Sleeping Soundly Thru a Market Crash: The Wasting Asset Retirement Model

Back in July 2017, I found myself up in the far north of Maine looking out at the Atlantic Ocean. I was a guest of one A. Noonan Moose.

Mr. Moose owns the beach house with this lovely view where we were guests and it is a far more impressive place than my little shack. The first time I met him was when I showed up on his doorstep to spend a few days.

See, he actually didn’t invite me. Mr. 1500 Days did.

“I’ll be up there with my family,” he said. “Come join us.”

“Thanks,” I said. “But perhaps we should ask Mr. Moose?”

“No worries. I did. He says it’s fine.”

“Mmmm. All the same, I’d like to hear it from Mr. Moose himself.”

This was not the first time Mr. 1500 had invited me to this Maine retreat he doesn’t actually own. But it was the first time I could get confirmation that Mr. Moose was onboard with the idea.

Mr. 1500 does this. He has done it to us when we were staying at my in-laws’ beach house. This is how I met Physician on FIRE, a great blogger and who is now a great friend. So, I’m not complaining.

Just pointing out, if you have a beach house or access to one and you know Mr. 1500 he’s gonna visit and invite some friends. Fortunately, you’ll like his friends.

Anyway, when I arrived Mr. Moose and Mr. 1500 were boiling the water for the unsuspecting lobsters that were our delicious dinner that evening. I felt welcome immediately and Mr. Moose and his lovely wife and I hit it off just fine. Seeing Mr. 1500 wasn’t too bad either.

A couple of days in, Mr. Moose started telling me about WARM, his retirement strategy. As he went on about how he holds almost no stocks (Stocks are essential for a portfolio’s long-term survival!) and mostly cash (I hate holding cash!) alarm bells were clanging in my head.

But I kept quiet and listened respectfully. I was, after all, a guest and enjoying his splendid hospitality. But inside my objections were raging and my eyes were rolling.

As I left, he handed me a few pages. “This,” he said “is an article I wrote about WARM in case you might be interested.” I politely took it with thanks and, sure I’d never glance at it, tossed it on my desk when I got home.

But a few days later I noticed it sitting there and I did pick it up. I started reading. The prose was clear and the ideas well presented. All those alarm bells? He had thought about and addressed them.

To be clear, this is not an approach I’d use or recommend to the readers of this blog. At least not most of them.

Since I began this blog in 2011, with rare minor corrections, the stock market has done nothing but go up. Anyone who has followed my advice has done nothing but make money.

But anyone who has actually read my advice knows I am always warning that the stock market is a very volatile beast and it provides a gut wrenching ride. “There is a Major market crash coming!!!” screams the title of the first post in my Stock Series. Over and over I say: Expect the market to periodically drop. Sometimes hard. This is normal. A part of the process.

And, for the last eight years, the market does nothing but go up. Where’s the big drop you need to prove your point when you need it?

Someday that will change. Those of you who lived thru 2008-9 with major money invested know what it is like and you know if you can grit your teeth, ignore it, not panic and ride it out. Or not. But unless you’ve lived through it, it is impossible to describe just how ugly it can be.

If those last few lines have you nervous, well good. It is easy, probably way too easy, to sit here basking in warm glow of relentless year-over-year market gains and think: Sure. No problem. I can weather the storms if they come.

(No, no, no, no!!!! Not “if” — When! When, dammit, when I tell you!! When!!)

Unless you are absolutely certain you can watch your net worth get cut in half with no end in sight and shrug your shoulders, ignore the panic and go about your day… Now is the time to reconsider.

Know thyself. Decide now that selling during a market plunge is simply not an option. If you can’t, if you are thinking dealing with such a trauma is more than you ever want to face (and who can blame you?), you’ll need another plan.

Because my advice here only works for the long-term if you stay the course. Panic and sell when the storm comes and you would have been better off in cash. Which leads us nicely to Mr. Moose and his WARM approach…


How to Sleep Soundly while Stock Markets Crash

by A. Noonan Moose

Retirement advisors must hate me. They call regularly, but they’re never hired.

Why not?

Ever since I retired in 2008, I’ve been executing my own plan for the future. I don’t need to hire experts because my approach is so simple, so boring, and so reliable that I can easily handle everything myself.

Best of all, my retirement plan is powered by something that’s largely within my control (household spending) rather than by something that’s beyond my control entirely (stock market returns).

If stocks were powering my retirement, I wouldn’t always sleep so well. But through any market turmoil I snooze away just fine.

Here’s why.

To implement my simple, boring, and reliable retirement plan you need to know only three numbers:

  1. your age
  2. your annual household spending
  3. your net worth

Like I said, it’s a simple plan. Here’s an example:

  1. John Dough is 50 years old and so is his wife Jane;
  2. their “burn rate” annual household spending averages $40,000 per year; and
  3. their net worth is $2 million.

Are the Doughs in solid enough shape to retire at age 50?

Yes, they are.

How do I know?

Because their net worth is enough to cover 100 percent of their spending needs for the next 50 years. The math is so easy a third grader could do it: $2,000,000 net worth / $40,000 burn rate = 50 years.

But how can I know whether 50 years worth of spending will be enough?

Statistics. According to the US Census Bureau, only 0.02 percent of citizens live to see their 100th birthday. That’s 1 in every 5,000 persons.

Thus, as long as the Doughs’ adapt reasonably to inflation (more on this below) the odds are very high that their money will outlast their lives.


My simple approach to retirement treats a nest egg like a “wasting asset.”

A wasting asset is an asset that has a limited lifespan and thus loses value over time. Eventually, the asset’s worth drops to zero (or slightly above zero if the item has scrap value).

Your refrigerator is an example of a wasting asset. You buy it new for $1,000 or so. After that its resale value declines steadily until it stops working whereupon you haul it to the junkyard.

Our nest eggs can be treated like wasting assets because we ourselves are wasting assets. Inevitably, human bodies decline just like refrigerators do (our remains might avoid the junkyard, but not the boneyard). When we depart, our wealth is worth nothing to us because we can’t possibly access the money and of course we’re too dead to care.

The WARM method for retirement planning can be presented as a simple chart (see below). If you know your annual burn rate and the years you’ll be retired, the chart shows how big a nest egg you need. If you know your annual burn rate and net worth, the chart shows how long your money will last if you treat it like a wasting asset.

Wasting Asset Retirement Models
Annual Burn Rates of $20k-$100k and Retirements of 35-65 Years    



45 50 55 60


$20,000 $700,000 $800,000 $900,000 $1,000,000 $1,100,000 $1,200,000 $1,300,000
$25,000 $875,000 $1,000,000 $1,125,000 $1,250,000 $1,375,000 $1,500,000 $1,625,000
$30,000 $1,050,000 $1,200,000 $1,350,000 $1,500,000 $1,650,000 $1,800,000 $1,950,000
$35,000 $1,225,000 $1,400,000 $1,575,000 $1,750,000 $1,925,000 $2,100,000 $2,275,000
$40,000 $1,400,000 $1,600,000 $1,800,000 $2,000,000 $2,200,000 $2,400,000 $2,600,000
$45,000 $1,575,000 $1,800,000 $2,025,000 $2,250,000 $2,475,000 $2,700,000 $2,925,000
$50,000 $1,750,000 $2,000,000 $2,250,000 $2,500,000 $2,750,000 $3,000,000 $3,250,000
$55,000 $1,925,000 $2,200,000 $2,475,000 $2,750,000 $3,025,000 $3,300,000 $3,575,000
$60,000 $2,100,000 $2,400,000 $2,700,000 $3,000,000 $3,300,000 $3,600,000 $3,900,000
$65,000 $2,275,000 $2,600,000 $2,925,000 $3,250,000 $3,575,000 $3,900,000 $4,225,000
$70,000 $2,450,000 $2,800,000 $3,150,000 $3,500,000 $3,850,000 $4,200,000 $4,550,000
$75,000 $2,625,000 $3,000,000 $3,375,000 $3,750,000 $4,125,000 $4,500,000 $4,875,000
$80,000 $2,800,000 $3,200,000 $3,600,000 $4,000,000 $4,400,000 $4,800,000 $5,200,000
$85,000 $2,975,000 $3,400,000 $3,825,000 $4,250,000 $4,675,000 $5,100,000 $5,525,000
$90,000 $3,150,000 $3,600,000 $4,050,000 $4,500,000 $4,950,000 $5,400,000 $5,850,000
$95,000 $3,325,000 $3,800,000 $4,275,000 $4,750,000 $5,225,000 $5,700,000 $6,175,000
$100,000 $3,500,000 $4,000,000 $4,500,000 $5,000,000 $5,500,000 $6,000,000 $6,500,000

You’ll notice this chart says nothing about investment returns. That’s because WARM distinguishes between: (1) your accumulative years, when you buy stocks to grow wealth; and (2) your post-accumulative years, when you avoid stocks to preserve wealth. Once your nest egg grows large enough to fund your desired term of retirement (see chart above), you transition your portfolio to safer assets.

In our household, for example, our nest egg has grown large enough to last us both past age 100 as long as we adapt reasonably to inflation (more on this below). Accordingly, we can afford to maintain a conservative asset allocation: 6.51 percent in stocks, 27.94 percent in real estate, and 65.55 percent in money markets/bonds.

Most professional advisors would deride our asset allocation as unduly timid, but our response to them is this: if we already have enough assets to both reach age 100, why should we expose ourselves to unnecessary risk? We’re frugal, not materialistic. We harbor no ambitions to suddenly become big spenders. Any gains we achieved from stocks would be entirely superfluous to our need and any big losses might send us scurrying back to the workforce. We therefore follow a retirement plan that avoids market turbulence, which is something we can’t control, and leverages our ability to manage household spending, which is something we do very well.

In other words, with this conservative approach to retirement, we sleep both safe and WARM.


What happens to you if inflation rears its ugly head?

If inflation grows, it won’t happen overnight. We’ll have enough advance warning to cut our discretionary spending. Our current lifestyle reflects many luxuries. Relatively painless cuts of 25 percent or more are well within reach. If absolutely necessary, we can also invest in greater risks that offer the prospect of larger returns.

But then again, if inflation grows we might just stick with our existing plan. Such a response is possible because WARM includes two baked-in hedges against rising prices.

First, WARM†ignores the money we’ll receive from social security. Retired workers currently average $16,220 in social security benefits per year and our household contains two retired workers. By law, social security benefits increase each year in lockstep with the Consumer Price Index. Sure, a glut of baby boomers is straining the system’s finances and this may reduce future benefits. But reduced benefits are not the same as zero benefits. Social Security will continue to exist in some form or other. And its steady income stream will offset inflation.

Second, WARM assumes that our annual expenses will remain level until we die. In reality, our spending will drop off long before we do. The Employee Benefit Research Institute reports:

“Household expenses steadily decline with age. With the age 65 expenditure as a benchmark, household expenditure falls by 19 percent by age 75, 34 percent by age 85, and 52 percent by age 95.”

Why the big declines? Simple answer: although oldsters spend more on medical care as they age, they also spend much less on travel and entertainment. Accordingly, inflation in later life is offset by lower living costs.

What about your longevity risk?

We believe we’ve adequately accounted for longevity risk by accumulating enough assets to get us both past age 100. In any event, if future medical advances dramatically extend current lifespans we can always reduce our burn rate and, if absolutely necessary, increase our exposure to stocks.

What about leaving a legacy for the next generation?

We have no children and we don’t believe in dynastic transfers of wealth to our nearest relatives. Our attitudes about inheritance are informed by our experience. People who expect big windfalls tend to coast, thus denying themselves the fulfillment that comes from productive pursuits. So instead of crushing the work ethics of our nieces and nephews, our estate plan funds several deserving charities that we’ve supported for decades. Our legacy will help many people instead of just a few lucky heirs.

By the way, please feel free to disagree with our estate plan. We know it’s not for everyone. But if you want to enrich your relatives, you need to gauge how much portfolio risk to undertake in order to reach that goal. Fair warning: rides in the stock market sometimes get rocky.

What are the tax implications of WARM?

Current federal policies, especially in the setting of interest rates, favor debtors over savers. As a result, our cash holdings haven’t produced much income each year, we end up in the 10 or 15 percent federal tax bracket. But our low brackets have produced some helpful side benefits. For instance, Obamacare premium tax credits regularly subsidize our health insurance costs. Moreover, the tax code exempts us from paying taxes on capital gains and qualified dividends. 

How does WARM compare to the Four Percent Rule?

