START worrying about the 4% rule

[Retire-Canada]

If you like your job, it might be not such a big sacrifice.

No unless you love your job and would do it for free it would be a terrible deal to trade your most precious resource [time] for money you don't need.

[GenXbiker]

Regarding trading years for money, this has come up in some other recent threads:
https://forum.mrmoneymustache.com/welcome-to-the-forum/cfiresim-success-rate/msg1649685/#msg1649685

Edit: corrected typo

[AdrianC]

Inflation and healthcare cost can go through the roof

Healthcare cost inflation is a genuine concern. Those of us approaching FIRE in the USA and not covered by a group plan need to be sure we've built in a safety margin for healthcare costs. I demonstrated how I did it in the "Stop worrying about the 4% rule" thread here:

https://forum.mrmoneymustache.com/investor-alley/stop-worrying-about-the-4-rule/msg1649407/#msg1649407

I'd be interested in hearing how others have done it or plan to do it.

I do not see a reasonable way to hedge against health care costs. The problem is as you approach medicare age the premiums are going up much higher than inflation, while at the same time you are statistically more likely to get serious medical problems which incur large out of pocket expenses. You can eat kale 3 times a day and ride your bike everywhere, but you still may get cancer or MS or need expensive surgery when you are in your 50s. It also may be difficult to go back to work when you are sick.

Having 10k out of pocket medical costs per year when you are living off 25k is a real problem for the 4% rule. You can either accept the risk or save more, only two options really.

Sure.

Instead of simply saying I can FIRE when I get to 25x expenses, I've tried to use the tools available - CFIREsim - to model my own unique circumstance. Some will argue about my assumptions, e.g. 13% inflation for healthcare costs, but I can justify it.

For me it ends up at an initial 3.5% SWR. And I'm already there so it's not an issue.

Using the same assumptions for someone trying to FIRE on < $1M will give an even lower SWR. C'est la vie. The way to hedge against health care costs is having more money.

[Le Barbu]

I don't think it's cool to start an entire thread to mock a commenter.  He has his opinions, you can disagree with them, but this seems over the line. 

The market is overvalued right now so I see people's points for the 4% rule being dangerous for people who retire early with no income - I think this risk can easily be avoided with any kind of part time job income.

Over the line? Are you serious? You know there is an entire sub-section of this forum called Antimustachian Wall of Shame and Comedy with over 100,000 posts?

First, I started this thread because Runewell, who belong to start it, declined my offer. Then, I understand that many should think twice before blindly think that 4% is bulletproof. The other thread purpose is to help people to worry less about the fineprint. Runewell attitude toward this thread doesnt help in any way.

If you think that 4% is not safe, here is the place to post!

[grettman]

Because:

CAPE is high (in case you dont know it)
Market is expansive, especially in the US
Past performance is no guarantee of future results
You do no want to work for money ever after pulling the plug (as required by the IRP)
You may outlive your stash if your blessed with good health and/or luck
Inflation and healthcare cost can go through the roof
You did not find your inner badassity yet

This list is far from being exhaustive so, feel free to add your own concerns

***disclaimer, this post does not reflect the opinion of Le Barbu***

The things you listed would make me worry about a 6% withdrawal rate. Remember, 4% withdrawal is worst case scenario. So, to redo your list, here's things that would get me worrying about the 4% rule:

Global Pandemic
World War
Worldwide Famine
Massive Energy Shortage
Alien Invasion

Anything I forget?

Zombies.  And they should be at the top of your list.

[runewell]

If you think that 4% is not safe, here is the place to post!

In a thread that will eventually disappear?  Not a chance.   If this were permanently fixed below the other 4% thread I could go with that, but I'm not going to waste any more time here - my last post in this thread.   

[Incandenza]

You, from the sticky thread:

I knew my simplistic approach had flaws.

It boggles my mind that you want ideas that you admit are both simplistic and flawed to be enshrined permanently.

[fattest_foot]

I don't think it's cool to start an entire thread to mock a commenter.  He has his opinions, you can disagree with them, but this seems over the line. 

The market is overvalued right now so I see people's points for the 4% rule being dangerous for people who retire early with no income - I think this risk can easily be avoided with any kind of part time job income.

The market is overvalued right now...based on what?

If it were overvalued, the price would be going down. The market is valued at exactly what the market should be valued at. By definition of what the market is, it can't be overvalued.

[fattest_foot]

That reminds me of the story of an economist who would refuse to pick up a $20 bill on the sidewalk, because his theory would be that it must not be real or else someone would have already picked it up.

So besides witty quips, you don't actually have any rationale for why the market is overvalued?

I can't wait to hear about how it's all due to PE ratios.

[Dicey]

If you think that 4% is not safe, here is the place to post!

In a thread that will eventually disappear?  Not a chance.   If this were permanently fixed below the other 4% thread I could go with that, but I'm not going to waste any more time here - my last post in this thread.

It was I who suggested that runewell start another thread in lieu of continually hijacking of the other one. There's a "Pay Off Your Mortgage Thread" and a "DON'T Pay Off Your Mortgage Thread", which is what gave me the idea to suggest it. Runewell declined, so Le Barbu started one and the conversation's been pretty lively, as often happens here in Mustacheland.

Then runewell pulled on their complainypants, came over here and said they weren't going to come here because this thread doesn't have a sticky.

Did runewell ask the mods to make it one? Dunno.
Does runewell understand that active conversation will keep this thread near the top as long as people are interested, sticky or no? Dunno.
Did runewell say they weren't going to follow this thread? YES.
Did runewell then come here and start griping? YES.
Did runewell just say they were not going to post here any more? YES!

Apparently runewell wants to spend their time on the other thread, frantically trying to convince everyone else they're wrong, just because that thread has a sticky. Oh well, buh-bye, runewell. It coulda been a great conversation with your input.

Edited for typos and emphasis.

[Le Barbu]

The forum as become weird lately!

