ChooseFI Safe Withdrawal Rates, Drawdown Strategies, RMDs and 50 Year FI Timelines
22 snips
Sep 8, 2025 In this discussion, Karsten Jeske, known as Big Earn, a Ph.D. in economics and withdrawal rate expert, teams up with Fritz Gilbert, author and retirement strategist. They dive into the controversial shift from the traditional 4% safe withdrawal rate to a proposed 5.5%, scrutinizing its implications. The duo emphasizes the importance of adjusting retirement strategies based on longevity and highlights critical factors like Social Security and Required Minimum Distributions (RMDs) that can impact financial independence.
AI Snips
Chapters
Books
Transcript
Episode notes
5.5% Rate Changes The Goalposts
- Bill Bengen's 5.5% claim changes the success metric from 'fail-safe' to 'average', which hides higher failure risk.
- Karsten Jeske argues that calling 5.5% safe is misleading because average historical rates imply much higher failure probabilities.
Small‑Cap Outperformance Is Not Guaranteed
- Bengen's higher rate depends on assuming persistent small-cap and micro-cap outperformance.
- Karsten warns that small-cap premia largely disappeared after ~1980 and likely won't reliably reappear.
Use 4% As A Practical North Star
- Use the 4% rule as a practical North Star but recognize it's a rule of thumb, not a guarantee.
- If you want near-certainty, Karsten suggests lowering to around 3.25% for the safest historical floor.
