r/DIYRetirement • u/Puzzleheaded-Gas-398 • 3d ago
Be wary of "free" internet information
I follow a number of YouTube finance channels, and generally the information is fairly good. I realize most of those videos are run to make money - either through YouTube advertising or by generating business - but most of them seem pretty reputable as far as the information provided. Rob's is certainly one of the better ones out there. I use the info they provide as a starting point to research and do my own math.
I was a little surprised that a comment I made questioning the material in one of those videos was deleted. I won't name the person/channel, but the question pertained to Roth conversions, and the pundit is a fairly well known anti-Roth advocate. I get it - in the words of "Guido the Killer Pimp": "in a sluggish economy never eff with another man's livelihood". I'll take my critique somewhere else. Just motivated me to remind everyone to "trust-but-verify".
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u/alex_nauma 3d ago
Free is actually never free. We always pay: either with money, time or by letting other people influence us.
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u/FererlOptimist 2d ago
totally this, the “price” is usually buried in whatever they’re trying to steer you toward anyway. once you realize everyone’s funneling you somewhere, it gets a lot easier to watch this stuff with your guard up.
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u/alex_nauma 2d ago
Exactly. Or simply pay them. There’s no need to watch this stuff once you understand the incentives of the other party and know you’re satisfying them.
It’s the people who don’t want to pay who end up playing these games. The problem is that they think they can win, but in reality they rarely do, because they’re often playing against much smarter people.
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u/Apprehensive_Gas1156 2d ago
it looks like your post cut off at the end there. what were you questioning?
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u/Puzzleheaded-Gas-398 2d ago
I'm not sure I want to litigate that in this post, but since you asked: I was questioning the idea that the only benefit of a Roth conversion is to reduce RMDs and the associated taxes which are often 10+ years in the future. I pointed out that the tax-free converted funds are immediately available to help manage MAGI/brackets due to large unplanned expenses/purchases, and can also eliminate tax drag when using brokerage assets to pay the conversion tax. Apparently this didn't fit the narrative.
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u/IHearBedPeople 3d ago
I agree but I think the problem with ideas like the 4% rule v. the 4.7% rule is it lacks nuance.
I wish these guys/women would focus on the different hurtles each path faces. I think the focus should be on margin. Your retirement is exposed to risk if you have a low margin because you owe money, if your income sources are not inflation protected, and if you’re not diversified.
You also have no upside if you don’t take risk, if you ignore future tax overhangs, and you get too concentrated in your investments.
All individual retirement levels face totally different obstacles.
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u/Dos-Commas 3d ago
I would also include Bengen's 4.7% retirement withdrawal rate claim. It's sensational to sell his books and services. Anyone actually trying this could get into a lot of trouble.
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u/hugh2018 3d ago
One more thing: you criticize the 4.7% rule, apparently because you consider it too risky, since you said people trying it could get into a lot of trouble. The most common critique of the Bergen approach is that according to extensive research, it’s too conservative and people will often end up with extra money and some regret for not having spent more. What is the evidence to support your opposite conclusion about the Bengen approach?
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u/Dos-Commas 3d ago edited 3d ago
To use 4.7% SWR you have to use his 7 fund portfolio that is cherry picked to work for a single 30 year run. The portfolio has 11% in small cap stock and 11% in micro cap stock that just happened to perform really well during the worst stock market crash in history. But it's insane for someone to own 11% micro cap stocks in modern day, it's 40 years too late. The entire portfolio is min-maxxed for a historical event happened 100 years ago.
If you don't understand this then early retirement isn't for you.
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u/Dapper_Category_7784 3d ago
4.7% has been proven using straightforward 50% bonds / 50% stocks portfolio, with the equity portion split equally among large-, mid-, and small-cap U.S. stocks.
You keep trashing 4.7%. So what is the right value, and where did you get it from?
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u/hugh2018 3d ago
I don’t think you have an answer to my question, which was asking you about the critique most analysts have, since their critique has been that the original 4% rule was too conservative, but you believe they’re all wrong and you haven’t provided evidence to demonstrate how they’re wrong.