So, it's not cool Pete started that blog about financial indépendance through badassity? The mainstream médias and complainypants where just fine! Now, everyone on this forum agree with him and echo the same ideas ad nauseam...

Runewell was not supposed to come here but did, now he is supposed to post on the sticky thread only to annoy a maximum people apparently

[Roland of Gilead]

1)  Fuel is cheap

2)  Resources (steel, copper, etc.) are cheap

3)  Automation is growing


These are things that are likely to sustain growth, not dampen it.

[maizefolk]

1. Shiller PE is high, meaning price growth is outpacing earnings growth.

If earnings grow faster than they have in the past, you can get a situation where P/E ratios are exactly the same, but the Shiller PE increases, because faster earnings growth and a fixed P/E pushes prices up while earnings from previous years obviously do not change.

Consider two cases (I'm intentionally choosing an ridiculously extreme scenario to illustrate this property):

A) Companies earn $1T/year for ten years and the stock market is worth $15T in the last year. P/E=15. Average earnings over the last decare are $1T/year so the Shiller PE = 15. 

B) Companies earn $1T/year for 9 years and $3T in year 10. Given a P/E of 15, the stock market is now work $45T. Average earnings over the last decade are $1.2T/year so Shiller PE = 37.5

I'm not arguing that's necessary what is happening at the moment, but it's important to understand the different mathematical properties of the Shiller PE when trying to interpret it (and this is putting aside the accounting issues you point out which make comparisons of the Shiller PE before and after the mid-1990s an issue of apples and oranges).

2. More people are leveraging.  Consumer debt, auto debt, mortgages, student loans, all growing hugely (see MMM article):

http://www.mrmoneymustache.com/2017/06/20/next-recession/

I don't disagree with this point. All that debt together isn't as big as the bad debt of the housing crisis, but a lot of it clearly is bad debt.

3. Speculative investments are gaining steam.  Bitcoin and other cryptocurrencies are created out of thin air and people buy them.

The total value of all cryptocurrencies in existence is something like $100B (an effectively a lot less than that since a lot of that is composed of bitcoins that people lost the private keys to years ago).

Personally I think crypotcurrencies have the potential to do a lot of good for the world economy long term, but the fact of the matter is that at the moment if we woke up tomorrow and every cryptocurrency on the planet ceased to exist, it wouldn't even be a blip on the US economy.

4. Construction cranes everywhere, overbuilding retail, but when you go to these new locations the restaurants look empty.  Old malls have tumbleweeds going through them.

Read somewhere an estimate that as a result of consumers shifting to more and more online purchases we likely have more than one billion square feet of surplus retail space that will have to close. However, I do think reason for a lot of the new construction you see in the USA is the ongoing shift towards economic concentration in a few large urban centers. Even if we need a lot less total retail space going forward, there may be local areas where the population is growing fast enough that they don't have enough of it. When I visit places like DC, SF, or ATL and see lots of new towers and skyscrapers going up, it seems like most of that is new residential housing.

5. Hearing stories of my neighbors, friends and family paying astronomical prices for houses, and keeping their old place and renting it out.

I guess my answer to this is pretty much the same as the one above. Some parts of the country are seeing big net inflows of migration and the supply of housing hasn't caught up yet. Other parts have stable or shrinking populations and housing is quite affordable.

[maizefolk]

1. The CAGR of EPS of the S&P 500 is 3.72% between 1986 and 2016.  Therefore, earnings would have to rise substantially for the Shiller PE ratio to decrease from the current 30 to the mean of 16 in 10 years. I think it's more likely that the growth of the S&P 500 will decrease from historical averages as it has in the past when the Shiller PE spiked above 30.

I believe you and I both pointed out in this same thread in the last several posts that the change in accounting data means that the historical average for the PE10 isn't an informative datapoint to use for comparison anymore.

2. The Shiller PE ratio is flawed due to accounting changes - Even after accounting for different acctg standards, it's still high

(and this is putting aside the accounting issues you point out which make comparisons of the Shiller PE before and after the mid-1990s an issue of apples and oranges).

[Le Barbu]

Many people exposing worries about the 4% rule just fear their future COL compared to actual COL

Better guess what you future COL will be factoring health care etc instead of worriyng about the 4% rule!

Ex. I am Canadian and a 80k$/year budget for 2 of us is bullet proof from my POV. When I hit 2M$ invested, I quit whatever CAPE level and P/E will be at that point! My realistic COL is probably more in the 60k$/year range, so plenty of safety margin right away!

Reason why I dont quit before is because I would never be able to earn that much latter and kids are still young. Actual COL is 50-60k$ and stash @ 4% would bring 36k$

I figure 5-7 more years...

[Retire-Canada]

Ex. I am Canadian and a 80k$/year budget for 2 of us is bullet proof from my POV. When I hit 2M$ invested, I quit whatever CAPE level and P/E will be at that point! My realistic COL is probably more in the 60k$/year range, so plenty of safety margin right away!

To be fair if your expected COL is $60K/yr and you save $2M you are at a 3%WR.

[Dicey]

Ex. I am Canadian and a 80k$/year budget for 2 of us is bullet proof from my POV. When I hit 2M$ invested, I quit whatever CAPE level and P/E will be at that point! My realistic COL is probably more in the 60k$/year range, so plenty of safety margin right away!

To be fair if your expected COL is $60K/yr and you save $2M you are at a 3%WR.

Doesn't the percentage depend on if the $60k/yr is before or after taxes? R-C, come back! Tell us more, please!

[WhiteTrashCash]

Human sacrifice! Dogs and cats living together! Mass Hysteria! Hide yo' kids, hide yo' wife, hide yo' husband, 'cause they financially ruinin' errbody out here!

[Le Barbu]

Ex. I am Canadian and a 80k$/year budget for 2 of us is bullet proof from my POV. When I hit 2M$ invested, I quit whatever CAPE level and P/E will be at that point! My realistic COL is probably more in the 60k$/year range, so plenty of safety margin right away!

