A.I.M. Users Bulletin Board

[ls7550]

Hi Tom

I've never done SWR planning

The common 4% SWR is just a rule of thumb, a guide. Based on 60/40 stock/bond historic worst case (peak to trough) 30 year period where the value drew down to zero in that worst case. The % is only used at the offset to indicate a $$$ value, thereafter its the only the $$$ value that is used (uplifted by inflation).

I guess that as a guide, if portfolio values are down from prior inflation adjusted highs you might just consider whether 4% relative to that prior high was 'enough' of a inflation adjusted income as part of decision making.

It's been a floating value at best and not by plan but by circumstance

That is the more common situation, I suspect very few actually stick with the hard SWR rule. Just use it as a indicator of whether it might be OK to early retire or not. In the average case a initial 4% value when inflation adjusted over time tends to become a increasingly smaller percentage of actual portfolio value over time. I'm pretty terrible with spending, have no real idea of my actual withdrawal rate, I just draw what/when I need, very variable. As I've not really seen any decline in wealth after withdrawals I've not felt any need to monitor withdrawals/spending closely. I early retired back in 2005 in my mid 40's, back then I was more concerned about whether I had enough and withdrawal rates/amounts ...etc. 25x years spending, 4% SWR was a guide back then, nowadays I'm more at like 100x, 1% SWR and I now also have a occupational pension that recently kicked in (at age 60). And in another 6.5 years a state pension also starts. I guess push come to shove I could survive on just those two pensions alone (around $30K/year net type lifestyle). But with comfortably into 7 digits of wealth also behind that. Far different to back in 2005 when I was pretty fearful that I hadn't accumulated enough (mid 6 digits) and the big life-change from dropping out of the rate race into the unknown was a significant concern. Given family circumstances since however and I'm very glad I took that decision however.

Regards.

Clive