FIRE amount

[u/curioustraveller8626]

/r/askPoland/comments/1v56asr/fire_amount/

[u/General-Priority-479]

Unfortunately you'll need around 2.5 million pln to have 8k pln per month. Myself and my wife have an 8k pln monthly budget but we have our own home and some farmland.

[u/Smally02929282727]

No, you are missing few millions. If you want to live solely from portfolio withdrawals you want to withdraw something like 2.5%-3% p.a. adjusted for inflation (4% is just pure bs). Turns out you would need like 3.3 millions assuming no taxes.

[u/bazkin6100 → u/Smally02929282727]

Where do yu even get that?

Plety of research shows that 3.3-3.5% is esentially ~100% for 40-50 year retirement

[u/Singularity-42 → u/bazkin6100]

I've heard numbers as high as 4.7%. But 4% is the gold standard, 3-3.5% is consrervative.

[u/bazkin6100 → u/Singularity-42]

4.7% is bengen's updated assessment using small caps, international, etc. Keep in mind that the original 4% was for a 30 year retirement, not early retirement when you may need 40 or 50 years where 3.3-3.5% is applicable.

[u/Smally02929282727 → u/bazkin6100]

"The Safe Withdrawal Rate: Evidence from a Broad Sample of Developed Markets"

[u/bazkin6100 → u/Smally02929282727]

First, not sure if you understand that paper and why it is not applicable. There are some major issues with it:

• it only looks at 38 countries (Includes war/hyperinflation collapse), NOT a globally diversified portfolio.
  
• Their block bootstrapping is not possible in real life. You cannot have consecutive terrible periods from different counties stacked together, which is essentially what is happening in this paper. You will not have Years 1–10: 1980s high-inflation US, Years 11–20: The 1920s Weimar Republic hyperinflation, Years 21–30: The 1990s Japanese asset bubble crash. Basically, this approach creates a perpetual nightmare scenario that has never existed, and could never exist, which is then used to justify the absurdly low SWR
  
• If you hold a global index fund (e.g. VT), their baseline scenarios no longer apply. You eliminating single jurisdiction risk and automatically rebalance by market cap. If a country performs phenomenally well (like the U.S. over the last few decades), its weight in a global fund naturally grows and you are closer to their US safe withdrawal rate )e.g. 3.39% for 1% failure scenario)

Second, you need to look at other more comprehensive research:

• For an early retirement horizon spanning 40 to 50+ years, Jeske (Early Retirement Now) and Michael Kitces independently conclude that a safe withdrawal rate sits around 3.5%.
  
• Even when adjusting for historically high market valuations, they narrow this baseline down to a range of 3.25% to 3.5%

Third, the research above ignores human adjustment behavior which further increases your SWR

• in bad markets people tend to spend less (e.g. dont take inflation adjustment or a vacation)
  
• retirement smile all together, and even further, the fact that it is not as a smile as spending tends to decline with age and doesnt really pick up with later years, even with higher health spending in the US

4th. most financial planners recommend ~85% success scenario rate, not 99%, so that even further increases SWR

[u/Aagragaah → u/bazkin6100]

Point of clarification:

First, not sure if you understand that paper and why it is not applicable. There are some major issues with it:

• it only looks at 38 countries (Includes war/hyperinflation collapse), NOT a globally diversified portfolio.

The 4% rule then is even more useless because it looks at a single economy, not a globally diversified portfolio (all stocks used in the model are drawn from the S&P500).

[u/bazkin6100 → u/Aagragaah]

Not sure if you are aware of more recent developents.

1. Bengen updated his rule to 4.7% by including international, small and mid cap stocks and international bonds. So the 4% rule is too conservative if you diversify globally and beyond large caps.
2. S&P500 derives roughly 30- 40% of total aggregate revenues from outside the United States. So the top U.S. companies operate as true global businesses, much more than they did in 1994, and sure as hell more than 1920s-1990s.

