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William Bengen is talking up his new book that both explains the 4% rule and revises it upward to 4.7%.

https://finance.yahoo.com/news/creator-of-the-4-ru...

Did you ever expect when you came up with a 4% rule that this was going to become the gold standard?

Not a clue. I was doing it for my clients at that time. It’s an amazing thing.

One big problem I have found is that retirees don’t spend enough. Most people are so conservative. They’ll take only their dividends and their interest and try not to tap the principal.

That runs counter to the approach that I use. In most cases, people will be able to take considerably more than that safe withdrawal rate. You worked your whole life to accumulate all this wealth. Why not get the most out of it while you’re retired?

You worked your whole life to accumulate all this wealth. Why not get the most out of it while you’re retired?

We could do so easily, but contentment is a wonderful thing. It's a trap to spend for the sake of spending. It's not as though we are reclusive penny pinchers, but value spending is something that is ingrained and I see no reason to change.

IP

I did not read that as an order to spend at that level. I read it as an admonition to not deny oneself things, experiences, gifts for others, or other expenditures that are within the "safe withdrawal rate."

I agree with Puck. It is advice to spend on things you enjoy. Not for the sake of spending, but because you enjoy them. I guarantee that you won't enjoy an expensive funeral because you'll already be gone. It won't matter to you if it's a pine box, or a silk-lined mahogany coffin with gold handles.

And, keep in mind, that your health will be fine until it isn't. And then it's too late. And you won't know when that will happen until it does. Travel, indulge hobbies, or whatever, while you still can. Because one day, in all likelihood, you won't be able to anymore.

I won't reiterate our story. I've told it a few times. But the above point was driven home to us in 2019/2020. We retired in 2022 after making sure we were secure financially. Since then, we've been to SE Asia, Iceland, the Canary Islands, Portugal, Norway...we're living and enjoying while we can. Collecting memories we can reflect upon when we're too old to do it anymore.

It is advice to spend on things you enjoy. Not for the sake of spending, but because you enjoy them.

Be assured, we do. It just seems that our preferred excursions tend to be free, along the lines of pickleball with friends, kayaking in our back yard, hiking across the street in the National Forest. And we travel about 3 months a year, but it tends to be by car and renting apartments, not 5 star hotels. I personally hate hotels. YMMV. We have gifted to the kids and have picked up the tab for the Roth contribution since they started at 14, not to mention paid in full for two college educations. We let them fund the 401K.

Our kayak van is a 2004. Looked at replacing it, but the Sienna has changed to the point that a new one wouldn't allow us to throw our kayaks in the back of the van, and decided instead to spend more in repairs than the blue book value of the vehicle. Heck, the personal property tax alone on a new vehicle would have been almost as much as the repair, and that tax is an annual expense. Our other vehicle is a 2013 that we bought off someone's end of lease in 2016. I am content with it. A faster car only brings more speeding tickets.

Told DH to stop buying me jewelry years ago, and am not a clothes fanatic, though I may allow myself to become personally familiar with Lululemon. I liked what I saw when I went in a local store to check out the company. My one "weakness" is real estate. Since I see no point in being in one place all the time, but prefer to live at home, I tend to accumulate residences. DH tends to balance that out with his resistance to them, though.

Next trip starts end of this month, with 9 days in Montreal, 7 days in Old Quebec, and a month in Portland, ME before heading home again. Was supposed to be a three month trip this Summer, but life got in the way. Very excited to practice French, eat good food, visit with son, and get my city side satisfied before we head back to the country. Between VRBO and FurnishedFinder.com, our apartments are about the same cost as owning, and I don't have to eat out 3 times a day.

I confess, it came as a surprise how far our funds go in retirement. We have been retired since 2018, (54 for me and 58 for DH,) and our net worth has increased, not decreased. Contentment is how we amassed what we did, and it is how we will continue to grow it. Contentment is not deprivation. Not by a long shot.

