imo, at age 44, I say just work the extra 4 months then use that bonus as an actual bonus and give yourself a nice retirement present, whether that be a boat, several expensive bucket list trips, or whatever. They can still live on the 1.5% WR.
I had to put it in concrete terms as well to help me reason about this scenario. Let’s say these folks live on a VERY modest $40k yearly spend in retirement. That’s a $2.666M nest egg and thus the bonus would be a little over $100k. That would be the low end of course and gave me enough perspective to practically navigate the issue.
and +1 mosdef. Also think the OP could get away with some hybrid remote work, ya he might cause some ripples with his team or whatever, but you’re leaving in 4 months dude, big fucking deal.
Withdrawal rate. A 1.5% WR means that their planned annual living expenses are 1.5% of their total savings.
Many planners use a 4% WR as a rule of thumb to tell if you’ve saved enough to retire, so 1.5% is quite conservative. Of course, Bogleheads tend to be more risk averse that average.
Not sure I would equate having one’s head up one’s ass with being “risk averse”, but I’ll allow it.
More seriously, I actually think that at some point Boglehead types get so addicted to the feeling that they are doing the right thing and everyone else is doing the wrong thing, that they just can’t stop. In their minds, as long as they keep saving a big % of income and investing it in low cost funds, no one can accuse them from being irresponsible like Those People that Deserve To Fail.
Many people on that site are absolute nut jobs. There are people who will argue (and honestly believe) a 3% withdrawal rate is irresponsible. Even if you cherry pick the exact worst time to retire, a 3% WD rate is fine 100% of the time. In any scenario where you go broke, you’re probably dead.
No. It doesn’t depend at all. A 3% WD rate is perpetually sustainable. I guess if you’re one of the “I am retiring at 28 with $500k to eat ramen noodles and sleep in my RV” people there is a chance you’ll go broke but come on.
Yes but you need the cushion to rebalance in the event of a crash.
There are more complicated strategies where you pull from stocks when they’re up and bonds when stocks are down but I’m not convinced it is better that a one fund portfolio.