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Old 01-17-2014, 07:13 PM   #21
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I prefer to stay around 3.5%WR, then to follow what I state in my signature line. Spreadsheet is a wish list to me. I prefer to use contemporaneous data.

See below.
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Old 01-17-2014, 08:30 PM   #22
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How do people use these predictions?

I can compute my weighted expected return and see that it is greater than my planned withdrawal rate, but I'm not really sure what else I should do with these numbers.
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Old 01-18-2014, 02:23 AM   #23
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Quote:
Originally Posted by photoguy View Post
How do people use these predictions?

I can compute my weighted expected return and see that it is greater than my planned withdrawal rate, but I'm not really sure what else I should do with these numbers.

I did the same looked at the averages and applied my current AA for each asset class. This gave me an expected average return, and because I am sure that numbers are 100% accurate I subtracted 2.5% for inflation. Divide the number 12 and plan and spend that much each and every month.

Ok actually I did nothing of the sort, but seeing the higher equity returns makes me feel better.
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Old 01-18-2014, 07:52 AM   #24
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I am not sure about the long term 2% inflation rate. Looking at inflation swap market the 30 year inflation break-even is around 2.81%
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Old 01-18-2014, 06:26 PM   #25
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Well, I am quite certain I will not be around 30 years from now.
While I suppose it is possible that I'll be around 30 years from now a big question mark is whether I'll want to be.

In the meantime I'll wager that one guy's crystal ball is just as good as anyone else's for that time frame.
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Old 01-18-2014, 07:05 PM   #26
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Not only are the 30 year returns higher than what I am hoping for, they are higher than what I need with two rather large buts in there:

1. inflation in the US may (or may not) average 2% pa over this period, but it is higher where I live and my cost of living has been going up by more than that;

2. the volatility of returns could be problematic if the negative returns are in the next few years (i.e. the first few years of my retirement).
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