No. of Recommendations: 2
Ray is running numbers with 100% S&P. Dave suggested a better comparison would be to have a 33% reserve and 66% invested in the market. This is similar to standard recommendations for asset allocation between stocks and bonds for long term retirement savings, where the goal of the bond portion it to reduce volatility at the price of reducing returns.

Ray, what do the numbers look like if you include a bond holding in addition to the S&P 500?


Well, the comparison I'm doing is S&P500 B&H compared to S&P500 with IUL rules, to compare like to like.
But, yes, I take your point. What I'd have to do is allow for different asset allocations. Right now it doesn't do that. But I have another spreadsheet which does -- except it handles only withdrawal. https://www.dropbox.com/s/xf4ma5blug27aws/SPY_Withdraw_by_Ca...
The technique is already done, I'd just need to incorporate it into this spreadsheet. Maybe a couple hours work, or less.

To do a quick SWAG right now:
Starting with $500K in Jan 1973, withdraw 4%/yr annual increase by CPI inflation. And remember that 1973 is a really bad time to start--so it's a good worst-case test.

The final (Jan 2013) account value is:
100% S&P, 0% T-bills:
$189,000 (But the account is headed for zero.) The Jan 2000 value was $1.5M

60% S&P, 40% T-bills:
$1,056,000. Jan 2000 value was $1.7M

66% S&P, 33% T-bills:
$1,263,000. Jan 2000 value was $1.9M

Same parameters, but Jan 1963 start, 40 year duration, ending value for Jan 2003:
100/0: $5,967,000 (Yup: Six million dollars.)

60/40: $3,260,000

66/33: $3,752,000
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