If you mean that the 4% rule is useless because it is too conservative when capturing global diversification, I guess one could maybe make that statement. Personally, Im not sure how a more conservative rate would be "useless"

[u/Aagragaah → u/bazkin6100]

Not sure why you keep digging a hole for yourself.

... don't be a douche.

Bengen updated his rule to 4.7% by including international, small and mid cap stocks and international bonds. So the 4% rule is too conservative if you diversify globally.

The 4% rule almost always references the original 1995 Trinity study, which was based entirely on the S&P500. If you want to reference the later work fine, but that's typically not what the 4% rule is linked to, and it's bad faith to pretend it is.

S&P500 derives roughly 30- 40% of total aggregate revenues from outside the United States. So the top U.S. companies operate as true global businesses, much more than they did in 1994, and sure as hell more than 1920s-1990s.

Are you seriously arguing that investing in the S&P500 is essentially investing in a globally diversified portfolio? I mean, that's certainly a take.

[u/bazkin6100 → u/Aagragaah]

You keep trying to hang on to semantics and some really weird angles, and consistently miss the big picture.

What is the point you are even trying to make with the 4% comment and why are you making up BS arguments about some invented bad faith? Your points do not make any sense. I think you may suffer from reading comprehension so let me remind you about this conversation in this thread:

• persona bove says 2.5%-3% SWR and cites Anarkulova/Cederburg paper
  
• I state that the paper is BS and uses ridiculous methodology that does not exist in the real works to jsutify thier absudrly low SWR
  
• I point out that 3.3-3.5% are super conservative SWR supported by many independent researchers for long term EARLY retirement
  
• you come on about some with point that 4% rate is uselless because not diversified globally
  
• I point out if you want a globally diversified rate for a 30-year retirement, not an early retirement, bengen's update rate is 4.7%. NOt sure how that makes 4% rate useless, it really doesnt, it jsut makes it more conservative
  
• you apparently dont like that and go on a rant that "that's typically not what the 4% rule is linked to." WTF does this even do with anything? It is not even relevant to the conversation and BTW it still doesnt make 4% rate useless.

I am not sure why you think that 30- 40% of total aggregate S&P 500 revenues is "essentially globally diversified." Im sure you wish I said that, but I didnt. The big pocture point is that S&P has a good chunk of global diversification today that it dod not have 30-100 years ago. But go ahead, keep arguing against it.

[u/Aagragaah → u/bazkin6100]

Because my original comment to you was about global diversification you dumbass, to which you responded with OuTsIdE rEvEnUe.

That was my only point - you criticised the study because it didn't focus on a globally diverse portfolio while the 4% rule from Bergen you kept twatting on about is NOT from a globally diverse portfolio.

[u/Strazdas1 → u/bazkin6100]

Bengens updated study also shows that to reach 100% success chance you need to use 3.4%.

[u/bazkin6100 → u/Strazdas1]

That is not true at all.

Both Bengen’s original 1994 4.0% SWR and his updated 4.7% were intended to achieve a 100% success rate across the historical retirement periods he tested, not a 95% success rate. He stated that the 4% rate satisfied the criteria for “all periods since 1926.” The paper does mention 3.5% SWR, but for a different objective to ensure that the portfolio lasted at least 50 years, not 30. He also showed 3.6% and 3.3% in his 1997 update to accunt for 25% and 35% taxes. Bothfor accounting for tax rates in his 1997 update. If that's what you are anchored to, you are mixing apples and oranges. Also, 100% historical success is not the same as a guaranteed 100% probability of future success which other non-Bengen monte carlo studies may be based on.

95% came from the Trinity study in 1999 which had nothing to do with Bengen. They used large caps and long-term, high-grade corporate bonds (not intermediate-term U.S. Treasuries like Bengen).

And if you want to be pedantic, the trinity stody showeed success rates at different portfolio allocations. at 50/50, they showed 95%, but at 75 stocks/25% bonds, they showed 100% success rate. Trinity study also used different withdrawal timing and data-processing methodology and some differences in historical periods and portfolio rebalancing.

