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I've seen a few posts in the past in which folks said they kept a bit of margin in their RE Target portfolio numbers because of the current high historical valuations of the various stock indexes. That makes a bit of sense to me - I'd feel more comfortable retiring with $1.5M of VFINX trading at an average PE of 16 than I would with the same $1.5M trading at 32 times earnings.

It seems to me that there might be a fairly strong inverse correlation between S&P 500 P/E ratio on RE day and the 40 Year Safe Withdrawal Rate. Has anyone here looked at that angle before? If there is such a correlation, it might be strong enough to incorporate it into our calculations, dontcha think?


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