Leesbro63 wrote: ↑Wed Dec 07, 2022 2:01 pm
HomerJ wrote: ↑Wed Dec 07, 2022 1:52 pm
Marseille07 wrote: ↑Wed Dec 07, 2022 1:39 pm
marcopolo wrote: ↑Wed Dec 07, 2022 12:56 pm
Sure. But, then you are changing the definition of "success" as it relates to the 4% "rule"
Re-retiring while keeping a floor at SWR + CPI isn't a free lunch. The retirees need to evaluate if the 10% failure rate is acceptable.
Just remember that "failure" means cutting back expenses in bad times. It doesn't have to mean running out of money.
If 4% represents "bare-bones" survival, then yes, I wouldn't count on 4%.
If 4% includes a decent chunk of discretionary expenses, then it's fine.
A 10% chance of "I might only take an expensive vacation every other year instead of every year" is much different than a 10% chance of "I might find myself living under a bridge eating garbage."
I think failure is like retiring in 1966. And by 1974 finding that your real stash is down by over half in real terms. And having 22 more years to go. Yeah, in hindsight we know that 4% actually did work. But how many could have just kept spending more inflated dollars every year (as per the 4% “rule”…constant real spending) as they saw their stash melt away? It just wouldn’t have happened for anyone but the totally oblivious. And the stress of that melting away is my definition of failure.
Well my point is that no one would actually follow the constant 4% spending plus inflation "rule" in that situation.
If you retire into a bunch of really bad years, you cut back. The failure is that you spend less than you planned, maybe for a short while, maybe for a long while, but no one blindly follows 4% into bankruptcy.
The point is that the 4% study had a 10% failure that you go broke in year 27 or something (if you live that long). But, in real life, for people on this site, the 10% failure is that you retire into a bad economic period, and you only get to take 2 vacations a year instead of 4 vacations a year for a while.
"Failure" isn't nearly as scary as it sounds.
I do agree that stressing over money could also ruin retirement. I will admit I am working a couple extra years instead of retiring right at 4% to create a buffer for myself as well. For instance, say $2 million is my goal... I might work a little longer and get to $2.2 million... but I don't reset my expectations around the new $2.2 million number... I'm still thinking of myself as retiring with $2 million, so I have the $200,000 buffer (in cash\CDs\etc) in case we have bad times the first couple of years after I retire.
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59