Holy Trinity it’s all about 4%

OK, so I get the ‘set it and forget it’ (well not completely forget it, but close to it especially if your investing in the entire market) approach to creating a stock pile of cash for retirement – you know the formula, time + discipline = compounded returns. Sure allocation matters, some say rebalancing matters, but overall socking money away is the easy part (the context here is not about how much, or what the right financial instrument should be, just how easy it is to put money somewhere for retirement).

What is not so easy (or so I thought), is how much do I need to retire, to achieve financial independence, and then with that, what the heck would be my exit strategy – right, so now many years have passed and I got all this cash (theoretically), now what do I need to do to ensure that it outlives me, whether that is for the next 20, 30, 40 years or more. It seems like this is ‘hard part do last’, and something that is never really talked about – now either because it’s taboo (inline with politics and religion), or most just don’t know.

Well say no more, let it continue to be taboo, but no longer can I say I don’t know thanks to this latest FIscovery over at Mr. Money Mustache – – the grand Mustachian himself has penned The 4% Rule: The Easy Answer to “How Much Do I Need for Retirement?” – with that, he goes on to talk about the 4% Safe Withdrawal Rate (how much I need and my exit strategy) and the Trinity Study (how and why the money will outlive me) and so much more.  A must read!

So now I know how to save it, figure out how much I need to save, how much I should be taking out, and quite confident it will last. 🙂