Ask Big Ern: A Safe Withdrawal Rate Case Study for “Mr. and Mrs. Shirts”

Welcome to the 10th episode of our Case Study Series! Today’s case study is for Mr. and Mrs. Shirts. They run their own blog Stop Ironing Shirts and I encourage everyone to head over and check out their outstanding work. Mr. Shirts and his wife face a dilemma; they have already amassed a pretty impressive nest egg, probably large enough to retire later this year. But the temptation to work a little longer to cash in that next financial milestone around the corner (bonus, vesting date, etc.) is a pretty strong incentive to stay onboard for just a little bit longer. Otherwise known as the One More Year Syndrome. In fact, in the Shirt’s case, it’s only nine months (June 2018 vs. March 2019). So, what are the tradeoffs, what are the pros and cons of retiring in 2018 vs 2019? Let’s look at the details…

Mr. and Mrs. Shirt’s situation:

Both Mr. and Mrs. Shirts will turn 36 in a few months. Some more background in Mr. Shirt’s words:

The core of my debate is I’d really hate to work full time for an extra nine months, especially if I don’t enjoy my job, then turn around and make enough money in early retirement/second career to have wasted that time in my life.   I enjoy the “core” of what I do, but I dislike the hours and am working for a megacorp that’s dying in mediocrity.  Not dying in a sense of bankruptcy/pension risk, but dying in terms of shareholder return, innovation, and its like watching a car wreck happen in front of you without being able to do anything.

My wife also experienced a scary injury (spinal CSF leak) that cost us almost a year of our healthy life and goals and there is a risk of this happening again.  She’s most of the way through her recovery, but its given me a stronger sense of “do I really want to contribute another eight months of my life, the healthiest months of my life, to a megacorp for gigantic stacks of cash”, especially when I might make some $ in retirement.  I also feel more fortunate than most because between social security, a traditional pension, and the ability to just move if a high housing cost area doesn’t work out, I am at less risk of starving in retirement than the average person.

I could probably “pack it in” and check out mentally and make it until the 2019 date, but I run a team that I care about.  Its very difficult to do this when I’m not wired for it.  I also wouldn’t mind supporting some charitable ventures with the additional money, especially as it relates to medical issues.

Wow, thanks for your honesty! If work is no longer fun then nine more months can be pretty painful. We’ll look into the tradeoffs below. Where do we stand with the net worth? Here are the numbers as of 2017 year-end:

After-Tax $253,856

IRAs $830,551

HSA $59,501

Deferred Comp $163,551

Home Equity $175,234      (we’ll count this in the NW, more details below)

Other (liquid/cash) $36,651

Total: $1,519,344.00

I ascertained that the Deferred Compensation package is still pre-tax. Specifically, upon retirement, the deferred comp will be paid out over the next 15 years, and each installment is still subject to income taxes (both federal and state), but not subject to payroll taxes. A little bit like a 401k plan with a forced liquidation over 15 years – and no penalty for withdrawals before age 59.5!

How about additional contributions between now and the two alternative retirement dates?

If I work until June of 2018, contributions to the accounts will be as follows: 401k: $25,700, Taxable: $37,200 (mainly RSUs vesting which I immediately sell and invest), Deferred Comp:  $47,900.  (Total: $110,800)
If I work until March of 2019 contributions look like this, which is inclusive of the numbers referenced in the June 2018 example above: 401k: $52,300, Taxable:  $103,820, Deferred Comp:  $121,700.  (Total: $277,820)

OK, I can see why you’re troubled! Just nine more months of work and you can cash in another $167k. You’d be leaving more than $18k a month on the table!

How about the housing situation? The house with $175k home equity in their current location will be sold and Mr. & Mrs. Shirt will move to another state:
We don’t know our final destination at retirement.  The two top candidates have very different costs:
  • Eastern Appalachian Mountains (North Carolina):  I’d like to run the estimate on a Home Price of $300,000 or rent of $1,750.
  • Hawaii:  Home Price of $750,000 or rent of $3,250/mo
It is highly unlikely we would buy our retirement home while working, which throws a wrench in the ability to finance it without employment.  We could buy the house in the Appalachian option, but would be renters with Hawaii.