The Four Percent Rule is a well-known formula for funding retirements that last as long as 30 years, which is the outer reach of traditional financial plans (quit at 65, die at 95). Under this rule, new retirees withdraw 4 percent of their nest egg to fund first year expenses and then in each successive year they adjust that dollar amount upwards for inflation. See New Math for Retirees and the 4% Withdrawal Rate, T. Bernard (New York Times, 05/18/2015).

Importantly for risk avoiders, the Four Percent Rule assumes that the retiree’s portfolio is split evenly between stocks and bonds. In contrast, a WARM retiree’s portfolio can afford to have a much smaller position in stocks (in the case of our household, less than seven percent).

WARM retirees have to pay for their ability to sleep soundly through market gyrations there’s no such thing as a free lunch. The best way to explore the necessary trade-offs is to review this chart.

4% Withdrawal Rule vs. WARM for a 30 Year Retirement
Burn Rate 4% Rule Nest Egg WARM Nest Egg Percent increase
$20,000 $500,000 $600,000 20.00%
$25,000 $625,000 $750,000 20.00%
$30,000 $750,000 $900,000 20.00%
$35,000 $875,000 $1,050,000 20.00%
$40,000 $1,000,000 $1,200,000 20.00%
$45,000 $1,125,000 $1,350,000 20.00%
$50,000 $1,250,000 $1,500,000 20.00%
$55,000 $1,375,000 $1,650,000 20.00%
$60,000 $1,500,000 $1,800,000 20.00%
$65,000 $1,625,000 $1,950,000 20.00%
$70,000 $1,750,000 $2,100,000 20.00%
$75,000 $1,875,000 $2,250,000 20.00%
$80,000 $2,000,000 $2,400,000 20.00%
$85,000 $2,125,000 $2,550,000 20.00%
$90,000 $2,250,000 $2,700,000 20.00%
$95,000 $2,375,000 $2,850,000 20.00%
$100,000 $2,500,000 $3,000,000 20.00%

As the chart reveals, retirees who follow the Four Percent Rule can convert to a WARM retirement in three different ways.

First, they can switch to WARM by amassing a 20 percent larger nest egg. This means lingering longer in the workforce or extending their exposure to the stock market.

Second, four percenters can reach WARM by cutting expenses. For example, retirees with burn rates of $40,000 need a $1 million nest egg to fund a 30-year retirement under the Four Percent Rule (see chart above). If, however, these retirees reduce their spending to $35,000, a similar-sized nest egg funds a switch to WARM. (Those who enjoy frugal living will likely prefer spending cuts to longer stays in the workforce.)

Third, to reach WARM retirees can combine larger nest eggs with lower†burn rates in whatever mix they find most palatable.

*†† *†† *

To sum up:

WARM elevates expense management (which you can control) over portfolio performance (which you can’t control). In the process, WARM lowers the risk of outliving your money, removes the need for expert advisors, and cuts income taxes. The price you pay for all this tranquility is: (1) a slightly larger nest egg; (2) a slightly lower burn rate; or (3) a thoughtful mix of each.

So what do you think of WARM? Is it something you would consider or is it too conservative for your tastes?

Please let me know by leaving your heated comments below. 😉


As he indicates in the last line above, Mr. Moose has promised to tune in and respond to your questions, concerns and challenges in the comments below.

As for me, I’ll stick with the approach I describe here on the blog and in The Simple Path to Wealth. But then, I know I’ll stay the course when the storms arrive. But the question you have to ask yourself, and that only you can answer, is: Will you?


Addendum:  The Mad Fientist interviews Michael Kitces, who is one of the great researchers on the 4% rule and retirement strategy. An important and fascinating conversation.

A while back I had a blast with Brad & Jon on their podcast Choose FI. So we did another:

 Stock Series, Part II

and their follow-up conversation about it


If you are interested, here’s a link to more of my…

podcasts, videos and interviews


Audio book: The Simple Path to Wealth


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Important Resources

  • Talent Stacker is a resource that I learned about through my work with Jonathan and Brad at ChooseFI, and first heard about Salesforce as a career option in an episode where they featured Bradley Rice on the Podcast. In that episode, Bradley shared how he reached FI quickly thanks to his huge paychecks and discipline in keeping his expenses low. Jonathan teamed up with Bradley to build Talent Stacker, and they have helped more than 1,000 students from all walks of life complete the program and land jobs like clockwork, earning double or even triple their old salaries using a Salesforce certification to break into a no-code tech career.
  • Credit Cards are like chain saws. Incredibly useful. Incredibly dangerous. Resolve to pay in full each month and never carry a balance. Do that and they can be great tools. Here are some of the very best for travel hacking, cash back and small business rewards.
  • Empower is a free tool to manage and evaluate your investments. With great visuals you can track your net worth, asset allocation, and portfolio performance, including costs. At a glance you'll see what's working and what you might want to change. Here's my full review.
  • Betterment is my recommendation for hands-off investors who prefer a DIFM (Do It For Me) approach. It is also a great tool for reaching short-term savings goals. Here is my Betterment Review
  • NewRetirement offers cool tools to help guide you in answering the question: Do I have enough money to retire? And getting started is free. Sign up and you will be offered two paths into their retirement planner. I was also on their podcast and you can check that out here:Video version, Podcast version.
  • Tuft & Needle (T&N) helps me sleep at night. They are a very cool company with a great product. Here’s my review of what we are currently sleeping on: Our Walnut Frame and Mint Mattress.


  1. Syed says

    Interesting, and conservative, approach. Like you stated it all comes down to your constitution and if you can ride out market drops. The recent near decade of market gains has ignited the FIRE movement, so it will be especially interesting to see the effects there.

    It would be wise to just consider a market drop as a sale on stocks and contribute as much as you have been. At that point I would just look at increasing my number of shares rather than focusing on the money in my accounts. So I will stay on The Simple Path to Wealth.

    • A Noonan Moose says

      Thanks for the terrific comment Syed!

      I agree with you that big market drops are great opportunities to increase one’s equity position. If such a big drop occurs, I’ll likely wade a tad deeper into equities for the modest and limited purpose of improving our household’s defense against possible future inflation. But we’ve moved out of our accumulative years and into our post-accumulative years. At this late date (I’m 58 and Mrs. Moose is 51), we aren’t motivated by a desire to add huge amounts to our net worth.

  2. G-dog says

    Interesting strategy – good to see the comparison tables to help the data sink in. This used to be the only option most Americans had – besides not retiring – before investing became a real option for more.
    Since I have apparently “over saved” – this lets me know that if market volatility becomes a risk I cannot tolerate, I can easily switch to this strategy and still be OK.

    • A Noonan Moose says

      Thank you so much for taking the time to comment G-dog.

      I should reiterate here that we were in fact heavily invested in the stock market for many years before I retired in 2008, so WARM does in large part depend upon equity returns. Without the helpful growth of our stock investments while we were still working, we never would have been able to retire so young (me at age 48 and Mrs. Moose at age 46).

      • G-dog says

        Thanks for the note.
        I was heavily in equities during accumulation phase also. I still am – I was 54yo when I learned more about how much you need to retire (SWR, ETC.). I retired 2 years ago at 55yo. So far, so good.
        But, it is good to see that you are several years into your retirement, and this strategy is still working for you.

  3. Liz says

    I like this, not because it is what I plan to follow (we weathered 08-09 just fine), but because it lays out an alternative so clearly and logically and simply that should the need arise for such a plan, he has provided a good starting point for someone willing to consider another angle. Our society has changed so rapidly and we are young enough that we do not know all that can or will change within our lifetime. I’m not necessarily talking about disaster, but also evolution.

    • A Noonan Moose says

      Thanks for the comment Liz!

      As you note, WARM is an alternative way of looking at retirement. It definitely is not for everyone. But Mrs. Moose and I have been wandering this path since I retired in 2008 and she left the work force in 2012. So far things have been working out just fine.

  4. Mr. PIE says

    The Mr Moose strategy does not give me the warm and fuzzies. A 30% market drop and sluggish recovery will have Mr Moose getting all hot and bothered. Another dip in the market and he’ll be dipping in the nearby pond, maybe never surfacing again, with that low equity allocation as his thin lifeline.

    I’ll stick with the boring 70:25:5 equity:bonds:cash and be cool with it.

    Enjoy the fall leaves Mr. Moose!!

    • A Noonan Moose says

      Thanks for the comment, Mr. 3.14!

      Moose does indeed enjoy fall leaves and wading into nearby ponds. Refreshed by these lush natural surroundings (and more importantly by his ever present stash of cash) Moose would likely be a modest buyer of stocks in the event of a 30% market correction–even he can’t resist such a bargain. But even then, his overall allocation will remain overwhemingly weighted in bonds and money markets. He much prefers lilly covered ponds to the shark infested waters of the equities markets.

  5. ZJ Thorne says

    This is definitely conservative, and should work. I’m with you on not allowing my heirs to coast off of my work. This is why I am planning on engaging in stealth wealth. I want anything they get from me to be an unexpected bonus, but not enough so that they can not make their own way in the world. My assets are destined for my college and a few nonprofits I have personally worked with and respect.

    • A Noonan Moose says

      WARM provides a plush security blanket for the risk adverse, and I freely admit that Mrs. Moose and I fear market volitility. Thanks for sharing in a general way your plans to benefit nonprofits–we too get great pleasure from knowing that several charities we care about will receive a stealthy bonus once we’ve finally cashed it all in.

  6. FullTimeFinance says

    It kind of reminds me of Bernstein’s comment a few years ago, “if you won the game, why keep playing”. At some point you have enough that you don’t need risky assets, at least if your not thinking legacy. It doesn’t fit me.

    • A Noonan Moose says

      That’s a great quote!

      I don’t believe we’ve quite won the game as yet because we have so many years left to live our lives in FIREed up freedom. I guess we’ve just changed from relying heavily on our offense (stock market investing before the Great Recession) to relying heavily on our defense (using Roth Conversions to limit our taxes, maximizing our Premium Tax Credit each year under Obamacare, living cheap but still loving life, etc.). The game continues!

      • Grant says

        I think Bill Bernstein means the game of reaching financial independence, not the game of life. He means once you have enough, put those assets in safe, inflation protected TIPS ( a 30 year TIPS ladder), inflation protected annuities and the rest in risk assets.

        Interesting post, Mr. Moose! I’d be concerned about inflation risk, though. We humans are hard wired to better understand short term risk rather than long term risk.

  7. JonE says

    Although I don’t have a cool acronym for my plan, it would fall somewhere between Mr Mooses’ (Mice?) WARM plan and Mr. Collins’ TOO HOT plan. I’ll call it the…

    STEAM – Savings, Time, Equities & Account Management plan!

    For the past – ummm…long time?? – I have fully funded my traditional TSP using a “one notch too hot” lifecycle fund, as well as a ROTH (100% equities with VG) each year, plus a few dollars additional away in a taxable account (50% VTSAX, 50% muni bonds), as well as paid additional on my mortgage and save a considerable amount of cash each month. I’m on my last 10 year leg and very much on track to retire at the federal minimum retirement age with no mortgage.

    Over the past 3-4 years though I have not increased the amount of money going to my taxable account but have maintained about a 75% allocation to equities across the investment accounts. Pay raises and manna from heaven have been allocated to building cash.

    My original plan was to enter retirement with a pretty typical 50/50 stock/bond split with about 2 years of cash in the bank. Post retirement I had planned to increase equity exposure slowly back to about 70%. However, this post will make me relook some of the numbers. I can withstand Mr. Market’s drunken binges but only because I know that I have a slug of cash and a slug of muni bonds as ballast for the ship.

  8. Jenny says

    This is all fine and dandy, and I’m certainly a fan of thrifty living. But Mr Moose has already met the goal that (I’m assuming) most of us are reaching for. Like Mr FullTimeFinance says, he’s already won the game. It’s smooth sailing from here on. This plan really seems to be geared towards folks who are already financially independent, or very close. Personally, I’d like to hear more about how Mr Moose got to that point. Congrats on the achievement! I’m working on getting to that point myself 🙂

    • A Noonan Moose says

      Thanks for commenting Jenny!

      You asked how we reached FI, which is a very fair question to ask. You’ll be glad to know that we did it the same way that you’re probably doing it. There’s no real magic involved, we just kept doing the same thing every year for two decades: (1) living well by living well below our means (depending on the year, our annual savings rate ran between 20% – 55% of our gross income); (2) maxing out our contributions to all available retirement accounts and Health Savings Accounts; (3) using Excel spreadsheets to watch and control every dollar spent for 20 years; (4) tracking net worth on a monthly basis for 20 years. We invested heavily in the stock market while we were both working. But when I retired in 2008, I converted most of our stock holdings to cash positions–not because I was smart enough to foresee the big sell-off in equities, but because I was closing out my 401k accounts at work and rolling them over into IRAs (converting to cash was the easiest way to get that done).

