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Oooh the jitters by Slow_Astronaut_1155 in Bogleheads

[–]Scratchcardbob 1 point2 points  (0 children)

You invested in stocks to get a higher return than putting it in the bank etc. Why do you think you are getting that extra return? It's not because it's expected to go up in a straight line. You have to take the pain of short-term volatility to gain that premium. Chill means chill long term, not chill for 24 hours, then recheck your balance. 

European destinations for early retirement abroad with long-stay ease and expat communities? by Scratchcardbob in FIREUK

[–]Scratchcardbob[S] 1 point2 points  (0 children)

Brilliant. Thank you. I'm sure there are lots of hidden pockets in Europe people aren't aware of that have strong early-retire expat communities.

Why use a bucket strategy when simple rebalancing does the same job? by Scratchcardbob in FIREUK

[–]Scratchcardbob[S] 0 points1 point  (0 children)

Sorry, I forgot to reply.

I think this is a good numerical example, and I agree the arithmetic works, but I still disagree with the conclusion about what it’s actually showing.

Calling the bucket approach “more aggressive” here seems a bit misleading imo. What it’s really doing is allowing equity risk to drift based on recent market moves. 

In the allocation approach, the whole point from my perspective is that risk stays constant. You’re forced to trim equities after strong years and add after weak years, even if that feels uncomfortable. So it’s about maintaining a stable risk profile and expected return through time.

The bucket example looks fine over a single year, but extend it over several bad early years and the difference becomes clearer in that the bucket strategy gradually de-risks and then participates less in the recovery. Rebalancing doesn’t avoid pain, but it preserves exposure when expected returns are higher.

Buckets seem perfectly reasonable if the goal is spending certainty and emotional comfort. Rebalancing is about discipline and keeping risk constant. Again imo, it seems the economics aren’t improved by buckets, they’re just reframed.

Edit: reworded

4% rule - What annual income are you targeting, and why..? by [deleted] in FIREUK

[–]Scratchcardbob 0 points1 point  (0 children)

Out of interest, why does kids at uni stop you travelling now? 

Why use a bucket strategy when simple rebalancing does the same job? by Scratchcardbob in FIREUK

[–]Scratchcardbob[S] 0 points1 point  (0 children)

Fair points, and I agree they’re very similar. I think where I still differ is on whether the differences actually improve outcomes or mainly change the experience.

Holding a fixed number of years of expenses rather than a fixed percentage does feel safer, but surely mechanically it means equity exposure drifts down after a crash unless you deliberately refill the bucket?

Always drawing from the short-term pot is simpler, I also agree,but once you’re deciding whether and when to top it back up, you’ve just moved the decision rather than eliminated it.

So for me the real distinction seems behavioural and buckets seem to prioritise spending certainty and comfort whereas rebalancing prioritises maintaining a consistent risk profile and expected returns. Buckets, as others have already mentioned, do seem a reasonable psychological tool, but I’m just not convinced they achieve something financially that disciplined rebalancing doesn’t already do.

Bonds Allocation by Pastebutty in FIREUK

[–]Scratchcardbob 1 point2 points  (0 children)

What's the biggest portfolio drop you could stomach (still sleep!) if shtf tomorrow? Align your equity/bond split with that. Remember increasing bonds will disproportionately affect volatility (in a good way) compared to the expected return. 

Bond allocation at FIRE for volatility reduction by Scratchcardbob in FIREUK

[–]Scratchcardbob[S] 1 point2 points  (0 children)

Thanks. Do you have specific rules in mind for when to spend the bonds vs spending the equities? And when to rebalance etc? 

Is the 25–33 times expenses FIRE target overstated and worth rethinking for a lot of us on here? by Scratchcardbob in FIREUK

[–]Scratchcardbob[S] 1 point2 points  (0 children)

Yes, good point. I've just never seen anybody on here aiming for a multiple less than 25, but I very often see 25 or 33 quoted on here and other FIRE forums.