IP

both explains the 4% rule and revises it upward to 4.7%...

Lovely omen of a secular market top?

The safe withdrawal rate is founded foursquare on the likely forward returns from the investments within it. Broad US market prices are (depending on the metric) either at or very near their most expensive ever and real bond rates are pretty low. So, there are reasonable discussions to be had about the best way to calculate a safe or appropriate withdrawal rate, but no matter which way you do it, the number you arrive at today should be near its lowest ever for.

My own view is different, in that I think living from a portfolio with ANY formulaic withdrawal amount is not very smart. Axiomatically, only a very small number of people will live to be VERY old, and therefore in aggregate it's perverse for 100% of the people to plan their investments against that scenario. Only pooled schemes for longevity risk make sense.

My baseline view of the optimal approach goes like this:
* Estimate your life expectancy. Maybe add a couple/few years. Say you come up with 88.
* Put aside around 10-20% of your money (this can be estimated), in inflation-protected government bonds maturing then.
* Spend the rest of your money more or less in a straight line so that you run out of cash around age 88. No need to sit in cash, stay invested in tings with positive real returns: if it runs out a bit early, just skip to next step.
* When the big pile has run dry, around the time that the bonds mature, put that reserved money into an immediate annuity. At age 88 (or whatever), immediate annuities have pretty big payout rates.

It's not too hard to estimate what fraction you have to put aside so your real annual consumption is flat between the two eras. If you die before your target switchover date the cost of the annuity is still in your estate, unlike with a deferred annuity purchased immediately. Your income is very much higher in both withdrawal and annuity eras than even the most risky/high-rate version of SWR will allow, while having zero instead of low risk of running out of money.

Jim

both explains the 4% rule and revises it upward to 4.7%...

Lovely omen of a secular market top?

The safe withdrawal rate is founded foursquare on the likely forward returns from the investments within it. Broad US market prices are (depending on the metric) either at or very near their most expensive ever and real bond rates are pretty low. So, there are reasonable discussions to be had about the best way to calculate a safe or appropriate withdrawal rate, but no matter which way you do it, the number you arrive at today should be near its lowest ever for.

My own view is different, in that I think living from a portfolio with ANY formulaic withdrawal amount is not very smart. Axiomatically, only a very small number of people will live to be VERY old, and therefore in aggregate it's perverse for 100% of the people to plan their investments against that scenario. Only pooled schemes for longevity risk make sense.

My baseline view of the optimal approach goes like this:
* Estimate your life expectancy. Maybe add a couple/few years. Say you come up with 88.
* Put aside around 10-20% of your money (this can be estimated), in inflation-protected government bonds maturing then.
* Spend the rest of your money more or less in a straight line so that you run out of cash around age 88. No need to sit in cash, stay invested in tings with positive real returns: if it runs out a bit early, just skip to next step.
* When the big pile has run dry, around the time that the bonds mature, put that reserved money into an immediate annuity. At age 88 (or whatever), immediate annuities have pretty big payout rates.

It's not too hard to estimate what fraction you have to put aside so your real annual consumption is flat between the two eras. If you die before your target switchover date the cost of the annuity is still in your estate, unlike with a deferred annuity purchased immediately. Your income is very much higher in both withdrawal and annuity eras than even the most risky/high-rate version of SWR will allow, while having zero instead of low risk of running out of money.

Jim
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Jim, I agree with your idea, but there is one idea it ignores.
What if you need the liquidity of your money for someday needing it to purchase a senior assisted care place or a nursing care place, or for just cost of nursing care as you get older and ill, or some other need..

an example is some go into assisted living places that cost $500,000 and up.

Put another way, the 4% rule supports roughly a 25 year retirement plan.

Putting aside 20% in 20 or 25yr TIPS in an IRA at inflation + currently 2.6% builds a big base. If that's needed before 25 years... just sell the TIPS?.

