Page 1 of 3

How many retirees on here follow the 4% rule?

Posted: Thu May 10, 2018 4:04 pm
by gaylejackson2
I just read this article, and I'm curious about what you all think.... and do. ;)

https://www.marketwatch.com/story/dont- ... 2018-05-04

Re: How many retirees on here follow the 4% rule?

Posted: Thu May 10, 2018 4:13 pm
by MackerelCat
That article mentions a Monte Carlo analysis, which DH and I just sat through a couple of weeks ago with a financial planner. I was not impressed because it did not take into account that our house will be paid off in a few years and we have no other debt. Basically, the planner thinks we should work until we're dead -- seriously! We don't think that will at all be necessary because we're very frugal and don't shop for anything except necessary consumables.

Re: How many retirees on here follow the 4% rule?

Posted: Thu May 10, 2018 4:58 pm
by floridacatlover
I think the 4% withdrawal rate is sound. Personally because I retired young (55) I have only withdrawn 2% or less since it might have to last me longer than if I retired at 65, 66 or later.

I don’t know anything about Monte Carlo (first time I’ve heard of it) but I have put my numbers in the following very simple calculator.

https://www.firecalc.com

The site is poorly designed but look off to the right side of the page for a small box to put in the three numbers. Basically it runs dozens of models and tells you on average if you will outlive your money or run out of money. You put in only three numbers: 1. how much you expect to spend from your investments each year (don’t include any money you get from SS, pensions or - thinking of LittleMiss - rental homes; 2. how much you have in total liquid investments, so not including your home; 3. how many years you want you money to last.

I think if it shows a 90-95% success rate, that would be very good for most people.

Like Mackie said, if you have a paid off home, that reduces your yearly expenses a lot. Plus, we are frugal and I would guess all of our yearly expenses are lower than those of a lot of people.

My good friend from work made a lot more than me, has a much, much higher pension plus two SS from her and her DH but still has a mortgage and a high condo fee so I think I’m probaby better off - unless the stock market crashes!

Re: How many retirees on here follow the 4% rule?

Posted: Thu May 10, 2018 7:15 pm
by colonialgirl
We live on our SSs and pensions. We don't plan to withdraw other than required mandatory distributions or if we decide to do a major trip or home improvement or health crisis. But even then we would try to take it from non qualified savings.

Of course if something happens to hubs, my circumstances may be greatly reduced and I would likely need to rely on withdrawals - depending on my costs at that time.

Re: How many retirees on here follow the 4% rule?

Posted: Thu May 10, 2018 8:50 pm
by icfrugal1
Assuming that I get 2% on our savings, both IRA and non-IRA and not counting $100,000 for emergencies, even having both houses paid for there are still expenses, we should have enough out of savings at 4% for 15 years, but again using the 4% rule we should have money until we are 97.

I'm assuming the 4% number starting in 2018 and using the same $ amount every year. If it's 4% of the savings every year the $ would last longer, but we would not have enough to live. :roll:

IC

Re: How many retirees on here follow the 4% rule?

Posted: Thu May 10, 2018 8:53 pm
by icfrugal1
icfrugal1 wrote:
Thu May 10, 2018 8:50 pm
Assuming that I get 2% on our savings, both IRA and non-IRA and not counting $100,000 for emergencies, even having both houses paid for there are still expenses, we should have enough out of savings at 4% for 15 years, but again using the 4% rule we should have money until we are 97.

I'm assuming the 4% number starting in 2018 and using the same $ amount every year. If it's 4% of the savings every year the $ would last longer, but we would not have enough to live. :roll:

We can not live on our SS and the income from the rental, and no, for the most part we do not live extravagantly. (outside of the rolling pins 8-) )

But we have no kids so......

IC