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Author: rayvt Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76078  
Subject: Drawdown Part 3 Date: 9/3/1997 9:43 AM
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Drawing down portfolio for retirement income. Part 3 of 4



In this series of four articles, I show the results of

drawing down an initial portfolio of $1000. The examined results were

for every 20-year period from 1961 to 1997 (17 such intervals).



Part 3 -- Entire portfolio in stocks. S&P 500 index fund.



This strategy will not support an 8% draw. You could have drawn 6%,

but the lowest balance ($145) was skimmming the pavement. It doesn't

look safe to me. Articles in the Wall Street Journal and other

magazines suggest using 4%-5% draw.



Here are some figures for 6% drawdown using S&P500:

Starting balance $1,000

Lowest ever year-end balance $145

Median ending 20-year balance $866 (1973-1992)

Total withdrawal $1,437

Total capped shortfall $455

Lowest ending 20-year balance $187 (1966-1985)

Total withdrawal $1,465

Total capped shortfall $428

# times hit 6% cap 19

# times hit 75% floor 14

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