It's Personal Finance Canada Maintaining FIRE
Jul 21, 2025
Dive into the Trinity study and uncover its true purpose behind the FIRE movement. Learn how its findings on sustainable withdrawal rates can help you balance longevity with quality of life. They discuss the crucial differences between stocks and bonds, emphasizing better portfolio survival rates with stock exposure. Christine shares tips on planning for early retirement risks and suggests using Monte Carlo simulations. Plus, hear strategies for protecting your finances, like spending only gains, eliminating debt, and keeping hard assets.
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What The Trinity Study Really Was
- The Trinity Study analyzed sustainable withdrawal rates using historical US data from 1925–1995.
- It aimed to find a withdrawal 'sweet spot' balancing standard of living and portfolio longevity.
Asset Mix Drives Longevity
- Asset allocation strongly determined portfolio survival across tested withdrawal rates.
- Pure bonds failed more often while higher stock mixes lasted longer in their historical tests.
4% Rule Depends On Context
- The 4% rule emerged from those historical backtests but depends on allocation and inflation adjustments.
- Adjusting withdrawals for inflation reduced feasible withdrawal rates in many scenarios.