Al.... thanks for the clarifying post.

Chin... heuristic arguments are not insightful in this situation. It may feel good but it does not say anything about 4% being a safe withdrawal rate, when you say the worst historical case in the last 50 years survived a 4% withdrawal rate.  Monte Carlo looks at many different scenarios most of which have not occurred in the past... but may occur in the future.

BTW... I recall the 4% SWR having a higher percent success rate, more like 97-99, rather than 95.  So rather than a 1 in 20 chance, the odds are more like 1 in 50.

Anyway, Al your post clarified my thinking and why I am unsettled with this restarting idea. Sometimes you need to step back and think about the bigger picture.  That is what your post did for me, it said what is this probability that MC is calculating.  paraphrasing.... the probability is the chance of a portfolio not surviving a 25 to 30 year time horizon given the starting point.

For what it is worth, this is a very conservative interpretation.  But exactly the way Statsgal thinks it should work.  She insists that I do not retire until our portfolio with our withdrawal rate has a 99% survival probability in the situation where my last paycheck corresponds to another great depression starting the next day.  For me, that means three more years of work... the downside (well that is the way Statsgal sees it) is that we will have a 12 figure portfolio when we die if the next thirty years are like the previous thirty years... well maybe downside was a poor choice of words...

I do not know how much extra risk a restarter is courting but I now see why he/she has increased risk.  And also why I have been unsettled by the idea.

I may not be back for awhile...  when no one is sitting in my beach chair, it disappoints the young ladies because there is no one to spritz with Perrier or serve mojitos...

Stats