Safe Withdrawal Rate [2022]

Hi guys,

As some of you in this thread, I was conservative by choosing a 3,5% SWR with 60% equity / 40% bonds portfolio diversified with international stock.
Latest video from Ben Felix made me even more conservative…

I also like the idea of a guardrail rate to work of 30% of your portfolio to drastically cut back expenses or go back to work.


Interesting, thank you for posting the link.

I was using 3.6% based on some old spreadsheet, that also accounted for 1st pillar pension kicking in at 65. 4% alone is clearly too risky for me, but I didn’t expect something as low as the 2.7% - 3.0% as quoted in the Ben Felix video. Will need to dig into those numbers a bit…

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While I’m a big fan of Ben Felix and his videos, I don’t think that it makes sense to lower ones SWR down to 3.0% or even below that and base the retirement portfolio on that. I think the whole thing is much more complex.

  1. It ignores age and life expectancy. Someone who reaches 25x at age 65 could have stopped working sooner as it’s highly unlikely for that person to live another 30 years. The other extreme would be someone reaching 25x at age 40. That person should probably aim for a higher number. In both cases there is a convergence. The longer it takes you to reach a certain number, the lower this number will get over the years. Take the 40 years old for an example. He concluded (as an example) that he needs 35x just to be 99% safe to sustain another 45 years. 10 years later he is at 35x but now his portfolio has only to survive for another 35 years. Thus reducing the required number from 35x to something lower he already achieved x years ago.

  2. It ignores AHV and other sources of income (like a younger wife still working). The former is especially important in my opinion. Example: Retiring at 55 with a 2.5 million portfolio and 100k/year expenses + expecting 30k of AHV in 10 years. Those 100k will be reduced to 70k which translates to a 2.8% withdrawal rate of the current portfolio. So it would still be sensible to withdraw 4%/year even if we assume that the real SRW is lower than that. SS will guarantee longevity. If the first couple of years of retirement turn out to be bad (due to a big market crash) one could start taking AHV sooner. If those years are great (portfolio is stable or even growing despite withdrawals) one could delay AHV till 70.

So for most people (ignoring the very young and the ultra high net worth), the 4% rule is still a great thumb of rule.


Agreed. To add one more point:

The additional factor in these SWR calculations (which Ben does briefly discuss) is that in reality anyone going for anything other than the leanest retirement will have variable expenses that they can cut down on during market downturns (travel, luxury purchases, …)

So really arguments about whether 4% or 3% or 2.7% is the correct SWR are academic: withdrawal strategies may vary significantly due to personal circumstances, so these SWR should be taken only as rough rules of thumb IMO