What Overall Rate of Return do you use in your financial projections

[Lusitan]

I use 6% if I'm having a good day (most days); 5% if I'm feeling especially pessimistic.

[Independent]

Originally Posted by nickel

It seems to me that time horizon should play an important role in determining expected returns. Those with more time can invest more aggressively, those with less can't (or shouldn't). So while the poll results are interesting, they're perhaps not that informative.

(FWIW, I've been assuming in the 7-8% range and am in my mid-30s.)

Agreed. A 35 year-old can assume long term averages for now, with plenty of time to adjust in the future.

A retiree age 65 has to be aware that those long term averages hide long strings of poor years.

It seems to me that anyone who is serious about a 4% SWR is implicitly assuming about 3% real. I don't know if we have any of those people responding to the poll, but I'm surprised that there aren't more low numbers.

[pie2008]

We're currently earning about 5.2%. Our total portfolio has been invested conservatively for the past couple of years as we are winding down for retirement in the next few weeks. Had we lost money in this awful market over the past year, my husband would have refused to retire. After retirement I expect our return will fluctuate, but it will always be conservative. I'm using an initial rate of 4.6%. We'll adjust it year by year, but we always plan to withdraw less than we earn. If rates go to zero, I will panhandle so I can deposit money. haha

[Notmuchlonger]

Originally Posted by pie2008

We're currently earning about 5.2%. Our total portfolio has been invested conservatively for the past couple of years as we are winding down for retirement in the next few weeks. Had we lost money in this awful market over the past year, my husband would have refused to retire. After retirement I expect our return will fluctuate, but it will always be conservative. I'm using an initial rate of 4.6%. We'll adjust it year by year, but we always plan to withdraw less than we earn. If rates go to zero, I will panhandle so I can deposit money. haha

Not worried about inflation eating away your purchasing power?

[pie2008]

Originally Posted by Notmuchlonger

Not worried about inflation eating away your purchasing power?

No, we've run our figures through many, many configurations using very conservative rates and higher inflation. We have always lived beneath our means -- we're "the millionaires next door." I grew up poor, so I still know how to live on next to nothing -- not that I want to go back to those days, but I could. When you're older, you buy less. Medical premiums (and later Medicare) may be our most challenging expense, but I figure everyone will be in the same boat then, and the outcry about lack of/poor medical care will be so great that the government will finally be forced to seriously tackle the issue. In the meantime, we go for all of our annual physicals and routine medical tests, and do most of the other things one is supposed to do to stay healthy.

As a sidenote: my doctor saw something suspicious when I recently went for a routine physical. She took a biopsy, and I spent a week in extreme anxiety waiting for the results which, I'm happy to say, were negative. But what made the biggest impression on me was that when I thought I was potentially facing something serious, I didn't regret that I didn't yet have a big screen TV or have traveled more, and I certainly didn't give a moment's thought about inflation -- all I wanted was more time doing simple things with my husband, like going for walks, preparing meals together, and waking up in a comfortable bed each morning with him by my side.

[bigla]

I use 7% now that I am retired.