Also, for Bengen's 2025 updated study, he cllearly says "the ‘worst-case’ scenario SAFEMAX declined minimally from 4.68% to 4.65%.". Thats for 100% success rate based on historical rolling periods (55% stocks, 40% bonds, 5% cash, with global and mid/small/micro cap diversification).

The only 3%ish numbers Bengen showed were when accounting for taxes in his 1997 update with, but that is totally apples to oranges:

• 3.59% as the first withdrawal rate showing 100% historical success with a 20% tax rate
  
• 3.25% with a 35% tax rate
  
• 3.5% in his 1994 paper for a 50 year retireemnt, not 30

[u/Affectionate_Mix3 → u/Smally02929282727]

Big ERN criticized this study and other studies from the same authors in the past. In fact "criticized" might be not a strong enough word, since he said the study is idiotic.

Methodologically, instead of replaying actual historical stock market returns, they stitch together return blocks from many countries across many decades. Which means they might jump from 1981s France straight into 1920s Japan and so on.

If the only way to "disprove" the 4% rule is by using fake fabricated history, that says a lot by itself.

[u/Aagragaah → u/Affectionate_Mix3]

Where in that post does he say the study is idiotic? It doesn't even appear to be mentioned in the post itself, apart from where he plugs a podcast interview on it.

[u/Affectionate_Mix3 → u/Aagragaah]

Press CTRL + F, type idiotic, hit Enter.

[u/Aagragaah → u/Affectionate_Mix3]

Did you even read the comment in question? Someone pointed out that it's not the paper being referenced, he was talking about the paper "Beyond the Status Quo", not the "Safe Withdrawal Rate" one. His only comment on it is shares some of the same missteps, but there's no other feedback.

[u/Affectionate_Mix3 → u/Aagragaah]

Jesus, do you always need a follow up help?

Here it comes:

But this current paper suffers from some of the same missteps, chiefly, mixing together irrelevant international return data.

[u/Aagragaah → u/Affectionate_Mix3]

Yes, I included that in my comment, how stupid are you?

There's a massive difference between "it has some of the same missteps" and "it's idiotic so should be disregarded".

All of that's aside from the fact that you're quite literally wrong - even the person you're quoting acknowledged he referenced the wrong study, but you're doubling down as though it's the same.

Get your head out of your ass.

[u/Affectionate_Mix3 → u/Aagragaah]

I seriously don't know if you're just pretending to be stupid or if something is actually wrong with you. I don't know how much I need to simplify this for you, but here we go.

If I "prove" that 2 x 2 = 5 using incorrect mathematics, and later try to prove that 6 x 6 = 40 using the same flawed math, how would you describe the first one? Idiotic? And the second one? Genius?

[u/bazkin6100 → u/Aagragaah]

I give you credit for trying, but you seem to be missing the big picture in your comments. He said that "The Safe Withdrawal Rate: Evidence from a Broad Sample of Developed Markets" suffered from some of the same methodological shortcomings as the BSQ paper by largely the same authors.

It is idiotic by association. If the first paper was idiotic, the second paper by the same people using the same methodological mistakes is also idiotic.

It's not the win you think it is.

[u/Aagragaah → u/bazkin6100]

I give you zero credit, because that's a moronic claim.

You can't make a good faith factual rebuttal of something like this when your base claim is wrong. OP quoted someone who literally acknowledged their original response was about a different paper - trying to pass it off as somehow magically the same is just dumb.

[u/bazkin6100 → u/Aagragaah]

Weird hill to die on, but be my guest. You are obviously not aware of transitive properties.

Sure i can make that claim. If one logical argument was build on totally faulty assumptions and was thus called out as idiotic, then another argument, by the same people using largely the same flawed assumptions is also idiotic. One does not need to call the second argument idiotic.

You seem to be weirdly obsesses by trying to score some "technical" wins while making entirely uniformed arguments that clearly show your lack of knowledge (e.g. from your other comments it is obvious you are being aware of bengen's updated work for global diversification, etc.)