      I’m glad you’ve made FI a personal goal. By refusing to live paycheck-to-paycheck you’re already enjoying a huge measure of freedom that most US consumers can only dream about.

      • Jenny says

        Thanks for the reply AND confidence boost! Hearing stories like yours give me encouragement. I feel very privileged that I have had some extremely inspirational people in my life that urged me to save, invest, and live below my means. Most importantly, I took that advice and used it! I still have a long ways to go!! No doubt about that. Ive had a stroke of bad luck recently with work and actually could not work due to an injury. I hated living off savings for 4 months, but I was able to, where so many people can not. I’m slowly getting back to work, but the money isn’t coming in like it used to. That will just take some time. My current “dilemma” is pondering what I should do with 10K I “inherited” from a custodial account. With the market being at record highs, I don’t know if I should hold it in cash until the market goes down, and then buy VTSAX? Or just do it now? I just don’t know. hmmmm…

  9. DP says

    The precision here is pretty hilarious:
    6.51 percent in stocks, 27.94 percent in real estate, and 65.55 percent in money markets/bonds.

    So, what’s the “real estate” investment? Is that personal residence, REIT, rental property, or something else? Kind of seems like a big part of the strategy to leave unexplained.

    • A Noonan Moose says

      Moose strives for accuracy on percentages DP!

      We don’t really have a real estate strategy. We own a winter home in Boulder Colorado (which provides a very healthy return on investment) and a summer home on the coast of Maine (where the veiw is a lot better than the return on investment). We own both houses free and clear of mortgages, but if we ever need to tap into the value they represent we can put one of them up for sale.

  10. Fuzz says

    This doesn’t offer a lot to the early retirement set. If your time horizon is 60 years, you double the savings for the WARM plan but keep the same savings for the four percent plan.

    I think if you plan on being around another 60-70 years, then you need to participate in the economy and “have your money work for you.” If you’re 60 with a huge nut and expect to die in your 80s, that’s less important.

    More power to him.

    • A Noonan Moose says

      Fuzz: thank you for the comment!

      You are correct that longer retirements cost more with WARM unless you’re willing to go whole hog on the commitment to frugality (the first chart above lays out the trade-offs). For example, Mr. Money Moustache reports that he is funding a family of three in Longmont Colorado for about $25,000 per year. With this frugal approach, he can fund a 60 year WARM approach to retirement with assets of only $1,500,000.

      I also have a quibble about your citation of the 4 percent rule, which is an approach to retirement that was designed for retirements lasting 30 years. For a 60 year retirement, retirement experts recommend a safe withdrawal rate of 3.5%. Here are some supporting cites you can Google: (1) Bengen, William P. “Asset Allocation for a Lifetime,” Journal of Financial Planning, August 1996 (3.5% optimal withdrawal rate for 45-year retirement time horizon); (2) Blanchett, David M. “Dynamic Allocation Strategies for Distribution Portfolios,” Journal of Financial Planning, December 2007 (withdrawal rate of 3.5% for a 40-year time horizon); (3) Kitces, Michael E, “20 Years of Safe Withdrawal Rate Research, The Kitces Report, March 2012 (for retirements of 40+ years, decrease safe withdrawal rate under 4% rule by 0.5%).

      • Dave says

        I agree with your quibble regarding the “4 percent rule” and the sources you cite.

        To me, the most daunting challenge to living frugally, especially before being MediCare eligible (forget the Medicare Trust Fund is problematic), is paying for health care and health insurance.

  11. Working Optional says

    An interesting approach. There are many paths to Rome, and ultimately its what works for you. If you have enough assets to outlast with a pretty conservative portfolio, then more power to you.

    • A Noonan Moose says

      WARM works for me, but I think it can also help solidify the thinking of those who are willing to invest in a balanced portfolio and adopt a chosen safe withdrawal rate (SWR).

      For example, if a 45 year WARM retirement at $50k per year costs $2,250,000 (see chart above) and a 45 year retirement at $50k per year with a 3.5% SWR costs a mere $1,428,571, most risk takers will choose the SWR approach. If they’ve kicked the tires on WARM, they’ll make this choice with a clear understanding of the amount they save—$821,429—through their willingness to undertake some equity risk.

  12. moneybag8988 says

    Does it have to be so complicated?

    (1) Graduate high school
    (2) Get a job and bum around until you want to go to college. try new things.
    (3) Graduate from college
    (4) Get a job that has a pension. (government or state job is good)
    (5) Buy a house and pay your mortgage for 30 years. Get the house you love!
    (6) Buy a car that you love!
    (7) work your 30 years. Do not waste sick days and cash them in to retire in 28 years.
    (8) Join your 401(k) plan and use an index fund (S&P 500 OR TOTAL MARKET) to invest in. Put every raise that you get in your index fund for the rest of your life.
    (8) When you retire, you have your pension, social security, and a paid off home.

    Note: Be careful. Avoid unwanted pregnancies and think long and hard about marriage. Ask your dad for advice if you know him. That license is a legal agreement between you and a woman and the STATE. Good Luck!

  13. James P. Ekdahl says

    I find Mr. Moose’s WARM plan to be an intriguing alternative. I’m a big fan of Jim Collins, and have read his book several times. I have learned and continue to learn much from him. As he emphasizes throughout his book and blog posts, you have to be sure you can ride out a wrenching market collapse without panicking. I’m not so sure I can. I worked hard and long to achieve FI, and watching losses mount would be tough. I suspect many folks are over estimating their ability to wait out a prolonged down market.
    A quick perusal of Mr. Moose’s chart indicates our nest egg can support us through our mid-90s, without even considering Social Security. It’s very tempting to make a switch over to the WARM plan! Or, it may just lead me to lower our equity allocation and sleep better.
    Thank you for providing valuable alternative perspective.


  14. A Noonan Moose says

    Great comment! It’s a testament to Jim Collins’ open-mindedness that he was willing to open up the doors of his site to consider an alternative way of funding retirement (even though he entirely disagrees with the WARM approach)!

    • vorlic says

      There’s a reason they call him The Godfather of FI. Not in the generosity sense, of course… In the sense he is happy to give The Opposition every opportunity to fall on his own sword! Not seen any horses’ heads yet, thankfully ????

      In all seriousness, it’s great to know there are a number of strategies. Mrs and I have made FI our goal. And yea, right now, we think we’re tough enough… Always need to get closer to the Monk, though… Simple Path for us at the moment, just wish she had discovered it 20 years ago!

  15. earlyretirementnow says

    WARM = worst advice regarding money

    I need an $80,000 p.a. withdrawal plus an inflation adjustment, most likely 2% p.a. Over a 60-year horizon, I’d need $4,8000,000 if I were to ignore inflation or $9,124,123 if I were to add up $80k plus 2% inflation annually. I don’t have that kind of cash. I have “only” 3 million dollars. With $3m initial capital and annual $80k withdrawals, I can likely make the money last due to the low withdrawal rate.
    Your WARM method allows me to withdraw only $50k per year ($3m/60). I’d rather start with my $80k and in the highly unlikely event of a 1929-repeat I might just reduce my withdrawals to $50k and still do no worse than the WARM method.

    • A Noonan Moose says

      ERN: thanks for the comment—although I respectfully dispute your very clever acronym!

      As my article recites, our adoption of WARM is largely powered by our adoption of frugality.

      As you point out, WARM is costly for big spenders like you. But for those who are more frugal and spend substantially less than $80k per year (yours truly among them) the asset requirements of WARM are more easily achieved. For example, Mr. Money Moustache runs his three-person household on a mere $25,000 per year and claims to be as happy as a clam. At that annual burn rate, a 60-year WARM retirement costs just $1.5 million, which is 1/2 of your stated net worth.

      I also agree that you can “likely” make your $3 million last 60 years with annual withdrawals of $80k, assuming that an even split exists in your portfolio between stocks and bonds. However, the thing I like about WARM is that it doesn’t rely on faith-based projections of future stock market returns which may or may not come to pass. Instead, it’s a simple application of indisputable math that any third grader can understand. This leaves me free to worry about whether tomorrow’s weather is favorable for kayaking or hiking or biking. I’ve spent the first nine years of my early retirement doing those things instead of worrying over a stock portfolio. So WARM has worked for me. I freely acknowlege it might not work for everyone.

      Thanks again for thinking and commenting about this approach to retirement!

      • earlyretirementnow says

        Haha, don’t take it personally! 🙂 I have done a lot of proprietary research on safe withdrawal rates ( and I think that a 4% rule is a bit too aggressive in today’s environment. But the 1/(100-age) rule implicit in the WARM rule is way too conservative. That would be 1.67% in our case. I can cut the necessary portfolio size in half when using my preferred SWR of around 3.25-3.5% with a portfolio of 80% stocks and 20% bonds.

        I also think the inferiority of WARM has nothing to do with frugality vs. my semi-frugality. The numbers are just scalable. Mr. Money Mustache lives on $25k per year but he retired a lot earlier than under the WARM rule. In his case, a retirement horizon of 70 years would imply a minimum portfolio size of $1.75m. He retired with less than $1m. Why would people in the FIRE community work for longer than necessary and build a portfolio twice the size? You miss the whole idea of FIRE if you try to save twice as much as you really need to. It’s like going to the airport 12 hours before the flight. True, you will never miss a flight but you also waste a lot of time.

        But nevertheless, thanks for the thought-provoking post. And thanks to Jim Collins for posting this!

  16. Sam says

    The serious danger with this approach is inflation. At a modest 3% inflation, in a mere 20 years John Dough’s $40,000 cash for spending will feel more like $20,000. And when he’s 90, it’ll only buy $12,000. That’s a pretty painful haircut.

    Having a TIPS ladder to match future basic needs is a much more responsible approach than cash or bonds.

    • A Noonan Moose says

      Good tip re: TIPS Sam!

      Inflation has been running well below 3% during the first nine years of my retirement so I haven’t given TIPS too much thought. TIPS seem to be a more conservative inflation hedge than stocks. But from a tax planning standpoint, I might prefer stocks to TIPS because as long as I keep within the 15% tax bracket, any qualified dividends on stocks are tax free and any realized capital gains are tax-free as well. With TIPS, I think I would have to pay at my marginal rate on the semi-annual interest payments.

      If inflation ever rears it’s ugly head, I’ll take a closer look at the TIPS option. Thanks for making this point!

    • Brose says

      In the $2MM / 50 year example, by the time you get to the end of the period your $40,000 in spending now has the purchasing power of $5,300 (using historic inflation from 1967-2017). I think that exceeds the limits that frugality can do for you. I agree, feels like the impact of inflation is underestimated.

      • A Noonan Moose says

        Inflation ramps up slowly, giving any rational adopter of WARM plenty of time to adapt. If inflation were to return to the bigger historic levels you reference, it would happen over the course of many months or even years. As a WARM retiree, I would start with spending reductions. If inflation continued to rise, I would become a buyer of stocks and an even more avid buyer of TIPS. (I haven’t bought any TIPS so far because since the date of my retirement inflation has been at or near historic lows.)

    • Millionaire Immigrant says

      I have written about this on my blog recently. Inflation can make or break things for sure. But historically, there are only a few years where the inflation was really high. On average, inflation has been less than 4% during past 50 years.

      You also need to understand that at 4% withdrawal rate, your investment money also keeps growing since your return will be higher than 4% based on historical data. This means your 4% amount will be higher next year compared to this year. This way, 4% withdrawal is designed to keep up with inflation.

      In your example, $2MM in 1967 is actually $93MM in 2017 at 8% return per year (historical average). So if you are talking about 2017, you should think that you started with $93MM, not $2MM.

  17. anonysubscribe says

    WARM is a beautiful explanation of risk and return in terms of safety which anyone can impelment. I am aiming for it though I am still in ‘balanced’ indexed portfolio mode (including global allocations) 75% growth and 25% defensive. Shares benchmarks are local 25-55% (not US), developed 25-55%, emerging 0-10%, fixed income 10-30% cash 0-20% and 20 % in aggressive an active share fund in local share markets. Both are within my pension plan I was 100% in the share fund so I am changing significantly as it is. I am trying to reduce risk. The active manager had a spotty history recently but is still with the pension fund.

