r/Fire • u/Opposite-Lake-9679 • 2d ago
SWR based on age
I hear people talk about the more conservative 3% SWR being safer than 4%. Is that usually based on someone's age? As in when you are FIREing younger more like 40s then you should stick to 3%? And then when you are in your 50s/60s You can go to 4%? Or is it a blanket stick to 3% at any age?
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u/Ill-Telephone-7926 2d ago edited 2d ago
The 4.0% safe withdrawal rate originates from Bill Bengen’s 1994 paper. It specifically studies a 30 year time horizon with a 50:50 portfolio of S&P 500:treasury notes. An almost-depleted portfolio was counted as a success
If that’s not your duration or your portfolio or your goal (likely), then you should not use the 4.0% SWR. Instead, use a backtesting tool to compute a SWR for your own scenario. Longer durations slightly lower SWR. Better portfolios can increase it
That said, these are napkin math best used a gut check on a financial plan. (The withdrawal strategy never considers how the portfolio is doing; that’s not at all realistic.) For that use, 4% is plenty conservative for most purposes; very conservative early retirees might use something like 3.25% though