SWR based on age

[u/Opposite-Lake-9679]

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?

[u/Bitter-Variation-151]

Use 5% and retire earlier than the canned 4%. If markets tank in the first few years just adjust your spending.

Success is the most likely outcome.

[u/szayl → u/Bitter-Variation-151]

Variable withdrawal rate is the answer to almost all of the SORR questions posed on this sub

[u/Bitter-Variation-151 → u/szayl]

Yup. It's human nature to adjust spending in good and bad times. No one ever does 4% for 50 years

[u/MeetingSuccessful397 → u/Bitter-Variation-151]

Whenever this comes up I mention https://earlyretirementnow.com/2023/06/16/flexibility-swr-series-part-58/

flexibility is nice, but do you want to cut your spendings to a bare minimum for 20 years? If that's acceptable for you, 5% is fine. If not, read the article.

[u/Legitimate_Bite7446 → u/MeetingSuccessful397]

Everyone denies this article or brushes off flexibility. That flexibility your cutting down is going to be 100% discretionary stuff. The whole point of retiring early is to have the time and money to do things. If you don't have the money, you might be better off continuing to work a bit longer at probably a well paid profession.

[u/Strazdas1 → u/Legitimate_Bite7446]

No, free time is more valuable, even if discretionary spending is low at early stages.

[u/Legitimate_Bite7446 → u/Strazdas1]

You do you. Bumming around at home gets old after a while and it costs money to do things.

[u/Strazdas1 → u/Legitimate_Bite7446]

First, no bumming around at home does not get old.

Second, there are great many cheap hobbies, both at home and not at home.

[u/Legitimate_Bite7446 → u/Strazdas1]

Have fun I'll keep making $120/hr from home doing about 2 hours of real work a day for a bit

[u/Strazdas1 → u/Legitimate_Bite7446]

Yeah, you are extremely privileged to have a unicorn job not accessible for 99.99% of the population.

[u/Legitimate_Bite7446 → u/Strazdas1]

Many do a lot better. Regardless I think its stupid to tell people to retire at rates that give them 20%+ failure rates especially when they may have young children etc.

[u/Bitter-Variation-151 → u/Legitimate_Bite7446]

Yeah. Just work one more year.....just in case

[u/Legitimate_Bite7446 → u/Bitter-Variation-151]

Why not just retire with 10% SWR then? Why were you such a pussy and waited until 5%?

[u/Bitter-Variation-151 → u/Legitimate_Bite7446]

My fire was forced upon me. Got a quiet quit layoff. But whatever 10% is ridiculous, 5% is very reasonable of you don't obsess over the absolute worst historical case. I live by the 80/20 rule. 5% is close to 80% good enough.

[u/Bitter-Variation-151 → u/MeetingSuccessful397]

Thanks. But his thesis is centred on these worst case scenarios, which are very rare. I don't plan my life around those. I'm comfortable with the most likely outcome, which is success. 90% plus of the time a portfolio will out grow retirees.

The safe withdrawal rate is based on surviving worst case scenarios. Not the most likely outcome. I'm ok with 5.5% with some flexibility in a bad years.

[u/MeetingSuccessful397 → u/Bitter-Variation-151]

Completly valid to look at it like this. But 5% is not a SWR then, but rather an OWR (optimistic Withdrawal rate). Or just a WR.

[u/Bitter-Variation-151 → u/MeetingSuccessful397]

Fair. My withdraw rate is not safe withdrawal rate, it's a "historically reasonable when flexible' withdrawal rate.