The 4% rule for retirement withdrawls in the US vs Australia

I believe there has been done on Australian-only stocks in a similar study and the safe withdrawal rate was slightly lower, something like 3.5% from memory. A bit of googling will be able to find the study.

It’s worth remembering a few things with these sorts of calculations, which most people seem to forget…

— The future may look different than the past, and there’s no 100% certain scenario

— Combining Aus/Global stocks together reduces volatility and therefore will increase retirement success rates

— Spending flexibility is massively important (having 25% flexibility in spending, or ability to earn a bit of income, has resulted in 100% success over all historical scenarios).

— Superannuation is an additional income stream we can tap into later in life. Many younger investors don’t even factor this into their planning, or underestimate the level of income achievable in future decades from super.

— In Australia we also have the ultimate backup plan in a decent pension system, which could be valued at $500k for a single and $1m for a couple based on its income stream, meaning the fear of running out of money is basically a non-event.

The following content gives a few further thoughts on this discussion if you’re interested…

Article: https://strongmoneyaustralia.com/your-flex-ra...
Podcast: https://strongmoneyaustralia.com/podcast-how-...

Dave

And to add to this, in the Australian context, we also have the benefit of franking credits.

From memory, the study didn’t include these, as they’ve only been refundable since the year 2000. So all the backtests couldn’t have factored these in.

But these are valuable and can add something like 1.5% to the income portion of returns.