The 4% "rule" should be treated with extreme caution in an Irish context -the 4% rule
I very much agree with this conclusion.For me since you have no large buffer either in the fund itself or as a cash reserve to ride out some severe market drops, I would suggest you need to wait until the €50kp.a. exp becomes <40k p.a. which would leave the ARF alone longer to reduce the amount of time you are reliant on it and hopefully grow.
There is the risk of a sequence of bad returns. There is also the risk of living to 95. These risks are uncorrelated!I consider 5% way too high a risk to take in terms of running out of money in old age.
I wouldn’t board a plane that crashes “only 5% of the time”.
Running out of money when you’ve no capacity to make any more if it is disastrous.
I wouldn’t board a plane that crashes “only 5% of the time”.
No, failure in this context means that the portfolio has been fully depleted - it’s not simply a shift to economy class.It should read, be kicked out of first class and have to walk all the way down to economy, only 5% of the time.
Surely the monetary denomination is irrelevant to the 4% rule (of thumb)?No, failure in this context means that the portfolio has been fully depleted - it’s not simply a shift to economy class.
Bear in mind that the so-called 4% “rule” refers to the dollar-amount that can be “safely” withdrawn from a portfolio every year over a 30-year period without fully depleting that portfolio. So, the dollar-amount is calculated at 4% of the initial portfolio value and then adjusted for inflation in each subsequent year.
Obviously withdrawing a fixed % from a portfolio with a variable value can never fully deplete the portfolio. The only snag is that the income will be, well, variable.
This is a very valid point. Do you want to reach the age of 90 with a big pot and say to yourself "if only I had this to spend 20 years ago".To be fair I think the analogy needs tweaking, although the point still stands..
It should read, be kicked out of first class and have to walk all the way down to economy, only 5% of the time.
50
Sorry, I don't understand your question.Surely the monetary denomination is irrelevant to the 4% rule (of thumb)?
Who said that the original poster's ARF is denominated in US$?Sorry, I don't understand your question.
The currency in which the drawdowns are denominated is obviously irrelevant if that's what you are asking.
Who said that the original poster's ARF is denominated in US$?
Bear in mind that the so-called 4% “rule” refers to the dollar-amount that can be “safely” withdrawn from a portfolio every year over a 30-year period without fully depleting that portfolio.
Is it just me or has this thread become a bit confusing
I'm in a somewhat similar situation.....although not planning to draw on pension assets just yet
The chances are that at 90 one would be spending less time in restaurants and pubs and would be taking fewer foreign holidays. In other words the cash burn rate should reduce over time. The biggest losers will probably be children and grandchildren who might see Grandad spending their inheritance.This is a very valid point. Do you want to reach the age of 90 with a big pot and say to yourself "if only I had this to spend 20 years ago".
The pursuit of absolute security leads to Howard Hughes style isolation. One could argue that with the various state safety nets you won't be left destitute in your 90s so plan for a fuller lifestyle in early retirement.
Yes the portfolio has been depleted, and then you land in the economy class of state supports - you don't die.No, failure in this context means that the portfolio has been fully depleted - it’s not simply a shift to economy class.
Bear in mind that the so-called 4% “rule” refers to the dollar-amount that can be “safely” withdrawn from a portfolio every year over a 30-year period without fully depleting that portfolio. So, the dollar-amount is calculated at 4% of the initial portfolio value and then adjusted for inflation in each subsequent year.
Obviously withdrawing a fixed % from a portfolio with a variable value can never fully deplete the portfolio. The only snag is that the income will be, well, variable.
Agree the first phase of retirement will have higher outgoings and the ARF will see me through that period. if it is completely bombed out due to some bad luck then the 2nd phase when slowing down will be shored up by state support.The chances are that at 90 one would be spending less time in restaurants and pubs and would be taking fewer foreign holidays. In other words the cash burn rate should reduce over time. The biggest losers will probably be children and grandchildren who might see Grandad spending their inheritance.
That's my plan too. I've a few more decades of work ahead of me though. I expect to be working into my 70's.I am not gonna holdback any lifestyle choices just to give some kind of guarantee of passing some money on to kids/grandkids who are not losing out on something that they never earned or owned, they might miss out on a bumper windfall, but I know I for one and gonna spend my money I earned as I see fit, help them out when I am alive sure, but they'll be under no illusion who deserves to benefit from the hard earned wonga
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