Safe Withdrawal Rate for Early Retirees & What It Means for Retirement

* The 4% rule is actually very safe for a 30-year retirement

* A withdrawal rate of 3.5% can be considered the floor, no matter how long the retirement time horizon

-“Safe Withdrawal Rate for Early Retirees“, MadFientist.com. October 19. 2015.

I thought this was interesting because it gives you a target for retirement. According to the American Community Survey, the median household income in the United States was $62,860 in 2019. Median earnings for a worker was $41,537 (Table A-6). Thresholds for poverty for a single person are $13,300 if they are below 65 years of age and $12,261 if they are older than 65 years old (Table B-1). Let’s calculate:

  • $12,261 / 0.035 = ~$350,315
  • $13,300 / 0.035 = ~$380,000
  • $41,537 / 0.035 = ~$1,186,772
  • $62,860 / 0.035 = ~$1,796,000

Now, let’s go the other direction. How long would it take you to reach these thresholds, if you managed to save 20% of your total income?

  • $350,315 / ($12,261 * 20%) = ~142 years
  • $380,000 / ($13,300 * 20%) = ~155 years
  • $1,186,772 / ($41,537 * 20%) = ~143 years
  • $1,796,000 / ($62,860 * 20%) = ~142 years

Since we are multiplying by 0.035, it is obvious these numbers would all be around the same. Equally obvious, you either need to quadruple the savings rate or the annual salary, or double both, in order to retire after 35 years of work.

Which really brings us to the point of this exercise, the only people that can look to be an early retiree are either a) using leverage to build equity, such as real estate and renting, b) investing in some kind of investment vehicle that returns at least a 7% rate of return (using the rule of 72, this gives us a doubling of savings roughly every 10 years), or c) radically increase your savings rate by living as frugally as possible, or d) have a much higher than median salary.

Doing the calculations over with a 7% interest rate, it takes about 35 years with a 20% savings rate for every income level mentioned above to get the necessary savings to do a safe withdrawal rate that replaces income. It’s rather sobering when you work through the numbers when someone starts talking about safe withdrawal rates and early retirement. Who is this advice for?

It can be done. If you are smart enough to do this kind of calculation before you go to work, you have a relatively high income, you pool your resources with a partner, you get a sizable inheritance, you get involved with index funds early or you do real estate. These are the options. Otherwise, you are working your whole life.

Cryptography from the Ground Up

“One of the most interesting and useful things computers can do for us is cryptography. We can hide messages, validate identities, and even build entire trustless distributed systems. Cryptography not only defines our modern world, but is a big part of how we will build the world of the future.

However, unless you want to dedicate years and a PhD to studying the subject, the actual workings of cryptography can be hard to learn. It can involve a lot of pitfalls and if you dare build from scratch, you are bound to make a fool of yourself. Why?

In my opinion, it comes down to history. Cryptography has had centuries of methods that have been made, broken, and remade again. Most tutorials on cryptography focus on the what: do this, don’t do that, follow the rules. But they skip over the why: why do we do the things we do? What are we trying to avoid?

To understand the why, we need to understand how we got here in the first place. And to do that, let’s set computers to the side for the moment and delve into the world of classical cryptography.”

https://cmdli.github.io/crypto/

OKIDO Magazine

“OKIDO’s philosophy is a simple one: every child is a creative scientist.

The OKIDO world immerses young children in a spectrum of playful activities and media, all intelligently designed by science and education experts. 

Whether watching the TV show ‘Messy goes to OKIDO’, engaging in family events and school workshops, or reading high quality publications and products, OKIDO children learn through play.

At the heart of it all lies STEAM learning (that’s science, technology, engineering, the arts and mathematics). Everything in the OKIDO world is designed by science and education experts to encourage collaboration, curiosity, exploration, discovery, creativity and critical thinking.

WHERE DID IT ALL START?

Messy grew up on the pages of OKIDO Magazine. An independent publication started by parents from a kitchen table in Brixton in 2007, it was designed to fire up young imaginations and spark a life-long love of art and science. Today its founders, scientist Dr Sophie Dauvois (PhD BSc PG Dip.) and artist Rachel Ortas, are still every bit as passionate about engaging young kids in the scientific world around them using play, art and fun.

FOR WHO? EVERYONE, OF COURSE!

OKIDO’s fun and games are for all genders. The OKIDO world is a stereotype-free zone, because we believe in promoting equality for all children.

OKIDO

Math: Ambiguity & Order of Operations

“The real answer, the one I believe any mathematician, physicist, engineer, other number-cruncher would tell you is to make sure your
expressions aren’t ambiguous. There’s no extra charge for another set of parentheses. Just toss them in. If you want the answer to be 16, write (8÷2)(2+2). If you want it to be 1, write 8÷(2(2+2)). Problem solved.”

—Evelyn Lamb, “The Only Way to Win Is Not to Play the Game.” Scientific American. August 3, 2019.

Greg Egan and the Permutation Problem

“Then on September 26 of this year, the mathematician John Baez of the University of California, Riverside, posted on Twitter about Houston’s 2014 finding, as part of a series of tweets about apparent mathematical patterns that fail. His tweet caught the eye of Egan, who was a mathematics major decades ago, before he launched an award-winning career as a science fiction novelist (his breakthrough 1994 novel, in a happy coincidence, was called Permutation City). “I’ve never stopped being interested in ,” Egan wrote by email.

Egan wondered if it was possible to construct superpermutations even shorter than Houston’s. He scoured the literature for papers on how to construct short paths through permutation networks, and after a few weeks found exactly what he needed. Within a day or two, he had come up with a new upper bound on the length of the shortest superpermutation for n symbols: n! + (n-1)! + (n-2)! + (n-3)! + n-3. It’s similar to the old factorial formula, but with many terms removed.”

—Erica Klarreich. “Mystery Math Whiz and Novelist Advance Permutation Problem.” Quanta. November 5, 2018.

Greg Egan’s hard sci-fi novels are amazing. Axiomatic is a collection of short stories that can give you a sense of what to expect. Read Diaspora if you want to jump right into the deep end. Read Quarantine if you want to take on a series.

Better Thought Technology 

“Technological innovation, in the conventional sense, won’t help us slow the publishing process back down. Slowing down requires better thought technology. It requires a willingness to draft for the sake of drafting. It requires throwing away most of what we think because most of our thoughts don’t deserve to be read by others. Most of our thoughts are distractions—emotional sleights of the mind that trick us into thinking we care about something that we really don’t—or that we understand something that we really don’t.”

—Eddie Smith, “From boiling lead and black art: An essay on the history of mathematical typography.” Practically Efficient. October 13, 2017.

Pretty good overview of the history of mathematical typography.

Mathematical Secrets of Ancient Tablet Unlocked After Nearly a Century of Study

“Our research reveals that Plimpton 322 describes the shapes of right-angle triangles using a novel kind of trigonometry based on ratios, not angles and circles. It is a fascinating mathematical work that demonstrates undoubted genius.

‘The tablet not only contains the world’s oldest trigonometric table; it is also the only completely accurate trigonometric table, because of the very different Babylonian approach to arithmetic and geometry. This means it has great relevance for our modern world. Babylonian mathematics may have been out of fashion for more than 3,000 years, but it has possible practical applications in surveying, computer graphics and education. This is a rare example of the ancient world teaching us something new.’”

—Kennedy, Maev. “Mathematical secrets of ancient tablet unlocked after nearly a century of study.” The Guardian. August 24, 2017.