The ALF bomb is hard to calculate. Unless one makes well over six figures in 50s and 60s and/or keeps working until they nearly drop, probably can't stash enough to be there more than a couple of years anyway.

Jim, I agree with your idea, but there is one idea it ignores.
What if you need the liquidity of your money for someday needing it to purchase a senior assisted care place or a nursing care place, or for just cost of nursing care as you get older and ill, or some other need..

Most people fall into one of three categories. You're so rich that strategy doesn't matter, you can buy an index fund and live forever from the dividends, as Mr Buffett recommended for his widow. Two, you're so poor that no amount of fancy footwork is going to keep you fed till you die. Or in the middle, where a bit of good strategy can materially improve your standard of living during retirement while guaranteeing that you don't outlast your funding. My comments (like so many others) are useful only for people in the last category.

The worry you mention is real, but could be seen to fall under the category of "sorry, you don't have enough money, and a fancy strategy isn't going to fix that". If you are living on a SWR and this situation occurs, and you use a meaningful chunk of your capital to deal with a sudden large expense like a heart transplant, you are not going to have that capital to live from thereafter. So it's a problem with a SWR approach, and it's a problem with my "barbell" approach. To me, the main difference is that the approach I advocate won't let you run out of income, and all SWR approaches (for people in that latter category) can. They just don't work that well: any withdrawal rate which is really really certain not to run out of money leaves you with an almost certain never to benefit from the wealth.

Of course, there is also no reason one has to put ALL of the money into an income producing strategy. If you have a sufficient bankroll, a certain amount could be just left as a portfolio like a category 1 person: let it sit and spend the dividends, serving the bonus purpose of being a pot for emergencies. If you're lucky enough to have sufficient funds for both that and an income-producing strategy. Similarly, a person concerned about how much ends up in their estate need not allocate all their funds to income production--if they have enough funds for both goals.

As an aside, my forever pet peeve:
I have a real problem with so many sites that recommend various SWR approaches claiming (say) only 1% chance of failure. That's one person out of a hundred among the people who follow their advice ending up living in a cardboard box under a bridge. And most such sites make the assumption that forward returns in future are going to be like those in the past, implicitly concluding that portfolio returns are uncorrelated with starting valuation levels. It was not just luck that made SWR approaches starting in 1982 work so much better than the ones starting in 2000. The smoothed earnings yield of the S&P 500 was about 18% in August 1982, and about 2.4% in March 2000. It's about 2.7% now. Starting at the top in 2000, the real total return was negative for a long time: the total return series didn't get up to its starting point for over 13 years. I don't know what the next 13 years will be like, but there is no reason to make any optimistic assumptions. Assuming forward returns will statistically resemble past returns definitely falls into the category of making an optimistic assumption.

Jim

Putting aside 20% in 20 or 25yr TIPS in an IRA at inflation + currently 2.6% builds a big base. If that's needed before 25 years... just sell the TIPS?

You don't even have to sell them. The general notion is to run your "other" portfolio down linearly so it runs dry just as the TIPS mature. Planning a withdrawal strategy to last through an unknown time interval is very hard, but planning one to last for a specific number of years known in advance is not difficult. Buy an immediate annuity on the date that your money runs out, using the money from the TIPS which will be maturing that same month.

If for any reason your "run it down linearly" calculation was off and you go broke a bit early--perhaps, as another suggested, you had an unforeseen large expense to cover--just sell the TIPS then, and buy the immediate annuity. Your future income is lowered, but you still have income for life. The prices of TIPS are pretty stable, especially with not too many years before maturity.

In terms of internal rate of return, annuities are about the worst deal out there, probably farther than face value than the expected value of a lottery ticket. But, if purchased when you're already quite old, you're much more concerned about covering a wildly variable period of income than you are about the internal rate of return...for shorter periods, there wouldn't be time for that much return compounding, and it's the high rate of return (mainly of capital) that dominates. In short, to overgeneralize, an annuity is a truly horrible financial deal for a 68 year old but a pretty smart move for an 88 year old. It's still a horrible investment deal in terms of probably costing you far more than the actuarially fair number, but it meets a very specific need very well, by entirely cutting off longevity risk at a reasonable absolute cost.

