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Author: workwayless Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 5069  
Subject: Re: Life Expectancy Date: 8/9/2003 2:00 PM
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tab wonders
How do you figure that 5% is a SWR for you? I guess I see the number 4% thrown around, but don't really know how it's determined and what you consider "safe". I can make a spreadsheet showing withdrawl per year and balance and earnings rate and play with the numbers, but I'd be interested to know how you figured this.


By safe, I mean the probability that I will not run out of money before I die. There have been various studies done to estimate what withdrawal rate would allow one a 100% chance to not run out of money if the future is like the past. Here's the REHP discussion board's take on it.

http://boards.fool.com/Message.asp?mid=18870026

As you can see, it mentions that 4% is 100% safe for a 40 year retirement. However, that figure is a general number and people have individual circumstances. So to calculate your personal SWR, you can use the FIREcalc.

http://capn-bill.com/fire/

This is how I calculated a 5% SWR for myself. This tool was developed by a former REHP board poster. I think it is one tool that should be in every FIRE Wannabee's toolbox, IMHO.
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