    • A Noonan Moose says

      Thank you very much for those kind words!

      The surest way to accumulate the money to do WARM is to undertake substantial risk in the stock market.This I did for 20+ years. I worried and fretted a lot, but that’s my personality—I’m not a very big risk taker. For me, retirement is much more enjoyable when I spend my time thinking about how to save money on taxes and living expenses (both are largely within my control) rather than thinking about how to prosper in the stock market (as another commentor has noted, Mr. Market occasionally goes out binge drinking).

  18. Matt says

    The behavioral aspect of investing is huge, so everyone has to find a strategy that works and lets them sleep at night. Seems like Mr. Moose has saved enough to follow a conservative approach, so kudos!

    One honest question – why not just purchase Single Premium Annuities with a fixed or CPI adjusted COLA? Seems like you would receive a higher payout and more inflation and longevity protection. Plus, you would probably still have some $ left over once you have secured the income floor to invest/save for unexpected expenses. Just curious.

    • A Noonan Moose says

      Great question Matt!

      In part, the answer is my peculiar desire to retain control of my fate. I like having the ability to direct where my money goes. I like being free to change my mind if I think the circumstances warrant. An annuity locks me in to a rigid plan of someone else’s invention. In contrast, at any time I’m always free to change my mind about WARM. (There’s also a very small risk of the annuity provider going belly up.)

      A quick story here. When I was still working, a co-worker set me up with his brother-in-law who was an insurance broker. The broker sold variable annuities. In exchange for hearing his pitch, I would receive a FREE round of golf at a very nice local country club. After the FREE golf, this salesman gave me a 80+ page single-spaced document outlining the terms of an annuity for which I would pay $1 million up front. I read much of the outline but could not fully understand the product. One thing I was able to understand was a footnote buried deep within the document which recited that the salesman would receive an upfront $50,000 commission upon my purchase. So I would be 5% down at the outset of a complicated investment I did not begin to understand. After buying the salesman lunch, I told him I wasn’t interested in the investment but that I very much enjoyed the FREE golf. (I hear Vanguard now sells bargain-priced annuities with much lower commissions.)

  19. Laura says

    Mr. Moose, what are your thoughts on medical expenses later in life? if you follow the 4% rule, you have a bit more of a cushion should medical expenses suddenly balloon past your normal annual spending. Since your strategy works on thinner margins, I’m wondering if that has impacted your plans.

    • A Noonan Moose says

      Great question Laura!

      I’m currently age 58 and Mrs. Moose is age 51. Our plan once we reach age 65 is to rely on Medicare. In the meantime, we’ve been relying on Obamacare.

      During 2014-2017, we’ve received FREE health insurance through the Obamacare Premium Tax Credit (PTC). In 2014 our PTC was $6,468, in 2015 it was $6,844, in 2016 it was $8,328, and in 2017 it will be $10,041 (projected). This insurance protects us from catastrophic medical expenses that would put a serious dent in our net worth.

      If Obamacare gets cancelled before we turn age 65, we can always cut back on luxuries in order to fund health insurance. (As the above article recites, about 25% of our current budget goes to discretionary spending.)

  20. wendy says

    Thanks for the post, it was a very interesting perspective.
    I think it’s important that different strategies and risk levels be discussed… because as Jim keeps pointing out, the big drops are scary and lot of folks may not be good at riding things out once they experience them…. we’re all different.
    And as you clarified, you did invest in equities for the wealth accumulation stage… and knew yourself and risk tolerance well enough to come up with very conservative wealth conservation strategy. I think it plays very nice with many of the ideas behind FIRE… after all, you have establish how much is ‘enough’ for you and you know yourselves well enough to determine what risk/reward you want… what else is the point of freedom from trading time for money if you can’t decide for yourself when enough is enough?

    • A Noonan Moose says

      I totally agree with you. The freedom we now enjoy includes as a very valuable component the freedom from having to engage in additional money gathering. With less than 7% of our assets invested in the stock market, I’ve been focusing my attention this summer on chainsawing dead trees, picking all kinds of local berries (strawberries, blueberries, raspberries, blackberries, cranberries), cooking lobsters, playing very bad golf, and kayaking around our undeveloped bay. I’ve gone full time Ferris Bueller. 🙂

  21. Bonnie Belza says

    It seems all of the gentleman here have managed to find a life partner to share the load. That would be the key investment IMHO. A little more on how they managed to achieve that would be an interesting post.

    • A Noonan Moose says

      The most important thing that’s ever happened to me is marrying Mrs. Moose. In May we celebrated the 20th anniversary of our first date. Next week we celebrate our 15th wedding anniversary. (BTW, we spent less than $3k on the wedding ceremonies.)

  22. Physician on FIRE says

    I started reading and thought “That’s exactly how I met Jim Collins.” And then that was the next line. Perfect.

    Regarding WARM, I was going to refer to Early Retirement Now’s academic research that shows a low stock percentage is risky and folly if you’re looking at a longer than average retirement timeline, but Big ERN beat me to it.

    With 3% inflation, your spending power is halved in ~ 24 years. At 2%, it will take 36 years. Over time frames of that length, stock returns have always outpaced inflation.


  23. Mr. FWP says

    Thank you for presenting this approach! I’m very familiar with it; it’s basically my mother’s plan, which I manage. She has a nest egg that she is slowly spending down. She’s frugal and has enough income that she should live comfortably without ever drawing down fully – and without worrying about any risk.

    She has a near-zero risk tolerance, and we want her to enjoy her life rather than worry about market bounces or about us. So this is what we do and it works well.

  24. Mike Crosby says

    Really enjoyed this. It’s fun to see the SWR from different perspectives. And this is one I’ve never thought about and I like it a lot. Even increasing his stock allocation from 6% to 20%, while a 300% increase, in the overall framework, it’s still very conservative.

    Here’s a few questions I have: I don’t see where Mr Moose is allowing for yearly inflation increases. Also, if have a $2MM portfolio, but with a SS future income of $3200/mo, Mr Moose can be even more conservative if he chooses.

    • A Noonan Moose says

      Thank you for the kind comment Mike!

      I might consider going as high as a 20% allocation in stocks in the event of a major market tumble, but that’s probably where I’d be topping out.

      I’ve basically ignored inflation during the first nine years of my early retirement (I retired 08/01/2008) because rates have been at such low levels. I pulled these annual consumer price inflation numbers from the Federal Reserve Bank of St. Louis’s FRED site:

      2009 — -0.35555 (deflation!)
      2010 — 1.64004
      2011 — 3.15684
      2012 — 2.06934
      2013 — 1.46483
      2014 — 1.62222
      2015 — 0.11863 (almost deflationary!)
      2016 — 1.26158
      2017 — not yet available


      So the average annual inflation rate during my retirement has been 1.37224, which is mercifully low.

      If inflation ever rears its ugly head, I’ll have plenty of time to adapt. At that point, I’ll have serveral options, including one or more of the following:

      1. as you suggest, increase our exposure to stocks from a 6% allocation to as high as a 20% allocation;
      2. as you point out, use social security to offset any lost purchasing power (bonus: under current law SS benefits are tied to the Consumer Price Index);
      3. take affirmative steps to reduce our discretionary expenses (our budget contains more than 25% of spending on luxuries); and
      4. instead of taking affirmative steps, let nature take its course as our annual spending decays during our geriatric years (my WARM article shows the drops in household spending that typically occur after age 65; these will likely outpace any loss in purchasing power).

  25. Jon says

    If I were to do a strategy like this I think I would go with Harry Brown’s Permanent Portfolio. It would probably be even safer than WARM. You can look up how the Permanent Portfolio fared in Ice Land during the 2008 crash. That is the real test. How would a portfolio survive something like that?

    Another interesting one would be Tyler’s Golden Butterfly portfolio.

  26. Fervent Finance says

    Inflation, inflation, inflation. Mr. Moose addresses the risk, but then never gives a way to mitigate the risk besides 1) social security, and 2) ability to cut spending. If there is a period of rampant inflation, Mr. Moose will be up a creek without a paddle. That is why a strong equity allocation is so important.

    For the more conservative investor, a 50/50 equity/fixed income portfolio would be a good option. A 40% fall in equity markets would only mean a drop of ~20% of your net worth, while having a good inflation protection with 50% allocation to stocks.

    • A Noonan Moose says

      I’m now in the 9th year of my early retirement (I retired 08/01/2008). The Consumer Price Index during this time has averaged 1.37% per year (for a detailed chart and citation see my above response to Mike Crosby’s comment). So far inflation has presented no problem.

      So what’s my response to a future bout of “inflation, inflation, inflation?” It will to adapt, adapt, adapt. For the details, see my response to Mike Crosby’s comment above.

      Thanks very much for the fervent comment!

      • Physician on FIRE says

        With inflation less than half the historical average in the U.S., you’ve lost 11% of your purchasing power in under a decade.

        If you’re on a lean budget to begin with, that’s not negligible, and I would expect a reversion closer to the mean, meaning it’s only going to become a bigger issue.

        Do what you like, but personally, I wouldn’t like to be holding so much cash.

        • A Noonan Moose says

          Physician on FIRE:

          Mrs. Moose and I don’t disclose details about our net worth, so let me respond to your comment by using some percentages.

          In our particular case, which is what you’re addressing, we haven’t lost any purchasing power. During the time period of 1/1/2009 through 12/31/2016, the Consumer Price Index increased 11%, as you point out. However, during that same period of time, our net worth, not counting my wife’s modest inheritance, has increased by more than 12%.

          How did this happen?

          During the time frame in question, Colorado real estate has been appreciating like crazy. Futher, we’ve profited heavily from an investment in a local oil fracking operation (and we cashed out well before the price of oil collapsed). In other words, our real estate, stock holdings and bond returns, though modest, have allowed our overall portfolio to stay ahead of inflation, which is a prospect that Oldster anticipated in his excellent comment below.

          What if we hadn’t been so lucky with our investments?

          Then we would have shifted a few more dollars into stocks or, more likely, cut back on some of the 25% luxurious fat that exists in our annual spending. As I’ve pointed out in other comments, I’d be willing to place as much as 20% of our assets into equities. It’s just that with inflation so low and market valuations at all time highs, I haven’t seen any compelling reason to increase our exposure to a big downdraft in stock prices. And as Jim Collins acknowledges, that downdraft will some day happen. When it does, I’ll likely increase my stock holdings, but not by too much.

          And what about future inflation?

          We’ll keep track of conditions on the ground and we’ll adapt by buying a few more stocks or cutting back on luxuries. I’m not worried too much about inflation after I turn 65, which at this late date is only eight more years away. This is true for two reasons. First, our social security benefits will be kicking in at about that time. The SSA’s calculator reports that our benefits will cover more than 2/3rds of our current living expenses (and under current law these benefits must rise lockstep with inflation). Second, during ages 65 to 95, typical spending drops off 52% (for the study, see my article above). On average, this geriatric deflation works out to 1.73% per year, which provides a strong offset to any consumer price inflation that might exist at that time.

          Thanks for taking the time to comment, flaming physician!

  27. PFBlogger says

    Makes perfect sense. If you have enough money, why take risks. I am assuming you are also renting out the other home when not using it. That’s additional income and possibly an additional hedge against inflation as well.

    Yes, it is easy to forget that our tax system is geared towards earned income and there are many benefits of having a high net worth and low earned income.

    • A Noonan Moose says

      Good point about off-season rentals PFBlogger!

      I confess that we are not maximizing our income opportunities.

      During the summer we have some bright-eyed millenials stay at the Colorado house for FREE in exchange for dog sitting and basic yard upkeep. So no income for us there (but then we don’t have to mess with the tax consequences of having rental income, either).

      IMHO, you make a very savvy point about how the tax system favors those with high net worths and low earned incomes.

  28. Stacy says

    My husbands risk tolerance has dropped significantly since 2009. He was 57 and the market correction in both equities and real estate did affect out net worth negatively during those years. How he viewed spending changed drastically and many decisions now err on the side of conservatism as he faces retirement in a matter of month.

    We have a conservative portfolio of 30% equites/30% cash/30% real estate. We are confident that we have the ability to weather the next 42 years through a combination of controlled spending, continued work for several years on my part, and our “warm” ish approach to managing our post accumulation stage.

    As previously stated:
    Ther are many paths to the same destination

  29. Chris @ Mindful Explorer says

    I love reading perspectives and always expanding my options. Great article but one sentence stood out the most. Let’s worry less about working more and start living our lives how we want today.

    This is what connected the most to me…..

