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Re: Reasonable Probability?
Old 12-22-2004, 07:03 AM   #41
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Re: Reasonable Probability?

I plan for a 0% after tax real return during retirement.

so (spending + med ins) x joint life expectancy = portfolio needed

portfolio divided by initial life expectancy for rate
age 62 1/62 = 3.3% annual draw

nominal returns just offset inflation

cheesy, but fairly consistent with past world averages and current U.S valuations.

And easy to explain to my wife.
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Re: Reasonable Probability?
Old 12-22-2004, 07:10 AM   #42
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Re: Reasonable Probability?

oops, mistakes in typing

starting age 62 1/29 years = 3.4% rate
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Re: Reasonable Probability?
Old 12-22-2004, 09:39 AM   #43
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Re: Reasonable Probability?

Mark,
I'd like your math more if I weren't in my 40s!
For me, it would give me about 1.6% SWR which would have my wife sending me back to work!
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Re: Reasonable Probability?
Old 12-23-2004, 05:55 AM   #44
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Re: Reasonable Probability?

Hey, I'm 43. Depending on whose demograpic chart you believe, I'm about the last of the Baby Boomers, or the first post-Boomer.
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Re: Reasonable Probability?
Old 12-23-2004, 08:01 AM   #45
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Re: Reasonable Probability?

Run Firecalc with a 1% expense ratio, which was about a cheap as you could invest in the past. I think Firecalc gives an optimistic figure if you input current low index fund expenses into a past history that always had higher investing costs. Surely past investors had some idea of their investment costs and priced securities accordingly.

Note also there are international markets with generally lower returns than the U.S. But we lack the level of information that is available for the U.S market. If any weight at all is given to these excluded results, the 0% after tax real return while withdrawing may not be far off the mark.

Todays higher valuations may be offset by todays lower index investing costs, making past average (but not likely above average) returns possible during accumulation. But the net amounts received by investors was generally lower than most sales brochures indicate.
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