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I am planning to retire in about three years, and I have been doing a lot of studying on this subject.

Several of the comments on this thread hint towards the way I have decided makes sense for me. Note that 4% of my portfolio will cover my basic living expenses.

My mix will be 80% equities and 20% in cash or laddered treasury bonds. This will keep about four - six years living expenses in bonds/cash.

I have decided to draw 6% the first year and see how it goes. The next year I will give myself a raise only if I need it AND if the market has been good. If there is a bad year, and my portfolio decreases, I will cut my draw down to only what I need.

I have backtested this concept using the F4 and S&P500 data and it allows an increase in principle over time.

rkm
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