I am actually planning to do this as well. I’ve just RE’d (without FI) and, while I may engage in part-time consultancy in the near future, there is absolutely no certainty and I cannot rely on that to cover living expenses.
This year our expenses are still 100% covered by salary, but from next year onward I will need to establish how and when to withdraw how much. Margin gives me an additional degree of flexibility.
The way I get it:
As the author says: “The problem with the margin requirement is that it has to be satisfied not just after 30 years, but at all times along the entire retirement horizon.”
That’s called unemployed, happens to a lot of people, afaik 
Sometimes “in transition”, “sabbatical”, “looking forward to my next challenge, meditating meanwhile”, “visiting the world”, “raising my kids”.
RE’d without FI, why not. There’s also a more sophisticated “RE’d not FI waiting for my benefactors to pass away, then my pillars should do the rest”.
(I get you decided to leave the corpo world and be somehow self sufficient, all the best!).
Thanks for sharing, great to have someone who is planning on using margin!
May I still ask if you planning to not sell anything and keep increasing your margin? From you thoughts I understand that this is not your idea, but that you are planning to use margin when useful and paying it back when useful.
Very happy to read and learn how other people manage their finances. And also to be proven wrong sometimes
they way i see it is this:
This may be reasonable but only if you still regularly sell stocks such that the margin loan doesn’t increase over time without real bounds, which could lead to overleverage. Unless your dividend distributions are high enough to roughly cover the average withdrawal.
I was referring to Using Leverage in Retirement – SWR Series Part 49 - Early Retirement Now posted above.
Your strategy could also work as long as you do not end up leveraging much…
I am not sure how the size of dividends could play a role. Aren’t they irrelevant? You cover your expenses from a combination of (selling, dividends, perhaps loan). Unless we are talking about the psychological factor.
If/while the dividend distributions on average match your withdrawal, you wouldn’t have to sell stocks and would still not be at risk of an unbounded margin loan.
I don’t expect this to be the case for the average investor as the dividend distributions of normal MCW world index funds is lower than the typical SWR. So this would only be the case for people who want to use a very low withdrawal rate, or who have a high dividend portfolio. However, I wanted to mention this exception for completeness.
But aren’t many people on here 100% into stocks because stocks>bonds. This also works for interest, so in principle letting the debt grow is OK since the stocks should grow faster.
Hmmm… Isn’t the main margin call criterion the value of your portfolio? does it matter if it provides 4% dividends or 0%? (lets put tax, costs etc aside)
If you get 4% in dividends, the value of the stocks will be 4% less. If you get 0% but you sell 4% then again the value is 4% less.
I suppose I am missing something here
It depends on your withdrawal rate and the actual stock returns, of course. I think withdrawing on margin is fine as long as you keep an eye on your leverage and stay within the risk level that you’re comfortable with. However, if you withdraw too much, relative to stock returns, it’s possible that your leverage gets too high, resulting either in more volatility than you can stomach, or even margin calls at the worst possible time.
I.e., I don’t think using margin during retirement is per se an issue, however, I would not recommend margin loan without any selling as a standard strategy as it can easily go very wrong if you’re not careful.
time in the market beats timing the market, leave it as long as possible until you are forced into a margin call. isn’t that when stocks will be at the highest?
If the total of dividends + sales is always 4%, sure, it doesn’t matter. My point was that dividends affect how much you have to sell. If dividend distributions already amount to 4%, you can skip the selling.
No, margin call will typically hit when stocks are down.
but who’s to say they won’t go down further? 
Sure, they might go down further 
But as you have no margin available anymore, you won’t be able to buy again to profit from the following upside (and this would obviously require market timing).
but if you sold earlier, you might have forgone a lot of gains which lead you to having a lower portfolio than had you deferred the margin call to later…
Maybe but, in my opinion, margin call generally means that you were overleveraged. Either your withdrawal rate was too high, or you should have been regularly selling some stocks.
unless you have an infinite retirement plan. the margin call should hit at some point if your game plan is to reach close to zero by end of retirement. it isn’t a sign of overleverage.