To be fair if your expected COL is $60K/yr and you save $2M you are at a 3%WR.

True, and 3% or 60k$ is a comfortable and trouble free COL but if SHTF, I can afford to spend 80k$ and still be within the  4% range. A bigger stash (let say 2M$) gives some opportunities that a 1.5M$ cant. Buying a house without a mortgage before selling the actual house, invest in a startup with no fear to loose $, travel in a more expensive way (à la DW;) etc

Some sequences can turn 1.5 to 2M$ in a blink when 100% stocks!

But I tell you something, if I hit the 1.5M$ mark and get bored from work, I will not hesitate to quit!

I have been out of the workforce for 14 months and realised that even if you are happy while not spending, you keep feeling a kind of lonelyness within family and friend. Since everybody is spendy and live as if we are still in the 60's (car is king, pollution does not exist, etc) you feel like a cheapstake even spending 5k$/month!

[Retire-Canada]

True, and 3% or 60k$ is a comfortable and trouble free COL but if SHTF, I can afford to spend 80k$ and still be within the  4% range.

No argument. A 3% WR is beyond safe and will likely give you a fire hose of cash to spend should you wish as your portfolio outruns your spending.

A 3%WR has never failed historically regardless of sequence of returns.

Using cFIREsim and $60K/yr on $2M portfolio with 100% stocks you get 100% success and a ~$10M median ending portfolio after 40yrs.

[Le Barbu]

True, and 3% or 60k$ is a comfortable and trouble free COL but if SHTF, I can afford to spend 80k$ and still be within the  4% range.

No argument. A 3% WR is beyond safe and will likely give you a fire hose of cash to spend should you wish as your portfolio outruns your spending.

A 3%WR has never failed historically regardless of sequence of returns.

Using cFIREsim and $60K/yr on $2M portfolio with 100% stocks you get 100% success and a ~$643M median ending portfolio after 40yrs.

I know all of this, but I cant see how I will not go from 7% to 4% in more than 5 years, then I can already be at 3% within months!

[Retire-Canada]

I know all of this, but I cant see how I will not go from 7% to 4% in more than 5 years, then I can already be at 3% within months!

Sounds great, but the reason you are not worried about the 4% rule is that you are going for a 3% WR.

[Le Barbu]

Ex. I am Canadian and a 80k$/year budget for 2 of us is bullet proof from my POV. When I hit 2M$ invested, I quit whatever CAPE level and P/E will be at that point! My realistic COL is probably more in the 60k$/year range, so plenty of safety margin right away!

To be fair if your expected COL is $60K/yr and you save $2M you are at a 3%WR.

Doesn't the percentage depend on if the $60k/yr is before or after taxes? R-C, come back! Tell us more, please!

Dont know for R-C but for me, stash is mostly pre-tax but COL is after taxes. Taxes are in the 20-30% range, depends on tax credit for individual situation.

[Le Barbu]

I know all of this, but I cant see how I will not go from 7% to 4% in more than 5 years, then I can already be at 3% within months!

Sounds great, but the reason you are not worried about the 4% rule is that you are going for a 3% WR.

Haha! When kids leave home and I get more freedom from this POV, then my WR can be anything from 3% to 5% I dont really care. I just cannot see how, at this point, I will not be <4%

There is a big différence being 2 adults vs a family with young kids

[sol]

Many people exposing worries about the 4% rule just fear their future COL compared to actual COL

Better guess what you future COL will be factoring health care etc instead of worriyng about the 4% rule!

This point has been raised here many times before, but all of the usual 4% haters continue to fail to grasp it.  If your concerns are about having enough money to live on within 4%, then your problem is one of expenses, not withdrawal rates.  4% works, you just need to be more comfortable with the number of dollars that 4% provides. 

Typical complaints about the 4% rule:  healthcare!  new car! new roof!  college expenses!  Every single one of them is a concern about future expenses, so the correct response is to estimate those future expenses and then save enough so that the 4% rule covers those expenses.  It doesn't make any sense to plan on a 3% SWR on the wrong expenses number, that's just deliberately ignoring your uncertainties and trying to overcompensate with additional safety margin somewhere else.  That's bad planning.

Get your expenses right, and the 4% rule will serve you just fine.  If you've estimated your future expenses too low, and end up "needing" to draw more than 4%, then your problem is not with the 4% rule.  Your problem in that situation is you.

And just as an aside, I feel I should remind everyone that no matter what your expenses are, there is someone somewhere who is happier than you and living on half as much.  Your quality of life should not be measured in dollars. 

[Dicey]

Man, I love your pithy wisdom, SOL!

[TheAnonOne]

Many people exposing worries about the 4% rule just fear their future COL compared to actual COL

Better guess what you future COL will be factoring health care etc instead of worriyng about the 4% rule!

This point has been raised here many times before, but all of the usual 4% haters continue to fail to grasp it.  If your concerns are about having enough money to live on within 4%, then your problem is one of expenses, not withdrawal rates.  4% works, you just need to be more comfortable with the number of dollars that 4% provides. 

Typical complaints about the 4% rule:  healthcare!  new car! new roof!  college expenses!  Every single one of them is a concern about future expenses, so the correct response is to estimate those future expenses and then save enough so that the 4% rule covers those expenses.  It doesn't make any sense to plan on a 3% SWR on the wrong expenses number, that's just deliberately ignoring your uncertainties and trying to overcompensate with additional safety margin somewhere else.  That's bad planning.

Get your expenses right, and the 4% rule will serve you just fine.  If you've estimated your future expenses too low, and end up "needing" to draw more than 4%, then your problem is not with the 4% rule.  Your problem in that situation is you.

And just as an aside, I feel I should remind everyone that no matter what your expenses are, there is someone somewhere who is happier than you and living on half as much.  Your quality of life should not be measured in dollars.

Greatly stated, these complaints are basically...

