The shockingly un-simple math behind retirement safe withdrawal rates, with Karsten Jeske, PhD (Part 1)

#35: When it comes to early retirement the most important (and difficult) thing you have to grasp is your safe withdrawal rate. FIRE bloggers rave about “the shockingly simple math behind early retirement,” but they almost never talk about the shockingly un-simple math behind safe withdrawal rates. So this week, I invited Karsten Jeske, PhD – a former professor, Fed economist, quantitative finance researcher, and early retiree – to the podcast to share insight on how to estimate your safe withdrawal rate in retirement. This is the most important financial planning concept early retirees must grasp to stay retired and guarantee they never have to go back to a j-o-b. What you’ll learn:The fatal flaw of the “4% rule” and why you might easily run out of money in retirement if you follow it blindlyThe importance of analyzing the conditional probability of failure based on the actual year you retireWhy sequence of returns risk and safe withdrawals rates are inextricably linkedWhy the business cycle in the year you retire is crucial to your safe withdrawal analysis, plus how to use the Shiller CAPE ratio to estimate your safe withdrawal rateHow Social Security factors into your safe withdrawal analysisWhy sequence of returns risk is front-loaded for early retirees but back-loaded for wage earners Have you analyzed your safe withdrawal rate? Do you think it is more or less than 4%? 3%? Let me know by leaving a comment when you’re done. Don"t miss an episode, hit that subscribe button... If you liked this episode, be sure to subscribe so you don’t miss any upcoming episodes!Apple PodcastsSpotifyGoogle PodcastsStitcher I need your help, please leave a listener review :) If you liked this episode, would you please leave a quick review on Apple Podcasts? It’d mean the world to me and your review also helps others find my podcast, too! Links mentioned in this episode:Early Retirement Now Safe Withdrawal Rate SeriesTrinity Study (4% rule)HYW private Facebook community Intro/Outro: Old Bossa by Twin Musicom.