The whole concept of FIRE is that, once you can cover your expenses with your investments, you essentially provide your own income. However, stock returns aren't stable, so the concept of what a "safe" level of withdrawal becomes complicated, especially since most information available online assumes a 30-year retirement (e.g. from 65 to 95).

For those who are newer to the concept, basically a SWR is a rate at which you should be able to withdraw from your portfolio and not run out of money before you die, with some level of success. Most analyses use a 95% success rate as the target, though your individual comfort level could certainly vary.

Here are a couple articles discussing safe withdrawal rates:

I personally am in the camp that a 3.5% SWR is probably the best choice for me, but I may revise that upward based on economic conditions when I'm about to retire (i.e. Shiller CAPE ratio, my sector's job demand, etc). Then again, I have a family to support, so the stakes for me are a bit higher than if I was single and could afford to change my lifestyle substantially as needed.

So what are your thoughts? Please ask any questions, or share your personal safe withdrawal rate target and your justification for why it makes sense.

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[–] yenahmik 2 points 1 year ago

Right now I stick with a SWR of 4% for planning purposes. Realistically, I will not retire immediately once I reach my number, so there should be some wiggle room. Also, it's entirely possible I will have some pursuits in retirement that will earn some money even if it's not similar to my current pay (e.g. I could pick up refereeing or coaching in my sport, if I publish my writing, etc).

As I get closer, and/or my life situation changes, I may adjust my SWR to a lower initial percentage if it makes me feel more confident in my choice.

Of course, once I reach my initial number I'll have the freedom to choose whatever works best for me. If I absolutely love my job at that point, why wouldn't I keep working? If I'm miserable at my job then the higher risk of a higher withdrawal rate would probably be worth it.

[–] DogMom 1 points 1 year ago

When I was in the planning stages, I decided to use a 3.5% swr for my modeling based on the analysis you noted in the OP. For the first year of retirement, I just spent what I wanted to see where I landed. Turns out in this phase of my life I'm closer to 2.5%. In the next five years or so that will probably bump up closer to 3.5% but at the moment the travelling I wanted to do and the new home is on hold.