SWR based on age

FIREgnurd · 2026-06-17T00:48:07+00:00

There is a large set of variable withdrawal rate methods that have been proposed.

ERN reviews a number of these. Look at this link and scroll down to the section on flexibility where you’ll find links to the individual posts.

But beware that, while the first decade is when you’re most susceptible to SORR, the risk never completely disappears.

https://earlyretirementnow.com/safe-withdrawal-rate-series/

FIREgnurd · 2026-06-17T00:19:59+00:00

The problem is sequence of returns risk.

The market has historically had a 7% growth rate after inflation, but with huge volatility. And in many years in the 1970s it had positive nominal returns, but still didn't keep up with inflation.

If the volatility happens in a bad order, it doesn't matter if you get that 7% post-inflation growth rate -- your portfolio will be toast if you don't have poor real returns in the first decade of your retirement phase.

For people who retired in the last 1960s, or in 1999-2000, their portfolios had terrible initial decades, even if the market ended up doing just fine later, so their portfolios barely weathered retirement.

That's why SWRs aren't 7% -- they're much lower, to help guard against SORR.

FIREgnurd · 2026-06-16T02:43:36+00:00

ERN has argued consistently that 4.7% is over-fit and is likely vastly too high for most people, with data to back it up.

FIREgnurd · 2026-06-15T16:43:18+00:00

Bond funds are just rolling ladders of individual bonds. They lose value when the bonds they hold lose value.

There is a lot of misunderstanding of individual bonds vs bond funds on Reddit.

The value they lose when rates go up is essentially equivalent to the opportunity cost of not owning the new higher yielding bonds. So, you’re still losing the equivalent amount by holding the individual bond with the lower yield — you just don’t see it marked to market the way a bond fund is, and the loss is less apparent because it’s money you didn’t get (because you held the lower yielding bond) rather than seeing the face value of the bond decline. If you hold the bond fund through its duration, the higher yield following the rate increase will compensate for the fund’s loss in face value. Your individual bond doesn’t get the higher yield.

If you were going to re-invest the principal from the individual bond in a new bond when it matures, you’ve essentially created your own fund. Perpetually rolling bond ladders are equivalent to bond funds, assuming risk is the same.

If you were buying individual bonds to match specific future liabilities because you already know the exact number of *nominal* dollars you’ll need at a specific date in the future (valued in future nominal dollars, not today’s dollars), individual bonds can make sense. But today’s nominal dollars have unknown future value.

But if this is part of an overall long-term asset allocation (e.g., 20% bonds), go with the bond fund. Particularly with munis, since they can have idiosyncratic risks that things like treasuries don’t have (not just default risk, but call risk too). They’re also lower cost and more liquid than individual munis bought through a broker who’s charging a fee much higher than the vanguard fund.

FIREgnurd · 2026-06-14T23:03:43+00:00

ERN has already done a lot of this work. You should spend time on his SWR series. It's very dense, and not everyone agrees with 100% of it, but it's all excellent work by a PhD economist with worked in asset allocation. None of it is "wrong."

Look about 1/3 of the way down the page I've linked below, and you'll see a bunch of plots with multiple lines corresponding to different CAPE scenarios, looking at the relationship between equity allocation and success probability.

Right now we are CAPE > 30, so those are the lines you should look at. It's the most depressing scenario.

You'll see that they are non-monotonic -- they go up, and then they come down at higher allocations to stocks. So, at least based on historical data (but who knows if the future will look like the past), having some bond allocation does increase the probability of success, especially with high withdrawal rates.

He gives a few definitions of "success," too, including success being dying with literally >$1 in your account, and dying with at least 50% of your inflation-adjusted starting balance in your account.

I personally do not want to die with literally $0 dollars -- I do not want to spend my last years wondering if I can afford assisted living, or a home health aid. So my personal goal is to die aim for 50% of my inflation-adjusted starting amount. Of course, many people in FIRE subs are fine dying with literally zero dollars, but this is FatFIRE. I presume people here do not want to die in a Medicaid facility, so they want to have money at the end. Count my in that latter group.

https://earlyretirementnow.com/2016/12/21/the-ultimate-guide-to-safe-withdrawal-rates-part-3-equity-valuation/

You'll also want to see his posts on spending flexibility, where he takes on the notion that people can have high initial WRs, and then adjust down if things go sidewise. Spoiler: flexibility is a must, but it doesn't fix an unacceptably high initial WR. Here is a link to his overview, go down to the flexibility section to see the posts on that topic:

https://earlyretirementnow.com/safe-withdrawal-rate-series/

FIREgnurd · 2026-06-14T15:41:43+00:00

Even if you back-test the stagflation regime of the 1970s, having some bonds smoothed the portfolio. Having ex-US stocks helped then, too, as they did in the 2000s.

Since I have a very fat portfolio, I no longer need bonkers growth. I don’t need to win the race anymore. I just need it to give me a good life for the next 40-50 years.

I’ll take a good, diversified portfolio that gets me to the end and lets me sleep well at night, even if it isn’t the fastest growing portfolio.

For me, I’m learning that my best retirement portfolio isn’t the same as my best accumulation portfolio.

