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Comment by dtech | Hacker News Reader

4% is the rule of thumb for indefinite withdrawal including correcting for inflation right? That's not necessary for a pensioner

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The 4% rule is from the Trinity Study, which was based on a 15-30 year retirement:

https://en.wikipedia.org/wiki/Trinity_study

For an indefinite time period you'd need a 3-3.5% inflation-adjusted withdrawal rate depending on how many 9s you want in the portfolio survival rate.

It's also based on having the money continually invested in the stock market, which becomes more nerve-wracking in retirement I'd imagine since you can't easily weather the storm of a half-decade downturn.

Yea, I don’t think 4% is all that conservative, either. Unless you have some reliable insider knowledge about when you’re going to die, you kind of have to plan for indefinite withdrawal, or at least until age 120 or something. Ideally, we are at exactly zero when we kick the bucket. Having money left over when you die is fine and let’s you leave a little bit to kin. Running out before you die is kind of catastrophic, no?

Then you leech off kin if you have any? We invented old people long before we discovered pensions and tax-advantaged retirement savings accounts.

The range of plausible return rates is hilariously wide, so nearly any withdrawal scheme that can provide a reasonable baseline standard of living with a low chance of going bust is extremely likely to grow faster than you spend it down and leave you with large amounts of money left over. Portfolio survival rate is a very artificial metric that does not accord with how people actually concretely plan their retirements outside a particular band of upper-middles who are weirdly allergic to the fact that they have social ties (and rich enough to avoid them).

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