The 1.9% Safe Withdrawal Rate?

New research from the big thinkers at the University of Arizona suggest the SWR is just 1.9%

As the US celebrates revolution, ignorance and innumeracy, they may be right.

The Safe Withdrawal Rate: Evidence from a Broad Sample of Developed Markets

intercst

These discussion seem never to end.

Now we have higher interest rates and we hope higher rates of return coupled with higher inflation rates.

Pick your numbers. Are you dealing with todays numbers? Or estimates of next year? Or x years from now?

My view us these discussions are not worth a plug nickel. 4% is ok with me. But build in some reserves. Don’t plan to retire on the minimum.

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pauleckler

These discussion seem never to end.

Now we have higher interest rates and we hope higher rates of return coupled with higher inflation rates.

Pick your numbers. Are you dealing with todays numbers? Or estimates of next year? Or x years from now?

[snip]

If there’s new, valid information, you should incorporate it into your thinking.

The problem is that someone living in retirement off an investment portfolio needs to predict the next 20 to 50 years depending on their age at retirement.

The United States has had a good 200-year run. But like the Empires before us, corruption, the excesses of the elites, and the inevitable revolution will eventually kill the Golden Goose.

intercst

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Was one of the authors the Financial Samurai?

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For many (most) people, higher interest rates with higher inflation is WORSE than zero interest rates with low inflation. That’s because of taxes.

0% yield with 2% inflation has zero taxes and a net -2% return.
4% yield with 6% inflation has 1-1.5% taxes and a net -3 to -3.5% return.

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That quote is from pauleckler. I’m still learning the new board functions.

I agree that higher interest rates have a very small constituency – just elderly people afraid of the stock market.

intercst

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