"The 4% rule won't work because I will go broke using the 7% rule"

[dandarc]

Your problem in that situation is you.

Amazing how many situations this applies to.

[steveo]

Many people exposing worries about the 4% rule just fear their future COL compared to actual COL

Better guess what you future COL will be factoring health care etc instead of worriyng about the 4% rule!

This point has been raised here many times before, but all of the usual 4% haters continue to fail to grasp it.  If your concerns are about having enough money to live on within 4%, then your problem is one of expenses, not withdrawal rates.  4% works, you just need to be more comfortable with the number of dollars that 4% provides. 

Typical complaints about the 4% rule:  healthcare!  new car! new roof!  college expenses!  Every single one of them is a concern about future expenses, so the correct response is to estimate those future expenses and then save enough so that the 4% rule covers those expenses.  It doesn't make any sense to plan on a 3% SWR on the wrong expenses number, that's just deliberately ignoring your uncertainties and trying to overcompensate with additional safety margin somewhere else.  That's bad planning.

Get your expenses right, and the 4% rule will serve you just fine.  If you've estimated your future expenses too low, and end up "needing" to draw more than 4%, then your problem is not with the 4% rule.  Your problem in that situation is you.

And just as an aside, I feel I should remind everyone that no matter what your expenses are, there is someone somewhere who is happier than you and living on half as much.  Your quality of life should not be measured in dollars.

This is a great post but I think some people are scared of the 4% rule in relation to market conditions rather than expenses. Estimating your expenses incorrectly in my opinion is though a legitimate reason why your retirement will fail but as you state that is not a knock on the 4% rule. It just means people have underestimated their expenses.

[sol]

If what i read are posts that attack other forum members, push for separate threads by narrow views, and bully unpopular choices i wont stay.

Bye, Felicia?

If we're each going to gripe, I think it's fair to point out that runewell was not attacked for having different opinions, he was criticized for being too stubborn to read the answers made available to him, and then stated emphatically as facts several blatant falsehoods in an attempt to mislead and confuse people.  He admitted he didn't know what he was taking about and had no point, yet continued to grossly misrepresent both the original 4% rule and the vast body of work this forum has generated. 

He contributed nothing of value, and ruined a perfectly good thread by filling it with lies, and I haven't yet decided if he did so out of ignorance or malice.

You don't like it when we fight back against ignorance and/or malice?  Feel free to jump into the conversation to set things right, then.  But don't wait a week and then leave cryptic BS like this as if your imagined moral superiority entitles you to toss around your condescending opinions unchallenged.

[markbike528CBX]

I'm really confused by this whole thread. Is the whole thing sarcasm?

No, it is cyber bullying.  It is an all too frequent practice in dying forums for clicks to emerge.  They then try to shame and humiliate people with an unpopular or different views because they are insecure in their beliefs and only want like minded people to post.

For me it is a huge turn off.

I don't think it's cool to start an entire thread to mock a commenter.  He has his opinions, you can disagree with them, but this seems over the line. 

The market is overvalued right now so I see people's points for the 4% rule being dangerous for people who retire early with no income - I think this risk can easily be avoided with any kind of part time job income.

Over the line? Are you serious? You know there is an entire sub-section of this forum called Antimustachian Wall of Shame and Comedy with over 100,000 posts?

First, I started this thread because Runewell, who belong to start it, declined my offer. Then, I understand that many should think twice before blindly think that 4% is bulletproof. The other thread purpose is to help people to worry less about the fineprint. Runewell attitude toward this thread doesnt help in any way.

If you think that 4% is not safe, here is the place to post!

I agree with mustaches.  I note also several posts that say things like .` if you save more than the minumum you have bigger issues to worry about'...as if being conservative was some sort of mental disease. 

The anti-surplus wealth rhetoric and general harassment of posters who chose to make and explain their own choices is the reason why i rarely post anymore and remain close to deleting my account.  It is a shame because with over 35 years of investing and frugal living experience (in several countries), i believe i have insights and experiences of value to share.

The site is being taken over by bullies who dont hesitate to use rhetoric that insults the choices of others, if they dont agree with them.  I want no part of a 'think like us or be shamed' forum.  It is a style of group think that tends to appeal to several of the younger, more enthusiastic about FIRE people on this site.  They go out of their way to aim criticism at those they have deciding they are morally superior to. 

While mocking anti-mustacian attitudes, comments or news items is part of this site's style, it is very different to mock things like news items versus deliberately mocking a fellow forum member.  Forum members with more than a few posts have come here to explore these ideas with us.  Disagreeing is fine, but attempts to humiliate are not cool.  These are very different actions. If you dont like someone`s ideas, i would suggest we ignore them.  I now ignore several forum posters and it is a big improvement.

At times the dialog starts to reminds me of militant vegan discussion boards, where the mindset is so completely closed to civil discussions of nutrition or the impact of food production on our environment, that only militant vegans would dare visit or post.  They become totally self reinforcing group think, which to me is anti-Mustachian.

The implication that others making rational decisions are stupid, need to be shamed, have mental issues, or need to be told to stop posting in a thread because they are not wanted is what will kill the value of this forum.   The jealousy towards those who have more than they need is obvious.  If someone works successfully and makes more than they need they are idiots with issues....wow.   I guess i should have quit work i enjoyed so i could sit at home wondering what to do to please MMM forum members. 

Just posting to explain why i have more or less stopped posting and left the site.  I will delete this post soon, so dont worry about replying.  Just wanted to vent.

PS for the record, i believe the 4% rule is a valid and useful planning tool.  I also chose, for reasons of my own, to grow my wealth beyond what was strictly needed under that 'guideline.'  I feel i have just as much right to participate in this forum free from insults or harrassment, as anyone else, though as i said i am still hesitant.  Having come back after some nice PM notes encouraged me to stay i hope to see a civil site and keep posting.  If what i read are posts that attack other forum members, push for separate threads by narrow views, and bully unpopular choices i wont stay.

