Link to: Safe Withdrawal Rates: A Guide for Early Retirees

Here is a link to "Safe Withdrawal Rates: A Guide for Early Retirees" by Earlyretirementnow.com.

I thought this was deserving of its own post.

Why?

1. I have a soft spot for non-academic, non-practitioner, skin-in-the-game, analytically-minded early retirees for obvious reasons.[1]

2. He, like I have in the past, makes the case that there are two different retirements out there: regular and early. Early has a sufficient number of characteristics and risks that are not shared by regular retirement that it can be considered an entirely different beast, a beast that is either ignored or glossed over in the ret-fin literature.

3. He makes a convincing case, as I have to myself and in this blog, that while academics and practitioners and their various studies can sometimes make it seem that a SWR of 4% (or even higher) might still be ok for some retirees some of the time (though I am seeing less and less of this), for an early retiree, in this kind of environment in 2017, it is kind of a non-starter. Better to keep it under 3.5% or even lower.

4. While he articulates at points a case for 100% equities, and in the context of his paper he is probably right, his charts whisper a slightly different story. No small number of them confirm my bias that there is, in a simplified 2-asset world anyway, a range of 40-70% equity exposure that seems to work an awful lot of the time...depending on time left and wealth, though.

5. He packs in an awful lot of the analysis that I have either done, was thinking about doing, or would do if I had thought of it or wished I had thought of. That means I can kick back and relax now.

I skimmed and need to go back and re-read but in general: good stuff.


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[1] it was pointed out to me that by saying "I like non-academics" about a PhD in econ might sound incoherent which I guess it does. But I think there is a difference between ivory tower papers on retirement and a guy with a PhD that has a job in the private economy and who is actively attempting to do an early retirement. That takes him out of the category and into the real world which was my original point.