For those who already have a foreign connection, it can be a no brainer. My only concern, personally, would be for medical costs.
Not only can you lose 50% of your capital, as was shown last election, you can lose 30% of your income. The really scary part was, many were cheering it on.
That is absolutely the right question to be asking. It comes down to how much you start with. If you go in "fat", then a 50% drop means you don't go on a cruise that year, or you delay buying that new car for a bit. If you retire "lean", then a 50% drop means you eat rice and beans until the market recovers. Two very different outcomes. I'm not close enough to retirement to predict which way I'll end up
I see the older workers at Bunnings. And good on Bunnings for hiring them. And when I previously rented, the guy they sent around for repairs looked about 80, and he had been forced back into work. But as you say, that's highly undesireable or even impossible for many people.
It is amazing how good a motivator childhood experience is, I as you lived in a very poor house hold and as you say it drives you to ensure history never repeats.funny that you should mention rice and beans. i grew up in a lower income household, and that is literally what we often had for dinner until i was in my early teens - rice, beans (or some other vegetable) with a bit of oyster/fish/soy (whatever was on sale at the time) sauce thrown in for a modicum of flavour. that's it. sometimes we had meat if that was on special, sometimes we didn't.
i have no desire to return to a diet like that ever again, so i guess that's also a factor which nudged me towards chasing fat FIRE with a 2.5% drawdown. i figure if there is a GFC-esque 40-50% drop, that 2.5% becomes 4% temporarily, and i can wait it out, continuing to eat well until the recovery.
"Fat fire" could be defined as having a high cost of living lifestyle that you need to fund, or it could mean that you've retired with enough money to have that lifestyle, but you've chosen not to use it. Some people would consider a retiree that withdraws 2% instead of 4%, as having fat FIRED. Others could see that as lean FIRE, with a safety net.to my understanding, the terms "fat" and "lean" refer to how extravagant your planned lifestyle is, rather than how badly you would be affected by a market crash.
In some contexts, there can be. Certain influential FIRE books have put out figures which then people run with and quote. Some fat FIRE forums have assumptions about amounts.but there probably aren't any official definitions, it can be whatever you want it to mean i guess.
I agree that's a much better definition. So effectively it becomes a $ amount you're withdrawing for your lifestyle, and separately, a % of AUM (or an equivalent)i do think there are 2 separate factors to consider here though, rather than a single fat <--> lean spectrum: how extravagant your lifestyle is, and what margin of safety you have to maintain that lifestyle.
An excellent point! Which begs the question, when people on ASF say they only draw dawn 3.5% (etc), that couldn't be based only on super.
Surprisingly, if you retire at the normal age of 65+, you're forced to drawdawn 5%.
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For everyone who things retirement = stick everything into Super, and then use the 4% SWR, wouldn't actually be allowed to do that (at least not in the first few years). A scary thought.
Which is exactly how Im working, a degree of flexibilty is the key IMOWhile the drawdown is 4%, I can reinvest a portion via accumulation account in super, dividend reinvestment on some shares , LICs or ETFs, buying more shares etc.
Iggy
Studies you want, then studies you shall have! This comes from the http://www.cfiresim.com/ calculator, a very popular site for calculating safe withdrawals.Interesting! Is there any studies about this method?
The share and bond returns come straight from actual, historical returns, monte carlo simulated. The important thing is that both methods use exactly the same data, making it a fair comparison.In your results above, what do you consider for share returns, bond returns and do you include any tax?
Thanks a lot for the precision, being an early retiree, i am fully taxed so any income is significantly reduced..so the will to more to less taxing countriesThe share and bond returns come straight from actual, historical returns, monte carlo simulated. The important thing is that both methods use exactly the same data, making it a fair comparison.
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In the original Fama-French "4% rule" studies, it was all assumed to be in a tax free retirement account. The failure rate over 30 years of the 4% rule tax free is 5%. I'd expect that to go up if it were in a taxable account, making it less safe. I'd expect the failure rate of the Zaxon 5% rule (currently 0%) to be unchanged.
I can describe how tax would affect both methods. Essentially, they both start retirement holding share index funds and bond index funds - the same ones. I suspect the calculator rebalances them annually. Neither method trades more than the other. They are both simple buy-and-hold, index strategies. Tax should affect them the same.
Big swings in yearly payments
From the bond smoothing fund? It calculates the return of the bonds, so that aspect is there. But it doesn't account for how the bond fund acts to smooth out returns. Sadly, these calculators are too limited. You can, however, download the raw data from that calculator and do further work.Thanks Zaxon!
One thing, does that site take into account adding/withdrawing from your "safe" portion?
I suspect not and would be good to test that idea if possible as I'd think it would help to smooth the ride
I'm the same with my super. 100% international. That balances out the exposure to Australian stocks I have in my taxable accounts.100% international equities (index). Why?... because I am in a pooled industry fund, I want something I don't have to monitor, and I want better sector diversification than what the concentrated Australian market can offer. I am also looking for growth.
I think Zaxon will answer more thoroughly, just my 2c is it should not be part of AUM as you need it to live in.@Zaxon if I can ask: do you put your PPOR as part of AUM or do you exclude it from all computations
If you do , the return on investment is obviously poorer..but you do not need rent money, it is also very inflexible as I can attest now.
Just to clarify and enlight other readers: I actually really like your 5PC principle, better than my indexed 60k a year
I would err that side too but @Zaxon has studied this thoroughly and keen on confirmationI think Zaxon will answer more thoroughly, just my 2c is it should not be part of AUM as you need it to live in.
Agree it can form a very large part of one's assets indeed. However until the potential of that asset is realised either via turning it into an investment property or sold (e.g. downsizing as done by a few retirees I know of) it shouldn't be part of the AUM strictly speaking IMO.I would err that side too but @Zaxon has studied this thoroughly and keen on confirmation
Ppor can be a huge part of one's assets but is indeed usually removed from wealth computation talks
@Zaxon if I can ask: do you put your PPOR as part of AUM or do you exclude it from all computations
If you do , the return on investment is obviously poorer..but you do not need rent money, it is also very inflexible as I can attest now.
I think Zaxon will answer more thoroughly, just my 2c is it should not be part of AUM as you need it to live in.
Interesting as to the downsizing. Did they move into a unit?Agree it can form a very large part of one's assets indeed. However until the potential of that asset is realised either via turning it into an investment property or sold (e.g. downsizing as done by a few retirees I know of) it shouldn't be part of the AUM strictly speaking IMO.
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