Jim

And most such sites make the assumption that forward returns in future are going to be like those in the past, implicitly concluding that portfolio returns are uncorrelated with starting valuation levels. It was not just luck that made SWR approaches starting in 1982 work so much better than the ones starting in 2000.

I'm sure you're aware the 4% swr is the *highest* rate for an 80/20 or 60/40 portfolio to last 30 years based on all historic starting dates.

Yes, that's not to say a new worst starting date can't happen. But, 4% is a good starting point if you're an average joe trying to spend down a portfolio.

And historically, using a 4% rate you're likely to end up with 5x your starting portfolio even after 30 years of withdrawals.

Why?

Again, because 4% is the *highest* "safest" rate. You could've withdrawn say 6%, but you didn't know that, because you couldn't know that, because no one knows how the future will unfold. The S&P 500 earnings yield might be an indicator though.

Anyways, I know the Bogleheads like to say use a 2% rate or whatever because it will last forever but then you risk not enjoying your money. But I guess your heirs will?

I have a real problem with so many sites that recommend various SWR approaches claiming (say) only 1% chance of failure. That's one person out of a hundred among the people who follow their advice ending up living in a cardboard box under a bridge.

It's worse than that - everyone starting this scheme at one of the "1%" times ends up living in a cardboard box under a bridge.

Well, kinda. In reality I expect most folks will trim spending in a very poor return scenario.

Anyone here retire in 2000? What did you do?

Anyone here retire in 2000? What did you do?

Not 2000. We retired in late 2006, just in time to walk into the 2008/2009 bear market.
Ended 2008 down -47%.

We used the Klinger-Guyton withdrawal rules on a 4.5% SWR. Bumped up to 5.5% after 10 years, to reflect the 20 year SWR instead of 30 year.
The Modified Withdrawal Rule & Capital Preservation Rule kicked in a few times.

Have withdrawn total of 1/2 the 2006 value. Current value is not quite twice the initial value.

It's a good life if you don't weaken.

Not 2000. We retired in late 2006, just in time to walk into the 2008/2009 bear market.
Ended 2008 down -47%.

That had to gut-wrenching. It was for us, and I was working.
Though looking back, I could actually have retired in 2007 and we would have been ok. Not sure I would have stayed retired in 2008.

It's a good life if you don't weaken.

Indeed.

Retiring is a one-way street. Nobody is hiring a 50 year old man at the salary he was making when he retired early.

We went to a seminar hosted by a Financial Advisor somewhere around late 2000/early 2001.
He said that they had many clients who had quit their well-paying professional & engineering jobs in the tech boom because of how well their investments had done in the tech boom --- and were trying to get back their old jobs when they lost it all in the tech bust. None of them were able to get anything close to what they were making when they quit.

Anyone here retire in 2000? What did you do?

As it happens, yes, I did!

First thing, I took out a broker loan and leveraged my portfolio up to buy an outrageously expensive house, in spring 2000. Hey, I didn't say I was smart.

I have to admit that I have occasionally thought of coming out of retirement (I once ran a hedge fund) to start a Bogle-style low-fee actuarially fair tontine. They're really wonderful.

The simplest is called a "mutual inheritance fund", and my preferred variant goes like this:
* Around 100 or more people, of the same sex, aged X or higher, get together, and irrevocably put up at least $100k to purchase shares in a trust. X might be 60 or 65 or 70. The amount to invest is on the order of your desired yearly income when you get really old.
* The money is invested in a few basic things that can't go broke or play in bubble, like a broad equally-weighted index fund.
* The trust is fully funded for all payment commitments from day 1, so unlike an insurance contract there is no need for extra capital.
* Dividends are used to pay the trustee's fee, which should be very low as the trustee has almost nothing to do.
* Any additional dividends, beyond the trustee's fee, get paid out quarterly to all participants, in proportion to their investment shares.
* Each time participant dies, their share is liquidated and paid out in four quarterly instalments over the next year, in proportion to their investment shares.

