Stock Market Return History Calculator

[audreyh1]

I found this cool little calculator on the web.

It lets you enter a % for expected annual stock market returns - inflation adjusted or not - and spits out what percent of the time, over various year periods, the market has met or beat that average annual return.

Past Stock Market Return Data

It uses Robert Shiller’s S&P 500 data from 1871 until 2012.

This site does admonish you not to quit your day job though [DQYDJ], no matter what the topic - LOL!

 

[Willers]

Interesting info. Thanks for posting!

Looks like I can't build 10% inflation adjusted returns into my plan like I was told I could back in the 90's...

 

[galeno]

Cool tool. Every 40 years the SP500 has delivered a real return of 4.4% 95% of the time. Assuming a real return of zero for bonds, a 60/40 portfolio should deliver a real return = 2.6%.

Subtracting our TER = 0.8% leaves us a 1.8% expected real return with a 95% survivability rate over our 40 year retirement.

Our retirement can survive with a 0.8% real return.

 

[audreyh1]

Here is another gem.

Inflation and Dividend Adjusted S&P 500 Performance

DQYDJ does a reasonably accurate job of inflation adjusted market returns, unlike the sites that just go by index values alone ignoring dividends.

 

[samclem]

Every 40 years the SP500 has delivered a real return of 4.4% 95% of the time.

But, if a person is withdrawing the typical 3-4% and if the first 10 years average -6% per year return, it won't much matter that the next 30 years bring the average up to 4.4% per year for the 40 year period.
Sequence of returns can be as important as the average. That's the primary reason some recent studies are suggesting that people sell off their bonds in their early retirement years to meet living expenses, just so the equities can get safely "out of the gate".

 

[aim-high]

Great links, thanks! It's making me much, much, more comfortable thinking that 2.5% to 3% withdrawal rates with the ability to drop down to 2% if necessary is a no-brainer for FIRE if I choose.

 

[galeno]

Our gross AWR=3.5%. TER=0.8%. We live on 2.7% of port. Next year we will drop our gross AWR to 3.3%.

Hopefully the stock market will keep going up for the next 4 years. We'd love to be able to get our gross AWR = 3.0% by then.