405K views · Dec 22, 2022 · 13:12 · 0 HN recommenders · 3 mentions · discussed 2022–2025
Ben Felix examines whether the well-known 4% retirement withdrawal rule holds up, drawing on academic papers. He argues that a safe rate may be closer to 2.7%, especially for early retirees.
Why Hacker News points people here: HN cites it as the source for the argument that safe withdrawal rates should be lower than 4%.
“For early retirees, Ben Felix has found the SWR to be closer to 2.7%.”HN comment, 2022
“For early retirees, Ben Felix has found the SWR to be closer to 2.7%.”
Safe withdrawal rate for early retirees
For early retirees, Ben Felix has found the SWR to be closer to 2.7%. The oft-cited 4% depends on US data and studied 30-year time horizons. this video
“a safer rate would be 2/2.5%[0]”
Safer withdrawal rates than the 4% rule
4% is specific to 60/40 US portfolio with 30 years horizon to not die poor at the end of it , a safer rate would be 2/2.5%[0] [0] this video
> What if your hypothesis is that the fundamentals have changed? There's been recent research on survivorship bias in market returns, especially with regards to the US: > Using international data, we quantify the magnitude of survivorship bias in U.S. equity market performance, and find that it explains about one third of the equity risk premium in the past century. We model the subjective crash belief of an investor who infers the crash risk in the U.S.~by cross learning from other countries. The U.S. crash probability shows a persistent and widening divergence from the implied global average. We attribute the upward bias in the measured equity premium to crashes that did not occur in-sample and to positive shocks to valuations resulting from learning about the probability. * link * this video I'm Canadian, so I have a different home market, but that is correlated to the US economy (cf. tariffs), but my portfolio (TSX:VGRO) also has non-US/CA equities.
