Playing around with all kind of simulators, I guess where I am landing is that 4% is too much when there are troubles, no matter what the AA is. I've been looking specifically at 66, 69. and 99/00*
I guess so far my conclusions are:
- 100% stocks are too volatile
- 4% is too much
I've redone my AA with the proverbial planned glidepath, so check on that! But hard to get to sub 4% WR before social security at age 70 for me.
I guess the other thing this chart suggests is that if you ever get to 50% of initial portfolio value/12.5 years expenses - time to get a job and/or cut expenses to the bone, etc.
Once you fall below 10 years of spending, cash out and buy an annuity and call it a day!
mmm! now I feel better! lol. I have a contingency plan. Hoepfully annuities would be a good deal or at least a good enough deal at that inopportune moment.
I guess I did learn my lesson :)
@mistymoney - we've discussed this before, but Michael Kitces is very well known in the retirement planning space. I heard him a couple of years ago on a Bigger Pockets Money podcast, and he summarized it well:
He noted that the Trinity study was a *worst case scenario* of what it would take to not run out of money in 30 years, with a 60/40 portfolio. He noted that there are a lot of small changes that - over 30 years - would have profound effects.
- Using 3.3% instead of 4%.
- Not taking the inflation adjustment in any year that the market ended "down."
- Earning small amounts of money. If you earn just $1700 per month (~$20k/yr), that substitutes for $500k of savings in the portfolio.
- Downsizing the house.
- Moving to a lower cost of living area.
- Buying a small SPIA to make sure that you have the fixed expenses covered for sure.
- Delaying Social Security past FRA - even if not all the way to age 70.
- Lowering your investments costs below 1%, which was a normal fee structure in 1994.
In fact, there are so many levers, he noted that the outcome after 30 years of retirement if you did just a couple of these things meant that it was far more likely that you'd end up with MORE money than you started with.
I note that you also say that you are only needing 4% up until age 70. It's perfectly fine to use something like the Bogleheads' VPW until age 70, and then reduce to 3% or so once you claim Social Security.
You have MANY levers. You'll be fine.
