Question 1

Which convention should I use?

Accepted Answer

Spending it down to a life expectancy you choose, if you want one recommendation, because it is the only one that knows how long your money has to last. A withdrawal rate is a perpetuity: it funds your spending for ever, which is a different and usually more expensive promise than funding it until you die. The catch is that a life expectancy is a guess too, and living longer than you planned is the risk the perpetuity is protecting against.

Question 2

Is a lower withdrawal rate safer?

Accepted Answer

It is more conservative, which is not the same thing. A lower rate means a bigger corpus for the same spending, so it demands more saving and later retirement to buy more margin. Whether that margin is worth it depends on how long you will live and what your money earns, neither of which anybody knows. What the page can tell you is exactly what the caution costs: at 3% instead of 5% the target nearly doubles.

Question 3

Where does the 4% rule come from?

Accepted Answer

American research on American inflation and a thirty year retirement. It is quoted everywhere in India and it was never derived here. That is why this page shows a gradient rather than a rule, and why no page on this site treats 4% as a default worth hiding behind. If you use it, use it knowing it is an import.

Question 4

Why is spending it down sometimes the biggest number?

Accepted Answer

Because a long retirement costs more than a perpetuity does. Retire at 45 and expect to live to 85 and you are funding forty years of spending, which is dearer than the corpus a 3% withdrawal rate would demand. Neither convention is reliably safer than the other, and how many years you will be retired is what decides it.

Question 5

Why do three of your pages give the same answer?

Accepted Answer

Because they are one convention asked in different numbers of questions. The comprehensive page, the five-input page and the drawdown method share an engine, so on matching inputs they agree to the rupee. That is worth saying plainly: seeing three calculators agree feels like corroboration, and here it is the same sum three times.

Question 6

Why is the financial independence page not in the table?

Accepted Answer

Because it answers a different question. It solves for the age at which what you are saving becomes enough, so its corpus belongs to the age it found rather than the age you asked about. Ranking it beside the others would put an answer about when next to three answers about how much. It is reported below the table instead.

How Much to Retire: Four Answers