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Old 07-26-2007, 10:31 PM   #21
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Originally Posted by Sam View Post
It was never a misunderstanding for me. But at 4%, the final average principal is ALWAYS greater or equal to the starting principal.
An astounding insight!
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Old 07-27-2007, 06:05 AM   #22
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Join Date: May 2005
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Withdrawal studies center on
- 60/40 market weight portfolio, 25 year withdrawals, U.S. market returns and volatilities
- arriving at past 4% of initial portfolio value + annual inflation withdrawals, no resetting
- using lower & higher starting withdrawal rates for longer & shorter withdrawal periods
- more activities early with more healthcare later, for nearly level spending until later life

Average retiree divides average portfolio over initial life expectancy + annual inflation.

While they’ve usually omitted
- lower returns, higher volatility, and longer bad runs exhibited by other capital markets
- lower dollar weighted return, past investing costs, more conservative retiree portfolios

Average retiree divides an average portfolio annually over remaining life expectancy.

With some authors suggesting
- changing allocations 1% yearly toward more bonds has little effect on withdrawal rates
- retirees have declining expenses during retirement, reducing the need to offset inflation
- overweighting past higher return assets for higher withdrawal rate or insufficient assets

Retiree divides an age weighted portfolio annually over remaining life expectancy.
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