The Real Problems with Using the 4% Rule to FIRE

Shortly after our July 9 post encouraging retirees to consider shoring up their floor portfolios by establishing budget buckets of low-risk investments to fund their future essential expenses, Michael Kitces released “The Problem With FIREing AT 4% And The Need For Flexible Spending Rules” aimed at very early retirees (Financially Independent/Retire Early individuals, or FI’ers).   His post discussed “safe” withdrawal approaches based on the 4% rule.  This rule of thumb anticipates at least 60% investment in equities, and, when assets are equal to 25 times expected annual expenses, may indicate when assets for an individual with a thirty year lifetime planning period are sufficient to retire (1/.04 = 25 times expected expenses).

Ok Retirees, Now May be a Good Time to Shore Up Your Floor Portfolio

This post is a brief follow-up to our post of April 23, 2018, Ok Retirees, What’s Your Plan for Dealing with the Upcoming Bear Stock Market?  In that post we said, “At some point in the future, we are going to experience another bear market.  We don’t know when it will occur, but we feel pretty safe in predicting that it will happen.”  We suggested in that post that you use our five-year projection tab to stress test your spending budget for potential poor investment returns.

Better Budgeting with “Actuarial Budget Buckets”

In this website we encourage you to use the full functionality of the Actuarial Approach and our workbooks to help you develop a better spending budget and a better sustainable spending plan in retirement.  In 2019 alone, our posts on this topic have included: