UnThreaded | Threaded | Whole Thread (46) | Ignore Thread Prev | Next
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 77550  
Subject: Re: Questions about early retirement Date: 4/19/2007 10:15 AM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
Does the 4% rule of thumb assume that you die with zero funds or are left with the principal intact?

Taking out 4% and the effects of inflation are not the only things going on. After the 4% and inflation is taken out, the remaining funds earn some assumed rate. So you take three steps back when you withdraw funds but one step forward with a return on the remaining balance. This process repeats every year. Depending on the rate of return, you probably will lose some years and catch up in other years. But I'd like to know whether this rule of thumb assumes that the balance at death is closer to zero or to the original principal. If you want to leave some money for your children and this rule of thumb assumes a zero balance, you might want to consider some other rule of thumb in that case.
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (46) | Ignore Thread Prev | Next


The Retire Early Home Page
Discussion on accelerating retirement day.
Kiddie Card Board
Should kids have their own credit card?
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Berkshire Hathaway

Taking Candy From Strangers
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.