Hack Your Wealth
The shockingly un-simple math behind retirement safe withdrawal rates, with Karsten Jeske, PhD (Part 2)
Jun 23, 2020 · 54 min
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#36: Last week, we dove headlong into the wonky but uber-crucial topic of retirement safe withdrawal rates.

My conversation with Karsten Jeske, PhD – a former professor, Fed economist, quantitative finance researcher, and early retiree – focused last week on sequence of returns risk and how to estimate your safe withdrawal rate in early retirement.

Our conversation was so action-packed that I had to break it up into two episodes, so this week we continue our discussion and focus on how to mitigate sequence of returns risk during early retirement.

We discuss:

  • How to adjust your withdrawal rate and rebalance your portfolio in response to market conditions
  • How to critique the common advice that the returns risk in the first 10 years of retirement determine success or failure in all retirement
  • Why sequence of returns risk is a “zero sum game” between retirees vs. savers, and why investing strategies for these two groups should therefore inversely mirror each other
  • Concrete actions investors can take, during their accumulation phase and during retirement, to reduce sequence of returns risk
  • How early retirees can use rental real estate to reduce sequence of returns risk
  • What is the lowest historical safe withdrawal rate that entirely eliminated sequence of returns risk
  • How coronavirus might impact your safe withdrawal analysis and early retirement prospects

What actions do you plan to take to fortify your safe withdrawal rate? What other questions about safe withdrawal rates and sequence of returns risk do you have? Let me know by leaving a comment when you’re done.

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Links mentioned in this episode:

 Intro/Outro: Old Bossa by Twin Musicom.

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