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Author: InvestMechanic Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75340  
Subject: 30-Year Retirment at 4.5% Withdrawal Rate Date: 5/13/2007 1:42 PM
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I took Fama/French's TSM (Total Stock Market) returns 
for the last 30 years and assumed 100% of retirement nest
egg would withdraw a constant 4.5% amount of the beginning
of the year balance while the remainder would earn what
the stock market actually did during the last 30 years
ending in 2005. Starting with $1,000,000, here is what would
have happened if the 4.5% was withdrawn on each January 1
and the rest invested in the stock market for the entire
year. The column net after tax assumes 30% of the gross
4.5% will be to pay all taxes and a nominal inflation rate
thus leaving approximately 70% take home after taxes and
inflation.

		January 1			                  December 31			
		         4.5%		                   8%				
Year	Nest Egg	Withdrawal	Nest Egg	Earnings	Nest Egg	Year	Net After Tax 	TSM
1	$1,000,000 	$45,000 	$955,000 	$255,558 	$1,210,558 	1	$31,500 	26.76%
2	$1,210,558 	$54,475 	$1,156,083 	($34,336)	$1,121,747 	2	$38,133 	-2.97%
3	$1,121,747 	$50,479 	$1,071,269 	$91,593 	$1,162,862 	3	$35,335 	8.55%
4	$1,162,862 	$52,329 	$1,110,533 	$271,081 	$1,381,614 	4	$36,630 	24.41%
5	$1,381,614 	$62,173 	$1,319,442 	$438,451 	$1,757,892 	5	$43,521 	33.23%
6	$1,757,892 	$79,105 	$1,678,787 	($66,816)	$1,611,971 	6	$55,374 	-3.98%
7	$1,611,971 	$72,539 	$1,539,433 	$314,352 	$1,853,785 	7	$50,777 	20.42%
8	$1,853,785 	$83,420 	$1,770,365 	$400,988 	$2,171,352 	8	$58,394 	22.65%
9	$2,171,352 	$97,711 	$2,073,641 	$65,734 	$2,139,376 	9	$68,398 	3.17%
10	$2,139,376 	$96,272 	$2,043,104 	$641,739 	$2,684,843 	10	$67,390 	31.41%
11	$2,684,843 	$120,818 	$2,564,025 	$398,962 	$2,962,987 	11	$84,573 	15.56%
12	$2,962,987 	$133,334 	$2,829,653 	$51,500 	$2,881,152 	12	$93,334 	1.82%
13	$2,881,152 	$129,652 	$2,751,500 	$483,163 	$3,234,664 	13	$90,756 	17.56%
14	$3,234,664 	$145,560 	$3,089,104 	$878,541 	$3,967,645 	14	$101,892 	28.44%
15	$3,967,645 	$178,544 	$3,789,101 	($230,377)	$3,558,724 	15	$124,981 	-6.08%
16	$3,558,724 	$160,143 	$3,398,581 	$1,143,623 	$4,542,204 	16	$112,100 	33.65%
17	$4,542,204 	$204,399 	$4,337,805 	$393,005 	$4,730,810 	17	$143,079 	9.06%
18	$4,730,810 	$212,886 	$4,517,923 	$523,627 	$5,041,551 	18	$149,021 	11.59%
19	$5,041,551 	$226,870 	$4,814,681 	($36,592)	$4,778,089 	19	$158,809 	-0.76%
20	$4,778,089 	$215,014 	$4,563,075 	$1,627,649 	$6,190,724 	20	$150,510 	35.67%
21	$6,190,724 	$278,583 	$5,912,142 	$1,251,009 	$7,163,151 	21	$195,008 	21.16%
22	$7,163,151 	$322,342 	$6,840,809 	$2,074,817 	$8,915,626 	22	$225,639 	30.33%
23	$8,915,626 	$401,203 	$8,514,423 	$1,897,014 	$10,411,437 	23	$280,842 	22.28%
24	$10,411,437 	$468,515 	$9,942,922 	$2,511,582 	$12,454,504 	24	$327,960 	25.26%
25	$12,454,504 	$560,453 	$11,894,052 	($1,314,293)	$10,579,759 	25	$392,317 	-11.05%
26	$10,579,759 	$476,089 	$10,103,670 	($1,137,673)	$8,965,996 	26	$333,262 	-11.26%
27	$8,965,996 	$403,470 	$8,562,527 	($1,784,431)	$6,778,096 	27	$282,429 	-20.84%
28	$6,778,096 	$305,014 	$6,473,082 	$2,145,179 	$8,618,261 	28	$213,510 	33.14%
29	$8,618,261 	$387,822 	$8,230,439 	$1,070,780 	$9,301,219 	29	$271,475 	13.01%
30	$9,301,219 	$418,555 	$8,882,665 	$649,323 	$9,531,987 	30	$292,988 	7.31%
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