    “”Our nest eggs can be treated like wasting assets because we ourselves are wasting assets. Inevitably, human bodies decline just like refrigerators do (our remains might avoid the junkyard, but not the bone yard). When we depart, our wealth is worth nothing to us because we can’t possibly access the money and of course we’re too dead to care.””

  30. Steve Poling says

    Excellent plan. It makes a lot of sense. The Achilles heel of this plan is inflation if you keep your cash in US currency. Some productive assets uncorrelated to the dollar may be desirable. That’s why I like walking on my investments (i.e. real estate).

    Its a pity that ICOs and cryptocurrencies are soooo perilously risky. They seem like an asset class that may be uncorrelated with either stocks or bonds. Whoever figures out how to incorporate this asset class into portfolio management will net a big win.

    • A Noonan Moose says

      Thank you very much for commenting Steve!

      You’re right about real estate. Our homes have appreciated substantially since the Great Recession. That appreciation has easily outpaced the modest inflation rate.

  31. Oldster says

    Lots of talk about inflation here. Without commenting on the reasonableness of Mr. Moose’s system, it should be noted that the accounts he keeps most of his money in themselves react to inflation. Deposit accounts will pay increased interest, bonds will return more, and real estate will also follow inflation upward. It’s not as if his money is in bank notes buried under a tree in the backyard. It may lag behind inflation, but his nest egg value won’t be a total loss to it either.

    • A Noonan Moose says

      A very good point, especially on real estate as applied to our local housing market. Most people aren’t lucky enough (and it is pure dumb luck) to live in a place where the values for single family homes skyrocket like they do in Boulder, Colorado. But even in cooler housing markets, real estate provides a solid long-term hedge against inflation.

  32. Mr. Tako says

    Good stuff JL. This WARM portfolio idea is very conservative and won’t be adopted by most…but so what! Mr. Moose isn’t looking to die with the most money in the world, he’s only looking to just make it to the end with enough.

    That’s commendable in its lack of greed. I’m guessing Mr. Moose will accomplish his goals.

    These days we hold about 8 to 10 years worth of expenses in cash. That seems pretty conservative to me, and more than enough to ride out any major recession.

  33. Dads Dollars Debts says

    I really enjoyed that. Thanks. It is interesting and I suppose once the nest egg is built, the family is founded (number of kids) and funded (529s, 401ks, IRAs), and an age is known, one can sit back and decide what their annual spending will be. If it is doable, the WARM strategy seems to take on a life of the biggest emergency fund ever, but the only one you need. I can see the attraction to it.

  34. Fritz @ TheRetirementManifesto says

    Moose, first off, congrats on finding a very big pond named JL Collins, nice waters for a moose looking to graze. The only problem, there are no trees around this particular pond, and hunters are everywhere trying to shoot you down.

    I applaud your approach, it works for you. PERSONAL Finance, right?!

    Just curious about your thoughts on whether there’s a way to marry the “traditional” 4% and your WARM plan (beyond the 20% you mention in your post). For example, could you use “WARM” to cover needs, and a blended approach to cover wants? I like the more conservative approach, but also fear the hunter named inflation. He’s known to be a savage hunter of moose. Perhaps a “Hybrid 4WARM” approach? Thoughts?

    • A Noonan Moose says

      First of all, thank you very much for not shooting at me.

      Also, you have an interesting idea about Hybrid 4WARM. Maybe we should call it “LUKEWARM” since it’s a watered down version of the uber-conservative strategy I follow.

      Anyway, following up on your comment, I’ve fitted a moth-ridden thinking cap over my ungainly antlers and come up with this: just create two buckets of assets, putting 1/2 value into the 4% rule bucket and 1/2 value into the WARM bucket.

      The 4 percent rule is designed for a 30 year retirement, so for a $2 million nest egg a 4WARM hybrid might look something like this.

      4% Bucket: invest $1 million in stocks and bonds using a 50-50 split. Pull out $40,000 in the first year, and then adjust upwards for inflation each year thereafter.

      WARM Bucket: invest in bonds, real estate, maybe a few stocks (or indexed mutual funds). Pull out $33,333 each year. In the event inflation becomes substantial (for the past 8 years it’s averaged a paltry 1.3% per annum), cut back on luxuries, modestly increase the WARM bucket’s equity holdings, and/or realize that in a 30-year retirement Social Security benefits, which themselves are indexed to the Consumer Price Index, will more than counteract any effects of inflation.

      This plan produces $73,333 of spending money in year one and more after that unless there’s a big stock market crash followed by a very slow recovery. In which case, the retiree will be very glad to have the WARM bucket on hand.

      A possible slogan for the Hybrid 4WARM a.k.a LUKEWARM model: “4WARMed is 4armed”?

  35. Done by Forty says

    Man, if my wife ever stumbles across this post, she is for sure going to argue that we go with this approach.

    $1.6M instead of $1M needed is actually not as big of a delta as I would have thought. It’s really not that many more years working/investing…

    Great plan for half of the Done by Forty household, for sure.

    • A Noonan Moose says

      It’s amazing how long it takes to earn the first $1 million and then how fast the next million is reached.

      If you’re in the mood to reach a compromise with your wife consider the Hybrid 4WARM approach suggested by Fritz @ TheRetirementManifesto in the comment directly above yours.

      Thanks for the kind words Done by Forty!

  36. LM says

    I appreciate the thought provoking article. It is easy to get fixated on hitting a number and then worrying about if the safe withdrawal percentage selected will match out against historical stock market returns. Your strategy shows that with a little extra saving the need to worry and take risk is greatly reduced.

    Here is an excellent article on how to think of cash, which shows cash’s past performance has kept up with or exceeded inflation:

    • A Noonan Moose says

      LM: I’ve just finished reading the cash article you linked and it contains a startling statement that Physician on Fire and Early Retirement Now would likely disagree with:

      “Completely counter to common belief, properly invested cash is perhaps the single most consistent inflation hedge available.”

      Any idea who wrote this piece? If so, I’d like to buy him or her a beer! (Like many commenters above, the author seems to be a big fan of TIPS.)

      • Jon says


        Tyler is his name. He’s a fan of portfolio style investing from what I read of all his blog posts. He’s even come up with his own called the Golden Butterfly. I’m not sure which one he picks though. I’m not sure if he would actually recommend putting all your eggs in one basket but I think he was showing in that article that cash (short term bonds) is a good part of your portfolio.

        There’s a contact page that is linked to at the bottom.

      • earlyretirementnow says

        Yes, I would disagree with that. T-bills, as referenced in that article, had a cumulative average return of only 0.86% after inflation since 1900. So, in a sense cash kept up with inflation (barely) but it wasn’t a smooth ride. There were two episodes where inflation eroded almost 50% of the value of T-bills (1915-1920, 1932-1950). In the 1970s Tbills lost 12% in real terms (due to surprise inflation, Federal Reserve asleep at the wheel) and currently, they are 13% underwater (due to low-interest rates since 2008/9).
        I wouldn’t call this a good hedge against inflation.

  37. Adrian - Investor Tuition says

    Thank you for some real food for thought. Having been an adviser for over 25 years and now teaching new advisers, you approach is very refreshing. Text book methods of retirement do indeed advocate fixed amount drawdowns, such as the 4% rule. The concept that underpins the 4% figure is what is the rate of return that can be easily achieved across all asset groups within all market conditions. The 4% figure is certainly not a golden rule of retirement income, and should at the very best be used as a guide. I do know that retirees, tend to like their lump sum to stay intact and therefore spend only the income produced from it. Interestingly, if we were discussing this topic during the 80’s the drawdown figure would more than likely be around 9% as interest rates and inflation were much higher in that decade.

    Your method of advocating the “satisfy your expenses” route does indeed give you control over expenditure and therefore you can cut your cloth according to your sail (I think that’s the correct saying) Therefore you needn’t eliminate important facets of a satisfying retirement just because you have not been able to achieve income targets. I certainly agree with your method for retirees.
    Your post made for very interesting reading which I certainly appreciated, thank you. Regards Adrian

  38. grbkeb says

    I’m certainly more in the WARM camp than the 100% equities camp. I don’t want to leave some gigantic legacy so my name can be plastered all over some building, so keeping the peddle to the metal seems greedy to me. My Hybrid of WARM is I have a bond portfolio (actual bonds not a bond fund) that is about 30% of my net worth that throws off the income that allows me what I feel is a lavish lifestyle. The rest I let ride with equity and alternative investments. I kind of think that all of those who preach about how foolish this is their tune would change once they hit some bigger net worth numbers relative to their annual burn(which most here will), granted some would stay the course. Seeing your net worth drop from $15M to $8M overnight (champagne problems!) because you were chasing a few extra percent that you don’t even need will have seemed foolish. I get it that if you just stay the course you’ll make it all back and then some, but I assure you it will bother your psyche in the years it will take you just to get back to ground zero. What do I know though!

    • A Noonan Moose says

      How perceptive and how true.

      Lots of people go through life never satisfied about their finances and always wanting to get their hands on just a little bit more. They’re never quite satiated. I’ve sat at lunches where I’ve heard multi-millionaires complain about how much better things would be if only they had $20-25 million instead of a mere $3-5 million. This is crazy. IMHO, the lower my number is for saying I have “enough,” the sooner I can stop worrying so much about money and instead start focusing on how to grow my own happiness and the happiness of those around me.

      For a guy whose “enough” number happens to be zero, visit the website of Dan Suelo:

  39. Mr. 1500 says

    Mr. Collins! It has occurred to me that I haven’t had the pleasure of inviting any folks to your new place yet!! So hey everyone, what are you doing next weekend?

    And WARM?! Dunno about that money stuff. All I need is a ping pong table, a cold beer and a tasty lobster and I’m happy. Wait, lobster is expensive? I’m game for the McLobster. That’s still $9? I’m game for the Taco Bell Value Menu. K.I.S.S. (Keep It Simple Sexy)

  40. Xyz says

    This is a nice approach to: quit while ahead.

    I really like the simplicity of it and the absolute low stress of this method.

    P. S. In the paragraph right above WARM FAQs, there is a typo : needsóand.

  41. firecrackerrev says

    If you can’t stomach the stock market t all, are okay with geographic arbitrage, don’t have any heirs and don’t care about leaving money to charity, this should work. (I’m a big fan of this statement: “People who expect big windfalls tend to coast, thus denying themselves the fulfillment that comes from productive pursuits.” So true!

    However, I’m still skeptical about how much you can control costs to combat inflation. In our case, since the 2 years we retired, our costs have actually go down, so our personal inflation rate is actually negative. Most of that can be attributed to geographic arbitrage (costs in Thailand are 1/3 of the costs in North America and there’s very little inflation) and not having to pay to work any more (in retirement, you don’t have to pay for community, work clothing, eating out, decompression costs, etc). However, there are some costs you can’t control. Like how property taxes will increase over time (if they own a place, they can’t just decide NOT to pay it), cost of labour for maintenance, utilities, etc. You can try to do without those things, I wouldn’t recommend it. If you live off the grid, you could probably grow your own food and avoid having to deal with increasing food costs.

    I’m curious though, if they are so adverse to risk, why not put the money into bonds, HISA (high interest savings accounts), or REITs (since they like real-estate)? It’s low risk AND you at least get some gains. At the very least, you could get a 2% interest, which will compound over time and you don’t need to worry about stock market drops. I feel like they are leaving money on the table since there are other better, risk-free options with at least SOME interest. You could live off the interest and still keep the principal. Even if you don’t have heirs, you can leave the money to charity, which is better than spending down the principal completely.

    • A Noonan Moose says

      Thanks for such a detailed comment, firecrakerrev!

      WARM has worked well for us so far. Nine years after my retirement, our net worth now is about 12% higher than it was on 01/01/2009 (and that’s not counting a modest inheritance that Mrs. Moose received). We’ve kept ahead of inflation (barely) because during this time period Colorado real estate has appreciated like crazy and so have some of the stocks in our small portfolio (particularly a local fracking stock).

      In case of any major future inflation, I’m pretty sure we could reduce our spending on luxuries by 25% or more. We could, for example, sell the house in Maine that Jim Collins visited. That alone would slash about 20% from our annual spending (consisting of real estate taxes, HOA fees, homeowners’ insurance, maintenance costs, utilities, etc.). In a major inflation pinch, we also could cut back on our giving, which in retirement has represented about 7.5% of our annual expenses. Finally, we could eat out less (since 2009, dining away has gobbled up 4.7% of our total outlays).