The nice thing about this is that the expected payments, though somewhat irregular at first, grow slowly then start to rise a lot just as you get past your initial life expectancy and health care costs explode.
As a pure bonus, you feel like a genius for every year you're a surviving member. If (when) you don't survive at some point, well, you won't be regretting the decision to have participated!

Jim

“Retiring is a one-way street. Nobody is hiring a 50 year old man at the salary he was making when he retired early.”

Probably true in the corporate salary-man world. I haven’t been an employee since 1999. A few times I have taken on no more work (“retired?”), then some time later taken on work (“unretired?”). I could say I’m FI-semi-RE.

Retiring is a one-way street. Nobody is hiring a 50 year old man at the salary he was making when he retired early.

Probably a good assumption, but not the case for everyone. When DH retired, his employer badgered him into becoming a consultant. Great gig, since he got to work from home, pick and choose his projects, was paid an insane rate at 15 minute increments, starting at the moment he left our door if travel were involved. No more 60-80 hour work weeks on a salary. Even with the intermittent nature of the work and much shorter hours, he still basically made the same salary, plus or minus.

Our industry had so many boom and bust cycles that those with his level of experience are in short supply and high demand. It was a nice surprise.

IP

I retired in 2000 at the age of 60. Wife said she loved her job and wanted to keep teaching. Had a couple of offers to join a couple of tech start ups but they didn’t look like either had a long-term workable concept. Tried consulting part time but found it interfered with my retired life style. After two years my wife finally realized that work was less rewarding than retirement. My backup was that I had somewhat of an in-demand skill set and had been able to find consulting work in the past.
One problem some have with retiring early is you don’t get Social Security and Medicare until 65 and for example at the age of 60 a healthy individual with health insurance has a median life expectancy of almost 30 years. I ended taking out more than 4% of investments the first few years but fortunately have been able to make more on investments than I spent.
I have never held much stock in a 4% rule that is based on one single retirement age and one life expectancy. But we both have scraped by through college with minimum wage jobs and know we can adapt to much lower incomes if we have to and still enjoy life. Toured most of Europe as a French resident alien in the 60’s with a 25 HP Renault 4 with a used tent and sleeping bags.
And now where in the process of moving into one of those exorbitant priced University connected Continuing Care Retirement Communities. There supposed to be more comfortable than a tent.

One problem some have with retiring early is you don’t get Social Security and Medicare until 65...

Yes. IMO the loss of retiree healthcare was accelerated by Medicare. The industry we were in, (DH and I met at work,) still has retiree healthcare, which we qualified for at 55, but lost at 65 when Medicare took over. Given I have been planning early retirement since the age of 19, and the pre-existing conditions DH had from childhood, we were careful in corporate changes to always go with a company that offered retiree healthcare. With DH now on Medicare, I can state strongly that our retiree healthcare was much superior, and we are very restricted by the requirements he has for mandatory in person quarterly appointments and last minute refilling of prescriptions. My preferred way of travel is to take off and live somewhere else for extended periods of time, grossly complicated by the difficulty of pre-accumulating meds and the mandatory appointments. (Some of DH's scripts are not eligible for "vacation" allotment.) Add to that the fact that the cost of Medicare is no less expensive than retiree healthcare for us, given the level of Roth Conversions we execute. My parents, with life long retiree healthcare, retired at 58 and moved into a 27' motorhome, in which they traveled continuously for the next decade until their health required a permanent home. Like them, I think outside the box and now feel very boxed in with Medicare rules which are not medically necessary.

Medicare is not necessarily the golden ticket it is made out to be.