Nice! I think that owning a house in early retirement is probably the best option to hedge against rental inflation and Sequence Risk. For this exercise, I will work under the assumption of owning a home North Carolina. That’s because – sorry to break the news to you – but Hawaii seems too far out of reach, both as a homeowner and as a renter. You might want to consider staying in NC for a while and maybe budget for a vacation rental every year or two!

Retirement Budget

Our “core” expenses haven’t really ever exceeded $25,000/year.   I define core expenses as everything except housing and healthcare.

That’s pretty low! Great job! I will budget an additional $20k in annual expenses for healthcare and housing expenses. About $10k each for healthcare (premium and out-of-pocket) and housing: property taxes, maintenance, repairs, etc. We will see below that your taxable income, even when doing Roth conversions, should stay below the Obamacare subsidy cliff, in your case $64,080 for a two-person household in 2018 (source: NerdWallet), hence, the relatively low health care expenses

How about supplemental income:

I don’t currently have a side hustle. My employment strictly prohibits that. This is something that “you don’t know until you know”, but I feel fairly confident I will earn something in retirement. Project work for clients, director’s fees, I’m a complete business nerd and am well connected in two large cities. My wife is a veterinarian by trade and maintains her licenses, it is very easy for her to pick up a half-day Saturday for $200-$350/day for extra money.

That’s nice to know that you’re flexible in retirement. Not everybody wants to chip in during retirement. I will assume that in the 2018 retirement scenario you will generate a small supplemental income. That will not be necessary for the 2019 retirement scenario.

How about Social Security and pensions?

I ascertained from Mr. S that he’s eligible for about $19,900 in annual Social Security at age 67 as of 12/31/2017. That figure goes up to $21,000 and 22,200 when working in 2018 and 2019, respectively, and putting in another year or two worth of Social Security contributions up to the cap.

I had only approximate numbers for Mrs. Shirts but I assume that she is eligible for $10,800 of her benefits. If Mr. Shirts works until 2019 then half of his Social Security is actually larger Mrs. Shirt’s own benefit. Also, given that you’re both still pretty young I’d like to apply a 25% haircut to your benefits to account for future benefit cuts:

Case Study MrShirt Table01
Social Security Assumptions. Age 67.
Mr. Shirts is also eligible for a pension.  $1,128/month if he quits in 2018 and $1,250 if he quits in 2019. This amount is not CPI-adjusted! Ahhh, those cushy perks of working for a “dying megacorp!”

Safe Withdrawal Rate Calculations

I will run the numbers twice, once for a June 2018 retirement date and once for March 2019 retirement with the additional savings. Both calculations require some assumptions about capital market returns between now and then, so I’ll try to be cautious and conservative with the capital market projections.

Retire in 2018:

The portfolio grows to just under $1.7m. Net of the purchase price for the house, that leaves about $1.375m in today’s dollars.

Case Study MrShirt Table02
Projecting the portfolio value as of 6/30/2018. I assume that half of the contribution is invested at the beginning of the year and the other half is deposited as a lump on 6/30.

Given that the asset position is a little bit thin and you indicated that you’re open to generate some supplemental income, let’s assume you bring in another $1,000 per month for five years, starting in 2019 (when you’re in a lower tax bracket), adjusted for inflation. I found the $1,000 figure will generate a 4% SWR and it’s also easily attainable with a few side gigs here and there, especially with Mrs. Shirt’s weekend vet gigs. You can go to the spreadsheet and play around with the numbers and see how the SWRs change.

