Talk about inflation!!!!

you did not include inflation at used 4% inflation number?

No, I did not. Increasing the withdrawal by 7% annually the $5 million port is exhausted in 26 years.

The Captain

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Swooping in to say that Nords had a small consulting role in the creation, but largely it was a reverse-engineered version of firecalc that had extra features added on from crowdsourced user input… created by me :wink: a current Fool.



There are 11 million households in the US with more than one million in assets.

There are perhaps 20% of earners that make a very good living in the US.

The issue of $5 million in pop literature. Just throwing something out their for anyone to feed on while reading.

In addition, those in that position most likely have two Social Security checks each month, so there’s an additional $72K each year – which should pay for the property taxes and utilities.


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Hey Lauren! Thanks for the clarification. I didn’t mean to slight your contribution, just highlighting the early TMF connection.

Suffice to say the modern FIRE movement was made possible by giants like intercst, Nords and you! Along with many others, of course.

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My rule of thumb: save 15 pct. annually, retire comfortably within your means in 30 to 35 years. A lifetime of living on 15 percent less than you earn will give you a comfortable retirement within your means.


I just explained it briefly in another post here - Withdrawal rate in these times - #6 by MarkR


Maybe using the phrase ‘magic number’ was not the clearest way to express my dislike for this ‘meme.’ There is nothing wrong with the numbers themselves, it’s their consequences that trouble me. In your referenced post you said

If people believe you, and the industry does, the above becomes a dictum. Everyone is advised not to take out more than 4%. The problem is that every portfolio has an owner with distinct characteristics, age, gender, family, wealth, health, risk tolerance, income sources, and so on.

A 4% straitjacket for everyone is not a good idea. It stifles creativity. Same for the 60/40 rule and many more. Let me illustrate with my portfolio. I no longer have any income stream so I need a portfolio that generates income. As I noted previously I do it with covered calls. 2022 results so far (approximate, conflating euros and US$, ignoring stock capital gains or losses from option trading). The income has allowed my port to beat NASDAQ by almost 2 to 1 despite having hard hit ‘high risk’ securities

Income    13.35%
Withdraw   8.30%

My point is that ‘magic numbers’ are interesting data points but should not be taken as commandments handed down from on high. There is too much variety among investors to do so. Portfolios should fit like well tailored clothes.

The Captain

This is completely untrue! The 4% rule of thumb is for a 60/40 portfolio for 30 years, nothing more, nothing less. All it says is that 4% out of a 60/40 portfolio would have withstood beginning withdrawals in 1929 and in 1966. That’s essentially it.

If you’re retiring at 75 and expect to live max to 95, you only need 20 years and the safe withdrawal rate is likely higher. If you are ill and expect to live only another 10 years, you can, and should, withdraw more. If you receive social security and/or pensions, that amount is off the top and when calculating what you need, you can withdraw more because you can accept a slightly higher risk of failure. If you have a wealthy family that will take care of you if you run out of money, you can withdraw more than 4%. If you “feel lucky”, you can withdraw more than 4%. Every one of these things you listed is taken into account.

It says nothing about people who have the skills to regularly double the nasdaq returns. Similarly, someone who has the ability to serve on corporate boards, and attend meetings a few time a year, and earn a bunch of money from it. People who have skills that can earn them extra money, will have more money than 4% drawn out of a typical 60/40 portfolio (or 3.93% drawn out of an 80/20 portfolio, or a 1.67% drawn out of a 0/100 portfolio, etc).


I don’t doubt that the above is the intention but, is that was the neophyte investor hears, what he understands? I certainly was confused!

The Captain

Oh, it’s far far FAR worse than this! The neophyte, and even the typical, investor is giving away a quarter to a half of their annual income to the company managing their retirement money. If you take a 4% withdrawal rate, and you pay 1.33% in management/etc fees (and this is very common just using run of the mill mutual funds), then you’re giving away a third of your annual income to them. Some people even pay 2% total annual fees, that’s HALF!

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The Captain

1 character missing to make it acceptable, but wait!

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