A recent deep dive into my IRA with Empower confirmed what I already suspected: it’s finally time to enjoy life more in retirement. Thanks to updated research by Bill Bengen, widely regarded as one of America’s top retirement strategists, retirees can now consider a slightly higher safe withdrawal rate (SWR) — allowing more spending without jeopardizing financial security. (bengen.com)
Viewing Tax-Advantaged Accounts as Bonus Money
Since 1999, I’ve treated all tax-advantaged accounts — 401(k)s, IRAs — as bonus money. This mindset forced me to grow my taxable investment portfolio enough to support early retirement, while maxing out my 401(k) each year to ensure comfort after 60.
Early in my career, I realized I couldn’t endure 40 years of banking with its long hours and stress. I chose the “easier of two hard paths”: save aggressively and buy freedom sooner.
Being Conservative in Early Retirement
Retiring at 34 comes with limitations. Early withdrawals from a 401(k) or IRA incur a 10% penalty plus taxes, so I needed a conservative plan. My early retirement strategy included:
- Negotiating a severance package to cover initial living expenses.
- Building multiple passive income streams to cover basic needs.
- Earning supplemental income through Financial Samurai and occasional consulting.
- Coordinating my wife’s work timeline so she could retire at 35.
- Cutting expenses, including downsizing homes in 2014 and renting out the previous property.
Although conservative, these measures created stability. By 2015, both my wife and I were financially independent, even with two children and no steady paycheck.
The New 5% Safe Withdrawal Rate
Bengen’s latest book, A Richer Retirement, updates the SAFEMAX withdrawal rate from 4.15% to 4.7%, rounded to 5%, based on a 55% equities / 45% bonds portfolio. My IRA, at nearly 100% equities, exceeds this allocation, meaning I could withdraw 5% annually without depleting my savings over 30 years.
- Moving from a 4% to 5% withdrawal rate increases spending power by 25%.
- On a $1.5 million portfolio, that’s $60,000 → $75,000 per year.
- Additional Social Security or side income further boosts flexibility. (investopedia.com)
Since 2012, I haven’t touched my retirement principal and continue saving ~30% of supplemental income annually, averaging $16,000/year into my Solo 401(k).
Why It’s Time to Stop Being Frugal
At nearly 50, I don’t want to regret not enjoying retirement. Early retirement has had challenges — from paying $2,500/month for unsubsidized health insurance to maintaining investments — but the experience has been rewarding.
Being a near-50 retiree is easier than being in your mid-30s: more experience, grounded perspective, and less stress about the unknown. With careful planning, even responsibilities like raising children and supporting parents are manageable.
How Retirement Portfolios Grow Over Time
Leaving my principal untouched since 2012, my accounts grew alongside the market. For example:
| Year | Start Balance | Withdrawal | S&P 500 Growth % | End Balance |
|---|---|---|---|---|
| 2012 | $3,000,000 | $120,000 | 16.0% | $3,340,800 |
| 2013 | $3,340,800 | $120,000 | 32.4% | $4,257,939 |
| 2025 | $12,285,460 | $120,000 | 10.0% | $13,550,006 |
- 5% withdrawal: ~$10 million today from $3 million in 2012
- 7% withdrawal: ~$4 million today (average from 400 retirees studied by Bengen)
Even a balanced 60/40 portfolio yields strong growth:
| Withdrawal Rate | 2025 Ending Balance |
|---|---|
| 4% | $5,959,300 |
| 5% | $5,146,696 |
| 6% | $4,438,007 |
| 7% | $3,820,844 |
A 5% withdrawal rate remains reasonable, as the portfolio still grows ~70% after 13 years. Using historical 60/40 returns (~8.2%), even 4% withdrawals could result in ~$38 million nominal after 50 years.
Why You Should Enjoy Your Wealth
If you’ve invested diligently since 2012, your wealth is likely higher than expected. With discipline, the next step is learning to enjoy your portfolio without guilt. Frugality is optional now — the math shows staying invested generally increases wealth over time.
Free Financial Analysis From Empower
If you have $100,000+ in investable assets, sign up for a free financial check-up with Empower. Experts can uncover hidden fees, optimize allocations, and provide personalized recommendations. (empower.com)
Final Thoughts
- The new 5% SWR gives retirees more spending power.
- Consistent investing and disciplined withdrawals can grow portfolios significantly.
- Early retirement doesn’t have to mean extreme frugality — with the right plan, you can enjoy life while staying financially secure.
