Does anyone have a resource for figuring out how to retire early and also draw down your money to near zero?

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  • #93248 Reply

      Like a different approach than the 4% rule because I believe that method keeps your principal intact indefinitely. If my wife and I want to die with zero, how do we calculate a number? I know the overall returns would go down as the principal is drawn and I wouldn’t actually die with zero, there would be a minimum amount of money we’d reserve for safety.

      I just don’t really like the idea of dying with $1.5 mil or something just because I never drew down on it. I know the 4% rule is only based on 25 years or something, but I also know there’s a high likelihood that your portfolio would actually be larger at the end, at least from what I’ve read in books.

      Any info would be appreciated!

      #93249 Reply

        No. This isn’t a thing. You need a large safety net because you don’t know when you’re going to die.

        If you decide “I’m going to jump off a bridge at 80” then you can absolutely plan to die with (nearly) zero.

        Short of that, unused savings is the price you pay for the security that you won’t outlive your money.

        Of course, you could opt for an annuity… but that just has you pay for the security in a different form.

        #93250 Reply

          The 4% rule comes from the Trinity study, where you investment has a historic 100% chance of not going broke for at least 30 years on a mix of 50/50 stocks and bonds. It’s not indefinite.

          I mean it really depends on how long you plan on living, that’s the biggest question.

          Have you seen: What do you all do for health insurance /coverage when you retire early?

          #93251 Reply

            This is the one place where an annuity makes sense. crappy investment, but if you set up one to supply the bare minimum you need for the rest of your life, you are protected from running out a bit earlier.

            #93252 Reply

              We are in the same boat. No children, no desire to leave wealth behind. To quote a dear fiend, I want my last check to be the first one to bounce.

              Obviously without knowing our expiration date, this becomes more guessing than math, but you can get closer by trying than not.

              We plan to travel a bunch the first couple years. Then slow down, but still pull more than 4%. Probably 6-7.

              At some point, likely when the first passes, the remaining spouse will sell the house and move into senior housing of some sort.

              #93253 Reply

                If you or your partner enter a nursing home for your last years of your life, then you might very well die with zero. As it has been pointed out, you don’t know how long you will actually live. If you find yourself with a lot of wealth when you enter a home, make it the nicest one your money will get you into.

                Otherwise, I believe all you can do is make adjustments to spending habits as you see how your health unfolds as you age.

                #93254 Reply

                  Hate to say it, but you may want to look into annuities.

                  You are desiring something that guarantees that you have enough resources until you die, but nothing leftover.

                  An annuity could max that out as the company is providing that guarantee.

                  It is suboptimal financially, but you are not looking for overall optimal as you don’t care or desire to leave anything behind.

                  Worth a look: What are the best part-time occupations for early retirees?

                  #93255 Reply

                    Generally, you’ll just need to keep adjusting as you go. If you start with the 4% rule, you have a 95% chance of not dying before your money runs out. As you age, you can adjust your withdrawal rate up.

                    A lot of folks in your position also decide they want to gift their excess money to nieces/nephews or charities they’ve grown to love.

                    #93256 Reply

                      Getting old has a high likelihood to include illness or need for long term care. This is expensive & costs for healthcare are going up much faster than inflation.

                      Take your 4%, and pray neither of you need memory care for years and years.

                      #93257 Reply

                        New Retirement has a max spending option, then you can look at your lifetime cash flow for annual spending/expenses.

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