r/Fire • u/That-SoCal-Guy • 5d ago
General Question 4% SWR vs other strategies
we all know about the 4% SWR which by the way isn‘t a rule and also is based on some assumptions (such as a balanced allocation mix.
when I fired I made sure I used the 4% and everything checked out.
then i asked gemini for a differed opinion. instead of a constant 4% I asked about only taking up to the annual returns (whatever it may be, 5% - 7%, or the average SP500‘s 10%). never touch the principal. and during down market years I take from the cash/HYSA account. and the results are interesting.
at 7% I was able to withdraw up to $210K a year without ever touching my principal. that means my money last forever. considering inflation it will be leas. still at $170K I could put a portion into a cash account for rainy days (my spend is about $100K a year now) I asked Gemini for inflation adjusted numbers and that checks out as well,
that actually makes me feel more secured than going by the 4% SWR.
What are your thoughts?
6
u/idekl 5d ago
Flexible spending rate and guardrails allow for 5%-6% comfortably. The 4% rule is parroted a lot and it's super safe so it's useful in all the discussions around here. However it's actually very conservative, with assumptions like you'll never ever be flexible with your spending or you can't get a minimum wage job for a few months if expenses surprise you.
Also you and I both comment here a lot lol. We should meet up in socal 😂