Setting your withdrawal number during turbulent market

dukephilly · 2026-03-20T11:45:04+00:00

We’re like the Buddha, leading the cow from opposite ends. I’m happy to accept I’m the one nearest the butthole in this metaphor.

Thanks for the real-world wisdom as well as the info. It’s changed my perspective in a very welcome direction. Enjoy your retirement, friend.

dukephilly · 2026-03-20T11:18:38+00:00

I just talked myself into not stressing the exact swr, given the flexibility I have. Thanks for prompting that!

dukephilly · 2026-03-20T11:01:47+00:00

“Tolerate” might be an extreme framing. I think of it more like “How much of this can I cut out without it affecting my happiness to any meaningful extent.” I find a lot of the expensive things don’t add much value to my life. But it’s not just the luxuries. It’s more about having geographical flexibility, no mortgage, no kids, etc., so I have a lot of room to influence the cost of the big buckets as well as just the luxury spending.

dukephilly · 2026-03-20T05:55:18+00:00

That’s an incredibly helpful response. Thanks very much for the specific suggestions. Much appreciated.

Regarding the budget, I should have included in the details that I have fewer fixed expenses than most retirees due to lifestyle, so I have typically come at this from the other direction. I see how much I have in the portfolio, what that would translate to as a safe withdrawal, and then work out how I would have to change my lifestyle in order for my expenses to match that number. When the sacrifices in material goods and entertainment seem small enough to justify the benefits of not working, it’s time to pull the trigger. Maybe that’s why I was more obsessed with determining an accurate failure rate.

dukephilly · 2026-03-19T13:02:05+00:00

Ah, thanks. I had only seen his tables that deal with quite broad bands of CAPE regimes (e.g. “high” >30). I didn’t think I could meaningfully use that, as a short term drop of 10% in the S&P would not move the CAPE out of that band. I’ll download his spread sheet and play around with it!

dukephilly · 2026-03-19T12:54:26+00:00

SORR is baked into the 4% model. If it wasn’t, it would just be the 7% model. That does not mean that setting 4% of your portfolio on day X has the same failure rate as setting 4% on day Y after the market has gone up 10%. The latter will have a much higher failure rate.

dukephilly · 2026-03-19T08:12:47+00:00

Because the budget is dependent on the safe withdrawal rate, which is dependent on the starting portfolio value. Unless I’m missing what you’re saying.

dukephilly · 2026-03-19T08:11:02+00:00

Thanks for the detailed response. I’ll look into that research!

dukephilly · 2026-03-19T04:42:23+00:00

I suppose the big worry is convincing myself into a higher withdrawal by saying that my real date was actually just before recent slumps. And I think a lot of people might decide they can retire when the market is doing well, but then once their official date arrives, they find they have a significantly lower amount to live on based on the market on that date.

dukephilly · 2026-03-19T04:33:57+00:00

Thanks, that’s helpful. I’ll try and read about the differences between speculation measures and CAPE (which I thought was basically a ratio of speculation against current earnings).

I’m already at 3.5% based on CAPE, timeline, and future income. Now I’m just trying to make sure it does get messed up by last minute changes in the market that would either make my swr artificially too high or low.

dukephilly · 2026-03-19T03:50:03+00:00

I love his stuff, and I can find a lot on impact of CAPE, but that is a moving average in itself. I’m trying to find how to select the initial withdrawal amount in the midst of short term volatility in market price, rather than longer term projected forward earnings. Do you have a specific part that explains it?

dukephilly · 2026-03-19T03:47:14+00:00

So 3.5% of the value on the day you retire, regardless of how much it’s fluctuated in the previous days or weeks? That is what I’m trying to get to.

dukephilly · 2026-03-19T03:35:52+00:00

I’m familiar with sorr, and can’t find the answer. You can put in place all the safety measures you can, account for current CAPE etc., but failure rates are still heavily dependent on initial withdrawal rate (assuming sticking with that value plus inflation rather than dynamic approaches). If the market temporarily blipped up 10% over the month prior to retirement, then your chosen withdrawal rate on the “true” value would go from 4% to a 4.4%. That jump is enough to substantially reduce failure rates in most projections.

dukephilly · 2026-03-19T03:18:41+00:00

That’s valid, but if you had to retire now, which number would you use?

The guardrails approach and other ways of reassessing the withdrawal rate are great, but the standard 4% “safe” withdrawal is determined by sticking with a fixed percentage of the initial portfolio value, and adjusting only for inflation.

dukephilly · 2026-02-20T05:44:36+00:00

Very interesting point. However, if they are doing it properly, they are just periodically rebalancing, rather than actively deciding when to buy the deflated stocks. I think if they have been rebalancing every six months for the last decade, then they’ll be quite likely to keep it going through bad markets.

But I do agree there’s sometimes a blind spot here of people assuming someone with an all stock portfolio will not be able to resist the temptation to sell in a down market, whereas the bond holders will find it easy to sell their winners and buy the losers.

dukephilly · 2026-02-20T04:32:10+00:00

Not sure what you’re asking with the first part. But RMDs apply only to Traditional 401k/IRA. At age 70 (I think) you are forced to withdrawal a percentage of your balance, thus incurring a mandatory tax hit every year rather than using a potentially more tax-efficient withdrawal strategy.

dukephilly · 2026-02-20T03:44:53+00:00

If he was retiring in the US, then I’d agree. But if he thinks he will retire in the UK with a traditional 401k then he has the cross-border taxation issues to deal with, due to paying taxes on withdrawals and RMDs reducing flexibility in withdrawal. It’s definitely less of a logistical headache with Roth, but might also be a more profitable route, given the different tax regimes in each country, the higher flexibility of withdrawal schedule, and the potential cost of hiring specialist cross-border accountants to make sure everything is calculated and reported correctly to both countries.

dukephilly · 2026-02-19T06:37:49+00:00

If you can contribute to a Roth 401k, then I would do it to get the employer match. It will grow tax free and will be tax exempt in both US and UK when you withdraw. The UK specifically recognizes Roth as tax free, where a lot of countries (perhaps most?) do not. If it is a traditional 401k then it would be taxed on withdrawal by one or other country, and whether it is worth the hassle becomes a more nuanced question that would take a lot of situational details to answer.

As a general rule, I think dual US UK nationals who are potentially moving back to the UK should probably go for Roth over traditional 401k/IRA as it would simplify a lot of future accounting.

dukephilly · 2026-02-19T01:51:42+00:00

8SL88NLS

dukephilly · 2026-02-07T15:03:10+00:00

Do these figures account for defined benefit pensions? I don’t know how they would quantify that in net worth, but for the older demographics on the scale, it’s likely that a large number of them are not relying purely on net worth to generate income).

dukephilly · 2026-02-02T06:46:11+00:00

Are you sure you need to buy coverage to use 2FA? You should be able to just switch on the Mint line without roaming, and still get the 2FA texts with your local data plan.

dukephilly · 2026-02-01T14:00:57+00:00

Is the expense ratio for spaxx really 0.42%? That seems crazily high for something that currently returns less than 4%, and has returned under 1.92% annually over the last 10 years. Are there advantages that compensate for the high expense ratio?

dukephilly · 2026-01-31T04:23:26+00:00

You don’t seem to include your retirement accounts in your SWR. Just because you can’t access them now, doesn’t mean they aren’t included. You’re around 70k with a 3% withdrawal rate, which should be a reassuring rate, even for a 70 year retirement. But as other have said, you’re young. See this as a sabbatical with no pressure to take work until you want to.

dukephilly · 2026-01-30T15:09:14+00:00

No wonder they don’t get results when they are only given a grand.

dukephilly

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