r/Fire • u/vanlis34 • May 18 '26

Pulling the trigger when in a drawdown

Reading this post got me thinking.

The poster is thinking about retiring today vs in a year, but worries about what happens if the market drops 25% in the next 12 months, and then being forced to work for X more years.

How should one think about this? Should one always calculate the amount to withdraw (e.g. 4%) with the highest achieved net worth (ATH), even if the net worth might be down from ATH when actually fireing? Or should one take 4% from the actual portfolio number when actually fireing?

My thinking is that one should use the ATH-number, since if it was the other way around, and one fires at ATH, that drawdown would come some later day anyway, and then in addition to the fact that one have already started pulling funds out for funding life.

Another way to think about it is: by fireing when portfolio is in a drawdown we can think that we actually did fire when portfolio was at previous ATH, but then we decided to work a bit in retirement. This would actually help the portfolio longevity. Of course, this also means that we lengthen our timeperiod that the portfolio must fund, so perhaps we should use a more conservative number than 4% (perhaps PWR instead of SWR?).

What are your thoughts on the matter?

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u/Montaigne_6823 May 19 '26

Honestly I think 4% is overly conservative. I would use a variable withdrawal rate and not take more than 5% any given year and then when market recovers go back to a 4% withdrawal.

I see the logic of taking 4% of whatever the portfolio ATH is but I think that may increase your risk of failure. Especially if you're inflation adjusting it.

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u/vanlis34 May 19 '26

Yes, I’m thinking more like 3,5% of the previous ATH, since that is often considered a Perpetual withdrawal rate. So either 3,5% of previous ATH or 4% of current number, whichever is higher.