I don't disagree with this in theory -- the main challenge with this extra-conservative approach is that saving a sufficient amount of money, particularly if one is not an HCE or equivalent, is that it would likely require an extremely frugal lifestyle over many decades to achieve. Not that there's anything wrong with this in the least. That said, there are going to be many folks who would probably view that tradeoff as tilted a bit too far towards the "delayed gratification" end of the scale, in terms of balancing future/retired financial security against enjoying life in the here & now.I am targeting 2.75%, and I hope to teach my son to follow the same.
The perpetual withdrawal rate isn't that far from the 4% rule.
Mr Bogle himself says in his books that your dividend/yield checks are really your baseline budget, and this is much closer to the perpetual withdrawal philosophy.
Why not leave something to your family or a charity while ensuring perpetual access to the cash flow for yourself?
To me the perpetual withdrawal rate is the single most important future in all of BH style investing!
If I sound like I'm disagreeing with you, I'm not intending that -- but 2.75% is quite a lean WR. If one has a multi-decade career that can accommodate that (few employment gaps, high income/salary, manageable tax situation, healthy parents, etc.) then I'm all for it. But I do think that, say, 3.25% (which essentially tracks to 99% success in most all scenarios) or even 3.5% would be plenty safe.
As always, though, personal finance being exactly that -- personal -- each of us will have a different definition of what makes us comfortable re: retirement drawdowns. If I can ever reach the point where 2.75% WR gets me my anticipated retirement-years expenses, I'll be over the moon -- on the other hand, I doubt I would work an extra 4-5 years in my 50s/60s, or however long that might take, to achieve that WR instead of my rough plan of 3.25%.
-rw
Statistics: Posted by rakish_weasel — Wed Jan 08, 2025 2:03 pm