Originally Posted by Totoro
0% return on TIPS means a 0% real return. a 0% real return means one can spend 100%/35 = 2.85% per annum to arrive exactly at 0 after 35 years.
Since TIPS are slightly positive it is actually a bit more.
Originally Posted by medved
Can you explain how the current return on TIPS suggests that a zero-equity portfolio should be able to safely sustain a 3% withdrawal rate for 35 years? I am not questioning that conclusion, but would like to understand it. Thanks!
I did not say that a zero-equity portfolio should
be able to safely sustain a 3% withdrawal rate for 35 years, but it could
. With TIPS, you are taking (arguably) no credit risk and
no inflation risk. But that is not the case with most fixed income investments. If you park all your money in a savings account, the outcome may not be nearly as favorable.