Paul,I think it works like this. If you have a million when you retire, you would withdraw 4% or 40k the first year. At the end of the first year, you check the inflation rate. Lets say its 3%. So you would increase your 40k withdrawal to $41,200 to adjust for inflation. The next year, you'd do the same thing. If inflation was 2%, you'd increase the $41,200 by 2%. Make sense?That's why this strategy is based on a 30 year retirement. Even though you only withdrew 4% of your portfolio the first year, you withdrew more than that the subsequent years.What would be REALLY neat is if someone took all the historical data and ran it for ALL time periods. Everything from 10 to 23 to 57 year time periods. That way, all you'd have to do is figure out how long you'll live....oh wait...how do you do that...?
Best Of |
Favorites & Replies |
Start a New Board |
My Fool |
BATS data provided in real-time. NYSE, NASDAQ and NYSEMKT data delayed 15 minutes.
Real-Time prices provided by BATS. Market data provided by Interactive Data.
Company fundamental data provided by Morningstar. Earnings Estimates, Analyst Ra