While I concur with PizzaSteve that the tone of the responses ( including this thread)  was harsh, I also concur with Sol's  just previous post about runewells's approach.   

I've asked the mods to considering unsticking the ----Stop worrying about the 4%" thread----, because by runwell's own  statement, that is why runwell was posing posting  there. 

quoted PizzaSteve only to prevent driveby postings.

[Dicey]

I'm really confused by this whole thread. Is the whole thing sarcasm?

No, it is cyber bullying.  It is an all too frequent practice in dying forums for clicks to emerge.  They then try to shame and humiliate people with an unpopular or different views because they are insecure in their beliefs and only want like minded people to post.

For me it is a huge turn off.

I don't think it's cool to start an entire thread to mock a commenter.  He has his opinions, you can disagree with them, but this seems over the line. 

The market is overvalued right now so I see people's points for the 4% rule being dangerous for people who retire early with no income - I think this risk can easily be avoided with any kind of part time job income.

Over the line? Are you serious? You know there is an entire sub-section of this forum called Antimustachian Wall of Shame and Comedy with over 100,000 posts?

First, I started this thread because Runewell, who belong to start it, declined my offer. Then, I understand that many should think twice before blindly think that 4% is bulletproof. The other thread purpose is to help people to worry less about the fineprint. Runewell attitude toward this thread doesnt help in any way.

If you think that 4% is not safe, here is the place to post!

I agree with mustaches.  I note also several posts that say things like .` if you save more than the minumum you have bigger issues to worry about'...as if being conservative was some sort of mental disease. 

The anti-surplus wealth rhetoric and general harassment of posters who chose to make and explain their own choices is the reason why i rarely post anymore and remain close to deleting my account.  It is a shame because with over 35 years of investing and frugal living experience (in several countries), i believe i have insights and experiences of value to share.

The site is being taken over by bullies who dont hesitate to use rhetoric that insults the choices of others, if they dont agree with them.  I want no part of a 'think like us or be shamed' forum.  It is a style of group think that tends to appeal to several of the younger, more enthusiastic about FIRE people on this site.  They go out of their way to aim criticism at those they have deciding they are morally superior to. 

While mocking anti-mustacian attitudes, comments or news items is part of this site's style, it is very different to mock things like news items versus deliberately mocking a fellow forum member.  Forum members with more than a few posts have come here to explore these ideas with us.  Disagreeing is fine, but attempts to humiliate are not cool.  These are very different actions. If you dont like someone`s ideas, i would suggest we ignore them.  I now ignore several forum posters and it is a big improvement.

At times the dialog starts to reminds me of militant vegan discussion boards, where the mindset is so completely closed to civil discussions of nutrition or the impact of food production on our environment, that only militant vegans would dare visit or post.  They become totally self reinforcing group think, which to me is anti-Mustachian.

The implication that others making rational decisions are stupid, need to be shamed, have mental issues, or need to be told to stop posting in a thread because they are not wanted is what will kill the value of this forum.   The jealousy towards those who have more than they need is obvious.  If someone works successfully and makes more than they need they are idiots with issues....wow.   I guess i should have quit work i enjoyed so i could sit at home wondering what to do to please MMM forum members. 

Just posting to explain why i have more or less stopped posting and left the site.  I will delete this post soon, so dont worry about replying.  Just wanted to vent.

PS for the record, i believe the 4% rule is a valid and useful planning tool.  I also chose, for reasons of my own, to grow my wealth beyond what was strictly needed under that 'guideline.'  I feel i have just as much right to participate in this forum free from insults or harrassment, as anyone else, though as i said i am still hesitant.  Having come back after some nice PM notes encouraged me to stay i hope to see a civil site and keep posting.  If what i read are posts that attack other forum members, push for separate threads by narrow views, and bully unpopular choices i wont stay.

While I concur with PizzaSteve that the tone of the responses ( including this thread)  was harsh, I also concur with Sol's  just previous post about runewells's approach.   

I've asked the mods to considering unsticking the ----Stop worrying about the 4%" thread----, because by runwell's own  statement, that is why runwell was posing posting  there. 

quoted PizzaSteve only to prevent driveby postings.

FWIW, you can't can't correctly call it "bullying" if you didn't read all of both threads. Runewell had his own agenda and cared not for anyone's benefit but his own. That's not meaningful dialog. Sometimes calling a spade a spade is just a factual assessment, not bullying. I'm gonna stand behind every word I've posted on both threads, including the use of appropriate humor, because they guy just wouldn't read or listen and blatantly and willfully ignored attempts to help him create a more appropriate place to explore his unique set of concerns.

I for one, am standing up and raising my hand. I have reported runewell's behavior to the mods and there has been no response either way.

For the record, the other hilarious accusation is the formation of "clicks" (Erm, it's "clique", btw), and you got only part of it right.

clique - klēk,klik (noun)
a small group of people, with shared interests or other features in common, who spend time together and do not readily allow others to join them.

Since anyone who follows the rules can join any discussion here, you missed that last part by a mile. There is exactly ONE forum member I know by sight, and they're not even involved in this discussion. How is that a clique? Now, if you said a number of people who are regulars here do not readily suffer fools, you might be onto something. But all anyone's doing is trying give the poor guy the proper place to work through his concerns (belt and suspenders, anyone?). Yup, humor is allowed and encouraged. Since the mods are at least doubly aware of the situation and have not stepped in in any visible way, I'd say your accusations of bullying are baseless.

And posting complaints and then deleting them is not exactly a stand-up move, IMHO.

[sol]

I wasn't defending runwell

Okay, my mistake.  It sure sounded to me like you were, but it was all kind of vague so hard to know for sure.

So please edit out the quotes

That seems unlikely.  You were quoted for the specified purpose of preventing "drive by posting".  If you want to contribute anonymously and without repercussions, there's always 4chan.  Around here, we like people to own their words.  The good ones and the bad ones.

as i prefer not to leave off topic `trash' in the `yard'

I assure you that you are not even close to the worst offender in this regard. 

