Reply to Retirement Saving Benchmarks

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]4% withdrawal rate is pushing it. US stock valuations are currently high and bond yields are projected to be lower (who knows?). 3% is a much safer bet. Maybe an argument could be made for slightly higher withdrawal rates like 3.5% if you increase international stocks and decreasing bond allocation, but again nobody knows.[/quote]

4% takes care of the worst historical periods. Go lower if you want but saying 3% is “much safer” is just silly.  Only if the future is much worse than any time in the past.[/quote]

All these benchmarks are anecdotal and you can't rely on them for planning.  You need to do the math for your situation

[/quote]

Not anecdotal, the 4% was based on research, though obviously all the data is backwards looking and past results may not be indicative of future results.

Still, I think there is a significant group of folks who are way too conservative, they wouldn’t be satisfied even with at $20M portfolio and a 2% withdrawal rate.  Fine if they want to hoard, I suppose, [b]but isn’t the point to know when you can relax and enjoy the fruits of your labo[/b]r?[/quote]

A lot of folks can do that without spending money. More money = money happiness is not always right. [/quote]

You’re 100 percent missing my point.[/quote]

no, i get  your pt. your pt wasn't that complicated[/quote]

Complicated enough that you missed it, but whatever.[/quote]

DP: I know a lot of people find security gives them more happiness than spending, so having a 2-3% withdrawal rate might allow them to enjoy the fruits of their labor rather than taking a risk. There are a lot of critiques of the 4% withdrawal rate--it's based on US data in one historical time period--when US was the dominant growing country.  And it was calculated at a time when statistics were more simple and it's based on a 30 year retirement.  The idea that you can safely and confidently set 4% of your initial retirement account and then get that amount inflation-adjusted return for your whole retirement just isn't that sensible.  Sometimes you would likely fall short, other times you would be wildly underspending. In my opinion, it's better to forget this idea of a SWR and instead set a minimum floor of what you need and get that through safe sources (e.g., social security, treasury bills, annuities), set a reserve fund for emergencies/health care/long-term care, and then spend more based on the earnings of what is left.  Stock market goes up--spend more, down --spend less.  Seems more fun too.[/quote]

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