BiggerPockets Money Podcast - How Much Can You Safely Withdraw in Early Retirement? | Christine Benz

Episode Date: October 6, 2026

How much do you actually need to retire, and once you get there, how do you turn your portfolio into income without running out of money? In this episode, Christine Benz from Morningstar joins us to talk about one of the biggest challenges of early retirement: decumulation. We get into how much you can realistically withdraw, what to do when markets are expensive or take a downturn, and how to build a portfolio that can support you for decades. Christine also explains why you don’t need a perfect portfolio or an overly complicated strategy to retire successfully, and why staying flexible may be one of the most important parts of a good retirement plan.To go beyond the podcast:Interested in a Flat Fee Financial Planner? Go to https://biggerpocketsmoney.com/fipro/Interested in Learning More About Buying a Franchise? Check out: biggerpocketsmoney.com/franzyGet 50% Off Your First Year of Monarch by using code ‘Pockets’: https://www.monarch.com/pocketsConnect with Christine Benz: Website: https://www.morningstar.com Podcast: The Longview We believe financial independence is attainable for anyone no matter when or where you’re starting. Let’s get your financial house in order!See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

We love to talk about investing here on this podcast, but what if your investment strategy doesn't have to be perfect to get you to financial independence? Today, we're talking with Christine Benz about good enough investing, knowing when you have enough and whether some of us are making financial independence harder than it has to be. And as always, this is not investing advice. This podcast is for entertainment and educational purposes only. Hello, hello, hello, and welcome to the Bigger Pockets Money podcast. My name is Mindy Jensen.

and with me as always is my decumulation interested co-host, Scott Tretch. Thanks, Mindy. I'm super excited to withdraw some information from one of the world's leading retirement researchers over at Morningstar and Christine Benz. Christine is Morningstar's director of personal finance and retirement planning and the author of How to Retire 20 Lessons for a Happy, Successful, and Wealthy retirement. She spent decades studying, investing in retirement planning, and she also hosts Morning Star's The Longview podcast. Christine, welcome to Bigger Pockets Money. Scott and Mindy, thank you so much for having me on. To start things off, I'd like to share the headline. We talk to several retirement decumulation researchers, experts here on Bigger Pockets Money. And the headline, I think that someone could take away simplistically from Morning Star research is, you know, Morning Star says the base case with today's valuations is a 3.9% withdrawal rate for 30 years, 3.5% for 35 years and 3.3% for 40 years, which is bad news or, you know, a little bit more conservative. I would say, than some of the other opinions out there in the decumulation or withdrawal expert field.

But that's also not the whole story. Could you tell us what your views are on decumulation rates and how you frame them today and how you bottoms up build the framework for evaluating these? Sure. Thanks for that question, Scott. The numbers that you reference relate to what we call a base case that we use in our retirement spending research. So in contrast with some of the research that people might be familiar with that anchors on backward-looking market returns. We actually incorporate our investment management team's capital markets assumptions. They're forward-looking 30-year capital markets assumptions. And we assume a static spending system. So we assume that someone would withdraw, say, 3.5 percent initially in retirement, and then just inflation adjust that

dollar amount thereafter. And so you're right. The numbers are are a little bit conservative relative to, say, the 4% guideline that people may have heard about. But the reason is that those capital markets assumptions, because stock performance has been so good for so long, they're fairly conservative, especially for the next 10 years. They sort of normalize after that. But within the next 10 years, our team is basically saying, you should plan for maybe not such great equity market returns over the next decade if you're a new retiree. And so that's why we come in a little bit low for that base case. A large part of the research focuses on different spending strategies that one could use, where if you are able to

flex a little bit with how your portfolio performs and how the markets behave, that redounds to the benefit of your plan, that you get to spend more over your lifetime if you are willing to be a little bit flexible. So that means reining in spending if a bad market materializes during that period to spend a little bit less. And then it means that in good market environments, you should be able to spend a little bit more. And there are lots of different variations on those flexible spending systems, but all of them give you a higher starting withdrawal percentage than that fixed real withdrawal system would let you spend. So with a flexible spending system, how frequently should somebody who is retired or is approaching retirement be looking at their financial picture and

their portfolio because it would be really awful to be looking at it, you know, once a year and then you're withdrawing. You're like, ooh, I didn't have to spend so much and now I wish I hadn't. Yeah, I think it's something, Mindy, that people should revisit annually, take a look at how your portfolio is performed. And they're all different variations on these flexible spending systems ranging from very modest adjustments. So one I like is simply, if your portfolio has had losses in the previous year, you just don't get an inflation raise in the year after that. It turns out that even that helps you take a higher starting withdrawal percentage. So that's a very simple tweak to a 4% type spending guideline.

And then there are more elaborate ones like the guardrails approach, which we detail in the paper, that lets you spend substantially more early in retirement, but does require more frequent course corrections. It really depends on the retirees. willingness to make adjustments. And, you know, if people have very tight plans, I would recommend they stick with like the more modest adjustments where it's not really jerking you around based on how your portfolio is behaved. If you have a slightly more flush plan, you could probably tolerate more frequent adjustments. So it depends on kind of knowing yourself, knowing how willing you would be and how much your budget would allow for periodic course corrections. The headline number is 3. 3% for 40-plus-year retirements. What does that number change to once we implement this framework around flexible spending? I don't know the 40-year number off the top of my head. I do know that for a 30-year time horizon, and we tend to do most of our research on, you know,

sort of using that 30-year time horizon, traditional retirement time horizon, I believe for, say, a guardrails type system, it goes as high as like into the upper fives as a starting withdrawal over a 30-year-time. horizon. So it would be lower for a longer, like a 40-year time horizon, but it would still be meaningfully higher than kind of that base case, assuming, you know, static withdrawals year after year. I've been studying this debate, I'll call it, in retirement decumulation, both traditional and early. I've mapped out a bunch of experts in their opinions in the space and what their headline numbers are. And what I found is that the debate, the differences that you come up with versus Bill Bingen versus, you know, Karsden, Jeske versus Cedarburg, you know, all depend on, I think,

six questions, right? So first is, what history are you using to project your future returns? And why did you cut, slice the data set there, right? So for example, somebody might argue, you should use the whole block, the longest available data and project that going forward. I believe, I could be wrong in this, that you are saying, well, you have to factor in current valuations and you slice the data and then project four returns based on the historical data we have for valuations where they're at in current in current stances. And that's a debate and friction point. So the next one is what safe means. Do you run out of money ever? Is there an acceptable failure rate that we're calling safe for these withdrawal numbers? How are you spending? Are we assuming constant

inflation adjusted spending or are we assuming guardrails, which we covered here? The assets that underlie the portfolio, the way you construct the portfolio, again, intersecting with how you slice the data, valuation conditioning we talked about here, and then taxes and other fees, whether they're included or not. How am I doing? Is this how you kind of perceive the differences in the decumulation debate or how you frame it? No, I think that's a wonderful analysis. And as you said, we are doing it a little bit differently in that we are attempting to think about current market conditions, current where we are with equity valuations, fixed income yields are an important input. And I think back to when we initially began to work on this research using these forward-looking return assumptions

that was back in late 2021. And I remember our initial result was super cautious. I believe it was 3.3% for a 30-year horizon. So significantly lower than 4%, obviously. Raised a lot of headlines when we came out with that research. But in hindsight, I was pretty comfortable with the way that things shook out because the message there was that starting conditions are super important. for your retirement spending. So if you can pay attention to where we are with yields and

inflation and equity valuations, that helps you accommodate different market scenarios that might play out. So in that specific period that I referenced the late 2021 period, we had high inflation, rising interest rates, which hurt bond prices in 2022, also rising interest rates that hurt equity prices in 2022. So the message in our research was, you know what, given where we are with conditions for the major inputs that you would think about, we would suggest some caution is warranted today. So I would encourage people, even if they are anchoring on historical returns as they're thinking about their spending rate in retirement, I would urge them to kind of anchor themselves in the here and now and think about, well, what do conditions look like for my particular draw

down period. If there's something that worries me the most about new retirees, it's that we could, and I'm not predicting this will happen anytime soon, but I think it's likely we will have some kind of equity downturn over the next decade. And so if new retirees can build that into their planning, I think that's incredibly beneficial. So be able to spend less if such an environment materializes, be able to spend from safer assets rather than having the bulk of your portfolio and equities, those kinds of things would influence overall a more conservative plan. When you're ready to start your business, Northwest Registered Agent helps you do more than just file paperwork. You get all the tools to build a real business identity from day one, a business

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Well, it does because we use Monte Carlo simulations as a lot of people who work in this area do. And I remember when we first started working on the research, our optimal safe withdrawal rates was corresponding with a very light equity waiting. And I remember saying, wait, go back and redo that because that can't be right. But it is partly a function of the fact that if we are thinking equity returns may not be that great, but bond yields are looking better, we're going to try to lock down that safe stream of income today by holding more in fixed income assets. So all of the pieces work together for the past few years in our research we have pointed to for new retirees who want a very consistent stream of real spending and retirement, we would argue that they should try to line as much of that up as possible by having ample fixed income assets. Having a decent size allocation to tips as well would also be a good strategy.

So this is a really interesting point here. This is what I think is so fun and fascinating about this whole. research field is because right now your real yield on tips supports like a five plus percent withdrawal rate. And then that brings a circular problem. The people listening to this show typically are looking at early retirement and really interested in decumulation in an early retirement sense. And you know, if you can build a safety margin, you know, using tips right now with today's assumptions, that's defensible, although very contested by other people in the space. And you get to a higher yield than your 3.3% number there just by doing.

that. Then the next question, I think that nobody asks, but they should, is what happens to my terminal wealth or my redolph, you know, 30 or 40 years in a median Monte Carlo Sim, if I do that versus keep my equity exposure. Well, now you have a real tradeoff. You can exchange a high degree of certainty for a much lower wealth number in many of these runs. Tell me how I'm thinking about this or how you would respond to a challenge like that and how that factors into the way you construct portfolios. Right. So the tips ladder that you referenced is a wonderful strategy for, I would say people's knowable fixed spending. So I love the idea of aligning those fixed spending needs with something like a tips ladder. The downside as you reference, though, is that it's self-liquidating.

So you spend, you know, you get your income from the tips bond as it matures and spend it in the next year and on down the line. But unless you have some other component of your portfolio, you will spend, spend through those assets. And that may or may not be what you want. So I like the, you know, sort of blended idea we had on our podcast, Stefan Sharkansky, who has this paper that I would urge people to go check out on the idea of having this tips ladder blended with an all equity portfolio. And I think he uses all U.S. equity. That is a sensible way to approach it where you sort of are addressing both goals. You'll have something left over, most likely, through that equity portfolio, but you'll have aligned your spending needs with that tips ladder.

Is now a good time to start thinking about bonds? I don't have any bonds in my portfolio. And I just read that bonds are at like a 10 year high, the bond yield. So that sounds good. As I get older and like closer retirement, should I start putting more money in bonds? And like how do you think about the yield? Like should I wait until the yields better? It's a great question, Mindy. I would say probably not try to be a bond market strategist. You know, I'm not a bond portfolio. manager, I would, you know, for people who are, say, over age 50 or I would say within 10 to 15 years of retirement, they should start building out their bond portfolios and just dollar cost averaging into that position, I think is a good way to go about it. But as you say, bond yields are high is high, maybe not high relative to history, but the bond yield is very much connected to the long-term total return of bonds. So like that, you know, if you look at a chart of where the Bloomberg Barclays aggregate indexes yield is relative to the long-term total return, they're like in lockstep. So that suggests that investors in, you know, a high quality fixed income portfolio

today are getting 5% or so, but that's a nominal number. And that's the big risk factor with bonds and why you wouldn't certainly want to put your whole portfolio in nominal bonds. because if inflation is, you know, wherever it is today, a high 2% range, that's just going to gobble up that much of your bonds returns. So tips, I think, are an attractive way to defend against that inflation risk, Treasury inflation protected securities. Yes, I do think it's a decent time for people who are in some reasonable proximity to needing their money to start derisking that portion of the portfolio. equity valuations are high, fixed income yields are higher, the only wildcard is inflation. Like, do we kind of hang out here with sort of sticky inflation for a while? I wouldn't rule it out, which is why something with some inflation protection is going to hold you in better stead than nominal bonds.

So what sort of portfolio makeup are we talking about for a traditional retiree who has retired in the last couple of years? Bingen's research was based on a 6040 stock bond portfolio. it sounded like you were suggesting a heavier bond or fixed assets, like more than stocks, almost. Could you define the portfolio? What is the portfolio you would recommend? Yeah, so we test all different portfolio equity allocations with that base case spending system. So we're assuming that someone is going to take out X percent initially and then inflation adjust that dollar amount thereafter. And so one of the reasons why when we're going to. run that base case research, it lands on that very conservative equity waiting is because

our system is basically saying back to us, you know what, if you want to spend like a robot throughout your retirement and you never plan to revisit your spending, guess what? We can kind of line that up today in fixed income securities. And that's one reason why that static real spending system does tend to correspond to a fairly light equity weighting. It's just a function of the spending system being conservative overall. And one important tradeoff to note there is that oftentimes those very conservative spending systems do correlate with really high leftover balances, which is probably not what most people want, right? If you are just going to take out a certain amount year after year, never revisit it, it will tend to mean in many market environments that would play out

over someone's time horizon, you're going to underspend pretty significantly if you're never going to revisit that spending. And that's one reason why I would say don't do that unless your plan is, you know, to leave some huge leftover balance or that's your goal. But in my experience, that's not most people's goal. Most people's goal is to maximize their own lifetime spending or opportunity for giving, whatever it might be. Most people don't want to underspend during their lifetime so that they can leave a big pile of money behind. What is the safety margin that you discuss here? So how much can my flexible spending come in under your flexible rules before your

simulation breaks and calls it a failure? Because if you have flexible spending, you could say, oh, I spend 4% of my portfolio and flex that down, for example, your portfolio could go down 80%. You're still spending 4% of your portfolio. It's really hard to get a failure rate in that situation. What do you define failure as in your framework? We use a success rate, we call it, of 90%. Which means that in a thousand simulations that we might run on an initial spending of X and an asset allocation of Y and Z, that in 900 of a thousand of those simulations, the portfolio would still have at least a dollar left over in it at the end of whatever time horizon we're testing.