IP

I was fortunate and smart to return to my old job where I could get healthcare at retirement for myself and my wife. I have a brother in law that recently retired (largely due to the program being shut down) but he is only 60 or 61 so I'm not sure what he will do for health insurance. His initial plans were going back to work somewhere but I think he has gotten used to retired life and helping out with the grandkids. I'm pretty sure he doesn't need a job for the money.

To me healthcare should be provided to all whether via taxes or some payment, etc. Right now we all pay way too much money for it due to middlemen taking out a large amount and adding headaches/expenses to doctors, hospitals, medical facilities, etc.

Regardless of official inflation numbers, a number of items that I have to buy certainly have skyrocketed since covid. Pretty much anything to do with home repairs and restaurants are way up. I was talking to an HVAC guy and it sounded like not long ago their hourly rate for labor was $200ish and now it is $500. That doesn't seem right to me but maybe it is. I do know the quality of the workers have nose dived. I found a better company now but several of the other guys had to call in for help and be walked through how to do things (not a lot different from me watching an youtube video on a repair except in this case I'm paying the guy to fix it) and being unable to get it done.

At least we are still alive. My friend had his 49th high school union. It was a small school class of 94. 31 are no longer alive.

Rich

Retired a bit early in 2022 (55yo) and really enjoying free time with spouse, family, friends, sports/activities, investing & some domestic travel. Don’t miss the half hour commute, headaches and grind of career in the medical profession. I’ve found retirement (family of 4, 2 kids of school age) to honestly be more expensive than I had anticipated, esp. with inflation in recent years. Good news is that our equity assets are net ~45% higher given stock appreciation vs. 3.5 years ago. We live well but not “extra well” like many around us & we still have 20 years left on a 3.75% mortgage. We have used up most of the initial saved cash/MM and we are now simply trimming a few investments in taxable accounts every few months as needed to fund our everyday needs, lifestyle, kids tuition… I have found marketplace insurance options are ok at best. They are pretty costly and premiums have risen each year a good bit (nearly $2200/ month for a family of 4 with high deductible) and limited MD choices. Hope we all here can enjoy pretty good health to a ripe old age!

<< Anyone here retire in 2000? What did you do? >>

I posted an analysis of the 1994 retiree (when I quit working) versus the 2000 retire. After 25 years of inflation-adjusted withdrawals, the 2000 retiree still has nearly his entire starting balance intact. I'd say that there is little risk that the nest egg will last for 30 years.



Why the 4% rule is the ultimate "sequence of returns risk" insurance
https://retireearlyhomepage.com/sequenceofreturnsr...

intercst

“I posted an analysis of the 1994 retiree (when I quit working) versus the 2000 retire. After 25 years of inflation-adjusted withdrawals, the 2000 retiree still has nearly his entire starting balance intact. I'd say that there is little risk that the nest egg will last for 30 years.”

Sure, for the 60/40 investor.

Aren’t you more of a 90%+ stocks kinda guy? The 2000 retiree sticking to that portfolio isn’t doing well, as your graph shows.

Aren’t you more of a 90%+ stocks kinda guy? The 2000 retiree sticking to that portfolio isn’t doing well, as your graph shows.

A 90%+ stocks guy is not going to be taking 4%. Unless maybe the slip rent for his yacht at Monoco is exhorbitant.

You don't go 90%+ stocks unless you are very sure that you don't have to take anywhere near 4% to live on.

There was a recent youtube video of a financial guy who said one of his clients was 85 years old and 100% stock. But they were quite safe because they had enough pension & SS income for all their living expenses.

40% bond allocation has a tremendous drag on your portfolio performance, although it might be necessary for risk control.
It is expensive to be poor.

“The 2000 retiree sticking to that portfolio isn’t doing well, as your graph shows.”