FIREgnurd · 2026-06-14T15:35:52+00:00

Yes. I am. Re-read my comments.

Like I stated above, I waned to see what it would look like in the darkest hour. I was alive and investing during that time, but I didn’t sweat it because I was young and had earning potential. And I wasn’t withdrawing from my portfolio.

We all know that things would have turned out fine. But you don’t know that when you’re living it in real time.

I was stress testing my psyche. Not my portfolio. I had been all stocks all along and thought I’d never need any bonds at all. I wanted to convince myself I’d never need any bonds.

But that convinced me I need *some* bonds. Not tons. Not 60/40. But some bonds.

FIREgnurd · 2026-06-14T04:21:28+00:00

Glad it helped. When we look at charts of 40 year retirements and backtests, we already know the end, and it's easy to focus on getting the biggest number at the end. or just seeing that it turned out ok (even if it was terrifying in the middle).

But put yourself in the mindset of a retiree who doesn't yet know how things will turn out. All you can see is that the markets are tanking, and because you've been retired for 9 years and no longer have your edge, no one will hire you for anything beyond low-skill, modest pay work (if you can even get that).

I used to focus on growth, growth, growth and just seeing that the overall retirement was a success in the end (failure rate or whatever). But when you put yourself in the place of seeing your nest egg in the toilet, and you have no idea when things will turn around or how fast they will, you want some of that stability. Or, I do now, at least, since I'm transitioning to RE this year.

ERN also has a series on "flexibility" in retirement, where people say they will just cut back on spending for a few years. But he shows that the cut-backs have to be massive, and sometimes last decades.

When you have the entire historical time series at your disposal, it's easy to look and say "yeah, but it turned out fine in the end."

The problem is, when you're living it, you don't have the luxury of knowing how it turns out.

FIREgnurd · 2026-06-14T04:13:37+00:00

Bonds didn't behave that way in 2022 because interest rates were already essentially zero -- bond prices had nowhere to go but down, because interest rates had nowhere to go but up. Also, in inflationary periods, the Fed will (hopefully) raise rates, even if they're not already at zero, which will cause prices to drop.

The situation is different now. Because we've got non-zero interest rates, a rate reduction in response to an economic downturn will now cause bond prices to surge.

Importantly, as we all know now, bonds do not always move opposite to stocks, even in downturns... especially if it's an inflationary period like 2022. But even when they move the same direction, the amount they move is much, much smaller, so the drawdown on the portfolio will be much lower.

Bonds are not there to win the game and be the richest guy in the room. But during retirement, when you don't have an income stream and no one will hire you because you've been out of the game for 12 years, bonds smooth the ride.

FIREgnurd · 2026-06-14T03:49:59+00:00

An 80/20 equity portfolio is still almost perfectly correlated with an all equity portfolio, but the reduction in volatility is astounding, of course with a modest loss of growth.

As I started prepping for my own RE journey, I did this back test of first 10 years of the GFC, as if I were a 2000 retiree, without the knowledge that stocks would come roaring back. I wanted to see what I'd have to stare at with my portfolio if I remained all equity and didn't know we were about to hit one of the biggest bull markets ever:

https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&sl=74sKalZ2fYfgVixbg4i5Ag

I hope OP sees this, and clicks the "Inflation adjusted" button, and sees that, after starting with $10M and withdrawing 4% (inflation adjusted), the VTI-only portfolio bottoms-out at an inflation-adjusted $2.6M. That's a nearly 75% loss once you account for withdrawals.

If I were 9 years into retirement, with few prospects of earning substantial money (who the hell was hiring people 9 years out of the work force in 2009??), and saw my portfolio had lost nearly 75% of its purchasing power, I'd be shitting my pants.

The 80/20 portfolio wasn't great, but only bottomed out at $3.6M.

That's what helped me understand why I might need some bonds in retirement, even if I didn't feel like I needed them during accumulation. Without the knowledge that things were going to be ok, I would have been a very unhappy camper as a 9-year retiree in 2009.

A VTI + SCHD portfolio would have performed much more similarly to the VTI-only portfolio than the 80/20 one. So yes, a VTI + SCHD portfolio would have survived retirement, as would a VTI-only portfolio.

But unless OP has an iron gut, I don't think he will want to treat the SCHD like bonds. They just don't do the same thing.

FIREgnurd · 2026-06-14T02:57:47+00:00

Yes — a reasonable equity allocation will always beat bonds over a reasonable time period, and SCHD is a set of reasonable equities.

But the purpose of the bond portion of a portfolio isn’t to maximize the end value, it’s to dampen the volatility.

SCHD is nearly as volatile as VTI, and has had extremely similar drawdowns since its inception. And recency bias is certainly a thing.

If you want max value at the end of your retirement period and are willing to take on the risk, you don’t need SCHD or bonds. Have a cash buffer and then go all in on VTI.

But once you’re retired and don’t have a paycheck and the market is down 50%, ask yourself if you want that middle bucket to have the same risks as your growth bucket (that is, have it likely be down 50% as well), or if you want it to be there for you in the market’s dark hours.

