Retiring into a dotcom type sequence
I'm about to pull the ripcord on a 20-year career to spend more time with my young family. Rationally, I understand the math behind the 4% "rule of thumb", but I keep coming back to the year 2000 retiree that you can track on Engaging Data.
If that retiree started with a $2 million portfolio (80/20 stocks and bonds) and followed a 4% withdrawal strategy:
- After 4 years, their portfolio had fallen to about $1.2 million.
- After 9 years, it was down to around $780,000.
- After 23 years, it sat at roughly $600,000.
They're now in 2026, looking at a portfolio that's down about 70% from where they started and facing a market with a historically high CAPE ratio - looking at AI hype - and wondering here we go again? Sure, if the remaining portfolio merely keeps pace with inflation, they may still scrape through the final seven years of the 30-year retirement window. But that doesn't exactly feel reassuring - especially if there was the second coming of a dotcom crash.
The numbers aren't dramatically better even at a 3.5% withdrawal rate.
I try to put myself in the shoes of that 2000 retiree. By year four, after watching my portfolio fall 40% and my cash/bonds depleted, I suspect I'd be questioning everything. I'd probably be looking for a job and wondering whether my FIRE plan had failed.
That's the part I struggle with. The historical data suggests a 30 year retirement might work. But living through 20-plus years of watching your portfolio steadily shrink feels is scary when to date - even through the market ups and down - it has been steadily up and to the right.
Does anyone else wrestle with this? If you've already retired—or are close to pulling the trigger—what gives you the confidence to move ahead despite scenarios like this?