So that's how we define success and failure in our research. Awesome. Tell me about the valuation argument. Why do you believe we should react or respond or change our assumption about withdrawal based on today's valuations? Well, simply because there's a connection. It's not a perfect predictor, but of the predictors that we have as investors, equity valuations tend to be one of the better ones, certainly, you know, better than earnings growth or something like that for the market. So I would say that's one reason why people should at least have that in the back of their minds when they're thinking about

how much they can spend from their portfolios and also, you know, kind of constructing the asset allocation of the retirement portfolio. It seems to me that most people would rather be safe than sorry with respect to their retirement plans. For a lot of people, you know, there's not an opportunity to go back to work once you've hung it up. And so most people in my experience would rather build in a margin of safety from that standpoint. In the FI community, the early retiree-focused community has this idea that, you know, I'm never going to go back to work, even though that's not true. A lot of people do different types of work that maybe don't pay them the same, but they still generate a little bit of income. But I'm never going to go back to work.

Therefore, I have to have this perfect portfolio. You know, everything has to be perfect. I'm not quite there yet, so I'll work one more year or I'm there, but I don't trust the numbers. I'll have to do one more year, one more year. Tell us about your good enough investing portfolio. Because I think so many people are focused on perfection. What is that? Good is the enemy of perfection? Yes. Perfect is the enemy of the good or something like that.

Yeah, something like that. I have experienced so many optimizers, certainly in my world, in the Bogleheads community among colleagues and the retirement research community, colleagues at Morning Star, there is this thought that you can optimize all of this stuff. And I think if we take a step back, we have to recognize that it's all a little bit of a guess. right, that we will only know in hindsight what would have been the right asset allocation for retirement, or the perfect asset allocation or the perfect withdrawal rate or the perfect types of stocks that I might hold or whatever. It's only going to be apparent when it's all over.

And in the meantime, it's helpful to remind ourselves, this is all a little bit of a guess and just relax about it, build a plan with some wiggle room built in, but don't get yourself in fits thinking that you're going to perfect this because there really is no perfect portfolio. The sort of dichotomy is, you know, the optimizer mindset versus a satisfacer mindset. And I'm definitely on team satisfacer, where at some point you just have to say, you know what, that's good enough. I've done my best here. I've tried to make reasonable assumptions about these things, but I'm never going to be perfect because I don't even know what perfect is. And I wish people would all kind of ground themselves in that mindset. But it's an upward climb. Yeah, nobody's ever going to be perfect because perfect

doesn't exist. There is always going to be somebody that you talk to who is doing something more optimized or better than you are. And that's okay. They have a different life. I mean, how much time do you spend worrying about optimizing that extra 0.00.1%? What are you pursuing financial independence for? What are you retired for? It's not so you get like an extra dollar 50 at the end of this year. Exactly. And it's kind of a cult of faux precision anyway, right? Like even our 3.3% spending rate or whatever, it's not going to play out that way. You know, there will be surprises along the way. We can give it our best guess. But ultimately, we should all be mindful. that this is all just really guesses. Yes, you know, market history may repeat itself,

but some other thing that we never could have guessed about might pop up like COVID or, you know, whatever. There's there's always some wrinkle that no one anticipated. Like this is why it's so fun, right? The faux precision, I think, is just like the funniest thing about retirement research. Like it's, it's like absurd because you get these, this like room of academics and they're just going after each, other about what assumption you're using for return in standard deviation in various asset classes relative to inflation. And like the data set goes back to maybe like the 1870s if you want to pick that particular data set and be pretty broad. It goes back less and less far if you want to do factor tilts like small cap value. There's an argument you can only really use from 1971 if you want to

use gold. And all of this only overlaps like five 30 year distinct periods from the 1870s if you really want to go back that far. Then you get other people, like this famous one from Cedarburg, which is like the most contested one. I don't know how you feel about this particular paper, but he's like, well, it could actually be as low as 2% for a safe withdrawal rate because when you factor in all the other countries around the world and their 30-year decumulation sequences, now you get into some really wacky places. And then somebody else will beat it up and say, well, if you're going to compare your situation to Weimar or Germany's events, then, you know, that's not going to happen in the U.S. It's not. So this is what I'm trying to get at is there's a whole

bunch of beliefs that sets you up for these conditions. And I think that this community of researchers, I'm imagining, would say, Christine, fundamental to your overall position. I think the grounding school of thought that you have is valuations matter and begin to dictate your portfolio to some degree, but much more the withdrawal assumption in there. And so one more time, can I just dive into that one and hear how you would defend a challenge from like one of these other experts in the space saying, no, you know, you're now you're cherry picking that date. to drive at that fundamental assumption. So a couple of things.

