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physicianonfire.com/drawdownWe work, we earn, we save. We invest simply and sensibly. Perhaps we’ve accepted the challenge to live on half. Eventually, we have reached our magic number.
We’ve got 25, 30, or 33.33 years’ worth of anticipated annual expenses for a 4%, 3.33%, or 3% withdrawal rate spread across various tax-deferred, tax-advantaged, and taxable accounts.
We are experts in adding to them. But how do we best subtract from them? Today, I’d like to share our drawdown plan in early retirement.
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Just like Elizabeth Warren, AOC, Bernie Sanders...just go away. Everyone is tired of your nonsense and general kookiness.
It's kind of like when you put on a suit and tie and are a white dude...no one questions you or looks at you funny when you walk into a store....you write an investment porn blog and just because you get a following that makes you an expert? Never take investment advice from anyone who doesn't have over $10MM. As Josh Brown refers to in is book, "How do you invest, show me your portfolio". Sheet.
Apologies for the snark. Sincerely DO appreciate the post.
In reality, all snark aside, I do truly believe the only safe retirement plans are for those who have a gov't pension and live in a "blue" state and will suckle off the teets of their fellow tax payers, come what may. The rest of us are all somewhat gambling in the casino and left to the whims of government monetary and fiscal policy.
Maybe, just maybe, keep it simple, control your spending, stay healthy as much as possible, don't take on too much risk (meaning either too aggressive investments or too conservate (guilty as charged))
Here's the extended version:
yes, that is what I was referring to. Is ORP related to
ah, I see that PoF thread has ref to Kitces and thence to ORP; is that what you are referring to?
The "active ingredient" through all of the ups and downs must be prudence. How soon might you be able to replace what you've taken? Will the market make up the difference in the coming year? Should you instead SKIP a yearly withdrawal, as has been your habit? Maturity needs to be in the recipe: putting off gratification in order to make something good possible, down the line, in the future. "Successful" people make bargains with the future, to enable them to be able to do things they could not do, otherwise. (Jordan Peterson.) And of course, assisting others is a reward unto itself, which must never be forgotten.
@crash, the natural disaster are very hard for many people, especially in countries where the government don't have much resources for their citizens.
While I am irritated by a lot of the smugness at American Association for individual investors, one of their key points is "if the SP500 is within 5% of all time high, take money out of equities; if it is not, take money out of something else"
The 4% rule is supposed to enable one to spend down savings so that they are not depleted for at least 30 years. But the savings are, or may be, depleted at some point past that.
As one draws down one's savings, the 4% of the original value gradually evolves into 5%, 6% and more of the remaining balance. The RMD calculation is designed to automate this while adjusting for a gradually growing life expectancy.
That is, as one grows older without dying, one's expected lifetime expands. So year by year, one needs to plan on living longer and draw down a bit slower (as a fraction of remaining assets).
They didn't require a withdrawal last year. & just maybe that is how they would handle a bad market of a few years ?!
HNY , Derf
Maybe remotely related … I’ve had decent luck with some tax-deferred money I withdrew 2 & 3 years ago and put in PRIHX. It scores poorly on M*, as I think they’re comparing it to longer dated muni funds. So far, volatility seems more in keeping with a short term or ultra-short bond fund. But, of course that could change. A gain of nearly 4.8% in 2021 on such a liquid, stable (and largely tax exempt) asset wasn’t hard to take.*
*Footnote : The fund invests in below investment grade (junk) bonds and is subject to market risk!
@Tarwheel - I hear ya. Third year of mask mandates about to begin. Makes air travel, concerts, plays, museums, etc. less than enticing - especially, I think, for us older folks. Don’t even think about overseas travel!