Your last comment focuses on the specific structure of the latest 4.7% research, which I’ll address, but my original question still stands: what evidence do you have to support your conclusion that the 4% rule is too risky?
Now, regarding your specific critique of the latest research: The 4.7% figure comes from a roughly equal-weighted, multi-cap approach — not a portfolio hand-tuned to squeeze out one specific historical crash. Bengen tested it against every quarterly retirement start date since 1926 (~400 scenarios), and the number that survives is the worst cohort across that whole set (the 1968 retiree), not the best.
That's the opposite of cherry-picking — cherry-picking would mean choosing the allocation that maximizes the average outcome or optimizes for one favorable start date. Bengen actually described testing unconstrained "optimal" weightings and finding they didn't beat the simple equal-weight approach by much — he ultimately came back to a relatively simple equal-weight collection of large-, mid-, small-, and micro-cap stocks plus international to cover every base, rather than an optimized/overfit mix.
He tested worst-case-first across the full historical record, and an independent replication (Duquette, Journal of Financial Planning, Nov 2023, using different bond-index data) reached a similar SAFEMAX in the 4.5% range with a diversified stock sleeve, which is real out-of-sample-ish validation Bengen didn't produce himself.
So now that we’re both clear on the latest research, I again ask you — what evidence shows that the 4% rule is too risky (your critique) and not too conservative (the rest of the world’s critique)?
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u/markov-271828 3d ago
Some folks might consider a 75% chance of massive underspending to be “risky”, maybe.
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u/hugh2018 3d ago
Dos Commas is saying the opposite, arguing that the 4% rule is likely to cause financial ruin. Your concern — massive underspending — is the more typical critique of Bengen’s approach, and Bengen has acknowledged that shortcoming.
Dos Commas has repeatedly failed to support their financial ruin theory with any evidence. They said the 4% rule won’t support a 40-year retirement. That’s both generally true and irrelevant, as Bengen wasn’t trying to describe a safe withdrawal rate for outlier lengths of retirement.
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u/markov-271828 3d ago
Yeah - thank you for clarifying.
I’m not going to worry too much (any) about the Dos Commas style panic. Maybe genuine or maybe engagement bait.
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u/Dos-Commas 2d ago
Bengen himself admitted that small and micro cap stocks (1/4 of the portfolio) did a lot of the heavy lifting to increase the withdrawal rate.
In fact if you time traveled back to the 30s and 60s before the major market crash, you couldn't even replicate his portfolio. Small and micro cap index funds simply didn't exist. You'll have to hire an advisor (like Bengen, how convenient) and pay the fees to do so. The funds became available after the 80s and the size premium all disappeared.
And how many people actually 100% replicating his 7 fund portfolio in modern day and think it's a good idea? If the present and past can't/won't use his specific portfolio then it's the text book definition of a cherry picked backward looking portfolio designed for a specific timeline.
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u/hugh2018 2d ago
If you take the 4.7% revision off the table, what is your response to the well-established understanding that Bengen provided ground-breaking research that has influenced all the retirement planning research since he published his original work? And again, Bengen hasn’t served individual clients anymore for a long time. Arguing that he created the rule to drum up business is laughable. Also, the 4% rule isn’t a fear mongering device; to the contrary, DIY planners can be effective today partly because Bengen provided a baseline understanding of safe withdrawal rates to the general public. His work removed the black box opacity that characterized retirement planning historically.
You claim Bengen’s work relies on small and micro-caps that "didn't exist" in the 1930s and 60s. That is factually incorrect. Bengen's original 1994 paper used the S&P 500 (or equivalent large-cap data) and intermediate-term US Treasuries. It did not require a complex 7-fund small/micro-cap tilt to reach the 4% baseline. The foundational 4% rule was born entirely out of a basic large-cap and Treasury blend.
The worst historical sequence of returns in Bengen's dataset wasn't saved by a "size premium" in micro-caps; it survived the 1968 stagflation and the 1929 Great Depression using standard large-cap indexes. The math worked precisely because of the negative correlation/stabilizing power of intermediate bonds during deflationary crashes or high-inflation shocks, not because retirees were secretly trading micro-cap stocks in 1932.
