Thursday, October 11, 2012  What is the Safe Withdrawal Rate?
Dirk Cotton's guest post this week has triggered lots of
interesting discussions about the 4% rule at a variety of
message boards. I think I understand Dirk's message, or at least
I know my interpretation about the meaning of the article.   In
my view, the point of the article, or my own view about the
matter, is not, as one commenter wrote, this:  The alternative
that I believe Wade advocates is to pay a HUGE additional cost,
in terms of reduced effective withdrawals, to shore up the
remaining 5% - be it through simply lowering SWR, using VERY
costly annuities, or dooming us to work until we're 80.
Regardless of however you go about it, to go from 95% to
approaching 100% will require an exponential order cost, not a
linear one. "True" safe withdrawal isn't worth the cost, IMO...
I don't think anyone is saying that you have to lower the
withdrawal rate to some truly safe level (i.e. zero).   So, what
is the safe withdrawal rate?  Actually, I was