3.5% might be safer, although I should have emphasized that I’m skeptical because the link you gave assumes you’re invested in only US stocks. This is hindsight bias because it so happened that the US market beat the world market in the last 50+ years. A more unbiased calculation would use a world market index (something like VTWAX instead of VTSAX).
And also maybe one should do the analysis without assuming that your home currency is US dollars, to avoid the bias that the US has been very prosperous in the past century? Not so sure about this. Maybe everyone should redo the analysis using their own home currency (e.g., Canadian dollars, Euros, etc.) and then decide what X% they can safely withdraw in retirement.
Great point; I agree. Also a great example of missing an obvious risk; I hadn’t noticed that before linking.
The calculator here allows simulating withdrawal rates by asset allocation, although it only has data back to 1970 so is a bit limited. I get the same safe withdrawal rate (4.3%) for 30 year retirees using either 100% US or 50⁄50 US/ex-US over that time frame. 100% Japan had a 1.5% safe withdrawal rate.
3.5% might be safer, although I should have emphasized that I’m skeptical because the link you gave assumes you’re invested in only US stocks. This is hindsight bias because it so happened that the US market beat the world market in the last 50+ years. A more unbiased calculation would use a world market index (something like VTWAX instead of VTSAX).
And also maybe one should do the analysis without assuming that your home currency is US dollars, to avoid the bias that the US has been very prosperous in the past century? Not so sure about this. Maybe everyone should redo the analysis using their own home currency (e.g., Canadian dollars, Euros, etc.) and then decide what X% they can safely withdraw in retirement.
Great point; I agree. Also a great example of missing an obvious risk; I hadn’t noticed that before linking.
The calculator here allows simulating withdrawal rates by asset allocation, although it only has data back to 1970 so is a bit limited. I get the same safe withdrawal rate (4.3%) for 30 year retirees using either 100% US or 50⁄50 US/ex-US over that time frame. 100% Japan had a 1.5% safe withdrawal rate.
That’s quite interesting! What was the stock/bond allocation in your examples that gave you a SWR of 4.3%?
100% in US stocks gives a SWR of 4.3%;