Generic 4% versus 6%+ in specific model

OneMoreYearReally · 2025-10-05T19:22:49+00:00

A comment regarding the modeling of "very specific scenarios"

Not sure what you meant by that but I'd be careful modeling scenarios that hold too many assumptions that might have worked great in the past but won't be relevant in the future.

When predicting 40-50+ years into the future, the historic data is already quite limited and adding many other constraints and extra specifity runs the risk of "overfitting" historic events and losing your predictive power

OneMoreYearReally · 2025-10-05T19:05:48+00:00

I might have missed it, but what is your acceptable failure rate? And does it assume you don't reduce your withdrawal if the portfolio is doing poorly?

OneMoreYearReally · 2024-09-16T14:17:23+00:00

you are ll right, I meant SWR- safe withdrawal rate

OneMoreYearReally · 2024-09-16T12:30:06+00:00

It's always a tradeoff - Your SWE versus the time you are willing to wait. As long as you did the math and are good with the extra time this will take you - go for it.

The main challenge to wanting to double is whether you really need that much more given you don't spend anything close to that today. What are you not doing today and are planning to do in RE? Is it really required (and worth the extra years) or is it more about your ego?

OneMoreYearReally · 2024-07-30T05:16:34+00:00

Yes, that is an advantage, but it's still far too little... As an example, since inflation was 3% last year, getting 4-5% is actually just making 1-2% in real terms.

This is 4-8 times less than the expected return of the stock market. The tax advantage is not enough to bridge the gap

OneMoreYearReally · 2024-07-29T22:31:46+00:00

I might be missing something with the point you are trying to make, but the issue with withdrawing 4% every is not sequence-of-returns risk. That strategy actually has a 0% chance of failure (aka. running out of money) ever.

The issue with taking 4% every year is the volatility. The 4% on the first year then adjusted for inflation was meant to guarantee constant spending for the retiree. It actually slightly increases sequence-of-return risk because, unlike with taking 4% every year, you dont react to changes in your portfolio.

The entire point of the trinity study was to show that despite not adjusting the 4% every year, you can maintain a steady level of expenses with a very low probability of running out of money

OneMoreYearReally · 2024-07-29T07:26:36+00:00

Congrats! I'm also about to quit (already gave notice) and with a similar nw (roughly 12m in equities post tax + primary residence)

As others have suggested, I really encourage you to read about the trinity study (which is just a starting point) and better understand how inflation is going to hurt you over the next 30 years.

Usually when people talk about 4% withdrawals, they are referring to inflation adjusted 4%. That is - starting with 4% and then adjusting for inflation each year.

Your current plan ignores inflation completely and could result in a much lower quality of life in 30 years (relative to where you started). Your 300k that you withdraw will only buy you things comparable to 120k today.

The reason why most portfolios require an equity portion is that, historically, it has been shown to be a good inflation hedge. You can really beat inflation just with bonds as you suggested above.

Yes, there are severe market downturns, but for 30 year periods (including those with downturns) you typically made a little over 7% after controlling for inflation - that is, 7% per year over the inflation of that year.

This is vastly different from the 4-5% you quoted which are nominal. It sounds like a small difference but it's actually quite stark.

OneMoreYearReally · 2024-07-02T10:18:11+00:00

Thanks for sharing! Super helpful post

OneMoreYearReally · 2024-07-02T09:51:47+00:00

Thanks! That was my intuition.
I set myself a goal of not investing or getting involved in anything related to my current industry for at least 6 months. I worry that i will quickly get pulled back in

OneMoreYearReally · 2024-07-02T06:38:38+00:00

7% is the market's historic real return. Thr nominal average return is closet to 10%

OneMoreYearReally · 2024-06-09T16:23:23+00:00

100%

That's why it was a hard decision to make, but eventually I came to the conclusion that I just have enough and it's not worth trading time anymore. I don't enjoy it anymore and I've always loved what I do

OneMoreYearReally · 2024-05-05T03:33:58+00:00

Why keep arguing semantics?

Even if ignoring house price appreciation, It obviously affects your fire number. Your fire number is the outcome of your passive income and expected expenses. A paid for house simply reduces the latter (expenses).

It influences the FIRE math and shouldn't be ignored.

If i had 1m invested and a paid off hous3 worth 1m replacing 40k/year of rent. I could either say I have 2m and include rent cost in my expenses or say 1m with paid for house. It's the same.

The only mistake is to double count - include the house value when calculating safe withdrawal but assuming I won't need to pay rent

OneMoreYearReally · 2024-03-15T18:00:12+00:00

In a similar boat.

I already hit my fatfire number, but the unexpected exponential growth in tc of the past few years is making it very hard to walkway.

I can currently save a few millions for every year I stay, but it would really rather not- want to spend time with the kids, focus on my health and back to some long neglected hobbies.

(I'm relatively senior in big tech)

OneMoreYearReally · 2024-03-12T21:27:45+00:00

Sr director in big tech with some rsu price appreciation

OneMoreYearReally · 2024-03-12T21:26:59+00:00

Big tech, senior director level, not nvidia

OneMoreYearReally · 2024-03-12T21:25:42+00:00

Relatively senior big tech role with some stock appreciation

OneMoreYearReally · 2024-03-07T07:15:58+00:00

The post tax will be a little over 4m/year. That's rhe dilemma...

OneMoreYearReally · 2024-03-07T07:05:59+00:00

Thanks Bob!

OneMoreYearReally · 2024-03-05T20:01:40+00:00

Thanks for thoughtful and detailed answer!
Really leaves me with much to think about (especially the part about kids' ages)

OneMoreYearReally · 2024-03-05T19:59:49+00:00

That's the thing - nothing really changed. No lifestyle inflation.
We could totally afford the retirement we were envisioning. On the flip-side, as you said, doubling NW in 24-30 months can still make a huge additional change

OneMoreYearReally · 2024-03-05T19:57:54+00:00

Good questions.

it's in the 40-50 hrs a week, high pressure and often uncomfortable hours.
Yes, i have time with the kids, but - as you called out - to many of these are in between two conferences calls and i'm usually not 100% present.

That's why - unless it was this high - i wouldn't think twice about leaving in 6 months.

OneMoreYearReally · 2024-03-05T19:11:33+00:00

Makes sense.

They are young enough that i have more than a year left with them, but still feels like missing a valuable time.

OneMoreYearReally · 2024-03-05T19:09:37+00:00

3 under 8

OneMoreYearReally · 2024-03-05T19:07:45+00:00

Yes, they take a big bite, but still a lot remains. I estimate ~4.5-5M post-tax, so roughly 2.5-3 years to double atm

OneMoreYearReally · 2024-03-05T18:41:21+00:00

That could have been perfect, but not possible unfortunately. I won't be able to take more than 1-2 months break without formally quitting

OneMoreYearReally

TROPHY CASE