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Investing/Strategies / Retirement Investing
|Subject: Re: Income Planning Assumption||Date: 6/7/2007 10:19 AM|
|Author: telegraph||Number: 57801 of 76095|
"Is the "4% " option designed to preserve capital forever? "
No..the 4% rule means that in the 'worst case' 30 year period, based upon previous history, you would be out of money after you took your inflation adjusted withdrawal in year 30.
In 29 or the 30 cases, you would likely have much more money...sometimes 5 times what you started with.
It all depends upon future returns of the different asset cases, inflation, recessions, politics, wars, etc.
In the original studies, the Trinity Study and others done for college endowment funds did look at capital preservation - finding the optimum withdrawal rate.
The most critical years are the first 5 -10 years. If you get favorable increases in every one of them, you can 'reset' your withdraal rate to a higher level
See the retireealyhomepage and all the disucsions on the Retire Early Home Page ( Retire EArly CAMPfire).....about resetting your withdrawal amount.
The probability is high that you will wind up with money 'left ovre' in most cases, but if you are planning for the worst case, in the 'worst case' you have zero money left. In most cases you will.
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