Some additional assumptions:

  • 70/30 asset allocation. I usually find that 80/20 is ideal in a bare-bones scenario without any additional flows (pensions, SocSec). 60/40 is ideal for older young retirees who expect sizable supplemental flows a few years down the road. You are smack in the middle and I found that 70/30 works best.
  • 60-year/720-month horizon.
  • 0% final value target

The Google Sheet is the usual setup as I explained in Part 7 of the SWR series:

Google Sheet with simulation results (2018)

If you like to make changes, please first save your own copy!!!

Let’s check out the results:

Case Study MrShirt Table05
Main Results when retiring in 2018.

The Failsafe is 3.88% (occurred during the 1965/66 retirement cohorts, exposed to the 1970s/early 80s mess). A 4% WR would have generated a 5% failure rate. Pretty good! Overall, this is not too surprising. The non-COLA pension and Social Security are 18 and 31 years away, respectively, too late to compensate for a drawdown early on, but with the supplemental income, you get to your desired 4% SWR. Relative to your $1,375,000 initial portfolio, that’s $55k of annual cash flow. Budget about $5k for taxes and you can spend around $50k per year. Even the failsafe 3.88% rate would leave you with $53k, probably $48k after taxes.

So, just from the backtesting/simulation perspective your June 2018 is a “go” though there are some wrinkles as I will detail later!

Retire in 2019:

With the additional contributions and some moderate capital returns (assuming 4% nominal over the 9 months for equities), we now got about $1,580,000 in the portfolio. This is already after paying for the house!

Case Study MrShirt Table03

Google Sheet with simulation results (2019)

I maintain the 70/30 allocation assumption. Also, the “stickler” that I am, I set the horizon to 711 months, 9 months shorter than in the other simulation just to be consistent and comparable to the other scenario! The Results:

Case Study MrShirt Table04
Main results when retiring in June 2019: The 4% Rule is not safe without supplemental income!

Now we have a slightly lower safe withdrawal rate, but with the additional financial net worth ($1,581k), those lower rates still generate about $58,500 p.a. for the failsafe and about $60,500 for the 3.83% WR. That’s significantly more. After tax, you’re now looking at a sustainable consumption of about $53k-$55k p.a., depending on how “safe” you want to be. It’s about a $5k cushion per year over and above the 2018 retirement scenario, every year, in a 50-60 year retirement. For 9 more months of work.

OK, I’ve talked to people who hate their work but I’ve never met anyone who’d walk away from a 10% boost to the post-retirement consumption for nine months of work. Check out the Grumpus Maximus blog. He faced the problem of grinding through not months but years of a tough job for that “Golden Albatross” of a nice government pension.  Incidentally, Grumpus was the guest on the ChooseFI podcast episode 57 on Monday!

Cash Flow Simulations

As always, I’m interested in how the withdrawal plan would work with the actual portfolio with all the different accounts spread over taxable, tax-deferred and tax-free accounts. I will do the analysis for the 2018 retirement date using the following assumptions:

  • All variables are nominal. Tax brackets, consumption targets, O-care cliff etc. all increase by my assumed 2% inflation rate per year.
  • After you sold your house (that’s where the big cash position comes from), you will use $200k of your cash, $120k of taxable investments and the first installment of the deferred comp (1/15th of the account balance) for the home purchase and the rest of the 2018 CY living expenses.
  • You keep a 60/40 allocation in the deferred plan and the 401k and a 100/0 allocation in the taxable and Roth accounts.
  • Your state taxes are 5.75% in the state of North Carolina.
  • The mandatory Deferred Comp plan withdrawals are 1/15th the first year, 1/14th the second year, 1/13th the third year, and so on, until the remainder is withdrawn in the 15th year.
  • Capital Market returns are my conservative estimates, as usual in my case studies. Only 5.75% for equity returns going forward!
  • You withdraw from the taxable account until it’s depleted. Scary thought, I know, but that’s where the Roth Ladder comes in!
  • I lump together your existing HSA with the new Roth. Make sure you keep all of your out-of-pocket receipts from now on so you can access the HSA balance later in retirement if you need to! The withdrawal doesn’t have to occur in the same year as the health expenditure!
  • Starting in 2019 you perform a Roth Conversion ladder, which shows up in the tables as a withdrawal from the 401(k) and a negative withdrawal (=contribution) into the Roth.
  • After you run out of money in the taxable account you’ll continue the Roth conversions but also start taking out money you Roth-converted earlier. You should have enough principal from conversions 5+ years ago, plus your HSA which you can use to fund health expenditures (make sure you keep all the receipts from now on!). Just like in the case study from a few weeks ago, you now still make a net contribution into the Roth, but you also take out a gross sum. For example, in 2026, you move $46,087 from the 401(k) to the Roth, but you take out $20,365 (=46,087-$25,722) from the Roth (principal from 5+ years before) to make ends meet!
  • In 2041, the year you turn 59.5, you can now use the 401k. You live off that until it runs out (in reality it may not run out at all, of course) and let the Roth grow. If you do run out of the 401k you’ll use your Roth. Here in the simple simulation that happens in 2049.
  • A very important comment about the Roth Conversions: Make sure you keep your Modified Adjusted Gross Income (MAGI) below the threshold! I assume here you do the conversion up to $1,000 below the threshold every year. Just to have a cushion! See Part 3 of this table for the evolution of the Obamacare Cliff and your personal MAGI. Your income is everything: interest, capital gains, supplmental income, Roth conversiond. Withdrawing cost basis from the taxable account doesn’t count, of course.
  • Your pension starts in the year 2037. Eight monthly installments that year, then $13,536 after that.
  • I assume that you both take Social Security in the year 2049 when you turn 67. You should, of course, revisit the benefit timing once more when you get closer. Married couples can do some benefit hacking that will give higher lifetime expected Social Security payments than the actuarially fair value!
Case Study MrShirt Table06
Cash Flow Simulation, part 1.
Case Study MrShirt Table07
Cash Flow Simulation, part 2. Variables shaded in orange are the numbers that Excel solves for to equalize net income and consumption target!
Case Study MrShirt Table08
Cash Flow Simulation, part 3: MAGI stays below the Obamacare Cliff!


The plan seems to work. You even grow your real portfolio value from $1.3m in 2019 to about $1.5m by age 70. By that time, you’d have shifted your 401k to the Roth and you should have no issues with Required Minimum Distributions. In fact, after age 67, your portfolio will keep growing because Social Security kicks in. The plan also generates a natural glidepath to 100% equities. If you’re not comfortable with that you can of course shift to more bonds inside your Roth once the Roth becomes the primary retirement account. If for some reason the Roth conversion ladder doesn’t deliver enough cash flow (remember, only the principal from 5+ years ago is fair game), you might consider the 72(t)/SEPP route as a last resort!


I think you’re likely ready to retire either way. Of course, one concern is your wife’s health. Another costly health episode could lower your combined supplemental income potential and also bust your budget in early retirement. Two bad risks with a correlation of one! This risk alone would entice me to just delay retirement by another short 9 months.

The other reason to hold off retirement just a little bit longer is the housing situation. Retiring in 2018 would seriously deplete your taxable savings and you’d have to really cross your fingers that the Roth Conversion Ladder works the way you planned. But then again, you can always use the 72(t)/SEPP route to tap the 401k savings before age 59.5.

Another unpredictable risk is the survival of the Obamacare subsidies. I’m pretty confident that some form of O-care will be permanent, but the subsidies could easily become a lot less generous over time. As we saw with the GOP tax change, politicians can take away “tax hacks” like the state and local tax deduction with a vote in each chamber and a president’s signature. I would not tie my retirement to the survival of those healthcare subsidies! Just look at the mortgage interest deduction which has become essentially useless for most taxpayers due to the high standard deduction. In the next tax reform, this deduction will go out the window forever because so few people will miss it then. Who would have thought ten years ago that the formerly sacred cow of the mortgage deduction can ever go away?

