Subject: Re: Have about 2.5 years of cash left for expenses
Now lets assume that they retired on Jan 1, 2025 with $50 which grew enormously and 5 years later on Jan 1, 2030 wound up with $100. Same fat-then-lean and lean-then-fat scenarios.
That's why the SOR risk is bogus, a boogeyman to scare people.
They had GREAT results the first 5 years of retirement. But the period after 1/1/2030 was the same, no matter if it was the 1st year of retirement or several years into retirement.
Every year is the first year of the rest of your portfolio. Doesn't matter how long ago the portfolio began.

I'm not sure I follow your straw man there : )
If they had retired five years earlier with $50, then on that retirement date no-one could know that the portfolio was about to double in value in five years.
And those starting out were starting with 8% withdrawal rate and thus behaving crazily.
Then five years pass and returns were great in those five years, so with hindsight their idiocy was saved by dumb luck.
Taking an unacceptable risk then getting out of it by lock doesn't demonstrate that the risk didn't exist.

For someone choosing fixed withdrawals that are too large relative to portfolio size on retirement date, sequence of return risk is a real risk, and the first few years are *definitely* materially different in importance compared to any subsequent year.
If they're particularly bad you go broke, and otherwise you don't, plainly enough.
For a *smart* person who doesn't make both of those two mistakes, sequence of return risk isn't a worry.

It is wildly untrue to suggest that every year is the first year in terms of this risk, unless you are prepared to change your withdrawal plan at any time.
Which means it isn't a fixed withdrawal plan, meaning that it's a person who hasn't made one of the two mistakes that, when combined, make sequence risk a big thing.

My own preference is to estimate the value of the portfolio on a regular basis, and adjust the values for inflation.
Smooth out that sequence if needed so it doesn't have too many short term squiggles.
The amount that you can liquidate with absolute certainty is the fraction of your investments that correspond to the increment in value (not price) since the last time you checked.
If you have 100 shares of something and they go up in intrinsic value by 8%, you can safely sell 8 shares. The price of those 8 shares might be high or low on that date, but it will be something.
By construction, and assuming your investments rise rather than fall in true value over time, your portfolio will always have the same real value and you can draw income forever without going broke.
You just don't know in advance how much it will be in any specific year.
This is a discussion of that using BRK as an example. http://www.datahelper.com/mi/s...
Note, the same valuation technique can be used to create a smooth trajectory that causes your portfolio value to reach zero on a fixed future date, liquidating the principal as well as the income.
The notion is that you would have a deferred annuity that would kick in on that date.
Even though annuities are almost always scarily overpriced, you still get to spend a whole lot more that way.

Jim