No. of Recommendations: 5
However, I suspect the numbers change radically when you start to withdraw money. Now, in bad years, you are taking more out percentage wise......

Indeed. That's where the 4% SWR analysis initially done by Bengen comes into play.

I just wanted to post the data, because it's something that I've wondered about for a long time. Yeah, yeah, yeah, the 20-year average annual return is 10.7%. Great, how'd that work out for us in the Jimmy Carter years? I remember getting 14% in my money market fund. But the inflation took it all away.

So, 10.7% average is a nice story, but it is effectively a lie. We don't eay nominal returns, we eat real inflation-adjusted returns.

After mulling it over based on back-and-forth discussions on the other thread, it dawned on me that I had all the data and it came to me an easy way to put it together. Figuring avg gain minus avg inflation is nonsense, you have to tie the annual inflation and the annual gain together. This morning that stupid cardinal bird that keeps thumping trying to get in our window woke me up early -- again! -- and while I laid there hoping he'd go away, I realized a simple way to do that in my spreadsheet.

10.7% nominal comes out to 5.3% real after inflation. That's what we eat -- 5.3% above inflation. But the average CPI was 3.5%, showing that just taking 10.7% minus 3.5% is way off -- totally bogus math.

Hey, if this was easy there'd be no debates.

and if you get hit with adverse selection - ie, the first couple years of your retirement are real downers...... then having more money allocated to stocks is going to hurt more.

Funny thing that. I retired just in time to get hit in the face by the 2008/2009 bear market.

Yes, they say that the killer in a retirement portfolio is bad returns in the first 15 years.
That's why everybody that's serious about it look at some sort of variable withdrawal strategy. To handle the low-probability of getting whacked by a bad sequence of returns. I use Guyton-Klinger myself, and that's an option in the spreadsheet.

Looking at this is detail is part of why I created that spreadsheet in the first place, to explore what would happen at various times in the past.
Plug in a start date, amounts of initial investment and monthly deposits, then plug in retirement date and amounts of monthly withdrawals, and assumed or historical inflation.
But I haven't uploaded this latest update yet. Will do so soon.
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