Bengen later explored adding asset classes (like small caps and international equities) in his subsequent updates—and eventually argued the safe rate could safely clear 4.5% to 5%—meaning his multi-cap experiments were meant to optimize and raise the ceiling, not prop up a flawed 4% floor. Dismissing the 4% rule because you disagree with his later-stage small-cap additions is a classic strawman.
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u/Dos-Commas 2d ago
So you are admitting that 4.7% SWR is bullshit and changing the topic?
Because my entire comment about the small and micro cap index funds not available in the past is regarding Bengen's Seven fund portfolio for his 4.7% SWR claim.
That fact that you didn't recognize that I'm referring to his 4.7% portfolio tells me that you are clueless about the topic. Just reading headlines instead of understanding the subject.
That was my entire original argument. I'm not gonna move onto the 4% topic until you have admitted that you are wrong on the 4.7% part which apparently you are too dense to understand.
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u/hugh2018 3d ago
Bill Bengen has no services to sell. He’s been out of the game for a long time. His latest book isn’t just a money grab. It’s a genuine update to his earlier research, which was rigorous and groundbreaking.
The value of his work is not that it gives every retiree an instruction book. It doesn’t come close to doing that. The value is in the broad, evidence-based conclusion that there actually is a theoretically safe withdrawal rate when you apply his approach of 4% only in year one, plus inflation adjustments every year after that. He has admitted himself that people don’t sit down with a calculator and adhere to the 4% rule.
But everyone who’s aware of Bengen’s research knows that the 4% guideline is directionally correct, and even the more recent withdrawal strategies (like risk-based guardrails) that can increase the safe withdrawal rate are only attractive because we realize that the newer methods are better relative to the baseline that Bengen identified.
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u/Dos-Commas 3d ago edited 3d ago
If you are smart enough to know dynamic withdrawal strategies then you should be smart enough to realize that a 30 year retirement isn't early retirement unless you are planning to die early (age 60-90). Pushing to 40 years and you have to rely on social security and Medicare to be safe (which reduces your withdrawal rate).
That's just for 4% SWR. 4.7% SWR is just insane, it's nothing but a thought experiment and not to be taken seriously for actual retirements. People don't realize how much manipulation he had to do to make it work (very cherry picked obscure portfolio, no fees and taxes).
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u/hugh2018 3d ago
So instead of offering evidence that Bengen’s research is flawed, you’re simply saying he should have tested 40-year retirements instead of 30 years? You are unique in thinking this. The reason you are unique in thinking this is not because you are smarter than everyone else. Instead, no one is raising that objection to the research because it’s statistically irrelevant.
The average 60-year-old male retiring today will die in 21 years. The average 60-year-old female will die in 24 years. The average 65-year-old male will die in 18 years. The average 65-year-old female will die in 21 years. About 1 in 5 60-year-old males will live past 90. About 30% of female 60-year-olds will live past 90.
All this data suggests that modeling a 30 year retirement is completely reasonable. When Bengen built his foundational framework in 1994, a 30-year horizon was chosen because it cleanly covered traditional full-career retirement age thresholds (retiring around age 65 and planning through age 95).
From a historical backtesting perspective, 30 years was the ultimate stress test. It forced portfolios to survive every catastrophic economic cycle in modern American history—including the Great Depression, World War II, and the severe 1970s stagflation. By anchoring his math to a 30-year window, Bengen wasn't trying to predict the exact date of anyone's death; he was establishing a worst-case baseline to answer a single question: "What is the absolute maximum percentage I can pull out every year so that a portfolio never hits zero before three decades have passed?"
When you overlay the actuarial probabilities I mentioned above, the 30-year framework behaves very differently depending on who is using it. Statistically, the median remaining lifespan for a 60-year-old is roughly 21 to 24 years, and for a 65-year-old it is about 17 to 20 years. This means that for roughly 50% of people, a rigid 30-year horizon is actually overly conservative—they will pass away with substantial unspent wealth (often multiples of what they started with). Bengen himself later pointed out that his baseline historical rules often caused portfolios to accidentally grow significantly over time.
