UnThreaded | Threaded | Whole Thread (17) | Ignore Thread Prev | Next
Author: intercst Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 736467  
Subject: Re: Where am I wrong? Date: 10/17/2001 12:15 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 10
sportfool asks,

First of all I am an newbie to this board. I may be forced into an early retirement next year, though it's not what I want it may come to pass anyway. I given some look at retirement calcuators and how much could be withdrawn for life. It seems that 3 to 4% is what's recommended. My question is, if stocks can reasonably be expected to appreciate 10% per year and inflation is roughly 3% or less why couldn't I withdraw say 7.5% per year and still have some appreciation and a margin of safety? Any comments will be greatly appreciated.

Ah, the age old question.

The reason you can't take 7% and retire happily ever after is volatility. The stock market goes up and down, and there have beem several extended down periods where a 7% withdrawal would have depleted your retirement portfolio past the point of no return.

If you haven't see it already, check of the Retire Early Study on Safe Withdrawal Rates, http://www.geocities.com/WallStreet/8257/restud1.html

Your not the first person that thought he could withdraw 7% from a retirement portfolio. No less a light than Fidelity's Peter Lynch thought so as recently as 1995 (Lynch, Peter, “Fear of Crashing” Worth Magazine, September 1995), but quickly withdrew the article after being presented with evidence to the contrary.

intercst


Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (17) | Ignore Thread Prev | Next

Announcements

Post of the Day:
Value Hounds

Mylan Transitioning from Generics
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement