The-Risk-of-Ruin-for-Retirees: Personal Finance News from Yahoo! Finance
Andy Mayo, Investopedia.com Sunday, June 1, 2008. Sponsored by Fidelity (Shame!)
He starts out talking about a 4% withdrawal rate and how that it is dangerous. He proceeds to build a scenario with a 10% withdrawal rate and 4% inflation (I guess "4%" had to come from somewhere) from 1987 to 2003, backwards and forwards and uses it to show that early low returns are dangerous (duh!), but when I ran the same numbers at 4% withdrawal and 4% inflation, neither scenario went bust. Starting with $100,000, he would actually wind up with $346,130 in 2003 or $322,761, depending on whether one went forwards or backwards.
He talks about a 13.47% "average annual return". (True, that is the arithmetic average...which is entirely useless. I guess he can't calculate the geometric average, 12.04%.)
More financial pornography from the media. Shame on Fidelity for sponsoring such misleading drivel.
Blah!
__________________
"Ain't got no money for no old-age pension;
I'm so broke, I can't pay attention!"
"I started out with nothin' and I still got most of it left."
Last edited by Ed_The_Gypsy; 06-04-2008 at 12:57 AM.
Reason: added ending balances
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