I've been thinking about this topic lately so figured I'd weigh in on this thread.
I'm increasingly thinking about this in terms of my "number" being the % likelihood of success on my chosen monte carlo simulation. I'd be pretty comfortable retiring when that number hits about 75%. I'm 46 today and I'd love to retire around 50-ish.
Before someone says I'm crazy and will run out of money, let me explain further on a few things:
1. When I say "retire" what I mean is "do whatever kind of work I want (without regard to pay)". I think meaningful work is a key component of happiness and I want to be happy in retirement. So, if I take the leap at 75% and then I find myself in the first decade of retirement having one of those bad-return-sequence scenarios where the plan could fail (25% likelihood), then I'll have flexibility and will likely still be healthy enough to work for money. Could add a little income and take my withdrawal rate down a bit during those years until the market recovers. (But... importantly... there would be a 75% chance I'll never need to earn anything again, and I like those odds.)
2. I'm well aware of the limitations of monte carlo. I know some of the extreme scenarios are pretty unrealistic, and I know it's a tool that's extremely sensitive to your inputs and assumptions. I tend to use Empower's retirement planner. I know there are much more sophisticated ones out there, and I would definitely run scenarios with a variety of tools before actually pulling the trigger. The Empower simulation factors in social security, and it uses a steady inflation-adjusted withdrawal rate. (You can have it decline your spending 1% a year but I de-select that option.)
3. I plan to use a variable withdrawal approach, along the lines of VPW but I'd probably look at some of the other models as well. Using VPW can improve the success rate to nearly 100% as long as you have the required flexibility in your spending. I plan to have flexibility in my spending-- i.e. my target spending includes discretionary things like travel, eating out a lot, etc. (There are downsides with VPW as well, like higher variability in withdrawals. Some of the other variable methods can mitigate those downsides, but VPW is great for simplicity.) If I retire at 50, my VPW initial withdrawal rate would be 5.48% and then drop later when social security begins. That's A LOT higher than the typical bogleheads 3%, 3.5%, etc. As long as you have flexibility to reduce when/if necessary, then you can have a much higher withdrawal rate initially.
4. As a general statement, I think bogleheads tend to be a bit too conservative, and tend to trade their good health to have a "bullet proof" retirement plan. However, I think the reality is that most retirees end up being more flexible, managing expenses to what their portfolio can support, and adding a bit of income when needed. (I heard a statistic recently but can't quote it perfectly. It was the % of retirees who retire with 1M who end up with more than 1M after X years of retirement. The % was high but I can't remember the exact number. If that's true at 1M, I would think it's even more true at 2M or higher.)
5. With all that said... health care is the big variable that I don't feel completely confident on how I would handle in early retirement. If structured correctly, could do ACA and keep my MAGI below the "subsidy cliff" ... but at present I haven't fully modeled that out. So, my plan needs some more work, but the above is roughly how I'm thinking about it right now.
Would love anyone's thoughts / feedback on the above!
I'm increasingly thinking about this in terms of my "number" being the % likelihood of success on my chosen monte carlo simulation. I'd be pretty comfortable retiring when that number hits about 75%. I'm 46 today and I'd love to retire around 50-ish.
Before someone says I'm crazy and will run out of money, let me explain further on a few things:
1. When I say "retire" what I mean is "do whatever kind of work I want (without regard to pay)". I think meaningful work is a key component of happiness and I want to be happy in retirement. So, if I take the leap at 75% and then I find myself in the first decade of retirement having one of those bad-return-sequence scenarios where the plan could fail (25% likelihood), then I'll have flexibility and will likely still be healthy enough to work for money. Could add a little income and take my withdrawal rate down a bit during those years until the market recovers. (But... importantly... there would be a 75% chance I'll never need to earn anything again, and I like those odds.)
2. I'm well aware of the limitations of monte carlo. I know some of the extreme scenarios are pretty unrealistic, and I know it's a tool that's extremely sensitive to your inputs and assumptions. I tend to use Empower's retirement planner. I know there are much more sophisticated ones out there, and I would definitely run scenarios with a variety of tools before actually pulling the trigger. The Empower simulation factors in social security, and it uses a steady inflation-adjusted withdrawal rate. (You can have it decline your spending 1% a year but I de-select that option.)
3. I plan to use a variable withdrawal approach, along the lines of VPW but I'd probably look at some of the other models as well. Using VPW can improve the success rate to nearly 100% as long as you have the required flexibility in your spending. I plan to have flexibility in my spending-- i.e. my target spending includes discretionary things like travel, eating out a lot, etc. (There are downsides with VPW as well, like higher variability in withdrawals. Some of the other variable methods can mitigate those downsides, but VPW is great for simplicity.) If I retire at 50, my VPW initial withdrawal rate would be 5.48% and then drop later when social security begins. That's A LOT higher than the typical bogleheads 3%, 3.5%, etc. As long as you have flexibility to reduce when/if necessary, then you can have a much higher withdrawal rate initially.
4. As a general statement, I think bogleheads tend to be a bit too conservative, and tend to trade their good health to have a "bullet proof" retirement plan. However, I think the reality is that most retirees end up being more flexible, managing expenses to what their portfolio can support, and adding a bit of income when needed. (I heard a statistic recently but can't quote it perfectly. It was the % of retirees who retire with 1M who end up with more than 1M after X years of retirement. The % was high but I can't remember the exact number. If that's true at 1M, I would think it's even more true at 2M or higher.)
5. With all that said... health care is the big variable that I don't feel completely confident on how I would handle in early retirement. If structured correctly, could do ACA and keep my MAGI below the "subsidy cliff" ... but at present I haven't fully modeled that out. So, my plan needs some more work, but the above is roughly how I'm thinking about it right now.
Would love anyone's thoughts / feedback on the above!
Statistics: Posted by siriusblack — Sat Sep 13, 2025 12:02 pm — Replies 404 — Views 71523