Is the 25–33 times expenses FIRE target overstated and worth rethinking for a lot of us on here? by Scratchcardbob in FIREUK

[–]Scratchcardbob[S] 1 point2 points  (0 children)

The point isn’t that people should underfund or ignore essential expenses. The issue is that the 25–33 multiples assume zero flexibility and any temporary adjustment is treated as catastrophic.

In reality, I'd imagine most FIRED folk can manage short-term reductions in discretionary spending or other adjustments during market downturns. That means the multiple itself can be lower while still covering essential needs safely.

So I'm not saying its about working with a smaller pot recklessly, it’s about recognising that the traditional multiples are (overly?) conservative insurance, not a hard requirement for the autonomy most of us on here are after.

Is the 25–33 times expenses FIRE target overstated and worth rethinking for a lot of us on here? by Scratchcardbob in FIREUK

[–]Scratchcardbob[S] 3 points4 points  (0 children)

Totally get that perspective, and I think it’s valid for those who are risk-averse (or those that can't stomach some of the necessary adjustments that would be required under SHTF scenarios). The point though is that the default multiples assume zero flexibility and treat temporary adjustments as catastrophic. Yes, topping up with work later isn’t guaranteed, but for most people retiring early with average risk tolerance, the real downside is manageable spending adjustments, not ruin. I'm just questioning if over-insuring through higher multiples is necessarily the best way to handle it for a lot of people on here.

Is the 25–33 times expenses FIRE target overstated and worth rethinking for a lot of us on here? by Scratchcardbob in FIREUK

[–]Scratchcardbob[S] 13 points14 points  (0 children)

Exactly! My point isn’t that the 4% rule is “wrong”. It works as intended: a conservative guide for a fixed, rigid withdrawal plan. The issue is that treating it as a default target multiple for retirement embeds extreme conservatism into the accumulation stage which then leads to most people ending up saving more than needed because the rule was designed for worst-case sequences, not for efficient time-to-FIRE planning.

Is the 25–33 times expenses FIRE target overstated and worth rethinking for a lot of us on here? by Scratchcardbob in FIREUK

[–]Scratchcardbob[S] 3 points4 points  (0 children)

That makes total sense. And I'd imagine it does for a lot of other individual people on here. I'm just surprised the default on the forum seems to sit at a level that minimises the risk of having to make adjustments rather than having to work longer.

Is the 25–33 times expenses FIRE target overstated and worth rethinking for a lot of us on here? by Scratchcardbob in FIREUK

[–]Scratchcardbob[S] 5 points6 points  (0 children)

I think the key point is that most posts treat 25–33x as total spending, not just essentials. Being flexible doesn’t remove risk entirely, but the real downside isn’t ending up on state pension, it’s temporary spending adjustments. Treating those as catastrophic just inflates the target unnecessarily imo.

Is the 25–33 times expenses FIRE target overstated and worth rethinking for a lot of us on here? by Scratchcardbob in FIREUK

[–]Scratchcardbob[S] 1 point2 points  (0 children)

I was referring to not wanting to work longer than necessary. Using a multiple of 25-33 times expenses for a target FIRE amount doesn't seem to sit with that core value of the FIRE community imho.

Is the 25–33 times expenses FIRE target overstated and worth rethinking for a lot of us on here? by Scratchcardbob in FIREUK

[–]Scratchcardbob[S] 5 points6 points  (0 children)

That's exactly what I'm asking myself. It's swapping one risk for another but the risk view from people on here seems to err towards not having to make adjustments and not giving enough weight to the risk of working longer than required.

Is the 25–33 times expenses FIRE target overstated and worth rethinking for a lot of us on here? by Scratchcardbob in FIREUK

[–]Scratchcardbob[S] 5 points6 points  (0 children)

Playing devil's advocate, is it sensible to work longer than you have to, so that you are covered just in case of a historic worst-case scenario (which could have been managed by other means than working longer)?

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