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Author: yddeyma Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76392  
Subject: Re: Questions about early retirement Date: 4/19/2007 6:52 AM
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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...?
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