Quote:
Originally Posted by ndfmnlf
Your entire rant is a straw man argument. You are assuming people are stupid and don't adapt to changed circumstances. The 4% SWR is a lowest common denominator type-guideline that is robust when applied on a portfolio consisting of the S&P 500 and and US treasury bonds. Show me anyone who invests only in the SP 500 and T-bonds. That's a bare bones portfolio with expected middling returns. In reality, well-informed investors are more diversified than that. They invest in small caps, REITS, foreign stocks, TIPS, commodities - higher risk asset classes with expected higher returns.
And in the real world, people adjust their spending according to how much money they have. Bear markets result in deflation. People eat out less, take vacations less. When they get real old, they just lay in bed the whole time. Nature has a way of imposing limits on unsustainable behavior, SWR or no SWR. The importance of the 4% SWR is that it gives people a number around which to work on their budgets. It is a guideline (as acknowledged by the Trinity authors), not the Ten Commandments.
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duh! show me one place im agreeing with taking a fixed swr... . this thread has been about what the work of others have said if your reading whats being posted and whats wrong with the 4% rule going forward..
they keep trying to doctor up the numbers with new data to improve the forward future telling but there are just to many variables including humans dont act in a fixed manner taking the same withdrawal year after year like robots.
its no different then human nature when we work. if we get a pay cut we spend less , if we get a raise we may spend more.
thats what people do when they retire. our spending is either going to be variable based on whats happening around us or like one fellow on another forum does is he takes around 4% and whatever he doesnt spend in a year he puts in a seperate account on the side, doesnt count it as part of his balance and supplements in down markets with it so he can cut his witthdrwawals until markets recover.
trying to find a fixed number in a variable world is fun on paper but only works out after the fact when back tested. people react in real time and adjust .
trying to use a fixed number may just as wrongly keep you from spending more and enjoying more things you could have done or it will leave you broke if your living in one of the failure periods.
this is about the only thing i agree with you on.
that doesnt mean prudent planning of whatever you do shouldnt be until at least 92 for a man and 95 for a woman though or at least start with a prediction on a financial calculator as a baseline.
that i believe 100% is the smart thing to do. better to plan longer and have to much for your spouse or heirs then not enough for them.
at least make sure the basic math for your plan works then fine tune it to real time events is my view.
as far as the 4% swr there is no disputing the facts, it worked 95% of the time in the past if you used the allocations they figured.
but like the saying there is a 95% chance you will never get a speeding ticket on the highway at 5 miles an hour or less over the limit how many people just do that in practice. very few i would say driving around here. most are 10 over the limit or below 55.
on paper yeah its true but in practice very few follow the conditions to make it true .
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