknown costs til you die and never retire.  - we live in a capitalist society the healthcare cost issue will be solved by technology in the not to distant future - and the system will be forced to change and already are due to not working as intended.  we're in a strange time where the resolution to the healthcare problem in the US is unknown which makes it scary but there may always be some unknown that adds fear to costing a person the greatest risk of all - working longer when they didnt have to - if you work 1 - 2 -10 extra years your guaranteeing only one thing - you worked X many extra year.  everything else is still uncertain.
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Bird In Hand

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #56 on: February 20, 2018, 10:31:11 AM »
Just wondering if anyone has FIRE’d right when they achieved the 4% withdrawal.

OP, do you have a clear idea what your lifestyle and expenses will be in retirement?  My only concern about pulling the plug now, at 4% SWR, is the sequence of returns risk.  I do think it's likely we'll enter a bear market soon, and I'd be somewhat hesitant to jump right in at 4% without a solid backup plan.  If you have the ability to dial back expenses if needed, and/or supplement with part-time work, then at age 53 I think I'd feel comfortable pulling the plug.

---------------------------------

Our biggest problem isn't coming to grips with whether 4% is "safe enough".

Our biggest problem is convincing ourselves that a particular target spending amount is "correct".  We've identified a couple spending figures just to have a frame of reference, but only the lower/barebones one has any basis in reality; it corresponds to the lowest possible amount we could imagine our expenses to be without drastically changing our current lifestyle.  But it would require some adjustments that we aren't eager to embark upon.

What if we want to move to a higher COL area in retirement?  What if we change our minds and decide it's a good idea to help pay for one or more of our kids to attend a very expensive university?  What if we get the travel bug?  What if we have to contribute some of the cost for the care of an elderly family member?  I could easily envision these things happening, and having a huge impact on our yearly expenses.

So what do you do if your yearly expenses might reasonably be anywhere in the range of $50,000-$100,000?  Well, for one thing you keep OMY well beyond $50,000.  Do you keep going right up to $100,000?  Beyond?  I don't know.  :(
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boarder42

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #57 on: February 20, 2018, 10:37:57 AM »
Just wondering if anyone has FIRE’d right when they achieved the 4% withdrawal.

OP, do you have a clear idea what your lifestyle and expenses will be in retirement?  My only concern about pulling the plug now, at 4% SWR, is the sequence of returns risk.  I do think it's likely we'll enter a bear market soon, and I'd be somewhat hesitant to jump right in at 4% without a solid backup plan.  If you have the ability to dial back expenses if needed, and/or supplement with part-time work, then at age 53 I think I'd feel comfortable pulling the plug.

---------------------------------

Our biggest problem isn't coming to grips with whether 4% is "safe enough".

Our biggest problem is convincing ourselves that a particular target spending amount is "correct".  We've identified a couple spending figures just to have a frame of reference, but only the lower/barebones one has any basis in reality; it corresponds to the lowest possible amount we could imagine our expenses to be without drastically changing our current lifestyle.  But it would require some adjustments that we aren't eager to embark upon.

What if we want to move to a higher COL area in retirement?  What if we change our minds and decide it's a good idea to help pay for one or more of our kids to attend a very expensive university?  What if we get the travel bug?  What if we have to contribute some of the cost for the care of an elderly family member?  I could easily envision these things happening, and having a huge impact on our yearly expenses.

So what do you do if your yearly expenses might reasonably be anywhere in the range of $50,000-$100,000?  Well, for one thing you keep OMY well beyond $50,000.  Do you keep going right up to $100,000?  Beyond?  I don't know.  :(

you missed a bit what if --- what if you never retire b/c you keep what iffing your self you're rapidly falling into that trap with these questions.
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Bird In Hand

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Re: Anyone pulled the plug right at a 4% wdr?
« Reply #58 on: February 20, 2018, 11:17:46 AM »
Just wondering if anyone has FIRE’d right when they achieved the 4% withdrawal.

OP, do you have a clear idea what your lifestyle and expenses will be in retirement?  My only concern about pulling the plug now, at 4% SWR, is the sequence of returns risk.  I do think it's likely we'll enter a bear market soon, and I'd be somewhat hesitant to jump right in at 4% without a solid backup plan.  If you have the ability to dial back expenses if needed, and/or supplement with part-time work, then at age 53 I think I'd feel comfortable pulling the plug.

---------------------------------

Our biggest problem isn't coming to grips with whether 4% is "safe enough".

Our biggest problem is convincing ourselves that a particular target spending amount is "correct".  We've identified a couple spending figures just to have a frame of reference, but only the lower/barebones one has any basis in reality; it corresponds to the lowest possible amount we could imagine our expenses to be without drastically changing our current lifestyle.  But it would require some adjustments that we aren't eager to embark upon.

What if we want to move to a higher COL area in retirement?  What if we change our minds and decide it's a good idea to help pay for one or more of our kids to attend a very expensive university?  What if we get the travel bug?  What if we have to contribute some of the cost for the care of an elderly family member?  I could easily envision these things happening, and having a huge impact on our yearly expenses.

So what do you do if your yearly expenses might reasonably be anywhere in the range of $50,000-$100,000?  Well, for one thing you keep OMY well beyond $50,000.  Do you keep going right up to $100,000?  Beyond?  I don't know.  :(

you missed a bit what if --- what if you never retire b/c you keep what iffing your self you're rapidly falling into that trap with these questions.

I wouldn't say I missed it.  Rather, that's the whole point of what I'm saying.  The OMY trap is vexing to me personally, and to many others.  I was just giving some context for why we struggle with OMY.  Having jobs we like further encourages OMY.  I think this is the one upside of having a crappy job -- OMY is not nearly as tempting!
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