Personal Investments • 2.5% withdrawal rate forever?

A 2.5% withdrawal rate should be a sustainable withdrawal rate for a very long time particularly now that interest rates have returned to more normal levels after many years of the Federal Reserve Bank keeping short term rates at essentially zero. Right now, short term US Treasuries return just over 5% so that alone ought to be able to sustain the withdrawal rate you are seeking.

I have joked about the sustainable withdrawal rate dropping, it went from 4% down to something like 2.8%, a lot of this discussion was fueled by the very low interest rates that persisted after the Great Financial Crisis of 2008-2009. My joke was that the new sustainable withdrawal rate was zero percent and you work until you drop. People got to be ultra conservative about this as many retirements don't last terribly wrong, I recently had an old friend who passed at age 72. My father lived to be 91 1/2 years, so his retirement was 26 1/2 years, which is a long time but some folks pass in their sixties and seventies. Mom is still living.

I turned 65 years old today, my current plan is to retire at Social Security Full Retirement Age at 66 and 10 months, but this is subject to change. I am aiming for a life expectancy out to 92 in my financial plan but who knows. I am aiming for a 3% withdrawal rate, which should give me some room for error.

Statistics: Posted by CyclingDuo — Fri Jul 05, 2024 9:03 am — Replies 14 — Views 490