Please explain what the Bye Felicia comment is meant to communicate?

http://knowyourmeme.com/memes/bye-felicia has details of the original quote.  I was asking you if you were giving us the "Bye Felicia" treatment with your post saying "Don't even respond, I'm so done with this."  Okay, I paraphrased, but that was the gist of your post as I understood it. 

[markbike528CBX]

Relax, this IS the trash thread.

[GenXbiker]

This is a great post but I think some people are scared of the 4% rule in relation to market conditions rather than expenses. Estimating your expenses incorrectly in my opinion is though a legitimate reason why your retirement will fail but as you state that is not a knock on the 4% rule. It just means people have underestimated their expenses.

That is my understanding also and is the point the Runewell has been making as well as the view expressed by the experts noted in the other thread.    I've seen posts by people who fear health care costs and by others who may not be including necessary home maintenance in their budget, but I haven't seen those posters calling those things causes of 4% rule failures.

Examples:
https://forum.mrmoneymustache.com/welcome-to-the-forum/budgeting-home-maintenance-costs/
https://forum.mrmoneymustache.com/welcome-to-the-forum/what's-your-biggest-fire-fear/

[Dicey]

Stuff
And posting complaints and then deleting them is not exactly a stand-up move, IMHO.

I only opened this from ignore out of curiosity.  You got me.  You cought an Autocorrect spelling error.  Boy you are so much smarter than me Dicey.  Enjoy your group think.  I can point to probably 100 rude and intolerant things you have posted and you are welcome to your community of like minded folks.

I hope you achieve your FIRE goals.  My lovely wife and I have achieved mine.

PS i delete posts not about the 4% rule to avoid cluttering up the thread with arguments.  It is for the good of the community, and is a stand up move.  Only someone with an EGO like you needs to keep their communications up or who feels a record of an arguement is useful to anyone.  It is garbage so i delete it once the message has been read by the intended audience.  What should be in this thread is discussion of the 4% rule, not meta discussions arguing semantics by ego driven young men.

Pizza Steve, I typically apologize profusely when I am wrong or my words are unclear or I have unintentionally hurt someone's feelings. Hell, sometimes I apologize when my comment merely reveals that I completely missed the point. I stand by my words consistently, honestly and without fear. Feel free to elaborate on the specifics of those "probably 100 things", but don't you dare throw random darts at me in hopes that I will be intimidated by you.

I've been an MMM reader practically since Pete's first article. I've been an active member of this forum for over five years and 5500+ posts. On December 5th of 2017, I will celebrate five years post-FIRE. I participate here with enthusiasm, in hopes of making it easier for others to reach their life and FIRE goals. I know there are others who stay for the same reasons. If that makes those of us who are willing to help light the way for others a "clique", that's a badge I'll wear with honor. Perhaps that "click" you hear is the sound of people turning on their lanterns.

Are you a fellow lantern holder, Pizza Steve? Are you here to learn? To help others? Or to be scathingly critical of anyone who dares to explore a different perspective than your own? Posting stuff and yanking it down does not contribute constructively to a useful body of knowledge which supports others in their quest for FIRE.

[MrMoogle]

Many people exposing worries about the 4% rule just fear their future COL compared to actual COL

Better guess what you future COL will be factoring health care etc instead of worriyng about the 4% rule!

This point has been raised here many times before, but all of the usual 4% haters continue to fail to grasp it.  If your concerns are about having enough money to live on within 4%, then your problem is one of expenses, not withdrawal rates.  4% works, you just need to be more comfortable with the number of dollars that 4% provides. 

Typical complaints about the 4% rule:  healthcare!  new car! new roof!  college expenses!  Every single one of them is a concern about future expenses, so the correct response is to estimate those future expenses and then save enough so that the 4% rule covers those expenses.  It doesn't make any sense to plan on a 3% SWR on the wrong expenses number, that's just deliberately ignoring your uncertainties and trying to overcompensate with additional safety margin somewhere else.  That's bad planning.

Get your expenses right, and the 4% rule will serve you just fine.  If you've estimated your future expenses too low, and end up "needing" to draw more than 4%, then your problem is not with the 4% rule.  Your problem in that situation is you.

And just as an aside, I feel I should remind everyone that no matter what your expenses are, there is someone somewhere who is happier than you and living on half as much.  Your quality of life should not be measured in dollars.

While I agree with you that it's not really a gripe about the 4% rule, estimating future expenses is tough, and it often gets presented as using your current expenses or just retired expenses.  It's a gripe about implementing the 4% rule.  What good is the rule if I can't implement it?

If it's 2004 and you're retiring and planning on using catastrophic only insurance, how do you plan for when 2009 comes around and that no longer exists and you need to spend $5k+ more on insurance each year?  Now that is the ONLY event I can think of in the last 100 years that is like that, so I'm not really worried about another one.

I'm still young and single, and will probably still be by the time I FIRE.  I'd like to get married and have kids one day, and while I am adding a buffer for that, there's no way I'm going to be accurate.  It just depends on too many things.

While it's great data and analysis, it's difficult to use for some of us.  It's easier to look at all that uncertainty and say, I'll just spend 3% my first year and see how it all plays out, and make adjustments later if I need to.

[Le Barbu]

If you think that 4% is not safe, here is the place to post!

In a thread that will eventually disappear?  Not a chance.   If this were permanently fixed below the other 4% thread I could go with that, but I'm not going to waste any more time here - my last post in this thread.

Now, the sticky thread is locked. How long before we get trouble makers here?...

[Le Barbu]

If you think that 4% is not safe, here is the place to post!

In a thread that will eventually disappear?  Not a chance.   If this were permanently fixed below the other 4% thread I could go with that, but I'm not going to waste any more time here - my last post in this thread.

Now, the sticky thread is locked. How long before we get trouble makers here?...