      You’re absolutely right that we’ve left some money on the table as a result of pursuing WARM. But it hasn’t been without recompense. Our low income means we can better control our exposure to state and federal income taxes. Each year, we make tax-free conversions of $25,000 to $40,000 from our traditional IRAs into our Roth IRAs. Further, our lowish income qualifies us for a 100% Obamacare premium tax credit (which in 2017 will total over $10,000).

      Finally, rest assured that our WARM strategy includes generous charitable donations. First, we’ve been giving money away during each year of our retirement (as noted above, on average, giving to others represents 7.5% of our annual outlays). Second, our WARM plan carries us both past age 100. Since we are both likely to expire before then, our charities should enjoy some big paydays.

  42. Financial Samurai says

    I love the acronym and the attitude!

    Also, it is commendable to quit while you’re ahead and not be so caught up in FOMO. This is definitely one of my problems, or because I live in San Francisco, it seems like everybody is making massive amounts of strides. So you just have a natural desire to keep on going.

    But if I move back to Hawaii, it’s so much more chill. I think that’s what I’ll plan to do for my little one starts going kindergarten.

    How do you think your thoughts will change if you had children and how old are you guys right now? I was continuously going to the enough path, but once I had a son, now I’ve got this let’s build a fortune attitude again. It’s kind of weird. Or maybe it’s simply biological where her father needs a sense of providing.

    The one X factor everybody should consider is working on their business. I’ve come to realize the equity you can grow and make from a business and blows any market returns out of the water. When I was doing my investment tracker quarterly update, I really saw almost what a waste of time turning 10% a year it is compared to my contributions. It’s nice to have a tailwind, but whether it is 5%, 2% or 10%, it almost doesn’t even matter if you are growing your business at a much greater rate.


    • A Noonan Moose says

      Sam–thanks so much for commenting! I’m a big fan of your site!

      In response to your question, I’m 58 and Mrs. Moose is 51. At this point, our childbearing years are in the rear view mirror. So i’m not sure how our views about dynastic wealth transfers would have changed had we been blessed with young ones. Like you say, people start out with one attitude in mind, but then going through a big life event (like the birth of a son or daughter) changes everything.

      • Financial Samurai says

        Wait, u don’t believe in giving your kids mega millions so they can chill out and lead a carefree life?! 🙂

        I’m always thinking a
        Bout secret financial buffers. Surprise! You want starve son! After he’s tried and failed.

  43. jlcollinsnh says

    Well, Mr. Moose…

    Based on page views and all these engaged comments (with more to come I’m sure), I have to say your guest post has been a smashing success!

    Thank you for sharing WARM thoughts with us and for WARMly responding to all the questions, concerns and comments here. Great discussion!

    Thanks to you and to all those who read the post and especially those who added to this conversation!

    • A Noonan Moose says

      Mr. Collins…

      Thank you so much for having an open mind and exposing the Wasting Asset Retirement Model to such a large sWARM of passionate readers!

      WARM isn’t right for everyone—and I’m cool with that.

      But I strongly believe that those ablaze with FIRE should explore multiple approaches to funding their retirements before they settle on a final choice. There is more than one way to skin the cat of financial freedom. WARM is a viable method that has been working well for me since August 1, 2008. I’m grateful to you and your readers that it has been given such a fair hearing.

  44. FF,PharmD says

    Mr. Collins:
    I first want to thank you for your stock series and this blog, it has helped me tremendously. I discovered the meaning of FIRE in the financial world earlier this year around February, after my wife introduced me to Mr. Money Mustache’s blog. After reading your guest post on MMM, I eagerly devoured and learned everything from your stock series, and just finished reading The Simple Path to Wealth. Incredibly easy to read and understand, not to mention fun! I can confidently say my wife and I are on the path to FIRE using your simple plan – we’re shooting for 2027 when we turn 40. We will be done with student loan debt this December, then it will be 100% VTSAX and the way of the monk. Again, many thanks!

    Which brings up several comments and questions for Mr. Moose:
    Thank you for sharing your WARM method. It’s definitely an interesting perspective on retirement planning, plus the ability to sleep soundly during the inevitable crash sounds very inviting! Having just recently been financially awoken, I have nothing to back up this statement but I believe that I will be able to “stay the course” during a crash – I must!
    With the WARM method and my goal of retiring by 40, that leaves ~60ish years of retirement. If my wife and I spend $40,000 total annually, according to your chart we will need a nest egg of $2.4 million.
    According to MMM’s analysis of the Trinity Study, there is very little difference between a 30 year retirement period and a 60 year retirement period, in regards to the 4% safe withdrawal rate. So in my case, we would only need a nest egg of $1 million to last us 60 years – of course, and the ability to adapt if there is a major crash.
    A nest egg difference of $1.4 million is massive, adding a decade or more of working for the man. I think the Simple Path and the 4% rule is the way to go in my situation. Am I thinking about this correctly?

    Thanks again to the both of you, looking forward to reading much, much more!

    • A Noonan Moose says

      Congratulations for embarking on FIRE. By starting at the ripe young age of 30, time is definitely on your side.

      I respectfully disagree with your reliance on the 4 percent rule, which is an approach to retirement that was designed for retirements lasting 30 years. For retirements of 40 years or more, financial planning experts recommend a safe withdrawal rate (SWR) of 3.5%. Here are a few supporting cites: (1) Bengen, William P. “Asset Allocation for a Lifetime,” Journal of Financial Planning, August 1996 (3.5% optimal withdrawal rate for 45-year retirement time horizon); (2) Blanchett, David M. “Dynamic Allocation Strategies for Distribution Portfolios,” Journal of Financial Planning, December 2007 (withdrawal rate of 3.5% for a 40-year time horizon); (3) Kitces, Michael E., “20 Years of Safe Withdrawal Rate Research, The Kitces Report, March 2012 (for retirements of 40+ years, decrease safe withdrawal rate under 4% rule by 0.5%).

      What are the ramifications to your preliminary retirement plan of having an SWR of 3.5% instead of 4%?

      I’ve done the math on an Excel spreadsheet. It won’t fit into this comment field, but here’s what it shows. To support $40,000 of spending per year, you would need to increase your planned nest egg by about 14.29%—from $1 million to $1,142,857. Alternatively, if you wanted to stick with retiring on a $1 million nest egg, you would need to cut your annual spending by 12.5%—from $40,000 to $35,000 per year. (Incidentally, the 25x annual income multiplier that applies to 30-year retirements under the 4% SWR gets boosted into a 28.57143 multiplier for retirements of 40+ years that require a 3.5% SWR.)

      In your case, the funding requirements for WARM are not so far afield from the 4% rule as you have suggested. This is true for several reasons. First, under the 3.5% SWR that applies to 40+ year retirements, your required nest egg is actually $1,142,857 (and not the $1 million you cite). Second, most professional retirement planners would regard planning out to age 100 as unduly conservative (a charge to which I plead guilty). If you reduce your expected lifespan from age 100 to age 95, which for you on the WARM chart represents a 55-year retirement, the required nest egg drops $200,000—from $2.4 to $2.2 million. At this point, funding a WARM retirement costs about $1 million more than a retirement with a 3.5% SWR. Third, it will take you a lot less time to make your second million than it took to make your first—and far fewer years than the 10+ that you’ve projected. As proof, look at the personal finance bloggers who’ve already reached the $1 million mark and regularly update their net worths. A helpful list of such bloggers appears here: For example, my good friend Mr. 1500 has added $400,000 to his first invested million in just 18 months. At this pace, he will reach his second million in about four years.

      At the tender age of 30, you still have plenty of years to go before you need to choose a strategy for withdrawing the funds that will pay for your retirement. For the reasons outlined above, WARM may be an easier option to pursue than you first thought. Consider keeping it in mind as your retirement date of 2027 approaches.

      Good luck!

  45. Adam and Jane says

    Mr. Moose,

    Thanks for sharing your retirement plan. I love reading and learning how different people retire. There is no wrong answer if you are living your dream being retired within your means. You kept it simple.

    Your WARM plan is not conservative for us. Since Life always throws a curve ball, we strive for 3x expenses not including Social Security. We have NOTHING in the stock market including our 401Ks. Our expenses was 40-45K for the last 6 years during our accumulating phase and it will be 55-65K going forward since we loosen up. We are age 53 and 52 with no kids.

    – We have 2M of 4-5% individual municipal bonds that generate 87K tax free yearly. We started buying them in 2010 to generate passive income preparing to get laid off.

    – Wife was laid off last year and she has a 52K pension and 8K for medical yearly from our company. She is SO happy now to NEVER EVER work again!
    My pension is 37K at 55 if I quit today but I get no medical money if I leave before 55.
    At 55 in 2 long effing years, my pension will double to 70K and I get 8K yearly for medical.

    – Our 401Ks generate over $100 of interest each per day in 4.4% fixed dollar investment.
    At 60, I expect that we can withdraw a combined amt of 80K from interest without affecting principal. If the 401K interest is 0% then principal will last 30 years.

    – We also have 8 years of expenses in savings just in case we lose any streams of passive income.

    Many will say that we have more than enough to walk away with passive income 3x expenses. I want to retire so badly but due to the golden handcuffs, I “need” to stay another 2 years to double my pension and get 8K for medical yearly. We also want to live in Hawaii part time and take world cruises which requires money. We NEVER EVER want to worry about money again like our parents.

    Medical is our highest expense. My wife’s Aetna medical is 12.5K in 2017 minus 8K is 4.5K out of pocket. In 2016, her medical was 11K and her out of pocket was 3K. I expect medical to keep increasing.

    Although, I can quit today and pay for my own medical, I rather work another 2 years to increase my benefits. I work from home providing 24×7 online support with no backup. My backup was laid off last year as the company outsourced to an Indian company, TATA. I work 10-20 hours a week so I can’t complain with a salary of 172K not including bonus. To cope, I consider myself semi-retired and I focus on my hobbies to take my mind off working another 2 long years.

    I can’t agree with you more on people that expect money will coast! I see this in my brother and my cousins. My brother receives “economic outpatient care” from my mom. She pays his rent plus more But my brother DOES manages my mom’s 5 rental apartments. Several cousins received 80K each to buy a house. Two other cousins received houses worth 800K and 1.5M.

    We paved our own road and did it like you from blunt forced savings.

    One last thing, consider buying 1M of individual muni bonds to get about 35-40K tax free if your city/state is financially stable. We pick our own bonds from Fidelity to avoid a higher 2% markup from brokers and bank financial advisors. I know you don’t need the money but you never know when there will be unexpected major expenses like a new car, roof, heating system, etc. You can always leave more money to charities. Since you are set, you don’t have to do anything but to relax.


    • A Noonan Moose says

      Hi Adam

      Sounds like you’re ready to take the leap into a great early retirement!

      I share your concern about the high cost of health insurance premiums and medical care. We’ve been lucky to receive 100% premium tax credits under Obamacare during tax years 2014-2017, and that has freed up a lot of cash to pay other expenses (our PTC will total $10,000 in 2017).

      Given the uncertain future of Obamacare, it looks to me like you’re smart to work two more years to qualify for retiree medical benefits through your employment.

      Thanks very much for sharing your bond-rich version of a prosperous retirement!

  46. Nadeem says

    Sir, I’ve been meaning to send this question to one of my favorite bloggers but couldnt choose, and this post topic makes most sense for me to ask the question:

    – So Im in wealth building stage (95% equities, 5% cash), as I get closer to my number goal, I’m thinking of adding bonds to the picture. Once I hit my number, I was thinking of moving in the total opposite direction and go 80-90% bonds and the rest cash until that first 5 year period is up (incase of a correction or crash) and then move back to 80% equities or even 95% equities. I know the first 5 years are critical for the success of the portfolio so this thought came up

    Have you ever come across someone who has done this.

    • jlcollinsnh says

      Hi Nadeem…

      The basic concept you describe is a fairly common one, but typically not executed quite as radically as you are proposing.

      More commonly it entails overweighting bonds in a stock/bond allocation for the first few years along the lines of 20/80 to 50/50 depending on how conservative you want to be.

      One caution I’d offer: If you are using the 4% rule as a guide, it begins to breakdown without at least 50% in stocks.

      Good luck!

  47. Crew Dog says

    It is interesting to see all the pushback against Mr. Moose’s WARM approach when it is really not all that different from Joe Dominguez and Vicki Robin’s approach (Your Money or Your Life). Nothing is new under the sun.

