Running out of Money in Retirement

About this video

• Video Title: Running out of Money in Retirement
• Channel: BeatTheBush
• Speakers: B the Bush
• Duration: 00:06:44

Overview

This video discusses the 4% rule for retirement withdrawals, its origins in the Trinity study, and the speaker's personal reservations about relying on it. The speaker explains how the rule works, its historical data basis, and the inherent 10% chance of failure. They suggest strategies to increase success rates, such as lowering withdrawal percentages, adjusting spending during market downturns, and maintaining a supplemental income stream. The speaker also shares their personal progression from lean fire to fat fire and their investment goals.

Key takeaways

• The 4% Rule: This retirement guideline is based on the Trinity study, which simulated portfolio performance using historical data. It suggests a 90% success rate for a 50% stock/50% bond portfolio, with withdrawals increasing by inflation annually.
• Speaker's Skepticism: The speaker expresses a lack of full trust in the 4% rule due to the inherent 10% chance of running out of money, the reliance on historical data, and the volatility of markets.
• Strategies for Success: To mitigate risks, the speaker suggests lowering withdrawal rates (e.g., to 3%), adjusting spending during market downturns (reducing burn rate), and introducing flexibility into withdrawal strategies.
• Supplemental Income: A key strategy for the speaker is to maintain a small, steady income stream (passive or semi-passive) to cover the small percentage of risk associated with retirement withdrawal rules, providing a safety net during market downturns.
• Personal Retirement Goals: The speaker outlines their progression from "lean fire" to "normal fire" and their current goal of achieving "fat fire," which involves significant annual spending and investment opportunities.