Our research incorporates the assumption that not only do equity valuations matter in terms of affecting our expectations of what returns might be over the next 25 or 30 years, but we also believe that where fixed income yields are today or, you know, when someone starts retirement, also a super important input as well as the rate of inflation. So inflation had been kind of a non-issue, I think, for a lot of retirement. planning calculations. Now it's kind of in the front burner. And we know from the data that medical inflation, health care inflation tends to be a big factor for older adults and it tends to hit them harder, hit their budgets harder. So I would say all three things ought to be on the

dashboard at least. And my bias would be, why would you just say, oh, I'm just going to look backward at market history? Why wouldn't you, in addition to that, while that's certainly a great grounding, why wouldn't you also give some thought to, well, okay, the specific environments that's prevailing when I'm retiring, those three inputs where fixed income yields are, where inflation is, where equity valuations are, those all matter too. So my advice is to look backward, but also peer forward an attempt to get your arms around. You know, what's reasonable to think about market conditions over my particular drawdown period? And of course, you know, the real unknowable thing that we haven't even talked about. It's like, we don't know what these time horizons are, right? That,

yes, you should be conservative and plan longer, but no one knows that. So, you know, as we talked about, it's all a little bit of faux precision, I think. I'm grappling with this problem. Me and Mindy are grappling this in very different ways. I feel that the current valuation landscape means, hey, I'm just too concentrated in this particular portion of the market. And so my answer to that was to diversify my equity position into an equal weight index fund, just to get rid of that, rid of that, maybe some factor tilts along with real estate, which is bigger pockets, right, real estate. And so Mindy's response has been to put 80% of her position into the tech complex as part of that. Do you change your equity allocation in response to this in addition to the

overall weights across asset classes? Do you actually change the recommended equity tilt based on current valuations as well? No, not really. We hold them constant in this. research just for consistency's sake, so we don't move around intra-equity asset allocations. We stick with pretty much static mix. We do, I think, like relative to a total market index, we maybe have a little higher weighting in smaller cap stocks, but not meaningful. And we do hold it constant from year to year. Listening to this, though, it did make me think of Colin Roche. I don't know if you know him. He's a writer who I appreciate, and we had had him on our podcast within the past year or so when we were talking about all this. And he was like, you know what? You don't address equity risk with your equity waiting. Like if you're worried about equities or if you think that equity returns might be low or whatever, do it with adding non-equity positions to your portfolio, which really does add up to me. So anyway, just food for thought as people think about their retirement portfolios. You said you aim for a 90% success rate. So 3.9% is your suggested withdrawal for 30-year

retirement horizon. 3.5 for 35 years, 3.3 for 40-plus years. When Bill Bagan ran his numbers, looking backwards and you're looking forwards, he came up with 4%. So very close to your 3.9. People will picknits about that, but whatever. He had a 96% success rate. And I think he said something like 3.3% withdrawal for a 30-year time horizon will give you a 100% success rate or as close to 100% as possible. And again, his success rate is having money at the end of the 30-year time horizon. Do you have any suggestions that would give more of a closer to 100% success rate? Because we have had lots of conversations with people in the FI community and they're like, 4% only gives you a 96% success rate, you know, that's too liberal for me. I need a more conservative withdrawal strategy just in case. And I mean, honestly, those are the people that are never, ever going to be satisfied and they're never going to retire because they can't fathom an idea that maybe they might run out of money in year 97 or something. Right. I love that question, Mindy, and we've heard that feedback a lot on

our research too. I can't tell you how many times I've spoken about this research, especially to individual investor groups and heard that same pushback. Like, no, I want 100%. The point is that that will lock you into a very low rate of spending, maybe unlivable for a lot of households, that 100% success rate. And it really will probably lead you to significantly underspend during your lifetime. In fact, one system that we test in our research is it's in play in a product called Income Lab, which is a software program that a a lot of financial advisors used to help glide their client withdrawals. And Derek Tharp is one of the researchers who has contributed to that. And the Income Lab approach actually retests success rate every year and makes adjustments based on how the success rate looks. And I forget the specific

percentage that's deemed acceptable before a course correction comes into play. But they let success rate go very low. But the bottom line is that in their research, success rate is something that you revisit on a regular basis, that you don't just test your starting success rate, that you're actually looking at this on an ongoing basis and letting that guide how much you take out. That's a more sophisticated system, in my opinion, and a preferable system. It's another one of the flexible spending systems that I would urge people to take a look at. I had had a conversation with Mr. Money Mustache about this. And he said, anybody who has reached early retirement financial independence,

