re: Did y'all catch Dave Ramsey rip George Kamel apart over withdrawing 4% from retirement?

I have been looking at safe withdrawal estimates for a long time. I think the 4% rule is a good starting point for estimating how far retirement assets will go but the math behind it is very rigid. For instance, are you going to withdraw 4% from your retirement account every year and quit? Or, after a couple of good years in the stock market, are you going to withdraw 9% so you can buy a new truck (or roof, or AC) that year, but figure you are still safe because 4% of what's left is going to be enough next year? Are you going to try to get by on 3.5% if the stock market declines for a couple of years, maybe skip a vacation or something? When you compare the options of taking Social Security at age 62, 67, or 70 do you still plan to draw your assets down by 4% in each scenario?

It's a very typical of economists who keep preaching that the economy is like a pie, and that if someone gets a bigger piece, then everyone else's piece has to be smaller. In reality, everyone will adjust their spending somewhat to conditions. We see that every day in economic statistics when consumer adjust their spending based on how they perceive the economy. You will do the same in retirement, and a great many will crash and burn regardless of what withdrawal rate they choose.

In all those "Monte Carlo Analysis" scenarios, usually something like 8% is a safe withdrawal rate in something more than 60% of all scenarios (don't hold me to exact numbers this is off the top of my head), and 4% is safe in 95%. I don't go out deep sea fishing when there are 12 foot swells, if the water is too rough, I stay home. That's how people live, and how most are going to manage retirement assets. The 4% rule, or 8%, or 12%, are useful numbers, but life is different than that, and you will adjust your behavior to the situation at hand. If you have been good at doing that all your life, you probably will continue to be good in retirement.

Just remember the fable of the ant and the grasshopper. If the market is good for a few years, plan on that truck, but plan on stashing some of your wealth in some asset to prepare for the inevitable times when the market will not be good.