Oups! Just read the posts above, seems like some already invited themselves!

[Dicey]

Now, the sticky thread is locked. How long before we get trouble makers here?...

Looks like it's only temporary right now. Hopefully order will be restored in the land.

Posted by Frugal Touque at 4:36 today:

[Locking the thread temporarily while we discuss what to do with it]

(ETA in case it's not clear: The "Stop" thread is temporarily locked, not this one.)

[Dicey]

It's unlocked, It's unlocked! Thanks mods!!!

[Mr Mark]

Many people exposing worries about the 4% rule just fear their future COL compared to actual COL

Better guess what you future COL will be factoring health care etc instead of worriyng about the 4% rule!

This point has been raised here many times before, but all of the usual 4% haters continue to fail to grasp it.  If your concerns are about having enough money to live on within 4%, then your problem is one of expenses, not withdrawal rates.  4% works, you just need to be more comfortable with the number of dollars that 4% provides. 
...

Agree with this.

I take the whole Trinity study/Bengen and the 4% rule [of thumb] as a rough and very useful guide. It's an extreme model experiment based on a very narrow and very rigid set of assumptions that do not come close to describing most real experiences or even sensible plans. I find it hard to imagine someone in reality FIREing away on a 'pure' 50/50 portolio of 25x expenses, starting with a 4% withdrawal rate inflation adjusted year on year for 30++ years. In the real world your expenses will go up and down, by choice and by circumstance. Your stock/bond portfolio's unrealised cash value will be volatile. Taxes will change. Your exposure to healthcare costs will vary. The risks of FIRE are not "is 3% or 4% or 5% a SWR ?" but more prosaic things like illness, divorce, & accidents.

This is why I 1000% support MMM's pragmatic badassity approach of multiple safety nets combined with his optimist gun. Got ~25x guestimated expenses? Got more interesting ways you'd like to spend 40% your free time than working until you're 70? Then go for it! Spend that time doing things you'd rather be doing. Travel. Invest time in yourself, your kids, your significant other, your friends & family.  Hone your skills at avoiding (and even reversing) hedonistic adaption and mindless consumerism.

Some of the things you end up doing will bring in unplanned income and will reduce those meticulously planned expenses. There will be social security payments and possibly other windfalls. You are unfortunately unlikely to need the same cash at 95 as you did at 40. Diversify your investments and passive income streams - low cost equity Index funds, quality debt instruments, real estate, commodities, side gigs, etc while (legally) minimising the negative impact of taxes.

A friend of mine worked at our company his whole career. Great guy. At age 59, the company decided his talents were surplus to business requirements and he got laid off with a sizeable cash package plus a generous guarenteed AAA defined benefit lifelong pension. He spent the first year off doing some traveling, and as a keen hiker and kayaker had some fun adventures with his spouse and teenage kid. Just 1 year later he suffered a super-massive heart attack and died.

Every day on this wonderful planet is a gift. Mustachianism is not about worrying about the future and micromanaging a stock/bond portfolio, but about grabbing life by the balls and living.

The last thing I worry about is the 4% rule.

[GenXbiker]

There seems to be confusion about what a 4% WR "failure" actually is.  As stated earlier in the thread, you have to get your expenses right first, but underestimating them and running short on cash because you had to increase your WR is NOT a failure of the 4% WR if the 4% WR would have worked based on your original estimated expenses.  In that situation, it's a failure of you getting your expenses correct so that you could live off an inflation adjusted 4% WR.  The 4% WR actually would have worked - the problem is that you exceeded 4% WR to pay for your higher expenses.

On the other hand, if your investments dropped early in retirement, and if you reduced your withdrawals to an inflation adjusted 3% for several years and worked part time for several years to help pay your expenses, and you successfully lived through 30 years of retirement before you died with $100 left in your account, I would call that a 4% WR failure even though the retirement was successful.

So in those two cases, the failure or success of the 4% WR did not match the failure/success of retirement.

Even a historical back-tested year that shows 4% WR was factually a failure could have been a successful retirement by making adjustments as I mentioned above, but that doesn't mean the year didn't result in a failure of the 4% WR as historical study clearly shows.

I am not worried about the 4% rule either, but that's because I know I'm not relying on a strict 4% WR to cover 100% of my bare bones expenses, so I have plenty of cushion to cut back if needed.

I believe runewell was basing the concern on the strict inflation adjusted 4% WR because of potential low future market returns, especially during the next 10 years, due to current high stock valuations, for someone retiring now, just as experts cautioned  about as referenced in one of the previous posts on the matter.  A successful or failed retirement can still be had despite a 4% WR being successful or not.  They aren't necessarily the same thing despite a 4% WR being an excellent guideline.

[Retire-Canada]

Every day on this wonderful planet is a gift. Mustachianism is not about worrying about the future and micromanaging a stock/bond portfolio, but about grabbing life by the balls and living.

Yes. Just found out a friend who "made it" [built business and amassed millions] has a year to live due to an unexpected health issue. He always dreamed of hitting the road and travelling the world, but there was always one more thing to do at work. Then his health failed and he's been battling to just breathe for the last few years and can't really get far from home. Apparently that battle has taken a turn for the worse and his daughter told me yesterday to go visit him will I still can. :(

By all means save and invest a big old stash, but don't lose track of the big picture and the really scarce resources - time and health.

[Le Barbu]

Many people exposing worries about the 4% rule just fear their future COL compared to actual COL

Better guess what you future COL will be factoring health care etc instead of worriyng about the 4% rule!

This point has been raised here many times before, but all of the usual 4% haters continue to fail to grasp it.  If your concerns are about having enough money to live on within 4%, then your problem is one of expenses, not withdrawal rates.  4% works, you just need to be more comfortable with the number of dollars that 4% provides. 
...

Agree with this.

