Forget About Money 🧩 Sequence of Returns Risk Solved! Karsten Jeske on Safe Withdrawal Rates 📈
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Jul 5, 2024 Karsten Jeske, known as Big ERN, is a retirement researcher with a PhD in economics and the founder of the popular blog Early Retirement Now. He delves into the intricacies of Sequence of Returns Risk, explaining how the timing of returns can significantly impact retirement savings. Karsten advocates for tailored withdrawal strategies and discusses the importance of a conservative bond allocation. He highlights practical tools for adjusting withdrawal rates and critiques common bucket strategies, emphasizing a gradual asset allocation shift to mitigate risks in retirement.
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How Early Retirement Now Began
- Karsten started Early Retirement Now in 2016 while still working and used deep quantitative curiosity to build the blog.
- He expanded an intended short series into 60+ posts through reader questions and iterative research.
Adjust Budget Not Retirement Timing
- Don't let market timing stop you from retiring; instead, dial your withdrawal rate lower if necessary.
- Retire with a smaller budget rather than not retiring at all if markets look risky.
Reduce Equity Risk At Retirement
- Shift from aggressive accumulation into diversification before decumulation; hold 20–40% diversifiers like bonds in retirement.
- Avoid 100% equities when withdrawing, because some historical cohorts had safe rates under 3%.