So, whatever retirement date you pick, best of luck! Keep us updated!

We hope everyone enjoyed today’s case study. Please leave your comments and suggestions below!

59 thoughts on “Ask Big Ern: A Safe Withdrawal Rate Case Study for “Mr. and Mrs. Shirts”

  1. Another fantastic analysis ERN. As a conservative person, I’d also work an extra nine months to increase my retirement lifestyle by 10% forever. I do understand the desire to get out ASAP though. Congrats to the Stop Ironing Shirts family for doing so well at such a young age. In my book you guys are #Winning!

    1. Thanks for reading the study – I knew there were a number of things that all come together with that date, but I hadn’t quite seen it being a 10% change in retirement lifestyle in perpetuity.

  2. ERN, another excellent and informative case study. You really are differentiated by the quality and detail of your work, very excited to hear more about your personal journey and ‘RE’ in March. Just a interesting addendum might be to see how much greater the starting portfolio balance would need to be and b) the incremental time necessary to generate this increase (in terms of delayed retirement) to permit the Hawaii buy and rent scenario. Any interest? 🙂 I am a bit self-interested in the answer as it is a long time dream of mine to retire there as well!

    1. Thanks for reading, what detailed analysis ERN put together! One of the challenges with planning on Geographic Arbitrage as part of a retirement plan is analysis paralysis. To ERN’s credit, I threw out a scenario of a 3br detached home in South Maui, those run about $800,000. That would really require me to buy this as a second home and qualify for a mortgage before leaving the job, then have some mortgage debt and consistent post-retirement income to qualify. I love the savings today of tax advantaged accounts, but it doesn’t help if your strategy for early retirement involves a free and clear home. Its been very popular for homeowners in Hawaii to build a small Ohana and rent it out to supplement housing prices, but the various cities/counties are cracking down on that and its causing some flux in what the “real” cost is of a home there. There are far more affordable options on the islands and there are some expenses that would drop since recreation is almost free. My estimate is $1.8mil cuts it close and $2mil is a go on Hawaii on the scenario we gave. There are some more affordable options we could do today.

    2. Good question. I haven’t run any detailed analysis, but I would think the additional portfolio value has to be more than just the $500k ($800k for HI minus $300k for NC). Hawaii also has a higher cost of living and a higher marginal tax than NC.

      1. Thanks to you both. Very helpful feedback. The relative isolation and plane travel expense would also increase the cost of living vs. NC, unless a lot of travel to Asia was planned from NC in which case perhaps a partial offset via Hawaii Asian proximity. The limited scope of the Hawaiian economy (tourism, gov’t, retail, etc.) could limit the financial / tech / other consulting opportunities to the extent they are not fully addressable via online presence as well I suppose.

  3. Enjoyed reading the case study.

    Without knowing the details, hard to know if $20K is adequate or over-kill for healthcare plus housing costs. We are budgeting $7K for annual house maintenance/repairs. Roofs/siding/heating systems/air-con etc are all costly nuisances, on top of the usual stuff. Throw in RE taxes ($2.5K), home insurance ($0.9K) and we have eaten >$10K already, without even considering healthcare. With our family of four (total), we will add another $19K (premiums/deductible and visits) for healthcare/dental/vision.

    Of course a lot depends on how conservative you may be with expenses. Building in healthy buffers across the larger line items is our philosophy as it is a nice surprise if you are not stung with a large outflow of money on any given year. But if you are, you have planned and prepared.

    Good luck with the OMY. I can tell you from experience it ain’t easy but it is worth it. I have got 4 months to go and it seems the long days of winter are even longer than usual….!!

    1. Great points! Healthcare is the #1 uncertainty for us. 2018 and potentially 2019 are still high-income years for us without any hope to qualify for O-care. $20k for healthcare is probably the minimum budget for us. Hopefully, we can time our income and minimize our MAGI in 2020 to get at least some help!