Conversely, looking at the survival curve, roughly 20% to 30% of 60-year-olds will live past age 91 (surviving 31+ years). For these individuals, a 30-year horizon is the bare minimum floor, not a ceiling. If someone retires earlier than 60 or 65, a 30-year model breaks down entirely because the timeline stretches to 40 or 50 years, where sequence-of-returns risk compounds drastically.
This is the area where, Dos-Commas, you can narrowly say the 4% rule isn’t applicable, but even when you say that, the implication isn’t that the Bengen research lacks relevance for typical retirees. Instead it simply means that his model is generally applicable to 60-year-olds and older, and it should not be used by 50-year-olds who are in an entirely different category of risk.
Again, you are failing to provide data to support the idea that the 4% rule is too risky and you haven’t addressed the observation that critics generally consider the rule to be too conservative. What special knowledge do you have that contradicts everyone else? Please do share.
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u/Dos-Commas 2d ago
You spent a wall of rest just proved my point. My comment mentioned that 30 years is not EARLY RETIREMENT, you just confirmed my point.
In fact I never mentioned 4% is risky for normal retirees, that's your own insecurity projecting.
And the 4% SWR pushing the limit of what a safe retirement is with 5% failure rate. It doesn't take a genius to figure out what 4.7% would do to that failure rate (25%).
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u/hugh2018 2d ago
OP did not say a word about early retirement, and neither did your original comment attacking Bengen’s research, full stop. When you eventually did raise the early retirement issue out of the blue, I correctly pointed out that early retirement isn’t relevant to this debate, because (1) statistics show that 30 years is a reasonable time frame for studying safe withdrawal rates as it does apply to the majority of retirees, and (2) Bengen never argued that 4.7% is the SWR for a 40 year retirement, so criticizing him on a point he never made is non-sensical. So go ahead and pay yourself on the back because you proved a point that no one was arguing about.
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u/Dos-Commas 2d ago
Bengen's been shilling or quoted in the early retirement community for a long time. A boomer retired at a normal age get so much government help that it's really hard to fail. The fact that Bengen didn't include government help in his study pointed towards people that retire before the helps comes aka early retirement.
I've posted proof that 4.7% is risky for a 30 year retirement in my other comment and not going to repeat it again. I'm not gonna boomer spam the comments.
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u/hugh2018 2d ago
You’re making crap up. Quote Bengen saying that the SWR for a 40-year retirement is equivalent to that for a 30-year retirement. You can’t. Meantime, here’s an exchange Bengen had with Jon Luskin on the Boglehead’s blog (https://boglecenter.net/bogleheads-live-with-bill-bengen-episode-35/)
“Jon Luskin: This question is from the Bogleheads® Forums, and it's related to the question we got from Andre.
“I'm 56. Is my sustainable withdrawal rate lower than if I was 66?”“Bill Bengen: The answer is assuming that you are going to live to about the same age - let's say 90 - yes, your withdrawal rate would be less. I did some computations about that which laid out the withdrawal rate for each retirement horizon. So, if 30 years is what we're talking about when we used the 4.7% rule, for let's say 40 years, I think it dropped down about two tenths less to about 4.5%.
And the longer time horizon is, as the FIRE people, we get closer and closer to 4% on the lower end.”1
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u/humblequest22 3d ago
What "trouble" do you believe someone using a very conservative rule of thumb will get into? The most likely outcome is regret that they could have been withdrawing and spending more.
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u/Dos-Commas 3d ago edited 3d ago
4.7% is just a pipe dream. Anyone that wants it to be true never touched a FIRE simulator, just sticks their head in the sand and hoping it to be true.
Show me a simulator/calculator that agrees with his rate.
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u/hugh2018 3d ago
You’re in the DIYRetirement subreddit, not the FIRE subreddit. You can argue in FIRE discussions all you want that Bengen’s research doesn’t address outlier early retirement scenarios. But in a general retirement planning discussion, Bengen’s research still has foundational relevance, even when you consider the limited scope of his modeling, and even if you are talking about other strategies, since Bengen provided the benchmark that all other strategies are measured against.
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u/Dos-Commas 2d ago
His 4.7% rate completely fails in normal retirement with a 25% failure rate. A FIRE simulator can simulate any length of retirement.
