UnThreaded | Threaded | Whole Thread (25) | Ignore Thread Prev | Next
Author: Rayvt Big gold star, 5000 posts Top Favorite Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 74759  
Subject: Re: Does the 4% rule include taxes Date: 6/1/2011 3:52 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 3
If you want to read about withdraw rate, a place to start is:...
what level of risk you are willing [to] assume...
we decided that 3.8% was our withdraw rate.

It's a big balancing act. If you want to have a 100% guarantee, you have to pick a very low SWR. Problem is, if the world doesn't come crashing down during your lifetime, what you've done is lived a miserly retirement and left a very large estate to your heirs.
If you want to live a more-than-bottom-line lifestyle you have to use a higher rate, but with the risk that your portfolio will be depleted before you die.
What to do, what to do?

Another good place to start is reading on the Guyton/Klinger strategy:
http://schulmerichandassoc.homestead.com/Using_Decision_Rule...

In particular note these items:
"When the Modified Withdrawal Rule is applied to the above case with an initial withdrawal rate of 5 percent (my emphasis), the success rate improves to 100 percent."

"By applying [these three] decision rules, retirees can, on average, withdraw nearly $26,000 more a year, double their total withdrawals, and still achieve a 99 percent success rate."

"[If the market crashes] retirees may intuitively think that, if the need arises, they can act and modify their withdrawals to rescue their portfolios. Now their actions can be made explicit in the form of [these] decision rules"
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (25) | Ignore Thread Prev | Next

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
2013 Feste Award Voting Begins!
Who will win the 2013 Feste Award? Vote now for the Fool that most exemplifies the Fool Community mission of Learning Together!
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Tax Strategies

TMFPMarti-Feeling Good
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement