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I did a search but could not find where this had been previously posted.
The 4% Rule: Why it still makes sense for retirement
Clark Howard responds to a WSJ article saying the 4% withdrawal rule should actually be 3%, recreating the 1994 study with updated market returns. Some key findings:
FIRECalc anyone?
The 4% Rule: Why it still makes sense for retirement
Clark Howard responds to a WSJ article saying the 4% withdrawal rule should actually be 3%, recreating the 1994 study with updated market returns. Some key findings:
Our work recreated Bengen’s study with retirement withdrawals beginning every year from 1929 to 2009. This is 82 separate retirement starting points. We used actual market data until 2017 and ran multiple simulations with historically conservative average return estimates after that: 5% for stocks, 2% for bonds and 3% for inflation figures.
Here is a brief rundown of our findings:
70% of the time (58 of 82 scenarios) retirement funds lasted 50 years or more.
30% of the time, the money “ran out” [prior to 35 years] with the worst-case scenario in our study being 29 years.
Our conclusion: Yes, the 4% Rule still works.
FIRECalc anyone?
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