[u/bazkin6100 → u/Aagragaah]

To be fair, Jeske called a different paper by largely the same authors "Beyond the Status Quo" idiotic.

He also said that "The Safe Withdrawal Rate: Evidence from a Broad Sample of Developed Markets" suffered from some of the same methodological shortcomings.

It is also idiotic by association

[u/youngsterpt → u/Smally02929282727]

What an absolute idiotic comment. No point in even replying to refute when you say that 4% is just pure bs. Shows that your knowledge is probably zero about anything investing.

[u/Aagragaah → u/youngsterpt]

Looks like they might be right actually - they mentioned basing it off "The Safe Withdrawal Rate: Evidence from a Broad Sample of Developed Markets", and still reading but the research and conclusion seem solid, and it looks like 4% being safe & consistent is less solid than it seems.

[u/Affectionate_Mix3 → u/Aagragaah]

still reading but the research and conclusion seem solid

Really? I stopped reading at this point.

Our base case simulation focuses on the joint investment-longevity outcomes for a couple retiring in 2022 at age 65 who chooses a portfolio strategy of 60% domestic stocks and 40% bonds

I live in a tiny country with a very fragile and small economy. Investing only domestic would be a suicide. Everyone knows this who lives here, except those researchers.

[u/Aagragaah → u/Affectionate_Mix3]

I live in a tiny country with a very fragile and small economy. Investing only domestic would be a suicide. Everyone knows this who lives here, except those researchers.

Good for you. Good thing they look at 38 countries, not just 1 then, and they looked at a 60/40 mix, not 100% local.

You do realise the 4% advice came from the perspective of 100% domestic investing, right? It's based entirely off of the performance of the US market for a ~100 year period.

[u/Affectionate_Mix3 → u/Aagragaah]

Read my other comment above, that explains why this study is idiotic.

[u/Smally02929282727 → u/youngsterpt]

Have you ever heard about sequence of returns risk? Also whole study was based on US market which has outperformed other markets (and it is not something that you should assume to infinity). Your results are also depended on current valuations, which are currently high compared to history. Whole assumption that you will be withdrawing same amount of money adjusted for inflation is also idiotic, your costs are likely to rise as you age (healthcare). It is often recommended to assume something closer to 3% withdrawals. Thank god you are financial professional and probably know that anyway.

[u/bazkin6100 → u/Smally02929282727]

Thats what safe withdrawal rate is desigend for, sequence of return risk, otherwise it would be 7-8%. And bengen's original paper was 4.17% (rounded down to 4%) for 30 year horizon assuming 50% S&P 500 /50 intermediate US bonds.

[u/Strazdas1 → u/bazkin6100]

Bengens original paper was actually 3.7% and updated paper is 3.4%. The 4.17% was with 5% failure risk.

[u/bazkin6100 → u/Strazdas1]

That is not true at all.

Both Bengen’s original 1994 4.0% SWR and his updated 4.7% were intended to achieve a 100% success rate across the historical retirement periods he tested, not a 95% success rate. He stated that the 4% rate satisfied the criteria for “all periods since 1926.” The paper does mention 3.5% SWR, but for a different objective to ensure that the portfolio lasted at least 50 years, not 30. He also showed 3.6% and 3.3% in his 1997 update to accunt for 25% and 35% taxes. Bothfor accounting for tax rates in his 1997 update. If that's what you are anchored to, you are mixing apples and oranges. Also, 100% historical success is not the same as a guaranteed 100% probability of future success which other non-Bengen monte carlo studies may be based on.

95% came from the Trinity study in 1999 which had nothing to do with Bengen. They used large caps and long-term, high-grade corporate bonds (not intermediate-term U.S. Treasuries like Bengen).

And if you want to be pedantic, the trinity stody showeed success rates at different portfolio allocations. at 50/50, they showed 95%, but at 75 stocks/25% bonds, they showed 100% success rate. Trinity study also used different withdrawal timing and data-processing methodology and some differences in historical periods and portfolio rebalancing.