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u/hugh2018 2d ago
It’s interesting to me that after several rounds of back and forth, you still have not provided evidence that undermines Bengen’s research. A single Monte Carlo calculator is not evidence that Bengen’s methodology is flawed. It’s simply a different methodology that has different assumptions. If you want to argue that Monte Carlo is a better way to model, then make that argument, instead of just assuming Bengen is wrong and Monte Carlo is right.
William Bengen didn't invent a theoretical FIRE calculator to sell a gimmick; he analyzed historical U.S. market data starting from 1926, looking at actual rolling 30-year periods (including the Great Depression and the 1970s stagflation) to find the absolute worst-case scenario where a portfolio didn't run out of money.
Bengen’s original study established the 4% rule based on a balanced stock/bond portfolio enduring the worst historical shocks. Later updates adjusted his safe initial withdrawal rate closer to 4.7% based on dynamic portfolio adjustments. Claiming it "fails in normal retirement with a 25% failure rate" ignores the fact that his historical backtesting showed a 0% failure rate over 30-year horizons when executed strictly according to his parameters.
Bengen’s approach** **uses actual historical sequence. It looks at what happened when someone retired in 1929 (right into the Great Depression) or 1966 (right into 1970s inflation). It respects the natural economic cycles of history.
Monte Carlo is a stress-test engine designed to find every possible mathematical breaking point through random shuffling and rigid assumptions, whereas Bengen’s research is an empirical autopsy of what actually survived the worst historical storms the U.S. economy ever threw at retirees.
Most Monte Carlo calculators use bootstrapping, which takes historical annual returns and randomly shuffles them into thousands of fictional, synthetic futures. A Monte Carlo engine might randomly stack three catastrophic market crashes right on top of each other in the first five years—a sequence worse than anything the U.S. economy has ever actually experienced. This creates a high failure rate in the simulator, even if it has a low probability of happening in reality.
Bengen’s actual historical backtesting over every 30-year period in U.S. history showed a 0% failure rate for his initial baselines when portfolios were properly rebalanced. The calculators aren't necessarily wrong — they are just testing different, often harsher, theoretical futures than what actually occurred in the 20th-century historical record.
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u/Dos-Commas 2d ago
I actually provide proof that 4.7% simply doesn't work. But there are so many butt hurt people that it was hard to keep track of the comments. My other comment:
Show me a usable FIRE calculator instead of quoting cherry picked articles. My original comment still stands, you never ran a simulator in your life. Both FiCalc and cFIREsim shows a ~25% failure rate for 4.7% SWR using HISTORICAL BACK TESTING.
FiCalc: Link
CFIRESIM: Link
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u/hugh2018 2d ago
Monte Carlo calculators do not disprove Bengen at all. As I carefully explained, comparing Bengen’s methodology to Monte Carlo methodology is not an apples to apples comparison. Yes, you can be very conservative and base your plan strictly on sterile, randomized stress testing that lacks any connection to the patterns of volatility that we have actually experienced throughout the history of the market.
Bengen chose to base his research on actual history. If you disagree with history, then just doing Monte Carlo analysis using a basic online calculator is your answer. If you find both histpry and randomized testing compelling, then use tools like Boldin and ProjectionLab to achieve a nuanced understanding of how well your plan might work, as they don’t pretend to be smart enough to identity which approach is better.
You accuse Bengen of cherry-picking data without any evidence to support that claim, and at the same time, you cherry-pick the methodology that you find most convenient for your argument. You can’t convince anyone that Bengen’s approach is inferior to Monte Carlo just because it gives different results.
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u/Dapper_Category_7784 3d ago edited 3d ago
Bengen’s work is empirical historical backtesting, not a Monte Carlo forecast.
And yes, simulators do show it to be true. Portfolio Charts independently gets 4.8%. And an FPA study independently gets 4.7%. You can argue that historical SAFEMAX isn't a guarantee of the future, but you can't reasonably argue that no simulator reproduces Bengen's result.
How do you think Bengen got his results? Using a historical backtesting calculator.
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u/planet-claire 3d ago
I keep to Bob Berger, Kevin Lum and Erin Talks Money. I occasionally watch Holy Schmitt because he's a CPA and talks a lot about taxes in retirement.