    2. Mr Pie – Its so difficult to estimate today with the ACA in flux. The first nine months will be almost 10k in just premiums because the income in the first three months will boot us out of subsidies. After that, I think the premium cost goes way down, but the large out of pocket max is still a risk if we end up being users of healthcare. This already ripped apart my idea of $1,000,000 and a free and clear house as the FIRE number.

  4. One thing about the 72t, if I understand the rules correctly, is I think you can only pull out something like 4% max. I had not appreciated this before, I thought you could name your “price”. But if you get your balance down low doing conversions, and then you actually need it, you might only be able to do a few thousand per year. You’ll pretty much have to start taking principle from Roth.

    1. There are basically three different 72t payout options; two lead to a fixed amount for the whole sequence, one changes per year. There is some flexibility in planning the one that works best for your situation. It might not provide the full 4% (or whatever SIS’s target ends up being), but it could provide a stop-gap and form part of the yearly drawdown. And even if it ends up being “too much,” remember you don’t have to spend it all; instead, it could end up going back into the taxable investment bucket (perhaps not the most efficient strategy, but as a matter of risk management it’s a tool that’s available).

      1. Good point! If you withdraw too much you can always reinvest it in a taxable account! But as I said, the 72t is a messy calculation, especially if you start so early (in your 40s), I’d try to avoid this approach! 🙂

    2. The 72t is such a can of worms (different approaches available, even options to change the calculation along the way) I would probably want to hire a tax planner to get this right. If one were to mess up the calculations and the IRS declares all of the past distributions ineligible and subject to the 10% penalty that would be a major setback!

      1. Completely agree ERN…especially ever considering a 72t with the larger of the two accounts, there’s a crippling financial risk in a $500,000+ 401k if a 72t is done wrong

    3. The 72t is one of the scenarios I’ve played with. Mrs. Shirts has a Rollover IRA that is reasonable in size, but not overwhelming and we could use to do a 72t on it and pickup $5,200 or so per year. You can see I’ve been pretty addicted to “taking the tax break today” vs saving in taxable accounts, even sometimes to my detriment (missed out on residential rental property in Atlanta eight and nine years ago).

  5. Good case, ERN. For people who live a life of sensible frugality and accumulate sizable net worth like this couple, the hard decision isn’t about supporting income needs throughout early retirement, but tempering the innate mindset to “save” more and so, move towards actually withdrawing from the portfolio. A lifetime of saving isn’t easy to break when you enter retirement where the shift is towards ‘sustainable withdrawal’, but withdrawal nevertheless! They are far better prepared for FIRE than 99% of couples their age.

    1. Thanks Ten…yes, I wonder about us breaking the scarcity mindset. I was running scenarios in my head just this weekend about “Move here, buy a duplex to start, renovate it, leverage it with a 2nd home mortgage right before I leave, house hack it, then buy final house”. Mrs Shirts pointed out I was a bit nuts for worry about that and she didn’t want to live in another self-done renovation.

  6. Ironing Shirts,

    Congrats on the nice NW at such young age! Where in NC would you consider relocating to and why?

    Can you elaborate on this “she didn’t want to live in another self-done renovation.”? It sounds you have a story behind it ;-).

    1. Thanks! We haven’t settled on a location. We’re good with anywhere between Virginia and Georgia along the Appalachians, but want to be in a large enough town with airport access. I think we’ll end up within two hours of Charlotte or Atlanta, with Northern Georgia or Asheville taking the lead (although we need to spend more time in all those places). Western VA has healthcare and airport challenges and spent most of our life around there.

      Yes…about 3 months after discovery Mr. Money Mustache took a new job and bought a 1950’s house in a college town on a move. Mrs. Shirts was a lot better at that then me, we learned a lot but lost a lot money!

      1. May I suggest Kentucky, where I’m from and will move back to. They don’t tax up to ~40k withdraws from qualified retirement accounts; and the area in an around the triangle between Louisville, Lexington, and Cincinnati is beautiful, growing, and right mix of urban and rural. Fairly LCOL, even more so as you move east to the mountains.

