update: ffree^carefree^ezlife #horizon explains that ffree analysis is dominated by big shocks and hazzards

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https://en.wikipedia.org/wiki/Trinity_study , https://www.investopedia.com/terms/f/four-percent-rule.asp describe an influential 1998 paper by three professors of finance at Trinity University, using U.S. data on stock, bond and inflation. However, the 4% rule was actually proposed by a 1994 paper by Bill Bengen.

It illustrates the long-term strength and volatility of the U.S. stock+bond market. It is relevant to me as well as the majority of U.S. retirees.

In Oct 2020 Bill Bengen updated 4% to a higher, more aggressive max_withdrawal_rate.

This blogpost is mostly based on https://www.getrichslowly.org/four-percent-rule/.

— safe …. from running out of money within 30Y. It is assumed that the portfolio needs to last thirty years. The withdrawal schedule is deemed to have failed if the portfolio is exhausted in less than thirty years and to have succeeded if there are unspent assets at the end of the period.

Capital preservation was not a primary goal, but the “terminal value” of portfolios was considered for those investors who may wish to leave bequests.

— CPF-life and the U.S. stock/bond market
I guess the 4% rule was created based on US market. In contrast, CPF-life invests globally and pays out in SGD.
— alternative nonwork income: The original researchers are very confident about their safe withdrawal rate, but I’m not. I need more cushion, more buffer, like my rental income, CPF-life
— inflation: It is assumed that the portion withdrawn in subsequent years (after 1st year) will increase with the consumer price index (CPI) to keep pace with the cost of living
I have reason to believe SGD inflation is better controlled.
— black swan disasters? Researches used historical black swan events to back-test the withdrawal schedule and vindicated the 4% rule.
I tend to worry about unprecedented, imagined disasters.
— key clarification on 4%: Note that the 4% is calculated against the balance of the account only in the first year: withdrawal amounts in subsequent years are calculated by adding inflation to the previous year’s amount, and not 4% of account balance in later years.
— stable burn rate: https://www.getrichslowly.org/four-percent-rule/ points out that for many retirees, burn rate is nowhere near “level” i.e. consistent and stable.

In my case, I expect my crbr (couple retirement burn rate) to be stable. I have better control of my burn rate than those American young retirees.

I track my monthly burn rate consistently. It gives me confidence and insight. One variable is my wife’s personal burn rate, invisible to me, but I have some observations of this rate.