News for hackers. Stuff that matters.

A comment on Ask HN: I have $450K cash, what should I do to maximize my return?. Parent comment

Re:Ask HN: I have $450K cash, what should I do to maximize m... by dmoy on Saturday August 01, 2020 @11:30PM (#24026106)
It's not 4% ROI, it's 4% withdrawal rate. And even that is not super safe if you're retiring for many decades (the RE part).

You can use a variety of online calculators to back test a 4% withdrawal rate - maybe 80% safe, but 20% of the time you'll go broke before dying.

[ Parent | on HN ]
Re:Ask HN: I have $450K cash, what should I do to maximize m... by IvoCass on Sunday August 02, 2020 @12:33PM (#24029669)
Why isn't it safe? Or where can I read more on that?
[ Parent | on HN ]
Re:Ask HN: I have $450K cash, what should I do to maximize m... by dmoy on Monday August 03, 2020 @01:32PM (#24040741)
Sure, so there's a few things to look at.

The first is going back to the origins of the 4% number in the first place, the trinity study. The parameters for that were a 30 year retirement period, and success was "not completely run out of money after 30 years, 95% of the time". If you extrapolate from that original study, if you retire for more than 30 years (FIRE includes retiring early), success drops from 95%.

There's articles exploring that, e.g.

https://www.fiphysician.com/safe-withdrawal-rate-early-retir...

https://www.madfientist.com/safe-withdrawal-rate/#:~:text=Th...

And then there are a variety of online calculators where you can play with the numbers yourself.

The other elephant in the room is pre-Medicare healthcare costs.

[ Parent | on HN ]