Author Topic: does anyone use a different swr rule than 4%?  (Read 2157 times)

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does anyone use a different swr rule than 4%?
« on: November 08, 2015, 09:52:35 AM »
just wondering how many do swr differently than 4%. my swr target is 1/2 of my yearly return. so if i want to spend $40k a year, i would need to make $80k a year.

using stock returns, i would need $1 million using the 4% rule
but for me, instead i assume that over time, i will get 6% (historic) growth each year so to get my $80k a year, i need almost $1.3 million for the same $40k which is my target number before retiring... sure i might hit fi before than but i dont know if i will be comfortable retiring until my own rule is met. well my goal is 1.5 but it will vary depending on what i get each year. just want my spend to be half of what i get. this way i can still have a 50% savings rate going forward in retirement as well

i heard real estate investors and dividend investors just spend the rent/dividends each month, but i dont know how that comes out as a swr number. i heard it is slightly higher than 4% but not sure since i dont do either if it isnt in the total stock index.

i am not anywhere close to it, just thinking about how people plan fire differently if they dont use 4% rule. i mean in reality, someone could be fi and spend 100% of returns, bit that would be foolish to me for long decades without more money going into system

mmm doesnt but it sounds like a lot on here are counting on that... which seems odd because people come to mmm because he fire, but he isnt following the 4% rule because he gets more than that as well. and i dont think he started fire with 4% rule but i dont know where his starting line was set

edit: not sure if it is in right forum now that i typed it out, please move to a better resting place if needed
« Last Edit: November 08, 2015, 10:02:13 AM by eyem »

bacchi

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Re: does anyone use a different swr rule than 4%?
« Reply #1 on: November 08, 2015, 10:11:25 AM »
I'll be using the VWP method of withdrawals.

Retire-Canada

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Re: does anyone use a different swr rule than 4%?
« Reply #2 on: November 08, 2015, 10:51:56 AM »
I'm shooting for a 4% WR.

1. work ~full time and invest [now]
2. move to part-time and invest some to $0/yr depending on how much I work
3. when portfolio hits 4% stop working part-time or at least stop giving a shit about working and do it only if I'm feeling it

The 4% SWR + my home equity + my lifestyle/work flexibility is so damn conservative already I would feel like an idiot working extra to lower that rate further.

That's just my take on it. I'm an engineer working in QC/project management and I am conservative by nature, but at the same time I value the opportunity cost of my life highly so freedom to do what I want should not be squandered needlessly.

Many of the freakish events that will cause a 4% WR to fail will also cause a 2% or 3% WR to fail. At a certain point more money is not the way to mitigate against future problems.

MDM

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Re: does anyone use a different swr rule than 4%?
« Reply #3 on: November 08, 2015, 04:06:08 PM »
...so to get my $80k a year, i need almost $1.3 million for the same $40k which is my target number before retiring...

Not quite sure what is being stated/asked here...?

Interest Compound

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Re: does anyone use a different swr rule than 4%?
« Reply #4 on: November 08, 2015, 04:31:06 PM »
Variable Percentage Withdrawal for me. VPW is great because it forces you to cut back when you need to (when the 4% rule would've failed anyway), it gives you higher withdrawals when the 4% rule wouldn't have failed (the vast majority of the time), and it does so very early in the cycle when you're still young enough to enjoy it. The best part is it gives me the confidence to pull the plug much earlier than I would otherwise. Remember, the 4% rule is a worst-case number. Most years you could get away with a much higher withdrawal. I'd love to FIRE on $800,000 with $40,000 expenses, instead of aiming for $1,000,000 to build up a buffer I might never need. If I choose an unlucky year and ended up needing the buffer, no problem. VPW will warn me very early on, and I can adjust.

(answer half copied from my post here)

arebelspy

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Re: does anyone use a different swr rule than 4%?
« Reply #5 on: November 09, 2015, 05:35:11 AM »
I donno, maybe 10%?  It depends on what you're measuring.

I'm not really counting too closely, and hard to project, but I'll probably do a post hoc look back at some point.
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