IS & One of the important conclusions in doing a deep analysis of my IRA with Empower, is that I should be able to accomplish it beyond retirement. In fact, we should all be able to live beyond retirement based on the safe UBIL BESENEN of Bill Bengen, one of the best retirement researchers.
Since 1999, I have been viewing all my tax advantaged accounts as bonus money. My philosophy was simple: By not counting on these accounts to fund retirement, I would be forced to build my tax-deductible investment portfolio large enough to support an early retirement. At the same time, by automatically contributing to a 401(k) every year, I was ensuring that life after 60 could be more comfortable than if I didn’t have one.
Yes, it can be difficult to withdraw money from your 401(k) every year and expect nothing in return for decades. But early in my career, I realized there was no way I could stay 40 years in a bank with those hours and that level of pressure. So I chose the easier of the two difficult options: stop being angry and buy my freedom soon.
Saving and living it down in early retirement
Of course, when you retire at age 34, “Freedom” comes with limitations. Any withdrawals from a 401(K) or IRA before 59½ face a 10% withholding tax, so I wasn’t going to spend what I spent. Instead, I developed five strategies for early retirement:
- A severance package was negotiated to cover living expenses for the first several years.
- Built multiple income streams to cover my basic living expenses.
- He earned income through financial samurai and occasional consulting.
- He encouraged my wife to work for another three years before retiring at 35.
- Cut costs – especially by downsizing in 2014 and renting an older one.
At 34, I just decided on a major source of income and I’m worried I’ve made a big mistake. Therefore, it only made sense to save for early retirement.
In retrospect, I should have worked another five years. But the fear of failure kept me away, and by 2015, our finances were stable enough for my wife to negotiate retirement.
Now it’s time to live
After another conversation with Bill Bengen, the father of the 4% Rule, I decided it was finally time for Yolo to retire.
In his latest book A rich retirementBengen is raising its Safemax withdrawal rate from 4.15% to 4.7%, rounding up to 5%. His model assumes a portfolio of 55% Equmes / 45% Bonds A SAFEMAX of 5% is considered the highest annual withdrawal rate at which I will not be out of money after 30 years.
Changing from 4% to 5% withdrawal rate increases spending by 25%. That’s like going from spending $60,000 a year to $75,000 on a $1.5 million portfolio, without running out of money. And that doesn’t even include social security or income, both of which improve your odds.
Since 2012, I have not touched my retirement principal. In fact, I save and invest about 30% of my extra income each year. For example, ten years ago, I contributed an average of $16,000 per year to a solo 401(K). Income from occasional communication and have income received in advance.
You can listen to my interview with Bill on Apple or Spotify, or click the button below. Your positive reviews are appreciated as each episode takes hours to film, edit, and produce.
Old enough not to be too difficult
What is unique about life is that the “old man” we thought was 20-30 years ago is now now. When that realization hits, it’s worth asking: Did life turn out the way we hoped? If not, what are we waiting for?
Almost 50 years old, I don’t want to regret not living longer in retirement. I have had 13 years of hearing problems and living without pay or benefits. From paying $2,500/month for unsecured health insurance to finding creative ways to contribute to tax-advantaged accounts, early retirement has never been easier, especially when we become two unemployed parents. But it looks like we’re going to make it like dups in time for all the kids.
With only a few years of annuity payments left, being a 50-year-old is much easier than being a mid-30s retiree. You are more experienced, more grounded, and less anxious about the unknown. That means, I still have 18 years until my younger children graduate from college. Then there are my parents – and everyone’s health.
Your retirement portfolio will continue to grow
After 13+ years of leaving the big one untouched, my retirement accounts have grown reasonably alongside the markets. If I were to put all my net worth of $3 Million AT the S&P 500 in 2012 and withdrawn steady-state $ 120,000 per year, the portfolio can be important $13 million today. Just be as strong as you can be. Meanwhile, Bill’s research assumes the withdrawal rate rises with inflation.
| A year | Start balancing | To withdraw | IS&P 500 Growth% | To support moderation |
|---|---|---|---|---|
| 2012 | 3,000,000 | 120,000 | 16.0% | 3,340,800 |
| 2013 | 3,340,800 | 120,000 | 32.4% | 4,257,939 |
| 2014 | 4,257,939 | 120,000 | 13.7% | 4,710,691 |
| 2015 | 4,710,691 | 120,000 | 1.4% | 4,648,859 |
| 2016 | 4,648,859 | 120,000 | 12.0% | 5,090,784 |
| In 2017 | 5,090,784 | 120,000 | 21.8% | 6,051,854 |
| In 2018 | 6,051,854 | 120,000 | -4.4% | 5,665,569 |
| In 2019 | 5,665,569 | 120,000 | 31.5% | 7,279,067 |
| 2020 | 7,279,067 | 120,000 | 18.4% | 8,445,000 |
| 2021 | 8,445,000 | 120,000 | 28.7% | 10,685,715 |
| 2022 | 10,685,715 | 120,000 | -18.1% | 8,670,573 |
| 2023 | 8,670,573 | 120,000 | 26.3% | 10,783,444 |
| 2024 | 10,783,444 | 120,000 | 15.0% | 12,285,460 |
| 2025 | 12,285,460 | 120,000 | 10.0% | 13,550,006 |
- 5% withdrawal: ~$10 million today from $3 million in 2012
- 7% withdrawal (average of 400 Bengen retirees initially studied): ~ $ 4 million today
Of course, I didn’t have 100% guts when I left my job. So here’s what the results look like using a realistic 60/40 portfolio with 2012-2024 60/40 real returns
| Withdrawal rate | 2025 Ending Balance |
|---|---|
| 4% | $5,959,300 |
| 5% | $5,146,696 |
| 6% | $4,438,007 |
| 7% | $3,820,844 |
Or with a balanced portfolio and regular withdrawals, the principal it is still doubled from $3 million to $6 million at 4% after just 13 years. So a 5% withdrawal rate doesn’t seem unreasonable, as I still end up with ~70% net worth 13 years later!
And if I live for 50 years and retire in 2012 and withdraw at 4%, my net worth will grow to a whopping $38 annually using returns of 38 years), or $12-$13 million in real inflation-value. So, a 4% withdrawal rate certainly seems a little low these days.
It’s been an amazing run since 2012, thanks to a strong liquid market. Of course we got dips in 2018, 1h 2020, and 2022, but most of them, but the investors were richly rewarded.
Could we face another “lost age” ahead? About the S & P 500 trading around earnings around. But with AI-driven productivity gains, the future can surprise us again. I am willing to invest in AI companies for my children to save them from a life of disappointment.
Time to enjoy what we have built
If you have been actively investing since 2012, chances are you are sitting on more wealth than expected. We worked hard, saved consistently, and benefited from one of the greatest bull markets in history.
So maybe now is the time to loosen up, enjoy the fruits of your discipline, and live some more.
Because if you have already done the hard part – saving, investing, and staying disciplined – then the next challenge is learning to enjoy our wealth without guilt without guilt.
Certain Retrirees, how profitable are your investment portfolios in retirement? Have any of you seen a meaningful decline in your portfolio or overall? If not, why is it more than people can retire earlier or spend more freely instead of retirement? The statistics clearly show that if you stay invested, there is a good chance you will end up rich even if you last for a long time.
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