          1. “This exclusion includes pensions, annuities, 401(k), and other deferred compensation plans, as well as death benefits, disability retirement benefits, and income received from converting a traditional IRA to a Roth IRA. The exclusion also specifically includes IRA accounts.”

            Probably above median in income tax; but probably below the median in other taxes (sales, property). For retirees, I prefer income taxes to other consumption-style taxes, because taxable income is usually less than consumption, and also easier to manipulate/avoid.

            With the above exclusion, KY is probably very friendly to retirees overall, especially if of modest income. Also has a property tax break if over 65. Kiplinger ranks in top 10:


  7. Awesome and so informative! I agree with others whose main concern is with healthcare. Luckily, for my husband and I, we are still about 10 years from FI, so hopefully there will be a little more clarity by then.

    1. I take some relief this year on healthcare that both sides agreed guaranteed issuance / pre-existing coverage is a must. The challenge is indecision about everything else continues to increase costs to levels that are challenging, especially if you generate part-time work that sends you over the cliff. Interesting times indeed

  8. I’m a couple of decades older than you and it always makes me smile when kids your age express concern about missing the prime years of your life. My marathon speeds in my 50’s crushed anything I did in my thirties and thirty something me would be lucky to get a single game off of old me in a tennis match. Same for my wife, we were up running eight and ten miles this morning before 5 AM in 15 deg F wind chill and had a blast. That’s after we bushwhacked across miles and miles of incredibly rugged terrain earlier this week to beautiful frozen waterfalls. Yes it is possible for a small minority of unlucky or sedentary people that they will face physical limits in their fifties or sixties but it is pretty unlikely if they maintain an active fitness program. Not to say you should or shouldn’t work the extra months but running out of peak fitness years should not be a concern unless your wife’s condition is expected to worsen over time. No disregard for her, that sounds scary and our thoughts are with you both.

    1. I appreciate the encouragement! I hope my experience in my 40s and 50s are as active as yours and we will do everything we can between now and then to give it a solid chance (Also enjoy giving you a good laugh).

  9. Yo ERN, Thanks for the shout out! I was messaging with SIS recently, and he mentioned that you referenced my blog during his case study. Admittedly I’m a little backed up on some of your articles, but I do appreciate the return favor. Keep up the good work, even if the Case Studies are over for now. I’m interested to see what your next project will be. Good luck!

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  16. Hello Ern. And thanks for another insightful analysis. Your blog never fails to enrich my knowledge of the multitude of things to consider in the pursuit of FI.

    Would appreciate your help in interpreting a result within the Google Sheet; i.e., for a given failure rate (zero %, for instance) the SWR for 20<CAPE 30 (this was reported for the initial analysis, with SWR of 3.88% for the lower CAPE range and 4.03% for CAPE > 30, as well s for the 711 month analysis, with 3.70% and 3.80% for the lower and higher CAPE ranges, respectively). Why would a higher CAPE result in a higher SWR for a given failure rate?

    Thanks a lot for putting out this terrific and informative Blog!

    1. What’s your bond share? I suspect the SWR around the DotCom bust (CAPE>30) can be higher if your bond share is high enough. That’s also aided by the fact that I assume no market vol and stable returns after beyond 2018, so that helps the 2000 cohort.
      In contrast, in 1965/66, when the CAPE was only in the mid 20s, the SWR was lower because bonds and stocks suffered 1973-1982.

  17. Hi ERN, I just found your blog, and I’m really enjoying it. Great work! Have you shared one of your cash flow analysis spreadsheets before? I’d like to see the cell calculations so I can run my own analysis. I think I’m ready to FIRE, but the analysis paralysis to actually do it. . . Wow! Thankfully your SWR series is giving me more confidence. Looking forward to hearing back when you find the time in your roadtrip. Enjoy!

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