No. of Recommendations: 5
"I'm not sure if this has been covered already, but I was wondering, once you retire, you have to worry about inflation and sequence of return risks, etc..., but at what point do you throw in the towel and then go back to work or employ plan Bs?"

IF you have saved and start your retirement taking 4% of your diversified assets each year........you shouldn't have to ever throw in the towel and go to Plan B.

For many people, they will be getting SS - most people in fact, that will provide a good portion of their needed 'income' in retirement.

We will assume you had an accurate budget when you retired so you know what your annual spending and income would be when you retired.

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"That is, at what point do you know you have a problem? "

When 4% plus inflation isn't enough to keep your checkbook balanced! When you are spending more than you are getting in income.

Yes, at points, you may be taking 7% out of your nest egg - if you happen to hit a bad market drop soon after retirement

However, in all of financial history (120 years), every 30 year period has successfully allowed a 4% SWR.

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"For example, if you're drawing 4% and there's a bear market, is the problem when your 4% (plus inflation adjustments) hits, say 7% of the base that you know you have a problem? What have people been doing to gauge the risk?"

Not much. the SWR at 4% will survive any future period as long as it is no worse than any 30 year period in history - which includes a whole bunch of recessions and depressions. And world wars.

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You can always have a plan B. You can always plan on maybe part time work if you are concerned. You might also be able to trim expenses in 'lean times'.

If you are just about barely squeaking by at planned 4% SWR you might want to reconsider your retirement date to accumulate more assets before retirement.



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