1. Interesting fact: When the 4% Rule was originally published by Bill Bengen, he came up with that using a portfolio of 60% bonds, and 40% stocks.
If you're not familiar with the 'rule', it simply states that if you retire at 65 with a balanced portfolio (described above)...
If you're not familiar with the 'rule', it simply states that if you retire at 65 with a balanced portfolio (described above)...
https://twitter.com/Redneck_Wealth/status/1423486678568771584
2. If you withdrew 4%, you would 'never' run out of money.
BUT, there are 2 fairly fatal flaws with that math these days, although it was valid at the time.
First, in the 1990's and prior, bonds paid 6-8% on average.
Second, average life expectency was mid 70's for most.
BUT, there are 2 fairly fatal flaws with that math these days, although it was valid at the time.
First, in the 1990's and prior, bonds paid 6-8% on average.
Second, average life expectency was mid 70's for most.
3. Today, it is mid to late 80's, and bonds pay 3-5% on average for the last couple of decades.
So many economists say that a realistic number is closer to an annual withdrawal rate of 2 to 2.4%
In fact, @WadePfau said 2.4% recently. (and he's really, really smart.)
So many economists say that a realistic number is closer to an annual withdrawal rate of 2 to 2.4%
In fact, @WadePfau said 2.4% recently. (and he's really, really smart.)
4. Anyway, I'll show you guys how to 'hack' this soon, but that's for another thread......
Oh, and here is where @WadePfau discusses that 2.4% number from last year....
thinkadvisor.com/2020/04/14/wad…
thinkadvisor.com/2020/04/14/wad…
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