I take the whole Trinity study/Bengen and the 4% rule [of thumb] as a rough and very useful guide. It's an extreme model experiment based on a very narrow and very rigid set of assumptions that do not come close to describing most real experiences or even sensible plans. I find it hard to imagine someone in reality FIREing away on a 'pure' 50/50 portolio of 25x expenses, starting with a 4% withdrawal rate inflation adjusted year on year for 30++ years. In the real world your expenses will go up and down, by choice and by circumstance. Your stock/bond portfolio's unrealised cash value will be volatile. Taxes will change. Your exposure to healthcare costs will vary. The risks of FIRE are not "is 3% or 4% or 5% a SWR ?" but more prosaic things like illness, divorce, & accidents.

This is why I 1000% support MMM's pragmatic badassity approach of multiple safety nets combined with his optimist gun. Got ~25x guestimated expenses? Got more interesting ways you'd like to spend 40% your free time than working until you're 70? Then go for it! Spend that time doing things you'd rather be doing. Travel. Invest time in yourself, your kids, your significant other, your friends & family.  Hone your skills at avoiding (and even reversing) hedonistic adaption and mindless consumerism.

Some of the things you end up doing will bring in unplanned income and will reduce those meticulously planned expenses. There will be social security payments and possibly other windfalls. You are unfortunately unlikely to need the same cash at 95 as you did at 40. Diversify your investments and passive income streams - low cost equity Index funds, quality debt instruments, real estate, commodities, side gigs, etc while (legally) minimising the negative impact of taxes.

A friend of mine worked at our company his whole career. Great guy. At age 59, the company decided his talents were surplus to business requirements and he got laid off with a sizeable cash package plus a generous guarenteed AAA defined benefit lifelong pension. He spent the first year off doing some traveling, and as a keen hiker and kayaker had some fun adventures with his spouse and teenage kid. Just 1 year later he suffered a super-massive heart attack and died.

Every day on this wonderful planet is a gift. Mustachianism is not about worrying about the future and micromanaging a stock/bond portfolio, but about grabbing life by the balls and living.

The last thing I worry about is the 4% rule.

Amen

[GenXbiker]

I believe runewell was basing the concern on the strict inflation adjusted 4% WR because of potential low future market returns, especially during the next 10 years, due to current high stock valuations, for someone retiring now, just as experts cautioned  about as referenced in one of the previous posts on the matter.  A successful or failed retirement can still be had despite a 4% WR being successful or not.  They aren't necessarily the same thing despite a 4% WR being an excellent guideline.

Regarding the comment about the previous post that mentioned experts advising caution on the matter, that was in a different thread, so here is a link to the post for reference as quoted and added to by me:

https://forum.mrmoneymustache.com/investor-alley/stop-worrying-about-the-4-rule/msg1656421/#msg1656421

[GenXbiker]

I was just reviewing the 4% sticky thread which has been "cleaned up".  At one point, someone posted something similar to this, although edited here by me for clarification of what I'm curious about:

"pick data to look at risk of >21 CAPE only, use this calculator, under the investigate tab you can run simulations on individual years (ie you could pick the years only with CAPE >21).  Pick only the years of known CAPE >21.  Calculate the 4% WR success rate based on that sample and come back to tell us about your study."

I never saw that anyone actually ran that calculation to see the results vs. using the common larger sequential range historical sample.  There was another thread where someone had calculated the success rate to be 40% based on the fact that someone was more likely to hit their target and retire on a peak year than on a random year as used by the online calculators...

https://forum.mrmoneymustache.com/welcome-to-the-forum/cfiresim-severely-overestimates-success-rates-for-mustachians/

But I don't see any reference in that thread of him narrowing his historical sample to years with high CAPE, so it would be interesting to know how that changes the calculation, just out of curiosity as a mathematical exercise, not that it would change my confidence in using the 4% rule.

Runewell, are you still out there, and did you ever run that calculation?

[maizefolk]

If you read further in that thread he updated his analysis to correct a bug in the code. The effect is really but quite small (may a couple of percent) for folks saving at MMMer levels.

[GenXbiker]

I saw his updated analysis later in the thread here:

https://forum.mrmoneymustache.com/welcome-to-the-forum/cfiresim-severely-overestimates-success-rates-for-mustachians/msg1625045/#msg1625045

but I still don't think he narrowed his historical sample to the high CAPE years as someone proposed Runewell do in the previous thread to reflect someone retiring today.   Anyway, I was just curious if it had been done.

Edit: another typo

[MrMoogle]

I was just reviewing the 4% sticky thread which has been "cleaned up".  At one point, someone posted something similar to this, although edited here by me for clarification of what I'm curious about:

"pick data to look at risk of >21 CAPE only, use this calculator, under the investigate tab you can run simulations on individual years (ie you could pick the years only with CAPE >21).  Pick only the years of known CAPE >21.  Calculate the 4% WR success rate based on that sample and come back to tell us about your study."

I never saw that anyone actually ran that calculation to see the results vs. using the common larger sequential range historical sample.  There was another thread where someone had calculated the success rate to be 40% based on the fact that someone was more likely to hit their target and retire on a peak year than on a random year as used by the online calculators...

https://forum.mrmoneymustache.com/welcome-to-the-forum/cfiresim-severely-overestimates-success-rates-for-mustachians/

But I don't see any reference in that thread of him narrowing his historical sample to years with high CAPE, so it would be interesting to know how that changes the calculation, just out of curiosity as a mathematical exercise, not that it would change my confidence in using the 4% rule.

Runewell, are you still out there, and did you ever run that calculation?

While that 40% number is interesting and good analysis, it was assuming something like a 10% savings rate, which doesn't apply to many people on this forum.  The lower that rate, the bigger the market affects when you retire. 

The problem with comparing past CAPE's success rates is that accounting has changed relatively recently.  A CAPE of 21 today is not equivalent to a CAPE of 21 from 30 years ago.  It's also not obvious what it should compare to, other than something less than 21.  Shiller himself says this:
https://www.nytimes.com/2017/03/31/upshot/trump-bull-market-stocks.html