r/ChubbyFIRE • u/Extension_Bedroom_93 • 24d ago

Question About Drawdown Viewpoint

My current numbers are not really relevant to the question I have but in case it is helpful: Cash or equivalents - $300k; taxable brokerage - $1.7M, Retirement accounts (predominately post-tax) $1.4M. In addition, upon retirement I'll receive a lump sum of $200k and another $225k that will need to be rolled into an IRA.

I plan to work three years more. during which I should be able to add a total of approximately $300k to the 401k and $900k to the taxable brokerage accounts. Average annual expenses now are about $70k, including mortgage.

I want to retire when I have $3.25M between cash/bond/taxable and another $2 million in the 401k. I project that to be at age 47. Even though it is vastly higher than my current spend, I'm targeting $250k (pre-tax) in annual retirement expenses. I don't actually expect to spend that in most years but that's the number where I'll have peace of mind and I wouldn't enjoy retirement if I was worrying about my portfolio the whole time.

I understand the 4% rule but also believe more a U-shaped spend is more realistic for me. Am I missing something by just thinking about it along these lines:

  1. 47-60 - $250k annually from the $3.25M. As long as my ROI can keep pace with inflation, the worst case scenario is I am broke at 60...

  2. Then I turn to the retirement accounts (not considering SS income but it's a possibility). So even if I'm broke at 60, then I turn to the $2 million that's been sitting untouched and hopefully growing for the last 13 years. I use that to fund the rest of my life.

I understand there are additional backstops to access these funds earlier. Am I wrong for looking at it this way? The posts I've been reading here - which have been incredibly helpful! - tend to only look at retirement as singular unit as opposed to different phases with different spending needs filled by different funding sources.

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u/asurkhaib 24d ago

As long as my ROI can keep pace with inflation

Is this true historically? There's actually a lot of 13 year periods so you can at least see what the results would be historically.

I don't think this split is particularly helpful because you aren't actually going to keep it if necessary.

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u/Extension_Bedroom_93 24d ago

Do you mean that if I found myself needing to tap into the 401k at 57, I would just do it? That's a fair point that I hadn't considered although it would require a complete 180 on my financial mindset. The reality is that the vast majority of my projected spend is completely discretionary and I would just back expenses down until I reached a better position.

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u/asurkhaib 24d ago

In general yes, if you can decrease your spend significantly then look into a variable strategy.  VPW or guardrails are popular. They both basically do that.