    • Jon says


      Joe Dominguez and Vicki Robin’s approach was to invest in long term US bonds at 15%. Vicki has said she had to change her strategy, if I recall correctly. The main thing I worry about the WARM approach is putting all your eggs in one basket. But I respect others approaches if they want to do it that way. I just question why you wouldn’t want to continue to accrue money and use it to do good in the world – which could be just to invest in companies so they can grow and hire people and make the world a better place. But like I said, if people are happy with this approach then more power to them.

      • Crew Dog says


        Mr. Moose said his current allocation is “6.51 percent in stocks, 27.94 percent in real estate, and 65.55 percent in money markets/bonds.” The 65% in money markets/bonds is pretty similar to Joe Dominguez’s laddered T-bill approach, IMO.

        Yes, I have always suspected that Joe & Vicki had to adjust their plan when the high interest rates of the 80s ended. However, the simple, secure mindset in both Joe & Moose’s approach is the same.

        As Moose (and J. L.) acknowledged, and as you mention, some people prefer an approach that is more aggressive and will accumulate more assets for philanthropy. Instead, Joe & Vicki opted to share their time and knowledge. IMO, neither approach is better or worse – they’re just different. Both approaches contribute to the planet.

        I can appreciate the simplicity and security of Joe & Vicki and Mr. & Mrs. Moose’s approach. At Casa Crew Dog, we have opted for the equities approach J. L. advocates – with a twist.

        Since Spousal Unit & I have a military pension that covers our annual expenses (we live fairly frugally) and gives us peace of mind, even though we are FIRE, we keep our investment assets 100% in equities. We contribute our time, money, and knowledge to organizations and individuals, and we continue (hopefully) to accrue assets for philanthropy.

        The beauty of FIRE is that there are many good paths to take – you just have to find/create the one that works for you and gives you peace of mind.

  48. Karl Withakay says

    “What happens to you if inflation rears its ugly head?”

    When, not if.

    “Because their net worth is enough to cover 100 percent of their spending needs for the next 50 years. The math is so easy a third grader could do it: $2,000,000 net worth / $40,000 burn rate = 50 years.”

    Assuming modest 3% average annual inflation, at Age 100, $40,000 in 2017 $ spending would require about $175,000 in age 100 $. A dollar is a wasting asset. Left alone, a dollar will asymptotically waste its value away over time due to inflation.

    In the above example, assuming an all cash position & 3% average annual inflation, without SS, they run out of money at age 87; with SS, they run out at age 91.

    I’m not saying that WARM doesn’t work or is bogus, but the simple cash burn carts and calculations referenced above should not be used by anyone as they don’t account for inflation at all.

    There is an excellent retirement calculator over at The Motley Fool that can easily be used to determine if you have enough to retire on, regardless of which model you plan to follow:

      • Karl Withakay says

        Really? That doesn’t seem to be the case over the last 100+ years. Please provide support and context for this claim.

        Regardless, this is true… now, and should be expected to be true in the foreseeable future. To plan one’s retirement based on the simple cash burn charts & calculations above and not account for reasonably expected inflation would be financially dangerous.

        • Noonan says

          Karl: The past few days I’ve been driving back to Colorado from Maine and haven’t had the chance to respond to your comments—so here’s a belated thank you for taking the time to write up your concerns.

          Similar points about inflation have been made by others. I refer you to my lengthy responses to Mike Crosby, Physician on FIRE, and firecrakerrev above.

          As a model for withdrawing assets in retirement, WARM’s inherent flexibility allows anyone using it to make year-by-year adjustments in the event inflation ever becomes a significant factor. WARM adopters can adjust their asset allocations based on real-life circumstances rather than generalized projections about the future (such as an ironclad prediction of 3% annual inflation). So contrary to the concern you stated, the WARM does indeed allow its users to account for the effects of inflation.

          I’ve been using WARM for the past nine years and I can report that so far inflation hasn’t made much of a dent in my plans—it’s averaged a mere 1.37% per year which is far below the 3% annual rate that you would have projected had you been writing back in 2008 before I retired. My modest investments in stocks, real estate, and bonds have so far outpaced real-life inflation’s minuscule effects. In fact, our household’s net worth today is higher than what it was when I originally retired on August 1, 2008 (and that’s after paying for nine years of living expenses). In short, WARM is a workable model that so far has worked very well for me.

          Thanks again for taking the time to comment!

          • Karl Withakay says

            If you’ll reread my comments carefully, I never actually said anything about your WARM model, beyond that inflation will not be zero. My comments focused on the simple cash burn chart and calculation (and the hypothetical example of an all cash position burn) you provided that do not account for any possibility of inflation, and since both the chart & calculation assume an all cash position, they should not be used without consideration for inflation. The link I provided to the Motley Fool site provides a much better calculator (it’s the best retirement calculator I’ve yet found) people can use to figure out if/when they can afford to retire, and it works just as well for your WARM model as it does for any other model.

            Presumably, a couple of reasons why inflation hasn’t been a problem for you so far is, 1. a historically low inflation rate following the Great Recession (though it would be a big gamble to depend on that continuing long term), and 2. you’re not in all cash position and are growing your portfolio faster than the rate of inflation (and draw down, apparently), and thus you are already accounting for inflation in your execution of the model.

            At heart, the WARM concept is so simple, it’s borderline tautology; if you have enough money to last the rest of your life, you have enough to retire.

  49. classical_liberal says

    I like jlcollins and refer my friends to his blog/book who are too conservative to invest in stocks. However, I agree with other commentators. An almost all cash/bond, “super secure” portfolio vs a near all stock portfolio is the definition of a false dichotomy.

    There are plenty of other asset classes and all equities are not created equal. It’s entirely possible to create a more anti-fragile portfolio with more than 50% stocks for growth, but also has a very a low risk of drawdowns greater than 15-20% of value. The key to to invest in non-correlated asset classes to ensure your riskier bets.

  50. Nathan says

    I’ll be 57 in a few months and am getting laid off from my job this month. I’m almost right at $1MM investable assets, not counting equity in my house. The reason I’m going to (and need to) maintain exposure to equity markets for the foreseeable future is because, simply put, I’m burned out, sick of the corporate rat race, and don’t want to have to work anymore. I need long term investment returns to get the rest of the way there. It won’t be fast, and having lived through 3 big crashes in the past it won’t be pretty, but this is where I am at this point in my life. To prepare, I’ve separated my investments according to when I will need to spend the money. First 2 years in cash and CDs, then the next few years in income funds, bond funds, and treasuries. Monies not needed for 10 to 15+ years will be those that have the bigger equity exposure, with hopefully plenty of time to recover from big drops.

    • Noonan says

      Nathan: sounds like your plan does a great job of hedging against market downdrafts!

      One other factor protecting you against market crashes is social security. Given that you’re about to turn 57, social security will likely still be there for you whenever you’re ready to start taking benefits, which can be as soon as five years from now when you turn age 62 (although you can increase your monthly benefits by about 30% if you forgo applying until you reach your full retirement age of 67).

      If you haven’t already done so, you can explore your projected benefits (based upon your own personal earnings history and pending exit from the workforce) by visiting the SSA online retirement calculator at

      Congrats on leaving the daily grind and thank you very much for sharing your well-thought out plan!

  51. Spyder59 says

    Like the approach Mr. Moose! You might take a look at Zvi Bodies’s website, He Boston University economist and is a big proponent of using Treasury I bonds and TIPs to fund retirement. In the case of someone who already has their retirement nut saved, this approach seems the easiest way to address inflation. Very inspiring read!

  52. ATM says

    Thanks for posting, In my Opinion the WARM plan is likely to ignore Rapid Increase of Inflation like the 80s where is the inflation was around 15%. However there are several portfolio which can reduce market risk significantly by adding an inflation hedge such as the permanent portfolio.

    • Noonan says

      I respectfully disagree with your worries about the “rapid increase of inflation.” As the above article recites, any adopter of WARM would have plenty of time to react to rising inflation because inflation doesn’t happen overnight. There certainly was no rapid increase of inflation in the 1980’s. Instead, there was a multi-year ramping up that gave anyone who paid attention plenty of time to respond. Here are the stats from the Federal Reserve Board:

      1976 — 5.74%
      1977 — 6.49%
      1978 — 7.65%
      1979 — 11.27%
      1980 — 13.51%


      As several above comments have pointed out, 21st century investors have access to an unbeatable inflation fix that didn’t exist in the 1980’s: Treasury Inflation Protected Securities a/k/a TIPS (they were first offered in 1997). As a hedge against inflation, I believe that TIPS are far superior to gold, which is the ancient inflation fix the permanent portfolio recommends. (Gold perhaps would be the hedge of choice against the apocalypse of a governmental collapse. But in that unlikely event we’d all have much bigger worries than our personal finances.)

      Thanks very much for adding to the conversation ATM!

      • ATM says

        Thanks for your kind reply,
        I ran a MonteCarlo simulation using the assets allocation of 6.5% US Stock, 28% REIT, 30% Bonds and 35.5% Cash.
        With the withdraw rate of 3% + Inflation for 50 Years. The percentage of success rate is 98%. If you adjust this to 2.5% you almost reach 100%.
        So I agree with you, your assets allocation is conservative, and should accomplish your goals and cover the inflation rise with withdraw rate up to 2.5%.

  53. Chris S says

    Hello Mr. Moose.

    Do you mind sharing where you put your cash? The best I’ve seen so far is 1.5% at CapitalOne360 for that large sum of money. I know there are others with 4-5% but it caps out at 10K or 50K. At 2 Million, an extra 0.5% would be 10000 a year, which is a sweet deal. 🙂

    • Noonan says


      Thanks for your question. I apologize for my delay in responding.

      Since last fall i’ve started to move cash out of money markets into Certificates of Deposit that mature one year from date of purchase. I’m basically building a CD ladder and i’m doing it rather slowly.

      In 10/17 I purchased a CD with a 1.45% Annual Percentage Yield (APY). In 01/18 I purchased another CD with a 1.75% APY. As of today’s date, 02/22/18, i’m seeing offers at Schwab for CDs that mature in 03/19 with an APY of 2.00%, so it’s probably about time to buy another CD for my ladder.

      My CD purchases have been in traditional IRAs so that i can avoid immediate taxation of the interest. This is important to me. Each year i try to control taxable income so as to limit taxes, maximize Roth conversions, and still qualify for a 100% Premium Tax Credit under Obamacare. In 2018, my PTC will be worth about $14,000 post-tax. To expand on your comment, if there’s a .05% spread between money markets and CDs, it would take $2.8 million in CD purchases to gain pre-tax incremental interest of $14,000—and of course even then the $14,000 in PTC would still be preferable because it reflects post-tax money (in most years my earnings are subject to marginal state and federal taxes of 14.63%).

      P.S. Most of my cash is still in money markets that are currently delivering a 7-day yield of 1.32%.

      Thanks again for taking the time to comment!

  54. Norton says

    To all who raise the spector of “rampant inflation” as an existential threat to Mr. Moose’s retirement, I have a question. What do you imagine will be the response of the Fed to this “rampant inflation”? Do you imagine the Fed will do nothing, sit on its hands, and watch from afar as inflation skyrockets? That it will hold the discount rate at 2% as inflation rises to 10%? Or do think the Fed will raise interest rates, and then raise again, and then keep raising as necessary? Of course it will raise. And thus will the return on Mr. Moose’s money markets and CD investments also rise.
    In periods of high inflation, cash is actually a very good investment. I am old enough to remember 15% CDs in the early 80s. My then retired parents had all their retirement funds in CDs and they did just fine despite the big inflation. I imagine not many readers here are old enough to remember getting $15,000 annual interest on a $100,000 CD.

    • Noonan says


      I’m old enough to have bought a few of those big-interest CDs in the mid-eighties!

      Thanks for the “interesting” comment!

  55. George says

    I have to say that I really do respect this asset allocation, since my father recently retired using the exact same strategy.

    My retort to all who quote “the stock market ALWAYS goes up” in one form or another really should realize that this “ALWAYS” applies ONLY to the stock market in the United States and only for the last 80 years or so. In fact, the 4% rule would have worked in only a handful of countries in the world – and honestly it’s just verified by retrospective analysis and back checking. And it certainly wouldn’t have worked pre-1929 when the stock market dropped almost 90% before the end of the depression.

    Currently the US is running a massive deficit and has a nearly unsustainable debt load which could definitely lead to one of two possible “default” scenarios. Hyperinflation – Zimbabwe/Weimar Republic Style is one possibility, and the other is Deflationary a la Japan since the early 90’s. Neither of those two scenarios would bode well for an equity heavy portfolio.

