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No. of Recommendations: 5
Some people seem to look at that 4% SWR as a natural law. It's just a useful guide for when the next 30 years are as bad as the worst 30 year period previously. I see articles saying that lower bond interest rates means the 4% needs to be 3.7% or 3.5% or whatever. Well, the inflation rate was 2% for a long time rather than 5%, so the real bond yield wasn't that much different than when interest rates were higher (especially after taxes).

The 4% SWR was really useful in correcting the thoughts of many that they could live off the 6% dividend stock payments and bond coupons while leaving the principal untouched. But all the discussion of what the SWR is going forward requires a prediction of stock returns, bond interest rates, and inflation rates for the next 30 years. And all that is *IF* the retiree can stick to the plan, which even Bengen himself couldn't do (or at least didn't do).

PLUS--it's a moving target. Most of us won't retire from a job and immediately start social security, a pension, and Medicare. Our income needs will change every few years as we switch from paying for private insurance (or company provided retiree health insurance [still exists?]) to Medicare, pay for all our expenses while delaying social security to maximize long term payout (maybe), etc.

Maybe it's not bad being extra cautious and working/saving/investing for another year before beginning to draw down one's portfolio. My thought was that I'd rather work a little longer during my peak earning years than to leave so early that when I noticed I needed more money that my professional skills were obsolete. But, being *too* conservative would have caused me to miss a rare chance--my company offered a lot of severance just ahead of my personal target date for putting in my two week notice.

I grabbed that chance thinking that if my portfolio went down, I could look for work, but as it turned out I didn't need to. A retiree probably has some expenses that can be deferred if the market takes a turn down at the wrong time.

Maybe a philosophical point that was brought home because of several coworkers' and former coworkers' deaths in 2021--it's nice to "not have to go to work," but even more than that, having "enough to retire," even if you continue working, really eases the pressure that seemed to drive others to stress-related illness. There were a couple heart attacks, but also some third and fourth heart attacks on retirees who had their first few while employed.
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