you know, where our audience is really at, anybody who's reached this point has done so by pretty much obsessively looking at the numbers and tracking their spending and doing all the things. So they're not going to reach financial independence and then just change into a whole new person and never look at the market again. And I think that somebody who has decided that, they're going to accept this 96% success rate instead of the 100, and they have pulled their job, and now they're living off of their investments. I think they will continue to constantly revisit,

like checking the stock market every day or every week or every month at the most, and we'll be able to course correct like a 2022 where the market was, am I remembering correctly, the market was down like 22% from the year before. Okay, great. Maybe. Maybe. 2023, I'm going to not go on all those vacations. And then, you know, the market up in 2023, kind of crazy, if I recall, I don't have the chart up in front of me right now. But we have had some big swings and anybody in our community is going to continually be looking at the numbers and course correcting all the time. I just want people to not let these numbers rule their whole life? What is the point of leaving your job only to be bound to these numbers and, oh, the market

went up a dollar, I can spend a little bit more. Oh, the market went down 50 cents. I got to pull back. I got to pull back. And, you know, this is oversimplification, but also it's not really oversimplification. There's some people that get a lot of anxiety around this. And I think that if you've reached financial independence and, you know, 4% is too much for you, 3.5. That's not a huge difference between four and three point five. That's a nominal spending over the course of the year that you're just not doing. Exactly. It's such an astute observation that, in fact, Jonathan Geithen, who was one of the creators of the guardrail system, makes the point in my book, that the impulse to spend less when the market is down is like a rare behavioral thing that aligns with

what's good for your portfolio. Like usually, you know, the things we talk about, behaviorally are bad, like selling in a down market or whatever. But this impulse to like, oh, you know what, market's looking scary. I don't know what's going to happen. It's probably a good time for me to try to spend a little bit less if I possibly can. I firmly believe that most FI people will really be taking that to heart as they think about managing their own plans on an ongoing basis. What got them successful in the first place is going to hold them in good stead going forward. I hope so. For younger retirees, like in the fire crowd, I asked this question the other day, do you want to retire early and withdraw at something close to four to five percent and, you know,

die was zero? Or do you want to retire early in your 30s or 40s and withdraw three percent per year, but be able to ratchet your spending up as your portfolio grows across time? And almost overwhelmingly people chose the second option. I know there's some research on this like Michael Kitsis, where at certain points in portfolio growth, you can begin ratching up your spending. But do you have a framework that you apply to that question of what's a portfolio of sufficient size where I can now spend more each year as it grows, you know, it's relative to some percentage of the portfolio, rather than fixing my spending to inflation, you know, at some fixed withdrawal rate, even with guardrails. We've talked about a couple of the systems. The guardrail system is one. I would urge people to check out. But it's important to note you got to take the good with the bad with that, right?

That yes, you can ratchet up spending in a good market environment, but you're all. going to have to take it down in a bad one. And nearly all of the systems, or I would say all of the systems that we tested, you know, have those tradeoffs where both things are happening, that you, you know, it's not just giving yourself raises because it will inevitably incorporate some downturns into your retirement spending horizon. So you need to have a plan for what you'll do during those as well. Christine, is there anything else that good enough investors should be keeping in mind as they're thinking about their retirement investments? Yeah, one of them is, and I'm passionate about indexing as a good enough strategy and a pretty darn good investing strategy where you know that you won't necessarily be the very best investment strategy at the end of your retirement time horizon, but you will have given yourself above average, maybe much better than above average odds of success.

And to me, that's one that investors should take to heart as they think about their plans to not try to overthink the specific investment selections, settle. And I put that in quotes because you're doing better than settling, but settle for whatever the market's return will give you and not spend too much time optimizing or, you know, sort of overly strategizing about the specifics of that investment portfolio. To me, you have to remember you're optimizing two things or you're looking for good enough in two things. One is your investment portfolio. The other is your time on earth allocations. And, you know, none of us knows how long we have. And so to me, it's really valuable to not spend time on things that really probably won't deliver meaningfully better results over time. Yeah, that's the one thing you can't buy.

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That makes building a ladder genuinely fast. Get your free quote at ethos. com slash BP money. That's ethOS.com slash BP money. Application times may vary and rates may vary. There was a wonderful episode recently on the Choose FI podcast, which we love, which was basically like, everybody sets their life expectancy to 95, and that is very optimistic in a lot of these. And that governs a lot of the assumptions in decumulation. And so just something to think about, that's one of many inputs that go into it, but perhaps maybe the most important one. What do you say, yours at, Scott?