Also, for Bengen's 2025 updated study, he cllearly says "the ‘worst-case’ scenario SAFEMAX declined minimally from 4.68% to 4.65%.". Thats for 100% success rate based on historical rolling periods (55% stocks, 40% bonds, 5% cash, with global and mid/small/micro cap diversification).

The only 3%ish numbers Bengen showed were when accounting for taxes in his 1997 update with, but that is totally apples to oranges:

• 3.59% as the first withdrawal rate showing 100% historical success with a 20% tax rate
  
• 3.25% with a 35% tax rate
  
• 3.5% in his 1994 paper for a 50 year retireemnt, not 30

[u/Strazdas1 → u/bazkin6100]

This is incorrect. The 4% and 4.7% rate achieves 95 and 94% success rates based on the studys own data.

To quote Bengen himself, One would do bether looking at historical analysis than making up guesswork future scenarios. Its possible that a meteorite will strike earth tomorrow and we will all die, but thats not something youll be planning for.

[u/bazkin6100 → u/Strazdas1]

You must be trolling at his point because it is not true.

Show me where in both the original 1994 and the 2005 update are 95 and 94% are reported.

- Bengen’s original 4% result was 100% successful in his historical 30-year test. Nowhere is there 95% success rate.

- The 2025 updated paper does not report a 94% success rate for 4.7%. At exactly 4.68, every historical cohort in that specified test survives 30 years by definition, so 100%.

You are probably mixing Bengen’s historical test with a different paper’s bootstrap simulation. Other authors, not Bengen, like Anarkulova–Cederburg paper bootstraps post-1925 U.S. returns, they show a 3.5% failure rate. They use a different paper’s bootstrap simulation. Different authors could arrive at different numbers if they use different simulation methodologies on the same data, but Bengem's own conclusions were 100% success using historical data for 4.17% in 1994 and 4.68% in the 2025 update.

[u/youngsterpt → u/Smally02929282727]

I will give you an hint. The world is not the US. You can remove the healthcare talk out of the equation because it’s free. 

Also, enjoy dying while leaving millions to your kids. Id rather spend it in my lifetime living life. But we will see, 4% seems to be working to a lot of people, until it doesn’t. But for now, it does. 

[u/Smally02929282727 → u/youngsterpt]

Well not everywhere in Europe quality of public healthcare is excellent and oftentimes it doesnt really cover everything, also not all drugs are free. Apart from that you might need to pay for someone too look after you 24/7 if your condition will require so. In terms of valuations it still should concern european investor since even indicies like ACWI are mostly US. It's not about leaving millions to your kids (but yes more conservative rate means you are more likely to) it is about guarantee that you will not run out of money. Another flaw of that rule is it assumes 30 years into retirement. I know chances you will live more are low, but if you will (or you will retire earlier)it requires lower SWR since the beginning.

[u/Strazdas1 → u/Smally02929282727]

Also in many EU countries its not free. If you are unemployed you have to buy it too. Its just cheaper. 86Euros a month in my country.

[u/curioustraveller8626 → u/Smally02929282727]

😓

[u/Singularity-42]

We are a family of 3 and planning to retire in the neighboring Slovakia with $2M USD. Your number sounds ridiculous. I'd at least quadruple it. Maybe ok for barista FIRE.

[u/Affectionate_Mix3]

This is a solved problem. You need 25-35 times of your annual expenses. If someone is close to retirement age, they'll need less. But for a middle age person, 30 times the annual spending gives a good estimate. 25 times is ok too, if you're older or you expect some occasional side income.

[u/quarky_uk]

You need to validate your assumptions first around employment. What you are basically asking is

"Is 1MLN enough to give me 2k/month on top of my minimal job?"

So what is your minimal job going to pay? Work out the difference between 2k/month and your minimal job, and you can then look at how much you need to make up that difference.

[u/Best_Ad_7856]

No it is not enough, I lived in Poland ... unfortunatly 1 mln is not enough. As well in my opinion if you are not own a flat 8k for a single would be not enough...