    I’m not trying to stand on my soapbox and yell “the end is near,” but let’s not profess to know exactly what the future holds and that the 4% withdrawal from an equity heavy portfolio will always be a reasonable answer…

  56. Torbjørn Enger says

    I have a suggestion here guys. This idea came up when i was thinking about how bad withdrawal from a portfolio of stocks is when the index is at its low. I wanted to smoothen out the annual outcome. You simply do this: Stay in the index when it is above the 365days average, ang get out when it falls below. I come from Norway and tested it on the Norwegian index osebx back to 1997 and only 19 trades are made in 20 years. The outcome besides that the worst fall of the investement was 13% from the very top in late 2011. An as an bonus, the total outcome during all those years showed 751% versus the index only showing 448%………….That was just a bonus, because i invented the method only because i rather would like annually income like 10% 15% 5% -5% than +40% -20% ………it would be easier to subtrect some money steadily from. Really plain and simple stuff. If you have some money in addition in an account with the same interest as the inflation ( now 2% on my account in Norway). You are pretty good off. Any thoughts on that are welcom ;-)-

  57. Michael Clements says

    I just read about this WARM strategy and it is interesting. I think that this strategy seems much safer than keeping all of your money in the stock market once you retire. After all, you asked the question, “Why should you put your money at risk whenever you have more than enough to live to be 100?” I agree that if you are in retirement, your nest egg shouldn’t be at risk.

    However, I did have a few questions about this strategy that weren’t addressed in the blog post. If they were answered earlier, maybe I overlooked them. Here they are, in no particular order of importance:
    1.) While the WARM strategy is good once you are in your retirement to keep your money safe, what strategy did you use to get to your desired nest egg? Did you still invest in the stock market, then switched to the WARM strategy once you reached your goal?
    2.) What if one doesn’t wish to invest in the stock market at all? I am asking this because my wife has been nervous about investing in the stock market since some of our investments fell in value because of this corona virus outbreak. What suggestions would you have for someone like my wife, who is gun shy about getting back into the stock market?
    3.) You also mentioned that you have about 28% (give or take) in real estate. Is this rental properties or are you investing in REITs or REIT funds?
    4.) Finally, you compared the WARM strategy to the 4% withdrawal rate strategy in your article. How does the WARM strategy compare to the three-buckets strategy?
    Thanks for your time. I would be curious to see how you responded to my questions.

    • A Noonan Moose says

      1.) While the WARM strategy is good once you are in your retirement to keep your money safe, what strategy did you use to get to your desired nest egg? Did you still invest in the stock market, then switched to the WARM strategy once you reached your goal?

      As far as I remember, we only used two coherent strategies during our working years.

      First, we always lived well below our means. From 1997, which is the year I started tracking expenses, through 2008, which is the year I retired, we consistently spent at about the 60th percentile for US households (per the Consumer Expenditure Survey (CES)). During this same time frame, we earned annual income that consistently placed us somewhere above the 90th percentile for US households (again, per the CES). Our post-tax savings rate during 1997-2008 averaged 48 percent per year.

      Second, we always maxed out our available retirement accounts. For many years (2002-2008) I fully funded a self-employed 401k (these type of accounts allow for huge contributions). And when I retired in 2008, my wife even funded a spousal IRA for stay-at-home me—and kept fully funding it each year until she finally retired in 2012.

      During our working years, we invested in equity mutual funds, but we did this without paying much attention to our asset allocation. Then, at some point in early 2008, I decided that I had had enough of working. In anticipation of moving my retirement accounts away from my employer, I shifted all my 401k investments into money markets. And for good measure I moved most of my non-retirement investments to cash as well (my thought was to build up a retirement strategy from ground zero). Thankfully, these moves caused us to miss the massive market downdraft of 2008-09. Our timing, which couldn’t have been better, was the result of dumb luck. Like most investors, I never saw the Great Recession coming. The only difference is that I just happened to be in the process of retiring—and this pending life change prompted me to move most of my stash to cash in order to give myself some time to think things over. Better lucky than smart!

      2.) What if one doesn’t wish to invest in the stock market at all? I am asking this because my wife has been nervous about investing in the stock market since some of our investments fell in value because of this corona virus outbreak. What suggestions would you have for someone like my wife, who is gun shy about getting back into the stock market?

      I would suggest that my fellow risk-adverse retirees figure out their personal loss tolerances and allocate assets accordingly. I continue to believe that some exposure to the equity markets is a healthy hedge against the creep of inflation, particularly in a timeframe when CDs are returning a mere 1.6 percent or less per year.

      Like many others who have FIREd we’ve recently lost money in the markets. But because we allocated so little to stocks—about 7 percent of our net worth—the hit to our finances has been negligible. From March 1 to April 1, 2020 our net worth fell by 1.76 percent. If we maintain our average annual spending and continue to keep pace with inflation, our nest egg remains plenty large enough to get my wife, who just turned age 54, well past her 100th birthday—and that’s before accounting for any Social Security/Medicare benefits.

      3.) You also mentioned that you have about 28% (give or take) in real estate. Is this rental properties or are you investing in REITs or REIT funds?

      Neither. We own two residences mortgage-free: (1) a place in Maine on the ocean; and (2) a place in Colorado near the mountains. If we ever need to access the equity in these properties we can put one or both of them up for sale.

      4.) Finally, you compared the WARM strategy to the 4% withdrawal rate strategy in your article. How does the WARM strategy compare to the three-buckets strategy?

      As I don’t know anything about the three-buckets strategy, I am forced to confess that this question is above my pay grade!

      • Michael Clements says

        Thanks for getting back to me so quickly, sir! I apologize for not replying sooner, but I just finished working a three-day, twelve hour shift at work. I rarely have time to respond to messages during these times.

        I’ve read your answers to my questions and I’ve also reread your WARM strategy several more times. So, if I have this figured out correctly, in order to implement the WARM strategy, you would need to figure out your annual expenses, figure out the number of years that you expect to be retired, multiply the two numbers, and this is the amount that you need in your nest egg for your WARM strategy to be successful. Then, once you reach that amount, you place this entire amount in cash and live on that amount. Does this sound right? Is this what you were saying?

        I am also new to the three-buckets retirement strategy, but from what I understand of it, it works like this: you divide your retirement into three separate “buckets”. The first bucket is your cash bucket, and in it, you need to keep about two years of living expenses in cash. The second bucket is the “bond bucket”, in which you will keep Years 3 to 10 in bonds. Bucket 3 is the stock bucket, designed for Year 10 through the rest of life. If the market tanks, you live off of the cash and bond buckets until the market recovers. If it is growing, you use the stock bucket to replenish the funds in your cash and bond buckets. This strategy is designed for people with less risk tolerance, as only 30%-50% of your nest egg is in the stock bucket. This way, if the market drops, then only 30%-50% of your nest egg is affected.

        However, I saw a YouTube video where someone was introducing a Two-Bucket strategy. In essence, you keep two years of cash in the cash bucket, while Social Security benefits serves as your bond bucket. You keep the rest in the stock bucket. However, as the market gives you returns, you “take the gains off the table” and move them all to your cash bucket. So, if you have $500,000 and you earn $40,000 that year, you would remove the $40,000 from the stock bucket and move it to the cash bucket. This does sound simpler than the three bucket strategy.

        Again, thanks again for your reply.

      • Selma says

        How is Mr. Moose doing? Any more worries about inflation? How are you investing your cash? at .5% interest “high interest” accounts? Bond seem almost as risky as stocks right now. Your place in Maine must have sky rocketed in value this past year! My husband and I ( in NH) regret not buying a place in Maine all these years that we’ve wanted to/analysis paralysis. Waterfront is insane.

  58. Jim says

    This is a fantastic strategy. I’m perhaps the most afraid of the market crash FIREE there is in the USA. I’ve had huge arguments with Mr. Big ERN over it, especially lately that he’s advocating to go 100% equities which for me nears insanity.
    The WARM strategy is sound, simple and, call me crazy, but I’m beginning to implement. It’s the only one that allows me to sleep well at night. Period.

    • Noonan says


      Thanks very much for the kind comment!

      Sorry I didn’t respond earlier, but both me and my portfolio were safely set on snooze mode zzzzzzzzzzzzzzzzzzzzzzzzzzzzzz 🙂

  59. Selma says

    How is Mr. Moose doing? Any more worries about inflation? How are you investing your cash? at .5% interest “high interest” accounts? Bond seem almost as risky as stocks right now. Your place in Maine must have sky rocketed in value this past year! My husband and I regret not buying a place in Maine all these years that we’ve wanted to.

    • A Noonan Moose says


      The Moose household has been doing just fine. Since the above article was published, annual inflation rates have stayed mercifully low:

      2017 — 2.13011%
      2018 — 2.44258%
      2019 — 1.81221%
      2020 — 1.23358%


      As you mention, the market value of the Maine house has recently spiked. But the house in Colorado has appreciated even more. These real estate holdings, along with our smallish equity portfolio, continue to keep our net worth ahead of inflation—even as we constantly siphon off dollars to fund our above-average living expenses.

      Thanks very much for commenting Selma!

  60. Markus says

    Here in Germany there is no possibility of taking tax-free investment income. Even income from german inflation-linked bonds must be taxed at 25%. That’s why I think WARM makes less sense for investors from countries that do not have tax exemptions on investment income and interest.
    Thank you for this chart. I was never aware that cash is so volatile. It shows that cash has volatility but nobody notices it, like the volatility of stocks.

    The 100% stocks and very low stocks quota camp reminds me that there are different people who deal differently with the uncertainties of life.

    100% stocks: These are people who can let go and trust in life.
    Low stocks quota: People who don’t trust life and therefore have to control everything.

    Life has taught me that with all things it is healthier to let go and trust life.

  61. Ralph says

    WARM should be more out there. More people should know about it. Especially those who don’t want to risk a dime in the mr. market

  62. Captain Fin-Dependence says

    Thank you Moose for the excellent alternative take on retirement planning!

    This is not entirely dissimilar from my “dream state” of retirement: accumulate enough assets that even “risk-free” interest is enough cash flow to cover our expenses. That is somewhat different than your model, as WARM depletes the asset base over time, and what I am speaking of requires a larger base that generates enough interest to cover expenses without depleting the base.

    At 45 years old, I am already in a position that I could “retire” however, I do not have the personality that would be entirely happy with “nothing” to do. I fully expect to work part time, either continuing the consulting work I do now, or just work part time as a Captain and Divemaster here on the Gulf Coast of Florida. (Dream Job!)

    My concern has always been the escalating cost of living with inflation. Our retirement model also ignores the Social Security benefits that we will get later in life. When the Fed does respond as of late, decent interest can be earned on various CD’s and T Bills. And the one thing I think people over look in their inflation fear models is even if there is a modest over accumulation of interest versus expense, there is still a compounding interest effect occurring with their holdings. That compound effect is not insignificant. Yes, inflation compounding is occurring as well, but many forget to model the delta between the two.

    My only concern with the WARM model, as with several others, is I do not like the idea of having to adjust spending down to compensate for inflation. We are very frugal, live a very modest lifestyle that we absolutely love. We want for nothing. There are ways to compensate for that risk, and they were covered by many others above me in the comments and in your post.

    I was wondering, if after all of the fantastic feedback you have received, if you have thought of any other alternatives besides flexing spending down, to help maintain a cash flow that compensates for inflation? Especially now, given the high rate of change we have experienced as of late.

    Again, thank you for a wonderful article with an alternative viewpoint. Always love seeing fresh ideas, especially those that challenge the norm!

    Captain Fin-Dependence

  63. Robin says

    Thank you for another great post and for exposing all options for your followers. We will stick with the 4% rule. 😉
    While we are with Vanguard and Betterment, I occasionally receive emails from Wealthfront. The last one was about their new (maybe) optimized Bond portfolio that they should or can take the place of cash. It’s designed to generate a higher yield than cash. I would like to get your take on it. We are hands off so I wouldn’t want to manage t-bills and the like myself.

  64. Petra says

    People who have 40, 70 or >100 times their annual expenses in assets and have an average life expectancy of less than 20-40 years can easily go for this WARM plan and hope to never outlive their assets. (And if they do outlive their assets after all, at least they had like 20-30 good years with good nights of sleep before running out of money).

    However, because I don’t earn so much, my plan does include the 4% rule *AND* takes into account the fact that at around age 70 I will receive social security and pension payouts (NB I live in Europe).

    I do think that if everybody was on the WARM plan, we would have lots of people dying having worked way too long and sitting on way too much money for too long. That would be a shame of valuable years of life.

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