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Subject: Re: 5 Year  Date: 4/14/2000 11:06 PM  
Author: jangle1  Number: 3547 of 20592  
Pixy writes: Given the low withdrawal rate you're using, that may work. However, I wonder if you're using 4% of the intial portfolio as increased by inflation each year, 4% of the initial portfolio held constant over the years, or 4% of the portfolio's value each year? It makes a difference. Give me that data, and I'll use that in an analysis I'm constructing for a future article. I'm using 4% of the initial portfolio value adjusted for inflation. I've used the safe withdrawal calculator from the "Retire Early Home Page" and with a 4% withdrawal, 100% stock allocation, a 40 year payout period, adjusted for inflation, and 0.2% investment expenses I come up with a 97% suvivability. That's close enough to 100% for me. Before I found the safe withdrawal calculator I developed my own spreadsheet, where I input the total porfolio value at retirement, use an annual return for the porfolio of 9%, inflation of 3.5%, and an initial withdrawal of 4%, and found that after 40 years the portfolio value matches pretty close to the median value of the Safe withdrawal calculator. So I feel that my numbers are varified. Now to reveal my deep dark secret: I'm not really retired yet, but hopefully about four years away from early retirement. What I've also put into my spreadsheet is a calculation of future value, where I can adjust the variables of rate of return, present value, periodic contributions, and number of years. In order to achieve my desired portfolio value, I'm using a 40% rate of return. You may gasp at this number, especially after the last month in the market, but if I don't get the 40%, I'll just delay my early retirement until I reach the portfolio value that I'm comfortable with. Now you may ask, what are you doing to try and achieve such a lofty goal? My next deep dark secret is revealed: I'm using mutual funds (oh, please forgive me). Namely Janus Global tech (JAGBX), Janus Mercury (JAMRX), Janus Olympus (JAOLV), Janus Twenty (JAVLX), and T. Rowe Price Science and Tech (PRSCX). So ther you have it, blast away. Jeff 

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