Originally Posted by wishin&hopin
In our search for perfection and certainty (fruitless, it can be argued), it's tempting to embrace the precision that calculated numbers seem to give. But is a 1.9 percentage point difference in success rates really significant? If this were a FIRECalc result, I wouldn't think much of it. Am I missing something?
If it means anything, the higher stock allocation portfolios probably also produced much higher average terminal values than the ones with high bond allocations. This wouldn't show up as a change in "success percent", since a run is "successful" whether you've got $1 or $1 million at the end of the window. So, while the success rate difference is not highly significant, the improved chance of accumulating a big pile of money may be significant to some people.
We won't be taking a straight ""X% + inflation" withdrawal, but will withdraw a percent of our portfolio's ending value each year. So, higher average portfolio performance translates to more money to spend each year (on average) and an improved chance that the spending power of our withdrawals will keep up with inflation. And the flip side: Higher volatility in portfolio value (due to having more stocks) = more variability in annual withdrawal amounts.
"Honey, this is gonna be a red beans and rice year. Vacation will be a trip to see your Mom."