95. Well, you know, there's a really important health, wealth effect in this country, too, that people who have investment assets, chances are they've had access to good quality health care throughout their lifetimes. And that is such a valuable benefit. And so we do see a really, really strong linkage between household level of wealth and longevity in this country. Absolutely.

I will say that, you know, just by having the flexibility. that I now have in my situation. It allowed me to build a home gym and build a workout program and, you know, spend the time researching. Like, there's a whole crap of supplements, you know, stuff out there. It takes some time to weed through that and actually understand what works and what doesn't. We will not talk about that here. We are not fitfluensers. That's a luxury of early retirement or, you know, financial independence that you can

spend the appropriate amount of time on that and build that. And that should, you know, or statistically will provide dividends, but no one knows what that will end up being. So, well, Christine, where can people find out more about you? So I'm a regular on Morningstar.com. Morningstar is my employer. My book is called How to Retire. The podcast that I work on is called The Longview, which is an interview-style podcast like this one. It's a weekly cadence. So those are probably the main venues.

And I have mentioned a couple times I'm also active in the Bogleheads community. So the John C. Bogle Center for Financial Literacy. John Bogle was the founder of Vanguard Group and really the father of modern. indexing as we think about it today. And I am active in that community on a volunteer basis. What does the Bogleheads community, sorry, I can't resist me anymore. What do they, what do they say about the tips ladder? Love tips. Okay. They love tips. So the Bogleheads are generally, despite being indexing enthusiasts, there's a big optimizer mindset in the Bogleheads community. In fact, someone, I think it was Jackie Cummings Koski. Do you know Jackie asked, how many engineers do we have here?

And I swear it was like half the room raised their hands at our conference. So there is an optimizer mindset and the optimizers do love tips. So yeah, very much a thread in the Bogleheads retirement planning community. Will you be at the Boglehead's conference? I will. I'll be like a little blur running around because I'm involved in organizing it. But yeah, it's been very, very gratifying to see that we've actually had to close it to new attendees because we blew through our goals for attendance. Yeah, we have a wait list right now. I was planning on going to the event and then so many other things happened that I can't go this year. But next year, 27, I am at Bogleheads.

I was just going to say that we, Mindy, tape every session of the Bogleheads Conference and we put them on YouTube. So the idea is that everyone should be able to access the educational resources that we provide. That is fantastic news because I was really sad to have to give up my ticket this year and really glad that I was. won't have to miss the presentations. Of course, you miss the, you know, conversations that you have with other attendees, but seeing the presentations will be really awesome. Okay, well, thank you for doing that. And where can people find that? So that is on the YouTube channel, the Boglehead's YouTube channel. There's usually a little bit of a lag because it takes us a little while to edit all those videos. So probably sometime in December, we'll start pushing out those videos from the conference.

but they're all there from 2025. They'll be there before long for 2026 too. Awesome. Well, Christine, this was a fantastic conversation. I really appreciate your time today. And we will talk to you again soon. Thank you both for the wonderful questions. I've enjoyed it.

Yeah, thank you for the wonderful answers. All right, Scott, that was a really fantastic and very interesting conversation with Christine Benz from Morningstar. What do you think of her concept of good enough investing? I like it a lot. I think Christine is wonderful researcher in the space. I think she does a great job on this.

I think it's a very boglehead friendly, as we discussed, approach to retirement decumulation. I think it's very defensible for the most part. And I think it fits in this box of the retirement decumulation debate. You can certainly create real challenges. And she was very open about, yeah, of course, that's a challenge to this, a different approach there. And that's what makes this so interesting to study with an open mind and so dangerous for people who are like, my guy's right in the decumulation space. This is a debate guys. And there's a lot of unknowable things that are going on in the space. And even with the most

defensible or best assumptions, there's still assumptions and guesses and decisions about what you're using and how to inform retirement decumulation. It's a very uncertain field. I think people get a little too passionate about what they think is the right answer. The more I study this, the more I'm like, there's only decisions people make about their assumptions and the tradeoffs that come with those decisions. There's no right answer. No one will know until the next 30 year or 60 year time horizon passes. Yeah, I think the best thing to keep in the back of your mind when you are working on your portfolio and working on your returns and working on your fine number is perfection is the enemy of good. Good enough investing is a really great phrase. And I'm going to start adopting that.

