Author Topic: Withdrawal question: I just got very confused and scared  (Read 459 times)

hydra

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Withdrawal question: I just got very confused and scared
« on: March 05, 2021, 12:11:29 PM »
I was reading some posts by Financial Samarai, in which he seems to imply that an early retiree should base the 4% withdrawal on what you have in your taxable account and act as if your tax-deferred retirement accounts don't exist. (See attached screenshot)

I had been assuming that during the time you're only drawing from taxable accounts (because you're not old enough to draw from tax-deferred accounts), you base the 4% on total of taxable + tax-deferred accounts.

For example, suppose:

2m in taxable
2m in tax-deferred

Current age: 50.

You can safely withdraw 4% of 4 million: 160k.

Yes, your taxable accounts will go down relatively fast, but they will recover later when you begin getting SS and drawing from your tax-deferred accounts.

Financial Samarai seems to be saying you can safely withdraw 4% of 2 million: 80k.

Am I reading him right? If so, is he shock jocking for clicks? Or does he have a valid point?

He seems to be trying to build up a huge amount of wealth to create rich heirs. I don't really see the point of that. Money is great, but having too much leads to problems in life (imo).


Malcat

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Re: Withdrawal question: I just got very confused and scared
« Reply #1 on: March 05, 2021, 12:22:59 PM »
Who listens to Financial Samurai anymore??

bacchi

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Re: Withdrawal question: I just got very confused and scared
« Reply #2 on: March 05, 2021, 12:24:06 PM »
Ignore FS. It's clickbait.

Without knowing your asset allocation, a 2% WR is very low. You're far more likely to run into RMD problems rather than money problems, even with a 4% WR.


hydra

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Re: Withdrawal question: I just got very confused and scared
« Reply #3 on: March 05, 2021, 12:28:05 PM »
Got it. Thanks!

I'm currently stuck in "one more year" syndrome and am trying to build up my psychological safety. Reading FS just stabbed my psychological safety in the neck. Fear sells.

Malcat

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Re: Withdrawal question: I just got very confused and scared
« Reply #4 on: March 05, 2021, 12:30:31 PM »
Got it. Thanks!

I'm currently stuck in "one more year" syndrome and am trying to build up my psychological safety. Reading FS just stabbed my psychological safety in the neck. Fear sells.

Don't read articles like that. Decide for yourself what is enough, no one else can decide this for you and no one online is actually an expert on what's right for you.

hydra

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Re: Withdrawal question: I just got very confused and scared
« Reply #5 on: March 05, 2021, 01:06:59 PM »
Nothing wrong with guidance. If you believe in the 4% rule or something similar, I doubt very much that you came up with that all on your own. We listen to experts because they know things. They've done studies. Like the Trinity study, etc.

Mr. Green

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Re: Withdrawal question: I just got very confused and scared
« Reply #6 on: March 05, 2021, 01:49:02 PM »
Financial Samurai has turned into a huge tool, just cranking out clickbait garbage. Definitely look other places for guidance.

Malcat

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Re: Withdrawal question: I just got very confused and scared
« Reply #7 on: March 05, 2021, 01:56:03 PM »
Nothing wrong with guidance. If you believe in the 4% rule or something similar, I doubt very much that you came up with that all on your own. We listen to experts because they know things. They've done studies. Like the Trinity study, etc.

You're right, I was mixing OP up with another thread where the OP indicated that they were nearing FIRE, which made me assume that if they're nearing FIRE, then by definition they must know their FI numbers already.

My mistake. In no way am I advocating that people not seek guidance on savings goals.