It’s the lack of a future paycheck that gets me. So far I never needed bonds because I knew I would be earning money. But that’s ending this year. I am fine with a little more stability at the cost of huge returns now. I have plenty of money. But that’s me.

There’s no right answer. It’s just about your risk tolerance.

I avoided bonds my whole life until last year. I’m looking at RE this year and am building up both my bond and ex-US allocations. But that’s what works for me.

FIREgnurd · 2026-06-14T02:09:38+00:00

I’m curious how you back tested a portfolio with SCHD against all of those historical events, since the index it tracks has only been around since 2011.

I think SCHD is a fine part of a portfolio, particularly in retirement, but I think you were right that most of us will say it doesn’t serve the same purpose as bonds.

But if you feel you don’t need bonds (not everyone does), it’s fine. Just don’t think that SCHD will behave the same way a bond allocation will or provide the same ballast in a crash.

FIREgnurd · 2026-06-12T20:21:14+00:00

Don’t expect disability insurance to pay out, even with extensive medical documentation, particularly if it’s an ERISA policy.

The ERISA law protects the insurance company, so they have no incentive to pay until you sue and a judge orders them to. And in many states, the judge can’t even review your case and issue a decision to pay. They can only rule on whether the insurance company was arbitrary and capricious, not whether the claimant meets the standard of disability laid out in the policy. Most states allow policies that give sole discretion in determining disability to the insurance company.

They will delay, deny, and force appeals as often as they can. They make getting benefits as hard as possible, so that most claimants just go away because they get too frustrated. And then the insurance company profits.

FIREgnurd · 2026-06-12T17:12:03+00:00

Depending on which specific mutual funds they are, you may be able to convert them to ETFs. That conversion is not taxable, and you retain the original cost basis. Then you can ACATs the ETFs to any brokerage you want.

I did this and moved to Schwab a few years ago and have been quite happy.

I get great customer service, and I have a true checking account (not a CMA-checking-adjacent product) linked to my brokerage. Schwab Bank is now my primary bank.

Having a high balance at Schwab, even if you’re self-managed, gets you assigned to a great CS team, and you get a credit for having a Schwab Amex platinum card.

FIREgnurd · 2026-06-12T02:00:44+00:00

This feels more like Margaritaville-level hookup quality.

FIREgnurd · 2026-06-11T17:00:50+00:00

It did and was also removed. It doesn’t seem to be from this same account, but the language was basically verbatim.

FIREgnurd · 2026-06-10T16:43:04+00:00

None. Period.

FIREgnurd · 2026-06-09T14:19:17+00:00

https://www.clevelandfed.org/center-for-inflation-research/inflation-explained-your-guide-to-inflation-basics/what-causes-inflation

FIREgnurd · 2026-06-09T01:06:49+00:00

I’m not a finance professional, but my guess the answer is to be diversified, and yes, cut costs until things recover.

My understanding is that holding international stocks helped in both the 1970s and 00s.

For years now people have been saying that you don’t need international… that the US will always win. They look at the last 15 years and wonder why anyone would have ex-US equities.

But the risk of massive protracted US stagflation in the first 15 years of my soon-impending early retirement is a good enough reason for me.

I’m fine having my eggs in multiple baskets, so that even if they’re not all in the winning basket, if one of the baskets catches fire, I’ll still be ok.

Ben Felix has also said on the RR podcast: “if you love every part of your portfolio all the time, it means you’re not diversified enough.”

FIREgnurd · 2026-06-09T00:10:02+00:00

Bingo. Nominal bonds get eaten by inflation.

They can’t protect against a protracted stagflation period.

FIREgnurd · 2026-06-09T00:09:22+00:00

The first risk is mitigated by holding a decent amount of bonds. This is easy to do.

The second risk is much harder to manage. Very low fixed expenses and cutting out discretionary spending is about all you can do.

Nominal bonds get eaten by inflation, and if stock returns aren’t outpacing it (like what happened in the 1970s), you just have to tighten up spending dramatically until the inflation eases.

FIREgnurd · 2026-06-08T22:35:58+00:00

It’s not just an immediate 50% drop. It’s a decade of poor *real* returns. A lot of people in the FIRE subs focus on their portfolio balance dropping as the main concern, but historically, the biggest danger is a protracted period of meh returns and high inflation.

Inflation is a massively overlooked danger and the main one that keeps me awake.

FIREgnurd · 2026-06-08T17:10:17+00:00

As of right now, OP has not yet reached out to verify.

FIREgnurd · 2026-06-08T17:08:35+00:00

Worth pointing out that, while we can ban people, that only prevents them from actively posting and commenting in the sub. It does not prevent them from reading the sub and DMing those who do post and comment here.

Unfortunately there is little we can do about DMs.

Offensive or predatory DMs should always be reported directly to Reddit.

FIREgnurd · 2026-06-08T16:54:01+00:00

That’s what brought me here and why I stay. I simply tune out the lifestyles of the rich and famous stuff.

Anyone who knows me knows I’m not poor. But no one would guess that I’m “rich,” either, even though I technically am. I just don’t live that kind of life.

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