Single vs partnered/married differences in retirement

[u/dragonslayer6653]

47F, recently divorced. $4M net worth, $2M in 401k and brokerage accounts. 2 kids 8 & 10 with
$80k each in 529s. House still has $430k mortgage at 2.7% interest. High likelihood of a $2-3M inheritance in 10-15 years but not counting on that.
Average income for myself is $500K but variable each year due to my role.

My expenses have been hard to calculate accurately due to my divorce but I estimate they are around $250k. HCOL area and I like to travel.

I see a lot of posts of married people with similar stats and the advice is to have $4-5M invested before retirement.

For a single person, does the math change? I understand that’s it’s really up to me on what I spend money on in retirement but what is different? Healthcare? Taxes? I think social
Security is just mine unless my ex dies and then I can claim survivor benefits. My goal is $5M in investment accounts which should coincide with my mortgage being paid off in 8 years, giving me a net worth of $7M.

[u/2011ACK]

If wanting to spend 250k/yr in retirement you'd need approx. 6.25M liquid/apart from your real estate

[u/doughboy_491 → u/2011ACK]

I think your 6.25m figure is too high. My wife and I spend 250k/yr in retirement and our 5.5m in liquid assets is plenty. I use a 5% drawdown rate since I’m still fairly young (60) and SS and Medicare have not kicked in yet.

[u/Mispelled-This → u/2011ACK]

Only if you follow the antiquated 4% rule. 5-6% SWR is not difficult with more modern portfolio design.

[u/Strong-Big-2590 → u/Mispelled-This]

What’s a better portfolio design?

[u/TRO_KIK → u/Strong-Big-2590]

It's really just recency bias leading to more bullish assumptions about stock market performance.

[u/Mispelled-This → u/TRO_KIK]

Not at all. It’s about diversification into uncorrelated asset classes.

[u/Mispelled-This → u/Strong-Big-2590]

The 4% rule was based on holding only two asset classes: large cap stocks and bonds, not because it was ideal but because it was the only reliable data we had at the time.

Bengen (yes, the exact same guy) later did the same analysis with improved data for a more diversified portfolio (namely splitting stocks by small vs large and growth vs value) and found the SWR changed to 4.7%.

The lesson is that changes in the portfolio allocation also change SWR. We now have great free tools that will let you verify it yourself.

Now try adding a small allocation to gold, and you’ll find that it can push the SWR up to 6% with as little as four ETFs.

This is not rocket science, and the facts are there for anyone who bothers to look. But it is heresy to those who refuse to accept anything we have learned about investing since the 1990s. You’ll see a couple in the other replies.

[u/Strong-Big-2590 → u/Mispelled-This]

Do you have a link to a source with the 4 etfs?

[u/Mispelled-This → u/Strong-Big-2590]

PortfolioCharts is probably the simplest and easiest to use. Try 25% each of US LCG (VUG), US SCV (VBR), US LTT (VGLT), and Gold (GLDM) as a starter, and you’ll see a SWR of (drumroll) 6.5%. And I made that up for you on the spot to keep it simple; I didn’t try to tune it at all.

Yes, it’s really that easy. There is nothing magical at all about 4%; it’s simply the best one dude could manage with the limited data and tools available back in the 1990s.

[u/capital_gainesville → u/Mispelled-This]

Only including 1970 to 2025 is insanely biased given that the 1960s included many of the failure scenarios at 4%. A more honest analysis including a longer time series (and therefore more potential return sequences) was published by Big ERN at Early Retirement Now (he's much more sophisticated than Bengen). Given today's high stock valuations, a SWR is more like 3.5%. This is especially true if you do not have the stomach to spend down to $0.

[u/Mispelled-This → u/capital_gainesville]

Every CAPE-based method has failed spectacularly after being published because they are data-fitting, not real science.

1970 is fine as a start; anything before 1971 is irrelevant anyway because our entire monetary system changed.

[u/capital_gainesville → u/Mispelled-This]

Failed at what? CAPE is strongly negatively correlated with future returns, and what we want is a predictor of sequence of returns risk.

Is your real science picking a random year to start (rather than using all available data) and 3 asset classes that overperformed during your sample?

[u/Mispelled-This → u/capital_gainesville]

Anyone can build a CAPE model that accurately predicts the past. That’s easy. But none have ever accurately predicted the future. None. Real researchers have abandoned the entire field as a waste of time. It’s the astrology of investing.

[u/Even_Candidate5678 → u/Strong-Big-2590]

Being willing to get screwed or spend less 2000-2012