The 4 Percent Rule has arguably become one of the best known and somewhat controversial strategies in retirement planning when it comes to safe withdrawal rates. Yet, despite how often we refer to it on this blog, it occurred to me that I’ve never actually written an article that talks about it comprehensively. While doing the research for my ebook “How Much Money Do I Really Need to Retire & Achieve Financial Independence?”, I got the opportunity to dive pretty deep into the publications that made the 4 Percent Rule famous and the studies where it originated. That ended up becoming a very interesting task because it helped me to understand this topic at a much deeper level. As it turns out, there is actually a lot of … [Read more...] about The 4 Percent Rule – Everything You’ve Ever Wanted to Know
Personal Finance
Right or Wrong, Keep Planning Your Retirement
One of the most frustrating parts of retirement planning is the fact that no matter how ironclad yours might be, there will always be someone who will tell you that its wrong. And unfortunately they’re right. They’re right in the sense that no one can predict what is going to happen in the future. Assumptions are the gears that make our retirement machines work. Choose unwisely and your plan will deviate from reality very quickly. Nearly every assumption we use in retirement planning is up for debate. The average annualized market return we use to forecast how much our portfolios will grow is really nothing more than just an “average”. You see this all the time that someone will make an Excel spreadsheet where their nest egg … [Read more...] about Right or Wrong, Keep Planning Your Retirement
Our Plan for How to Achieve Financial Freedom – January 2017
Welcome to the annual edition of our plan for how to achieve financial independence and retire early (aka F.I.R.E.)! Every year at least one time, I like to take everything I’ve learned about aspiring to a level of financial freedom and meld it all together into one big plan - OUR plan - my “money design”! It's possibly one of the most brilliant things I'll ever create - a blueprint for living off of passive income for literally the rest of our lives! Why do I do this? For both my sake and yours. I’m a big believer that knowledge is only as valuable as your ability to apply it to something useful. For me, I like the challenge of crunching the numbers and seeing if everything we're doing (or will be doing) is truly going to work out or … [Read more...] about Our Plan for How to Achieve Financial Freedom – January 2017
Does a “Percentage of Remaining Portfolio” Retirement Withdrawal Strategy Work?
Even after writing my last ebook "How Much Money Do I Really Need to Retire & Achieve Financial Independence?" which talks a lot about retirement withdrawal strategies, I still like to actively comb through the Internet and see what sorts of other ideas are out there. One of the least talked techniques that I've come across (but I see them mentioned in forums like the EarlyRetirement.org) is one where you simply take out a "Percentage of the Remaining Portfolio". Note that this is drastically different from the traditional 4 Percent Rule that most people follow. With the 4 Percent Rule, you take out 4 percent of the "initial" portfolio balance, not the remaining portfolio balance each year. What's got me thinking about this … [Read more...] about Does a “Percentage of Remaining Portfolio” Retirement Withdrawal Strategy Work?
Travel Hacking Chapter 3: Getting the Hotel and Rental Car for (Almost) Free!
Hello and welcome to another edition of what is becoming both an exciting hobby and lucrative financial opportunity: Our conquests in travel hacking! For anyone unfamiliar with this term, “travel hacking” is when you attempt to get free or near-free deals on your travel expenses. You do this by taking advantage of big credit card sign-up offers and optimizing the rewards points to get the best deals possible. As I mentioned in the original post, I decided to give travel hacking a try after looking over our expenses for the year and concluding that we needed to find a way to save money on our annual family vacation. We really enjoy our vacations and enjoy traveling to new places. So if I’m able to apply even just a few of the travel … [Read more...] about Travel Hacking Chapter 3: Getting the Hotel and Rental Car for (Almost) Free!
What’s the Fastest Way to Get Rich? Simple: Save MORE!
How can the average person become rich as fast as possible? You might think you need to be some kind of stock-picking wizard, or that you need a "guy" to manage your money for you. But in reality, that's often not the case at all. Study nearly any early retirement story and you will find that the truth is painfully very simple: To get rich faster, you need to save more money. A LOT MORE money! So then: Why does everyone focus on investing over the actual act of saving? While investing is a VERY important part of growing your wealth and eventually turning it into passive income, there is a limit. As we'll talk about more later in the post, history has taught us that there is an upper limit to what the average person can expect for … [Read more...] about What’s the Fastest Way to Get Rich? Simple: Save MORE!
Our Next Travel Hacking Scheme: How to Get a Free Hotel Stay
Hello! And welcome to the next phase of my attempt to become a travel hacker. For anyone who's not familiar with that term, “travel hacking” his when you get to travel for free or at a seriously reduced price by strategically signing up for various credit card offers and optimizing the value of your points. In my last post on this topic, I wrote about what a steal I got by scoring free flights for the entire family next year to Orlando! All it took was signing up for the Chase Sapphire Preferred card where I was awarded nearly 60,000 Chase Ultimate Rewards points as part of the sign-up bonus, adding another user, and meeting the purchase requirement. By combining this with the bank of Chase points I already had, this enabled me to … [Read more...] about Our Next Travel Hacking Scheme: How to Get a Free Hotel Stay
Could This Be a New Safe Way to Use 4 Percent Rule?
Who says you can’t have your cake and eat it too! If you’d like to use the 4 percent rule as your safe withdrawal rate but are terrified that it might leave you with nothing a few decades down the road, then I may have a great solution to offer you! As I’ve been doing more and more research for my latest ebook (which will be all about optimizing “how much” you need to save for retirement), I’ve been getting really excited about some of the cool stuff I’m finding out. For example, there was the post I did a little while back about how the updated Trinity Study showed that you could use a 7 percent safe withdrawal rate with a 91% chance of success if you don’t adjust your withdrawals for inflation. The 1994 uber-classic 4 percent rule … [Read more...] about Could This Be a New Safe Way to Use 4 Percent Rule?
