Spanky
Thinks s/he gets paid by the post
I used 6% nominal in the past, thinking about changing it to 4% nominal.
Either that or we (with our 0-4% real) will be pleasantly surprised. Oh well, we'll see. Better safe than sorry.I think people who assume 20th century (8% real) returns for stocks are going to be sorely disappointed.
1% real return (4% nominal, 3% inflation)
I think people who assume 20th century (8% real) returns for stocks are going to be sorely disappointed.
I use 4% and have for 13 years. It projects a positive balance forever (ignoring LTC). I used to use CPI but concluded that it does not reflect our reality.I used 6% nominal in the past, thinking about changing it to 4% nominal.
Gave up using rates of return and projections.
We've been retired for 16 years now. If our net worth keeps up with inflation, I'm quite happy.
So if you use a real return of 0, does that mean you don't really need to inflate any numbers on your spreadsheet year to year? For example, if I need $40,000 for 30 years with a real return of 0% for both inveatments & expenses, then I need $1,200,000 (30 x $40,000)? Am I looking at this correctly?
Racing for the FIRE finish line, but I don't know where it is.
For those already retired why do you forecast total returns at all? I've been retired 9 years and just spend what divs I get. These are very easy to forecast. Some years total return is great others not so much. Why forecast total returns other than to project what my heirs might get? Actual divs seem way more useful and certain? Even if you are not a div investor, why forecast returns once retired?
For those already retired why do you forecast total returns at all? I've been retired 9 years and just spend what divs I get. These are very easy to forecast. Some years total return is great others not so much. Why forecast total returns other than to project what my heirs might get? Actual divs seem way more useful and certain? Even if you are not a div investor, why forecast returns once retired?
Net worth keeping up with inflation after spending makes you happy?
Oh man, there are people who expect more than that?
I am not really forecasting total return, other than to expect it to at least match inflation over my retirement, which will in all likelihood be shorter than 30 years.For those already retired why do you forecast total returns at all? I've been retired 9 years and just spend what divs I get...
I think Dan's point was simpler. If you are retired, what will you do if the forecast is too low? Go back to work? Cut back? Tough it out?I am not really forecasting total return, other than to expect it to at least match inflation over my retirement, which will in all likelihood be shorter than 30 years.
That is because I am spending more than the dividend, but if the total return at least matches inflation, I will not die broke and even leave some for my children.
For some retirees, dividends are not adequate to live off of. Others prefer to hold value stocks such as Berkshire Hathaway which does not pay out a dividend at all and thus one needs to forecast total returns. Finally, tax treatment is different in some cases for dividends versus capital gains.