I’m a 2000 retiree who stuck to 100% equities with a little timing, after living expenses have > 5X starting balance. Early years of MI worked well, much less so last 12 years but still better than indexing. My timing reduced the volatility but didn’t increase the long-term gain. My unorthodox view is that one should reduce the 40% bond portion of your investments by 5 times your SS and pension. Let them be part of the stable portion of your long term plans.

Aren’t you more of a 90%+ stocks kinda guy? The 2000 retiree sticking to that portfolio isn’t doing well, as your graph shows.

Here's how to think about that.

You have a 60/40 portfolio for your 4% withdrawal, and a 100/0 portfolio for the excess.

So, if your portfolio value is $5m and your withdrawal is $40,000, you have $600,000/$400,000, and $4,000,000/$0.

In total $4,600,000/$400,000, or a 90% stock allocation.

<<Aren’t you more of a 90%+ stocks kinda guy? The 2000 retiree sticking to that portfolio isn’t doing well, as your graph shows.>>

Here's how to think about that.

You have a 60/40 portfolio for your 4% withdrawal, and a 100/0 portfolio for the excess.

So, if your portfolio value is $5m and your withdrawal is $40,000, you have $600,000/$400,000, and $4,000,000/$0.

In total $4,600,000/$400,000, or a 90% stock allocation.

lol That's funny!

0.8% withdrawal rate. Yeah, that should be able to weather any sequence of returns!

If I retired today, I'd be at about 1.25%. Guess I need to work longer.

I’m a 2000 retiree who stuck to 100% equities with a little timing, after living expenses have > 5X starting balance. Early years of MI worked well, much less so last 12 years but still better than indexing. My timing reduced the volatility but didn’t increase the long-term gain. My unorthodox view is that one should reduce the 40% bond portion of your investments by 5 times your SS and pension. Let them be part of the stable portion of your long term plans.

Were you pulling out an inflation-adjusted 4% each year?

I have always had trouble wrapping my head around a 40% or even 20% bond allocation.

You have a large interest rate risk. Granted, smaller than the volatility of equities.
Inflation eats up all or almost all of the long-term returns.

If you want truly safe and not just the illusion of safe, you should be in low duration fixed income. Yes, lower yield and the yield changes all the time.

Therefore IMHO that money should be in something like bank savings accounts or ultra-short-term bonds like JAAA, SGOV, FLRN, etc.

To paraphrase Tuco, "When you want to be safe, be SAFE."

<<Sure, for the 60/40 investor.

Aren’t you more of a 90%+ stocks kinda guy? The 2000 retiree sticking to that portfolio isn’t doing well, as your graph shows.

Sure after my portfolio increased by a factor of 4 and my withdrawal rate dropped to 1%. If the portfolio hadn't increased in value and my withdrawal rate was still something like 4%, I'd still be somewhere around 60/40.

Think of it this way. I can comfortably live off a 4% withdrawal from a 60/40 portfolio that represents 10% of my net worth. The other 90% is invested 100% in stocks.

intercst

Me: “after living expenses have > 5X starting balance”
AdrianC: “Were you pulling out an inflation-adjusted 4% each year?

I had to go back and do an evaluation to answer your question. I started out knowing I was going to have to pull out a little over 4% as a supplement until I could receive Social Security and Medicare. But I have based my withdrawals on an Amortization schedule similar to an IRA RMD. From my records I started out close to the 4% of the original value adjusted for inflation. Hower as the value increased and our life expectancy grew shorter. We have been taking out a multiple of the original 4% adjusted for inflation rule value. The original 4% rule value is less than our taxes.

This is the portfolio Bengen is suggesting in his book for a 4.7% SWR:

11% U.S. large-cap stocks
11% U.S. midcap stocks
11% U.S. small-cap stocks
11% U.S. microcap stocks
11% international stocks
40% in intermediate-term U.S. government bonds
5% in cash

Not sure how one would put 11% in micro caps.
20% of the stock portion in international *could* be a good diversifier.

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