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Author: intercst Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 817581  
Subject: Re: ER and having just enough Date: 10/16/2001 10:47 PM
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raddr writes,

<<<<<<I'm wondering if anyone leaves a margin of error when deciding to ER. Do you just take 5 years, 20% of your 25x yearly spending, pay the taxes on the hefty withdrawal and dump the cash into an inflation-matching cash investment and that's it?>>>>>

First of all I don't believe in the "4% rule" since I believe that it is the product of selective backtesting, i.e. datamining. I do, however, have a modest cushion in addition to what I felt I needed to retire comfortably. It helps me sleep better.

The "selective backtesting, i.e., datamining" (as you describe it) that underlies the 4% rule was used to determine the worst case pay out period over the past 130 years. It hard to fault the "4% rule" for containing any undue optimism -- or any optimism at all.

That said, it's fine for folks to not believe in it. And I hope whatever alternative withdrawal strategy they employ enjoys equal success.

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