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"No - I wouldn't do that. So are you saying a 4% SWR is wrong. Then what is correct?"


typically, you'd figure that you'd put spending needs - then wants - then
maybe dream spending together in a budget. After that you'd have three or
more spending estimates that would indicate what range of spending you might
actually need.
This approach aims you toward what you might need to accumulate - I have to accumulate X
in order to have Y. The 4% approach is pointed the other direction - i.e.
what can I spend, Y if I have saved X.
Both approaches have a place in planning - and both have errors which can
influence life after FRA.

And both end up having to assume inflation and rates of return - which introduce
other errors.
In passing, I have found my initial estimates of spending following a lay-off
were not correct. The estimates for "needs" were higher than actual spending.
The estimate for wants appear to be more on target. This is a "good" error to
my perspective.
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