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Old 12-17-2014, 04:15 PM   #21
Recycles dryer sheets
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I plugged it into my spreadsheet and used data showing returns as if you'd retired in 1929, which is a tough case, due to the early bad years. Here's the data. I used $1MM start portfolio, 4% WD first year, and 50% Stock/50% Bond AA.

You get some lean years, but you'd don't run out of $$ (as others have already noted)

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Old 12-17-2014, 11:33 PM   #22
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Originally Posted by haha View Post
Most of this is fluff. What counts is how much you have, how you invest it, and how much you take out. It is true that a % of remaining portfolio will never run out on paper, but in the real world you need a certain amount of money, and when your % withdrawals no longer provide that you go back to work if you can, at whatever you can do, or apply for subsidies ( you know, like ACA), food assistance, etc.

The rest is really entertaining to ER buffs, and makes good living for many otherwise untalented writer people, but it is only window dressing.

+1. Except most here would probably be getting SS + Medicare, not ACA tax credits, at the age the money might be running out.

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Old 12-20-2014, 06:04 AM   #23
Recycles dryer sheets
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By the way, like other withdrawal methods, the 90%/6% Burns rule also can leave you with a lot of money on the table at the end. One thing you can do is instead is to use a 90%/VPW instead of 90%/6%. The 90% part will limit how much your effective (post inflation) year-to-year withdrawals decline in a declining/high inflation market and VPW may help limit the amount of money remaining in your accounts at the end. I backtested using a VPW that started at 6% for year 1 by over-riding the calculation that the VPW spreadsheet uses based on expected returns. At least for the timeframe I backtested, the lowest post-inflation withdrawal using 90%/VPW was more than what was achieved with 90%/6% and once sequence of returns moves back into your favor, you climb out of the hole more quickly with 90%/VPW.

Also, it isn't clear that 90% and 6% are optimal. With enough spreadsheet knowledge, you can play around with both numbers and see what might have happened historically if, for example, you limited the year-on-year reduction to be 5% instead of 10% - of course that doesn't mean going forward would be anything like that. :-)

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