But perfection is the enemy of good. And you will never be perfect because perfect doesn't exist. Yeah. I think it's fantastic. Just I want to recap, though, to leave this with a parting note because I think as we bring on more of these retirement decumulation experts, I found these themes. I don't know if they'll be true, but I found these themes as I've mapped out all the different arguments. And again, there's six divergence points, right? Which history counts are using US data from 1871, some other slice, something from the 1971 when we went off the gold standard? What are you using for your historical data set to derive your assumption? Are you just doing a backwards or forwards forecast and using consensus forecasts like Christine is incorporating to some degree in her portfolio? How are you

deriving the assumptions about future returns. What does safe mean? Carsten Jeske, for example, has a pretty more strict definition of safe in his portfolio. He does not like the reduction in spending. He does not consider that a successful portfolio. Christine does. There's no right answer there. That's a worldview that you contain and that informs your model. Bangen has the safe max, what survived every, the worst historical period. All these guys define safe differently when they're coming up with these historical models. How your spending is going to curve, right? Some people like to use this retirement spending smile or whether they're going to use guardrails like gutton and clinger and that matters pretty greatly right what's what your asset portfolio looks like risk

parity contains a much more complex weave of assets than a you know tips ladder and uh total market index fund for example how long your sequence is going to be almost most not all but most prescribe a smaller lower withdrawal rate for a longer time horizon than for a shorter one right all but all but one or two um some folks do not seem to differentiate between those two horizons which i think is interesting. And then the valuation conditioning, does today's valuations, change how you forecast future returns or slice the data? Those are worldview decisions. They're not right answers. There's just defensible. But that's what makes this dangerous. People latch on to right answers in the space. And there's not necessarily right answers. There's more defensible and less

defensible approaches to constructing this. And then a lot of a great deal of uncertainty. So just want to couch that in there and say, this is going to be a learning experience. And the more you understand the uncertainty in the space, I think the better decisions you'll make. Good enough is a really good way to phrase what you should be aiming for here. Scott, I just had an idea. Why don't you take every single one of those options and make a calculator so people can run absolutely every single scenario? Impossible. I've tried. I've literally tried to do this. We just talked about some other show, but I can go on here and say, okay, now you take that and you want to build a calculator. Oh, then you have to put every state tax brackets in there and make sure that's updated. You have to run a tax

engine. You have to understand what the tax lot basis is and all your taxable brokerage accounts, how much receipts you've got for your HSA reimbursements. You know, you've got to have your return assumptions that are defended and toggled by each of these world-renowned researchers and how they define the return and standard deviation for various things. You got to say, I'm going to consider the factor zoo? That's a whole different thing. Like, you can find an academic paper that says stocks with the letter B in the name

perform better than the stocks of the letter F. You know, that's called the Factor zoo where people went back through the historical data and just like look like, like if you do enough of a large sampling, you can find a, a statistical case for a bizarre combination of things. So then you have that whole space, which, what do you assume for gold? Like all that goes through. Then you got to do the spending. It's impossible.

You know, it's a bold and projection lab do a good job with that. Not perfect. No one, I think it's impossible to do perfect. And even perfect would be an expression of your assumptions about how you frame the problem in the first place. So I have fun with this. I have had fun earning out with this. I will publish something eventually for my version of that.

But it will only be one version of the way to tackle the problem. And it will be full of holes that you can put. book. It's why it's as endlessly fascinating to me, as you can tell. No, it's not impossible, Scott. It's just a really, really, really big data set. So yeah, put every state and do every single HSA thing, a dollar amount, and do every, everything, and then you can get it done. Super easy. So suppose you have one guy who has like all of their wealth in the 401K. And then what do you assume for tax brackets going forward? Do you assume they're going to go up over the next couple of years? Do you assume, do you make that a toggle? How much? Assume every single one, Scott.

Yeah, like that's just one case. And somebody else has just the taxable brokerage and Roth and no pre-tax. Then that doesn't apply. So, I mean, it's just like the variable in your situation could be a, it's so fun. It's a puzzle that is endlessly complex, but also very simple if you just focus on good enough. Yeah, so you'll be able to find that in our resource page under Scott's endlessly complex Monty Carlo system. Yeah, the highly technical and complex way to build modest to moderately more wealth in retirement decubilation sequencing for early retirees. So we'll get there.

Just rolls right off the ton. That's right. Should we get out of here, Mindy? Yes, we should, Scott. But as always, you can find all of our awesome show partners at biggerpocketsmoney.com slash fi pro. That's F-I-P-R-O, like financial independence professionals for you. And you can sign up for our newsletter at biggerpocketsmoney.com slash newsletter.

All right, that wraps up this episode of the Bigger Pockets Money podcast. He is Scott Trench. I am Mindy Jensen saying got a scoot flute. If you've been putting off life insurance, I get it. The old process was miserable. Phone calls with an agent, a nurse coming to your house for a blood draw, then waiting weeks to find out what you'd pay for. That friction is exactly why so many people who should have coverage don't. Here's what I believe. Most BP money listeners need term life, and the right move is to build a ladder. A few term policies of different lengths stacked together, so your coverage steps down

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