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This 4% is really only a first year estimate and is a reasonable target. Although if you include several other asset classes, real estate, precious metals, foreign and high yield debt and diversify to more equities than the S&P500, a portfolio can actually survive history with over 5% inflation adjusted withdrawal rate. You would then need about 20 times the annual amount you plan to spend from the account.

The reason I call the 4% a target is because, if you have returns of 15%, then you could take out at least 10% and still have a better chance of you portfolio lasting 29 years than in the historical testing.
Not suggesting you always take out the full returns, but just to note, if 4% is the worst maybe you are not getting the worst and you should be able to enjoy your retirement!!

DrTarr





Interesting post.
Thank you.
And thanks for the welcome.
Much appreciated.

AM
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